SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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West Essex Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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[West Essex Bancorp, Inc. Letterhead]
April 22, 2002
Dear Stockholders:
You are cordially invited to attend the 2002 annual meeting of
stockholders of West Essex Bancorp, Inc. (the "Company"), the holding company
for West Essex Bank (the "Bank"), which will be held on May 21, 2002 at 10:00
a.m., local time, at the Radisson Hotel, Route 46, Fairfield, New Jersey.
The attached notice of annual meeting and the proxy statement describe
the business to be transacted at the annual meeting. Directors and officers of
the Company as well as a representative of Radics & Co., LLC, the Company's
independent auditors, will be present at the annual meeting to respond to any
questions that our stockholders may have regarding the business to be
transacted.
Please sign and return the enclosed proxy card promptly. Your
cooperation is appreciated since a majority of the outstanding common stock must
be represented, either in person or by proxy, to constitute a quorum for the
conduct of business at the annual meeting.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ Leopold W. Montanaro
Leopold W. Montanaro
Chairman of the Board, President
and Chief Executive Officer
WEST ESSEX BANCORP, INC.
417 Bloomfield Avenue
Caldwell, New Jersey 07006
(973) 226-7911
Notice of Annual Meeting of Stockholders
West Essex Bancorp, Inc. will hold its annual meeting of stockholders
at the Radisson Hotel, Route 46, Fairfield, New Jersey on Tuesday, May 21, 2002.
The meeting will begin at 10:00 a.m., local time.
At the annual meeting, stockholders will consider and vote on the
following:
1. The election of one director to serve for a term of two years
and two directors to serve for a three-year term of office;
2. The ratification of the appointment of Radics & Co., LLC as
independent auditors of the Company for the fiscal year ending
December 31, 2002; and
3. Such other business as may properly come before the meeting.
NOTE: As of the date of this document, the Board of Directors is not
aware of any other business to be presented for consideration at the meeting.
Only stockholders of record at the close of business on April 12, 2002
are entitled to receive notice of the annual meeting and to vote at the annual
meeting and at any adjournments or postponements of the annual meeting.
Please complete and sign the enclosed form of proxy, which is solicited
by the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
By Order of the Board of Directors
/s/ Craig L. Montanaro
Craig L. Montanaro
Senior Vice President, Corporate Secretary and
Treasurer
Caldwell, New Jersey
April 22, 2002
IMPORTANT: The prompt return of proxies will save the Company the expense of
further requests for proxies in order to ensure a quorum. A self-addressed
envelope is enclosed for your convenience. No postage is required if mailed in
the United States.
WEST ESSEX BANCORP, INC.
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PROXY STATEMENT
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This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of West Essex Bancorp, Inc. (the "Company")
to be used at the 2002 annual meeting of stockholders of the Company. The
Company is the holding company of West Essex Bank (the "Bank"). The annual
meeting will be held at the Radisson Hotel, Route 46, Fairfield, New Jersey on
Tuesday, May 21, 2002 at 10:00 a.m., local time. This proxy statement and the
enclosed proxy card are being first mailed to stockholders of record on or about
April 22, 2002.
Voting and Proxy Procedure
Who Can Vote at the Meeting
You are entitled to vote your Company common stock only if the records
of the Company show that you held your shares as of the close of business on
April 12, 2002. As of the close of business on April 12, 2002, a total of
4,900,643 shares of the Company's common stock were outstanding, including
2,937,651 shares of common stock issued to and held by West Essex Bancorp,
M.H.C., the mutual holding company parent of the Company and the Bank (the
"Mutual Holding Company"). Each share of common stock has one vote. As provided
in the Company's Charter, record holders of the Company's common stock (other
than the Mutual Holding Company) who beneficially own, either directly or
indirectly, in excess of 10% of the Company's outstanding shares are not
entitled to any vote in respect of the shares held in excess of the 10% limit.
Vote Required
The annual meeting will be held only if there is a quorum. A quorum
exists if a majority of the outstanding shares of common stock entitled to vote
(after subtracting any shares in excess of the 10% limit) is represented at the
meeting. If you return valid proxy instructions or attend the meeting in person,
your shares will be counted for purposes of determining whether there is a
quorum, even if you abstain from voting. Broker non-votes also will be counted
for purposes of determining the existence of a quorum. A broker non-vote occurs
when a broker, bank or other nominee holding shares for a beneficial owner does
not vote on a particular proposal because the nominee does not have
discretionary voting power with respect to that item and has not received voting
instructions from the beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors. Directors
must be elected by a plurality of the votes cast at the annual meeting. This
means that the nominees receiving the greatest number of votes will be elected.
Votes that are withheld and broker non-votes will have no effect on the outcome
of the election. In voting on the ratification of the appointment of Radics &
Co., LLC as independent auditors, you may vote in favor of the proposal, vote
against the proposal or abstain from voting. The ratification of the appointment
of Radics & Co., LLC as independent auditors will be decided by the affirmative
vote of a majority of the shares represented at the meeting and entitled to vote
on the matter. On this matter, abstentions will have the effect as a vote
against the proposal and broker non-votes will have no effect on the voting.
1
The Mutual Holding Company owns 59.94% of the shares of common stock
entitled to vote at the annual meeting. The Mutual Holding Company has indicated
to the Company that it intends to vote such shares of common stock "FOR" both
proposals thereby ensuring a quorum at the annual meeting, and the likelihood of
election of the Company's nominees for director and the ratification of the
appointment of the independent auditors.
