April 30,
2010
Dear
Stockholder:
You are cordially invited to attend the
annual meeting of stockholders of Naugatuck Valley Financial
Corporation. We will hold the meeting in the Community Room at
Naugatuck Valley Savings and Loan’s main office at 333 Church Street, Naugatuck,
Connecticut 06770, on May 28, 2010 at 10:30 a.m., local time.
The notice of annual meeting and proxy
statement appearing on the following pages describe the formal business to be
transacted at the meeting. During the meeting, we will also report on
the operations of the Company. Directors and officers of the Company,
as well as a representative of Whittlesey & Hadley, P.C., the Company’s
independent registered public accountants, will be present to respond to
appropriate questions of stockholders.
It is important that your shares are
represented at this meeting, whether or not you attend the meeting in person and
regardless of the number of shares you own. To make sure your shares
are represented, we urge you to complete and mail the enclosed proxy
card. If you attend the meeting, you may vote in person even if you
have previously mailed a proxy card.
We look forward to seeing you at the
meeting.
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Sincerely,
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John
C. Roman
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President
and Chief Executive Officer
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333
Church Street
Naugatuck,
Connecticut 06770
(203)
720-5000
____________________
NOTICE
OF 2010 ANNUAL MEETING OF STOCKHOLDERS
____________________
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TIME
AND DATE
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10:30
a.m. on Wednesday, May 28, 2010
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PLACE
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The
Community Room in Naugatuck Valley Savings and Loan’s main office at 333
Church Street, Naugatuck, Connecticut 06770
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ITEMS
OF BUSINESS
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(1)
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The
election of two directors of the Company for a term of three years and one
director for a term of two years;
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(2)
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The
ratification of the appointment of Whittlesey & Hadley, P.C. as
independent registered public accountants for the Company for the fiscal
year ending December 31, 2010; and
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(3)
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Such
other matters as may properly come before the annual meeting or any
postponements or adjournments of the annual meeting. The Board of
Directors is not aware of any other business to come before the annual
meeting.
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RECORD
DATE
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In
order to vote, you must have been a stockholder at the close of business
on April 9, 2010.
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PROXY
VOTING
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It
is important that your shares be represented and voted at the
meeting. You can vote your shares by completing and returning
the proxy card or voting instruction card sent to you. Voting
instructions are printed on your proxy card. You can revoke a
proxy at any time prior to its exercise at the meeting by following the
instructions in the proxy statement.
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Bernadette
A. Mole
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Corporate
Secretary
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NOTE:
Whether or not you plan to attend the annual meeting, please vote by marking,
signing, dating and promptly returning the enclosed proxy card in the enclosed
envelope.
NAUGATUCK
VALLEY FINANCIAL CORPORATION
PROXY
STATEMENT
GENERAL
INFORMATION
We are
providing this proxy statement to you in connection with the solicitation of
proxies by the Board of Directors of Naugatuck Valley Financial Corporation for
the 2010 annual meeting of stockholders and for any adjournment or postponement
of the meeting. Naugatuck Valley Financial is the holding company for
Naugatuck Valley Savings and Loan.
We are
holding the 2010 annual meeting in the Community Room at Naugatuck Valley
Savings’ main office at 333 Church Street, Naugatuck, Connecticut, on May 28,
2010 at 10:30 a.m., local time.
We intend
to mail this proxy statement and the enclosed proxy card to stockholders of
record beginning on or about April 30, 2010.
INFORMATION
ABOUT VOTING
Who
Can Vote at the Meeting
You are entitled to vote the shares of
Naugatuck Valley Financial common stock that you owned as of the close of
business on April 9, 2010. As of the close of business on April 9,
2010, a total of 7,022,659 shares of Naugatuck Valley Financial common stock
were outstanding, including 4,182,407 shares of common stock held by Naugatuck
Valley Mutual Holding Company, the mutual holding company for Naugatuck Valley
Savings. Each share of common stock has one vote.
Ownership
of Shares; Attending the Meeting
You may own shares of Naugatuck Valley
Financial in one or more of the following ways:
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Directly
in your name as the stockholder of record;
or
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Indirectly
through a broker, bank or other holder of record in “street
name.”