Voting by Proxy
The Board of Directors of the Company is sending you this proxy
statement for the purpose of requesting that you allow your shares of the
Company's common stock to be represented at the annual meeting by the persons
named in the enclosed proxy card. All shares of the Company's common stock
represented at the annual meeting by properly executed proxies will be voted
according to the instructions indicated on the proxy card. If you sign, date and
return a proxy card without giving voting instructions, your shares will be
voted as recommended by the Company's Board of Directors. The Board of Directors
recommends a vote "FOR" each of the nominees for director and "FOR" ratification
of Radics & Co., LLC as independent auditors.
If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their own best judgment to determine how to vote your shares. This includes a
motion to adjourn or postpone the annual meeting in order to solicit additional
proxies. If the annual meeting is postponed or adjourned, your Company common
stock may be voted by the persons named in the proxy card on the new annual
meeting date as well, unless you have revoked your proxy. The Company does not
know of any other matters to be presented at the annual meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Secretary of the
Company in writing before your common stock has been voted at the annual
meeting, deliver a later dated proxy, or attend the meeting and vote your shares
in person. Attendance at the annual meeting will not in itself constitute
revocation of your proxy.
If your Company common stock is held by a broker, bank or other nominee
(i.e., in "street name") you will receive instructions from your broker, bank or
other nominee that you must follow in order to have your shares voted. Your
broker, bank or other nominee may allow you to deliver your voting instructions
via the telephone or the Internet. Please see the instruction form provided by
your broker, bank or other nominee that accompanies this proxy statement.
Participants in the Bank's ESOP or 401(k) Plan
If you participate in the West Essex Bank Employee Stock Ownership Plan
("ESOP") or if you hold shares through the West Essex Bank 401(k) Savings Plan
in the RSI Retirement Trust ("401(k) Plan"), you will receive a vote
authorization form for each plan that reflects all shares you may vote under the
plans. Under the terms of the ESOP, the ESOP trustee votes all shares held by
the ESOP, but each participant in the ESOP may direct the trustee how to vote
the shares of Company common stock allocated to his or her account. The ESOP
trustee, subject to the exercise of its fiduciary duties, will vote all
unallocated shares of common stock held by the ESOP and allocated shares for
which no timely voting instructions are received in the same proportion as
shares for which the trustee has received voting instructions. Under the terms
of the 401(k) Plan, a participant is entitled to direct the trustee how to vote
the shares of Company common stock held in the West Essex Bancorp, Inc. Stock
Fund and credited to his or her account. The trustee will vote all shares of
Company common stock for which no directions are given or for which timely
instructions were not received in the same proportion as shares for which
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the trustee received voting instructions. The deadline for returning your voting
instructions to each plan's trustee is May 14, 2002.
Stock Ownership
The following table provides information as of April 12, 2002 about
those persons known to the Company to be beneficial owners of more than 5% of
the Company's outstanding common stock. A person may be considered to
beneficially own any shares of common stock over which he or she has, directly
or indirectly, sole or shared voting or investment power.
Percent of
Number of Common Stock
Name and Address of Beneficial Owner Shares Owned Outstanding
------------------------------------------------------ --------------------- -----------------
West Essex Bancorp, M.H.C. 2,937,651(1) 59.94%
417 Bloomfield Avenue
Caldwell, New Jersey 07006
The Baupost Group, L.L.C. 311,000(2) 6.35%
44 Brattle Street
Cambridge, Massachusetts 02138
____________________________
(1) Shares of common stock were acquired by the Mutual Holding Company in
the Bank's mutual holding company reorganization, completed on October
2, 1998. The members of the Board of Directors of the Company and the
Bank also constitute the Board of Directors of the Mutual Holding
Company.
(2) Based on information in a Schedule 13G/A filed on February 12, 2002.
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The following table provides information as of April 12, 2002 about the
shares of Company common stock that may be considered to be beneficially owned
by each director or nominee for director of the Company, by the executive
officers named in the Summary Compensation Table and by all directors and
executive officers of the Company as a group. A person may be considered to
beneficially own any shares of common stock over which he or she has, directly
or indirectly, sole or shared voting or investment power. Unless otherwise
indicated, each of the named individuals has sole voting and investment power
with respect to the shares shown.
Number of Shares
Number of That May Be
Shares Acquired Within
Owned 60 Days By Percent of Common
Name (excluding options)(1) Exercising Options Stock Outstanding(2)
-------------------------------------- -------------------------- --------------------- ---------------------
David F. Brandley ........ 17,248(3) 7,028 *
John J. Burke ............ 92,248(4) 7,028 2.0%
Charles E. Filippo ....... 48,835(5) 16,867 1.3%
William J. Foody ......... 19,592(6) 4,685 *
S.M. Terry LaCorte ....... 1,000 -- *
Everett N. Leonard ....... 14,123 7,028 *
Craig L. Montanaro ....... 26,044 16,867 *
Leopold W. Montanaro ..... 158,153(7) 11,714 3.5%
Dennis A. Petrello ....... 42,070(8) 21,084 1.3%
All Executive Officers and
Directors as a Group (9
persons) ............... 419,313 92,301 10.2%
____________________________
* Less than 1% of shares outstanding
(1) Includes unvested shares, and shares purchased by the trustee with cash
dividends paid on the unvested shares, awarded under the Company's 1999
Stock-Based Incentive Plan, as amended and restated ("Incentive Plan"),
for Messrs. Brandley, Burke, Filippo, Foody, Leonard, Craig L.
Montanaro, Leopold W. Montanaro and Petrello, as to which the holder
has voting power but not investment power, as follows: 2,886 shares,
2,886 shares, 6,925 shares, 2,886 shares, 2,886 shares, 11,717 shares,
14,427 shares and 10,666 shares, respectively. Includes 456 and 8,726
shares allocated under the supplemental executive retirement plan for
Messrs. Filippo and Leopold Montanaro as to which the holder has voting
power but not investment power. Also includes shares allocated under
the ESOP for Messrs. Filippo, Craig Montanaro, Leopold Montanaro and
Petrello, as to which the holder has voting power but not investment
power, as follows: 6,508 shares, 4,886 shares, 6,508 shares and 6,508
shares, respectively.
(2) Percentages with respect to each person or group of persons have been
calculated on the basis of 4,900,643 shares of Company's common stock,
which includes the number of shares of the Company's common stock
outstanding and entitled to vote as of April 12, 2002, plus the number
of shares of the Company's common stock which such person or group of
persons has the right to acquire within 60 days after April 12, 2002,
by the exercise of stock options.
(3) Includes 5,000 shares owned by Mr. Brandley's spouse.
(4) Includes 43,750 shares owned by Mr. Burke's spouse.
(5) Includes 3,750 shares owned by Mr. Filippo's spouse and 625 shares
owned by Mr. Filippo's son.
(6) Includes 6,250 shares owned by Mr. Foody's spouse.
(7) Includes 43,750 shares owned by Mr. Leopold Montanaro's spouse.
(8) Includes 37 shares owned by Mr. Petrello's spouse.
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Proposal 1 - Election of Directors
The Board of Directors of the Company consists of six directors. Five
directors are independent and one is a member of management. The Board is
divided into three classes with three-year staggered terms, with approximately
one-third of the directors elected each year. The Board of Directors' nominees
for election this year are nominated to serve for either a two-year term or a
three-year term, or until their respective successors have been elected and
qualified.
The Board's nominee to serve for a two-year term is S.M. Terry LaCorte.
Mr. LaCorte was appointed by the Board in April 2002 to fill the vacancy left
after the death of James P. Vreeland. The Board's nominees to serve for a
three-year term are David F. Brandley and Everett N. Leonard. No person being
nominated as a director is being proposed for election pursuant to any agreement
or understanding between any such person and the Company. Each of the six
members of the Board of Directors also presently serves as a director of the
Bank and the Mutual Holding Company.
The Board of Directors intends that the proxies solicited by it will be
voted for the election of the nominees named above. If any nominee is unable to
serve, the persons named in the proxy card would vote your shares to approve the
election of any substitute proposed by the Board of Directors. Alternatively,
the Board of Directors may adopt a resolution to reduce the size of the Board.
At this time, the Board of Directors knows of no reason why any nominee might be
unable to serve.
The Board of Directors recommends a vote "FOR" the election of all
nominees named in this Proxy Statement.
Information regarding the Board of Directors' nominees, directors
continuing in office and the executive officers named in the summary
compensation table who are not also directors is provided below. The age
indicated for each individual is as of April 12, 2002. The indicated period of
service as a director includes the period of service as a director of the Bank.
Board Nominees for Election of Directors
David F. Brandley is a partner in the law firm of Brandley & Kleppe.
Age 75. Director since 1959.
S.M. Terry LaCorte is the retired President of North Jersey Press,
Inc., a newspaper publishing firm. Age 65. Director since 2002.
Everett N. Leonard is a retired Verona, New Jersey Borough
Administrator. Age 88. Director since 1969.
Directors Continuing in Office
The following directors have terms ending in 2003:
William J. Foody is managing partner in the real estate firm of Crow
Holdings. Mr. Foody is currently Chairman of the Board of Directors of the Bank.
Age 74. Director since 1983.
Leopold W. Montanaro has served as Chairman, President and Chief
Executive Officer of the Company and President and Chief Executive Officer of
the Bank since 1998 and 1972, respectively. Mr. Leopold Montanaro is the father
of Mr. Craig Montanaro. Age 62. Director since 1972.
5
The following director has a term ending in 2004:
John J. Burke is the President of J.J. Burke & Associates, Inc., a
financial services, insurance consulting firm. Age 55. Director since 1992.
Executive Officers Who Are Not Also Directors
Dennis A. Petrello, age 51, has served as Senior Executive Vice
President and Chief Financial Officer of the Company and the Bank since 2001.
Previously Mr. Petrello served as Executive Vice President and Chief Financial
Officer of the Company and the Bank since 1998 and 1984, respectively.
Charles E. Filippo, age 61, has served as Executive Vice President of
the Company since 1998 and has served as Executive Vice President and Chief
Lending Officer of the Bank since 1994.
Craig L. Montanaro, age 35, has served as Senior Vice President,
Corporate Secretary and Treasurer of the Company and the Bank since 1998 and
1997, respectively. Mr. Craig Montanaro has been employed by the Bank since
1988. Mr. Craig Montanaro is the son of Mr. Leopold Montanaro.
Meetings of the Board of Directors and Committees of the Board of Directors
The Company and the Bank conduct business through meetings and
activities of their Board of Directors and their committees. During the year
ended December 31, 2001, the Board of Directors of the Company held 16 meetings
and the Board of Directors of the Bank held 16 meetings. All of the directors of
the Company attended at least 75% of the total number of the Company's Board
meetings held and committee meetings on which such directors served during the
year ended December 31, 2001.
Audit Committee. The Audit Committee consists of Messrs. Brandley,
Burke and Foody, who are all outside Directors and Mr. Petrello who is an
officer of the Company. This committee is responsible for the review of audit
reports and management's actions regarding the implementation of audit findings
and review compliance with all relevant laws and regulations. The Audit
Committee met three times during 2001.
Nominating Committee. The Company's Nominating Committee for the 2002
Annual Meeting consists of Messrs. Burke, Foody and Leopold Montanaro. The
committee considers and recommends the nominees for director to stand for
election at the Company's annual meeting of stockholders. The Company's Charter
and Bylaws provide for stockholder nominations of directors. See "Stockholder
Proposals and Nominations." The Nominating Committee met once to select
management's nominees for election as directors at this annual meeting.