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If your
shares are registered directly in your name, you are the holder of record of
these shares and we are sending these proxy materials directly to
you. As the holder of record, you have the right to give your proxy
directly to us or to vote in person at the annual meeting.
If you hold your shares in street name,
your broker, bank or other holder of record is sending these proxy materials to
you. As the beneficial owner, you have the right to direct your
broker, bank or other holder of record how to vote by filling out a voting
instruction form that accompanies your proxy materials. Your broker,
bank or other holder of record may allow you to provide voting instructions by
telephone or by the Internet. Please see the voting instruction form
provided by your broker, bank or other holder of record that accompanies this
proxy statement. If you hold your shares in street name, you will
need proof of ownership to be admitted to the meeting. A recent
brokerage statement or letter from a bank or broker are examples of proof of
ownership. If you want to vote your shares of Naugatuck Valley
Financial common stock held in street name in person at the annual meeting, you
must obtain a written proxy in your name from the broker, bank or other holder
of record of your shares.
Quorum
and Vote Required
Quorum. We
will have a quorum and will be able to conduct the business of the annual
meeting if the holders of a majority of the outstanding shares of common stock
entitled to vote are present at the meeting, either in person or by
proxy.
Votes Required
for Proposals. At this year’s annual meeting, stockholders
will elect two directors to serve a term of three years and one director to
serve a term of two years. In voting on the election of directors,
you may vote in favor of the nominees or withhold your vote as to the
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.
In voting on the ratification of the
appointment of Whittlesey & Hadley, P.C. as the Company’s independent
registered public accountants, you may vote in favor of the proposal, vote
against the proposal or abstain from voting. To ratify the selection
of Whittlesey & Hadley, P.C. as our independent registered public
accountants for 2010, the affirmative vote of a majority of the shares
represented at the annual meeting and entitled to vote is required.
Effect of Not
Casting Your Vote. If you hold your shares in street name it
is critical that you cast your vote if you want it to count in the election of
directors (Item 1 of this Proxy Statement). In the past, if you held your shares
in street name and you did not indicate how you wanted your shares voted in the
election of directors, your bank or broker was allowed to vote those shares on
your behalf in the election of directors as they deemed
appropriate.
Recent
changes in regulation were made to take away the ability of your bank or broker
to vote your uninstructed shares in the election of directors on a discretionary
basis. Thus, if you hold your shares in street name and you do not instruct your
bank or broker how to vote in the election of directors, no votes will be cast
on your behalf. These are referred to as broker
non-votes. Your bank or broker will, however, continue to have
discretion to vote any uninstructed shares on the ratification of the
appointment of the Company’s independent registered public accounting firm (Item
2 of this Proxy Statement).
How We Count
Votes. If you return valid proxy instructions or attend the
meeting in person, we will count your shares for purposes of determining whether
there is a quorum, even if you abstain from voting. Broker non-votes,
if any, also will be counted for purposes of determining the existence of a
quorum.
In the
election of directors, votes withheld and broker non-votes will have no effect
on the outcome of the election. In counting votes on the proposal to
ratify the selection of the independent registered public accountants,
abstentions will have the same effect as a vote against the
proposal.
Because
Naugatuck Valley Mutual Holding Company owns in excess of 50% of the outstanding
shares of Naugatuck Valley Financial common stock, the votes it casts will
ensure the presence of a quorum and control the outcome of the vote on both
proposals.
Voting
by Proxy
The Board of Directors of Naugatuck
Valley Financial is sending you this proxy statement for the purpose of
requesting that you allow your shares of Naugatuck Valley Financial common stock
to be represented at the annual meeting by the persons named in the enclosed
proxy card. All shares of Naugatuck Valley Financial common stock
represented at the annual meeting by properly executed and dated proxy cards
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” the nominees for director and “FOR” ratification of Whittlesey &
Hadley, P.C. as the Company’s independent registered public
accountants.
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 Naugatuck Valley Financial 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. We do 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 Corporate 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.