Compensation Committee. The Compensation Committee of the Company
consists of the entire Board of Directors of the Company. This Committee is
responsible for all matters regarding compensation and fringe benefits for
officers and employees of the Company and the Bank and meets on an as needed
basis. The Compensation Committee of the Company met one time in fiscal 2001.
Directors' Compensation
Directors' Fees. Directors of the Company do not receive any fees or
retainer for serving on the Company's Board of Directors. Non-employee directors
of the Bank, other than the Chairman of the Board, currently receive a quarterly
retainer fee of $3,000 and $700 for each regular board meeting. The Chairman of
the Bank receives a quarterly retainer fee of $3,750 and $825 for each regular
board
6
meeting. Directors do not receive any fees for special board meetings or
committee meetings. In addition, all directors, including retired directors,
receive medical and dental benefits. At this time, only one retired director is
receiving such benefits.
Executive Compensation
Summary Compensation Table
The following information is furnished for Messrs. Leopold Montanaro,
Petrello, Filippo and Craig Montanaro. No other executive officer of the Company
and the Bank received salary and bonus in excess of $100,000 in 2001.
Annual Compensation(1) Long-Term Compensation Awards(2)
--------------------------- --------------------------------------
Securities
Restricted Underlying All Other
Name and Principal Fiscal Stock Awards Options/SARs Compensation
Positions Year Salary($) Bonus($) ($)(3) (#) ($)(4)(5)(6)
---------------------------------------------- ------ ---------- --------- ----------- ------------ ------------
Leopold W. Montanaro.......................... 2001 $300,000 $125,000 $ -- -- $363,426
Chairman of the Board, President 2000 275,000 100,000 -- -- 118,545
and Chief Executive Officer 1999 275,000 100,000 175,475 58,566 110,202
Dennis A. Petrello............................ 2001 $150,000 $35,000 $ 30,000 5,000 $25,177
Senior Executive Vice President and 2000 140,000 42,000 -- -- 17,880
Chief Financial Officer 1999 140,000 38,000 105,289 35,140 23,246
Charles E. Filippo............................ 2001 $145,000 $25,000 $ -- -- $84,356
Executive Vice President 2000 140,000 30,000 -- -- 49,925
1999 140,000 30,000 84,227 28,111 53,053
Craig L. Montanaro............................ 2001 $110,000 $35,000 $ 71,535 4,829 $23,912
Senior Vice President, Corporate Secretary 2000 100,000 25,000 -- -- 13,157
and Treasurer 1999 90,000 15,000 84,227 28,111 14,830
_______________________________
(1) Does not include the aggregate amount of perquisites and other personal
benefits, which did not exceed the lesser of $50,000 or 10% of any
individual's total salary and bonus for the year.
(2) All restricted stock awards and securities underlying options granted
prior to October 22, 2001 have been retroactively adjusted to reflect
the 5 for 4 stock split distributed in the form of a stock dividend on
October 22, 2001.
(3) For 1999, includes 23,088, 13,853, 11,082 and 11,082 shares of
restricted stock granted to Messrs. Leopold Montanaro, Petrello,
Filippo and Craig Montanaro, respectively, under the Incentive Plan
which began vesting in five equal annual installments on April 30,
2000. For 2001, includes 2,000 and 4,769 shares of restricted stock
granted to Messrs. Petrello and Craig Montanaro, respectively, under
the Incentive Plan which will begin vesting in five equal annual
installments on November 28, 2002. When shares become vested and are
distributed from the trust in which they are held, the recipients will
also receive an amount equal to the accumulated cash and stock
dividends (if any) paid with respect thereto, plus earnings thereon.
Based on the closing price of $15.25 on December 31, 2001, the market
values of the unvested shares of restricted stock held by Messrs.
Leopold Montanaro, Petrello, Filippo and Craig Montanaro were $211,243,
$157,243, $101,382 and $174,109, respectively.
(4) Includes employer contributions of $299,360 and $34,539 to Messrs.
Leopold Montanaro and Filippo, respectively, pursuant to the Bank's
supplemental income agreements. These payments are made to pay premiums
on split-dollar life insurance policies the Bank has purchased on the
lives of Messrs. Leopold Montanaro and Filippo in connection with the
supplemental income agreements. Upon the death of Messrs. Leopold
Montanaro and Filippo, the Bank expects to retain proceeds from the
insurance policies sufficient to cover all prior contributions made to
the supplemental income agreements.
7
(5) Includes the market value of employee stock ownership plan allocations
of $25,177, $25,177, $25,132 and $23,912 for Messrs. Leopold Montanaro,
Petrello, Filippo and Craig Montanaro, respectively.
(6) Includes employer contributions of $38,889 and $24,685 credited under
the Bank's supplemental executive retirement plan for Messrs. Leopold
Montanaro and Filippo, respectively.
Compensation Arrangements
Employment Agreements. Effective February 1999, the Bank and the
Company entered into employment agreements with Mr. Leopold Montanaro. The
employment agreements provide for three-year terms and are renewable on an
annual basis following a review of Mr. Montanaro's performance by the Board of
Directors. Under the employment agreements, the current base salary for Mr.
Montanaro is $300,000, which amount is paid by the Bank and reviewed by the
Board of Directors on an annual basis. In addition to the base salary, the
employment agreements provide for, among other things, participation in various
employee benefit plans and stock-based compensation programs, as well as
furnishing fringe benefits available to similarly-situated executive personnel.
The employment agreements provide for termination by the Bank or the
Company for cause, as defined in the employment agreements, at any time. If the
Bank or the Company chooses to terminate the executive's employment for reasons
other than for cause, or if Mr. Montanaro resigns from the Bank or the Company
after specified circumstances that would constitute constructive termination,
Mr. Montanaro or, if Mr. Montanaro dies, his beneficiary, would be entitled to
receive an amount equal to the remaining base salary payments due to Mr.
Montanaro and the contributions that would have been made on his behalf to any
employee benefit plans of the Bank and the Company during the remaining term of
the employment agreement. The Bank and the Company would also continue and/or
pay for Mr. Montanaro's life, medical, dental and long-term disability coverage
for the remaining term of the employment agreement. The employment agreements
restrict Mr. Montanaro's right to compete against the Bank or the Company for a
period of one year from the date of termination of the agreement if his
employment is terminated without cause, except if termination follows a change
in control.
Under the agreements, if voluntary or involuntary termination follows a
change in control of the Bank, Mr. Montanaro or, in the event of his death, Mr.
Montanaro's beneficiary would be entitled to a severance payment or liquidated
damages, or both, in a sum equal to three times the average of the five
preceding taxable years' "annual compensation" (as defined in the agreements).
The Bank or the Company would also continue the Mr. Montanaro's life, medical,
dental and long-term disability coverage for thirty-six months. Even though both
the Bank and Company employment agreements provide for a severance payment if a
change in control occurs, Mr. Montanaro would not receive duplicative payments
or benefits under the agreements.
The maximum present value of the severance benefits under the
employment agreements is 2.99 times Mr. Montanaro's average annual compensation
during the five-year period preceding the effective date of the change in
control (the "base amount"). The agreements also provide for continued coverage
under the Bank's life, medical, dental and long-term disability programs for a
36-month period following a change in control.
Payments to Mr. Montanaro under the Bank's employment agreement will be
guaranteed by the Company if payments or benefits are not paid by the Bank.
Payment under the Company's employment agreement would be made by the Company.
All reasonable costs and legal fees paid or incurred by Mr. Montanaro under any
dispute or question of interpretation relating to the employment agreements
shall be paid by the Bank or Company, respectively, if Mr. Montanaro is
successful on the merits in a legal
8
judgment, arbitration or settlement. The employment agreements also provide that
the Bank and Company shall indemnify Mr. Montanaro to the fullest extent legally
allowable.
Change in Control Agreements. Effective February 2, 1999, the Company
and the Bank entered into three-year Change in Control Agreements (the "CIC
Agreements") with Messrs. Petrello, Filippo and Craig Montanaro. Commencing on
the first anniversary date of a CIC Agreement and continuing on each anniversary
thereafter, the Board of Directors may renew the agreement for an additional
year following a review of each officer's performance for the year. Each CIC
Agreement provides that in the event voluntary or involuntary termination
follows a change in control of the Bank or the Company, as the case may be, the
officer covered by the agreement will receive a severance payment equal to three
times the officer's average annual compensation for the five preceding taxable
years. The Bank or the Company will also continue to pay for the officer's life,
health and disability coverage for 36 months following termination.
Management Supplemental Executive Retirement Plan. The Bank maintains a
non-qualified deferred compensation arrangement known as a "Management
Supplemental Executive Retirement Plan" (the "MSERP"). The MSERP makes up lost
ESOP benefits to designated participants who retire or terminate employment in
connection with a change in control prior to the complete repayment of the ESOP
loan. Generally, upon the retirement of an eligible individual (designated by
the Board of Directors of the Bank or the Company or upon a change in control of
the Bank or the Company prior to complete repayment of the ESOP Loan), the MSERP
will provide the individual with a benefit determined by first (i) projecting
the number of shares that would have been allocated to the individual under the
ESOP if the individual had remained employed throughout the term of the ESOP
loan (measured from the individual's first date of ESOP participation) and (ii)
reducing that number by the number of shares actually allocated to the
individual's account under the ESOP; and second, by multiplying the number of
shares that represent the difference between such figures by the average fair
market value of the Common Stock over the preceding five years. The individual's
benefits become payable upon the participant's retirement or upon the change in
control of the Bank or the Company.
Supplemental Income Agreements. The Bank currently sponsors
non-qualified supplemental executive retirement plans for Messrs. Leopold
Montanaro and Filippo. The plans generally provide benefits to the two
executives otherwise lost under the Bank's pension plan as a result of
limitations imposed by the Internal Revenue Code ("Code") on the amount of
compensation the Bank can consider under the pension plan in determining
benefits. The non-qualified arrangements for Messrs. Leopold Montanaro and
Filippo are "funded" through the use of trusts and life insurance policies,
under which the Bank expects to recover the entire cost of its contribution to
the plans upon the deaths of Messrs. Leopold Montanaro and Filippo.
9
Option Grants in Last Fiscal Year
The following table lists all grants of options to Messrs. Petrello and
Craig L. Montanaro for the year ended December 31, 2001. None of the other named
executive officers were granted options in 2001.
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted(1) Fiscal Year Per Share Date
------- -------------- ----------------- ------------ ------------------
Dennis A. Petrello......................... 5,000 51.0% $14.60 November 28, 2011
Craig L. Montanaro......................... 4,829 49.0 14.60 November 28, 2011
____________________________
(1) Options become exercisable in five equal annual installments commencing
on November 28, 2002, the first anniversary of the date of grant;
provided, however, options will be immediately exercisable following a
change in control of the Company or the Bank or due to death or
disability.
Aggregated Option Exercises in Last Fiscal Year and
Option Value at Fiscal Year End
The following table provides certain information regarding the exercise
of options during the past fiscal year and certain information regarding
unexercised stock options held by Messrs. Leopold Montanaro, Petrello, Filippo
and Craig Montanaro as of December 31, 2001.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal In-the-Money Options
Shares Year-End at Fiscal Year-End(1)
Acquired Value ---------------------------- ----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
--------- ------------- ---------- ------------ --------------- ------------- -------------
Leopold W. Montanaro......... 23,426 $163,982 -- 35,140 $ -- $268,821
Dennis A. Petrello........... -- -- 14,056 26,084 107,528 164,543
Charles E. Filippo........... -- -- 11,244 16,867 86,017 129,033
Craig L. Montanaro........... -- -- 11,244 21,696 86,017 132,168
____________________________
(1) Value of unexercised in-the-money stock options equals the market value
of shares covered by in-the-money options on December 31, 2001 less the
option exercise price. Options are in-the-money if the market value of
shares covered by the options is greater than the exercise price.