Participants
in the Bank’s ESOP or 401(k) Plan
If you participate in the
Naugatuck Valley Savings and Loan Employee Stock Ownership Plan (the “ESOP”) or
if you hold shares through the Naugatuck Valley Savings and Loan Employee
Savings Plan (the “401(k) Plan”), you will receive a voting instruction form for
each plan in which you participate that reflects all shares you may direct the
trustee to vote on your behalf under the plan. Under the terms of the
ESOP, the ESOP trustee votes all shares held by the ESOP, but each ESOP
participant may direct the trustee how to vote the shares of 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 Company
common stock held by the ESOP and all allocated shares for which no voting
instructions are received in the same proportion as shares for which the trustee
has received timely voting instructions. Under the terms of the
401(k) Plan, a participant is entitled to direct the trustee how to vote the
shares in the Naugatuck Valley Financial Stock Fund credited to his or her
account. The trustee will vote all shares for which no directions are
given or for which instructions were not timely received in the same proportion
as shares for which the trustee received voting instructions. The deadline for returning your
voting instructions to each plan’s trustee is May 21, 2010.
CORPORATE
GOVERNANCE AND BOARD MATTERS
Director
Independence
The
Company’s Board of Directors currently consists of eight members, all of whom
are independent under the listing requirements of the NASDAQ Stock Market,
except for Mr. Roman, President and Chief Executive Officer of the Company and
the Bank, and Ms. Walsh, who is a former officer of the Company and the
Bank. In determining the independence of its directors, the Board
considered transactions, relationships and arrangements between the Company and
its directors that are not required to be disclosed in this proxy statement
under the heading “Transactions with Related
Persons,” including loans or lines of credit that the Bank has directly
or indirectly made to Directors Famiglietti, Plude and Walsh.
Board
Leadership Structure and Board’s Role in Risk Oversight
The Board of Directors has determined
that the separation of the offices of Chairman of the Board and President and
Chief Executive Officer enhances Board independence and
oversight. Moreover, the separation of the Chairman of the Board and
President and Chief Executive Officer allows the President and Chief Executive
Officer to better focus on his growing responsibilities of running the Company,
enhancing shareholder value and expanding and strengthening the Company’s
franchise while allowing the Chairman of the Board to lead the Board in its
fundamental role of providing advice to and independent oversight of
management. Consistent with this determination, Carlos S. Batista
serves as Chairman of the Board of Directors. Mr. Batista is
independent under the listing requirements of The NASDAQ Global
Market.
Risk is inherent with every business,
and how well a business manages risk can ultimately determine its
success. The Company faces a number of risks, including credit risk,
interest rate risk, liquidity risk, operational risk, strategic risk and
reputation risk. Management is responsible for the day-to-day
management of risks the Company faces, while the Board, as a whole and through
its committees, has responsibility for the oversight of risk
management. In its risk oversight role, the Board of Directors has
the responsibility to satisfy itself that the risk management processes designed
and implemented by management are adequate and functioning as
designed. To do this, the Chairman of the Board meets regularly with
management to discuss strategy and the risks facing the
Company. Senior management attends the Board meetings and is
available to address any questions or concerns raised by the Board on risk
management and any other matters. The Chairman of the Board and
independent members of the Board work together to provide strong, independent
oversight of the Company’s management and affairs through its standing
committees and, when necessary, special meetings of independent
directors.
Committees
of the Board of Directors
The following table identifies the
members of our Audit, Compensation and Nominating and Corporate Governance
Committees as of December 31, 2009. All members of each committee are
independent in accordance with the listing standards of The NASDAQ Global
Market. Each of the committees operates under a written charter that
is approved by the Board of Directors. Each committee reviews and
reassesses the adequacy of its charter at least annually. The
charters of all three committees are available in the Shareholder Relations
section of the Company’s website (www.nvsl.com).
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Director
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Audit
Committee
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Compensation
Committee
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Nominating
and
Corporate
Governance
Committee
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Carlos
S. Batista
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X
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X
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X
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Richard
M. Famiglietti
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X
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X*
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X
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James
A. Mengacci
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X
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X*
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Frederick
A. Dlugokecki
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X
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X
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Michael
S. Plude
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X*
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X
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X
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Camilo
P. Vieira
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X
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X
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Number
of Meetings in 2009
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8
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3
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7
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*Chairman
Audit
Committee. The Board of Directors
has a separately-designated standing Audit Committee established in accordance
with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended. This committee meets periodically with the independent
registered public accountants and management to review accounting, auditing,
internal control structure and financial reporting matters. The Board
of Directors has determined that Mr. Plude is an audit committee financial
expert under the rules of the Securities and Exchange Commission.