Transactions With Management
Federal regulations require that all loans or extensions of credit to
executive officers and directors must generally be made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, unless the loan or
extension of credit is made under a benefit program generally available to all
other employees and does not give preference to any insider over any other
employee, and must not involve more than the normal risk of repayment or present
other unfavorable features. The Bank currently makes new loans and extensions of
credit to the Bank's executive officers, directors and employees at different
rates than those offered to the general public; however, the Bank does not give
preference to any director or officer over any other employee, and such loans do
not involve more than the normal risk of repayment or present other unfavorable
features. In
10
addition, loans made to a director or executive officer in an amount that, when
aggregated with the amount of all other loans to the person and his or her
related interests, are in excess of the greater of $25,000 or 5% of the Bank's
capital and surplus, up to a maximum of $500,000, must be approved in advance by
a majority of the disinterested members of the board of directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
any registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Executive officers, directors and greater than 10% stockholders are required by
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of its executive
officers and directors has complied with applicable reporting requirements for
transactions in Company common stock during the fiscal year ended December 31,
2001.
Proposal 2 -- Ratification of Appointment
of Independent Auditors
The Company's independent auditors for the fiscal year ended December
31, 2001 were Radics & Co., LLC. The Company's Board of Directors has
reappointed Radics & Co., LLC to continue as independent auditors for the Bank
and the Company for the fiscal year ending December 31, 2002, subject to
ratification of such appointment by the stockholders.
Representatives of Radics & Co., LLC will be present at the annual
meeting. They will be given an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions from
stockholders present at the annual meeting.
Unless marked to the contrary, the shares represented by the enclosed
proxy card will be voted "FOR" ratification of the appointment of Radics & Co.,
LLC as the independent auditors of the Company.
The Board of Directors recommends that you vote "FOR" ratification of
the appointment of Radics & Co., LLC as the independent auditors of the Company.
11
The following table sets forth the fees billed to the Company for the
fiscal year ending December 31, 2001 by Radics & Co., LLC:
Audit Fees...................................................... $52,500
Financial information and systems............................... $ --
All other fees*................................................. $30,000
__________________
*Includes fees for assistance with securities filings and other services.
The Audit Committee believes that the non-audit fees paid to Radics &
Co., LLC are compatible with maintaining Radics & Co., LLC's independence.
Audit Committee Report
The Audit Committee of the Board of Directors is responsible for
assisting the Board of Directors in fulfilling its responsibility to the
stockholders relating to corporate accounting, reporting practices and the
quality and integrity of the financial reports of the Company. Additionally, the
Audit Committee selects the auditors and reviews their independence and their
annual audit. The Audit Committee is comprised of three directors, each of whom
is independent under National Association of Securities Dealer's listing
standards. The Audit Committee acts under a written charter adopted by the Board
of Directors, a copy of which was attached to last year's proxy statement.
The Audit Committee reviewed and discussed the annual financial
statements with management and the independent accountants. As part of this
process, management represented to the Audit Committee that the financial
statements were prepared in accordance with generally accepted accounting
principles. The Audit Committee also received and reviewed written disclosures
and a letter from the accountants concerning their independence as required
under applicable standards for auditors of public companies. The Audit Committee
discussed with the accountants the contents of such materials, the accountant's
independence and the additional matters required under Statement on Auditing
Standards No. 61. Based on such review and discussions, the Audit Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2001 for filing with the Securities and Exchange Commission.
12
The Audit Committee's responsibility is to monitor and review the
Company's financial reporting process, including its system of internal control
and the preparation of consolidated financial statements. It is not the duty nor
the responsibility of the Audit Committee to conduct auditing or accounting
reviews or procedures. The Audit Committee's oversight does not provide it with
an independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or policies, or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee's considerations and discussions with management and the independent
auditors do not assure that the Company's financial statements are presented in
accordance with generally accepted accounting principles, that the audit of the
Company's financial statements has been carried out in accordance with generally
accepted auditing standards or that the Company's independent accountants are in
fact "independent."
Members of the Audit Committee:
David F. Brandley
John J. Burke
William J. Foody
Stockholders Proposals And Nominations
The Company must receive proposals that stockholders seek to include in
the proxy statement for the Company's next annual meeting no later than December
23, 2002. If next years annual meeting is held on a date more than 30 calendar
days from May 21, 2003, a stockholder proposal must be received by a reasonable
time before the Company begins to print and mail its proxy solicitation for such
annual meeting. Any stockholder proposals will be subject to the requirements of
the proxy rules adopted by the Securities and Exchange Commission.
The Company's Bylaws provide that in order for a stockholder to make
nominations for the election of directors or proposals for business to be
brought before the annual meeting, a stockholder must deliver notice of such
nominations and/or proposals to the Secretary not less than 90 days before the
date of the annual meeting; provided that if less than 100 days' notice or prior
public disclosure of the date of the annual meeting is given to stockholders,
such notice must be delivered not later than the close of the tenth day
following the day on which notice of the date of the annual meeting was mailed
to stockholders or prior public disclosure of the meeting date was made. A copy
of the Bylaws may be obtained from the Company.
Miscellaneous
The cost of solicitation of proxies on behalf of the Board will be
borne by the Company. Proxies may be solicited personally or by telephone by
directors, officers and other employees of the Company and the Bank without any
additional compensation. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy material to, and obtain
proxies from, the beneficial owners, and will reimburse those record holders for
their reasonable expenses in doing so.
The Company's Annual Report to Stockholders has been mailed to persons
who are stockholders as of the close of business on April 12, 2002. Any
stockholder who has not received a copy of the Annual Report may obtain a copy
by writing to the Secretary of the Company. The Annual Report is not to be
treated as part of the proxy solicitation material or as having been
incorporated herein by reference.
13
A copy of the Company's Form 10-KSB for the fiscal year ended December
31, 2001, as filed with the Securities and Exchange Commission will be furnished
without charge to persons who are stockholders as of the close of business on
April 12, 2002 upon written request to Craig L. Montanaro, Corporate Secretary,
West Essex Bancorp, Inc., 417 Bloomfield Avenue, Caldwell, New Jersey 07006.
By Order of the Board of Directors
/s/ Craig L. Montanaro
Craig L. Montanaro
Senior Vice President, Corporate Secretary and
Treasurer
Caldwell, New Jersey
April 22, 2002
You are cordially invited to attend the Annual Meeting in person. Whether or not
you plan to attend the Annual Meeting, you are requested to sign, date and
promptly return the accompanying proxy card in the enclosed postage-paid
envelope.
14
REVOCABLE PROXY
WEST ESSEX BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 21, 2002
10:00 a.m. Local Time
_______________________________
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of West
Essex Bancorp, Inc. (the "Company") with full power of substitution, to act as
proxy for the undersigned, and to vote all shares of common stock of the Company
which the undersigned is entitled to vote only at the annual meeting of
stockholders, to be held on May 21, 2002, at 10:00 a.m. local time, at the
Radisson Hotel, Route 46, Fairfield, New Jersey and at any and all adjournments
thereof, with all of the powers the undersigned would possess if personally
present at such meeting as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
David F. Brandley, S.M. Terry LaCorte and Everett N. Leonard
FOR ALL
FOR VOTE WITHHELD EXCEPT
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark
"FOR ALL EXCEPT" and write that nominee's name on the line provided
below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Radics & Co., LLC as independent
auditors of West Essex Bancorp, Inc. for the fiscal year ending
December 31, 2002.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
This proxy, if properly sign and dated, is revocable and will be voted as
directed, but if no instructions are specified this proxy will be voted "FOR"
Proposals 1 and 2. If any other business is presented at the annual meeting,
including whether or not to adjourn the meeting, this proxy will be voted by the
proxy committee in its best judgment. At the present time, the Board of
Directors knows of no other business to be presented at the annual meeting. This
proxy also confers discretionary authority on the proxy committee to vote with
respect to the election of any person as director where the nominees are unable
to serve or for good cause will not serve and with respect to any other business
that may properly come before the annual meeting or any adjournment thereof.
Please be sure to sign and date this Proxy in the box below.
____________________________________________
Date
____________________________________________
Stockholder sign above
____________________________________________
Co-holder (if any) sign above
WEST ESSEX BANCORP, INC.
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a notice of annual meeting of stockholders and of a
proxy statement for the annual meeting of stockholders and of the annual report
to stockholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
_____________________________
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
____________________________________________________
____________________________________________________
____________________________________________________
WEST ESSEX BANK LETTERHEAD
Dear ESOP Participant:
On behalf of the Board of Directors, I am forwarding to you the
attached green vote authorization form for the purpose of conveying your voting
instructions to RSI Trust Company (the "ESOP Trustee") on the proposals
presented at the Annual Meeting of Stockholders of West Essex Bancorp, Inc. (the
"Company") on May 21, 2002. Also enclosed is a Notice and Proxy Statement for
the Company's Annual Meeting of Stockholders and a West Essex Bancorp, Inc.
Annual Report to Stockholders.
As of the Record Date, April 12, 2002, the West Essex Bank Employee
Stock Ownership Plan (the "ESOP") Trust held ______ shares of Common Stock,
_______of which had been allocated to participants' accounts. These allocated
shares of Company common stock will be voted as directed by the ESOP
participants; provided timely instructions from the participants are received by
the ESOP Trustee. The unallocated shares of Company common stock in the ESOP
Trust and the allocated shares of Company common stock for which no instructions
are provided, or for which no timely instructions are received by the ESOP
Trustee will be voted by the ESOP Trustee in a manner calculated to most
accurately reflect the instructions the ESOP Trustee has received from
participants regarding the shares of Company common stock allocated to their
accounts, so long as such vote is in accordance with the Employee Retirement
Income Security Act of 1974, as amended.
At this time, in order to direct the voting of the shares allocated to
your account under the ESOP, please complete and sign the enclosed green vote
authorization form and return it in the enclosed postage-paid envelope no later
than May 14, 2002. Your vote will not be revealed, directly or indirectly, to
any officer, employee or director of the Company or West Essex Bank. The votes
will be tallied by the ESOP Trustee and the ESOP Trustee will use the voting
instructions it receives to vote the shares of Company common stock in the ESOP
Trust.
Sincerely,
Dennis A. Petrello
Executive Vice President and
Chief Financial Officer
Name:____________________
Shares:___________________
VOTE AUTHORIZATION FORM
-----------------------
I understand that RSI Trust Company, (the "ESOP Trustee"), is the
holder of record and custodian of all shares allocated to me of West Essex
Bancorp, Inc. (the "Company") common stock under the West Essex Bank Employee
Stock Ownership Plan (the "ESOP"). I understand that my voting instructions are
solicited on behalf of the Company's Board of Directors for the Annual Meeting
of Stockholders to be held on May 21, 2002.
Accordingly, you are to vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
David F. Brandley, S.M. Terry LaCorte and Everett N. Leonard
FOR ALL
FOR VOTE WITHHELD EXCEPT
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Radics & Co., LLC as independent
auditors of West Essex Bancorp, Inc. for the fiscal year ending
December 31, 2002.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
The ESOP Trustee is hereby authorized to vote any shares allocated to
me under the ESOP in its trust capacity as indicated above.
_____________________________ ______________________________
Date Signature
Please date, sign and return this form in the enclosed postage-paid envelope no
later than May 14, 2002.
WEST ESSEX BANK LETTERHEAD
Dear 401(k) Plan Participant:
On behalf of the Board of Directors, I am forwarding to you the
attached yellow vote authorization form for the purpose of conveying your voting
instructions to RSI Trust Company (the "Employer Stock Fund Trustee") on the
proposals presented at the Annual Meeting of Stockholders of West Essex Bancorp,
Inc. (the "Company") on May 21, 2002. Also enclosed is a Notice and Proxy
Statement for the Company's Annual Meeting of Stockholders and a West Essex
Bancorp, Inc. Annual Report to Stockholders.
As a 401(k) Plan Participant investing in the West Essex Bancorp, Inc.
Stock Fund, you are entitled to direct the Employer Stock Fund Trustee as to the
voting of Company common stock credited to your account. The Employer Stock Fund
Trustee will vote all shares of Company common stock for which no directions are
given or for which timely instructions were not received in a manner calculated
to most accurately reflect the instructions the Employer Stock Fund Trustee
received from participants regarding shares of Company common stock in their
401(k) Plan accounts.
At this time, in order to direct the voting of Company common stock
credited to your account in the Employer Stock Fund, you must fill out and sign
the enclosed yellow vote authorization form and return it to the Employer Stock
Fund Trustee in the accompanying postage-paid envelope by May 14, 2002. Your
vote will not be revealed, directly or indirectly, to any officer, employee or
director of the Company or West Essex Bank. The votes will be tallied by the
Employer Stock Fund Trustee and the Employer Stock Fund Trustee will use the
voting instructions it receives to vote the shares of Company common stock held
in the Employer Stock Fund Trust.
Sincerely,
Dennis A. Petrello
Executive Vice President and
Chief Financial Officer
Name:____________________
Shares:___________________
VOTE AUTHORIZATION FORM
-----------------------
I understand that RSI Trust Company, (the "Employer Stock Fund
Trustee"), is the holder of record and custodian of all shares credited to me of
West Essex Bancorp, Inc. (the "Company") common stock under the West Essex Bank
401(k) Plan. I understand that my voting instructions are solicited on behalf of
the Company's Board of Directors for the Annual Meeting of Stockholders to be
held on May 21, 2002.
Accordingly, you are to vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
David F. Brandley, S.M. Terry LaCorte and Everett N. Leonard
FOR ALL
FOR VOTE WITHHELD EXCEPT
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Radics & Co., LLC as independent
auditors of West Essex Bancorp, Inc. for the fiscal year ending
December 31, 2002.
FOR AGAINST ABSTAIN
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
The Employer Stock Fund Trustee is hereby authorized to vote any shares
credited to me under the 401(k) Plan in its trust capacity as indicated above.
_____________________________ ______________________________
Date Signature
Please date, sign and return this form in the enclosed postage-paid envelope no
later than May 14, 2002.
WEST ESSEX BANCORP, INC. LETTERHEAD
Dear Stock Award Recipient:
On behalf of the Board of Directors, I am forwarding to you the
attached blue vote authorization form for the purpose of conveying your voting
instructions to RSI Trust Company (the "Incentive Plan Trustee") on the
proposals presented at the Annual Meeting of Stockholders of West Essex Bancorp,
Inc. (the "Company") on May 21, 2002. Also enclosed is a Notice and Proxy
Statement for the Company's Annual Meeting of Stockholders and a West Essex
Bancorp, Inc. Annual Report to Stockholders.
As a recipient of a Stock Award under the West Essex Bancorp, Inc. 1999
Stock-Based Incentive Plan, as amended and restated ("Incentive Plan"), you are
entitled to vote all shares of restricted Company common stock awarded to you
under the Incentive Plan that are unvested as of April 12, 2002. The Incentive
Plan Trustee will vote the shares of Company common stock held in the Incentive
Plan Trust in accordance with instructions it receives from you and other Stock
Award Recipients.
At this time, in order to direct the voting of Company common stock
awarded to you under the Incentive Plan, you must complete and sign the enclosed
blue vote authorization form and return it in the accompanying postage-paid
envelope no later than May 14, 2002.
Sincerely,
Dennis A. Petrello
Executive Vice President and
Chief Financial Officer
Name:__________________________
Shares:________________________
VOTE AUTHORIZATION FORM
-----------------------
I understand that RSI Trust Company (the "Incentive Plan Trustee") is
the holder of record and custodian of all unvested shares of West Essex Bancorp,
Inc. common stock awarded to me under the Incentive Plan. I understand my voting
instructions are solicited on behalf of the Company's Board of Directors for the
Annual Meeting of Stockholders to be held on May 21, 2002.
Accordingly, you are to vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
David F. Brandley, S.M. Terry LaCorte and Everett N. Leonard
FORALL
FOR VOTE WITHHELD EXCEPT
--- ------------- ------
[_] [_] [_]
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
_______________________________________________________________
2. The ratification of the appointment of Radics & Co., LLC as independent
auditors of West Essex Bancorp, Inc. for the fiscal year ending
December 31,2002.
FOR AGAINST ABSTAIN
--- ------- -------
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
The Incentive Plan Trustee is hereby authorized to vote any unvested shares
awarded to me under the Incentive Plan in its trust capacity as indicated above.
_____________________________ ______________________________
Date Signature
Please date, sign and return this form in the enclosed postage-paid envelope no
later than May 14,2002.