Compensation
Committee. The Compensation
Committee approves the compensation objectives for the Company and the Bank and
establishes the compensation for the President and Chief Executive Officer,
other executives and non-employee directors. In general, the
Compensation Committee considers the Company’s financial performance, peer group
financial performance and compensation survey data when making decisions
regarding the Chief Executive Officer’s compensation, including salary, bonus
and awards made under the 2005 Equity Incentive Plan. For all other
named executive officers, Mr. Roman, our President and Chief Executive Officer,
annually reviews each officer’s performance and, based upon guidelines
established by the Compensation Committee, determines the appropriate base
salary for each officer. Mr. Roman also makes recommendations to the
Compensation Committee with respect to payments to be made under our annual cash
incentive plan and grants of long-term equity incentive awards for each named
executive officer, excluding himself. Based on these recommendations
from Mr. Roman and other considerations, the Compensation Committee approves the
payments to be made under our annual cash incentive plan and grants of long-term
equity incentive awards for each other named executive
officer. Decisions by the Compensation Committee with respect to the
compensation of executive officers are approved by the full Board of
Directors. The Compensation Committee also assists the Board of
Directors in evaluating potential candidates for executive
positions. The Nominating and Corporate Governance Committee has
established the following non-employee director compensation
plans: annual retainer; per meeting fees; long-term incentive
compensation; and retirement plan. The non-employee director
compensation plans are designed to attract, retain and motivate talented
directors while balancing the interests of stockholders.
Nominating and
Corporate Governance Committee. The Nominating and
Corporate Governance Committee takes a leadership role in shaping governance
policies and practices, including leading the Board in its annual review of the
Board’s performance, recommending to the Board of Directors the corporate
governance policies and guidelines applicable to Naugatuck Valley Financial and
monitoring compliance with these policies and guidelines. In
addition, the Nominating and Corporate Governance Committee is responsible for
identifying individuals qualified to become Board members and recommending to
the Board the director nominees for election at the next annual meeting of
stockholders. It recommends director candidates for each committee for
appointment by the Board. The procedures of the Nominating and
Corporate Governance Committee required to be disclosed by the rules of the
Securities and Exchange Committee are set forth below.
Nominating
and Corporate Governance Committee Procedures
Minimum
Qualifications.
The Nominating and Corporate Governance Committee has adopted a set of
criteria that it considers when it selects individuals to be nominated for
election to the Board of Directors. First, a candidate must meet the
eligibility requirements set forth in the Company’s Bylaws, which include an age
limitation of 70 years and a requirement that the candidate not have been
subject to certain criminal or regulatory actions. A candidate also
must meet any qualification requirements set forth in any Board or committee
governing documents.
The Nominating and Corporate Governance
Committee seeks to create a Board that is strong in its collective knowledge and
has a diversity of skills and experience with respect to accounting and finance,
management and leadership, vision and strategy, business operations, business
judgment, industry knowledge and corporate governance. Accordingly, the
Nominating and Corporate Governance Committee will consider the following
criteria in selecting nominees for election or appointment to the Board of
Directors: financial, regulatory and business experience; familiarity
with and participation in the local community; integrity, honesty and
reputation; dedication to the Company and its stockholders; independence; and
any other factors the Nominating and Corporate Governance Committee deems
relevant, including age, size of the Board of Directors and regulatory
disclosure obligations. Further, when identifying nominees to serve as director,
the Nominating and Corporate Governance Committee seeks to create a Board that
is strong in its collective knowledge and has a diversity of skills and
experience with respect to accounting and finance, management and leadership,
vision and strategy, business operations, business judgment, industry knowledge
and corporate governance.
In addition, before nominating an
existing director for re-election to the Board of Directors, the Nominating and
Corporate Governance Committee will consider and review an existing director’s
Board and committee attendance and performance, length of Board service,
experience, skills and contributions that the existing director brings to the
Board and independence.
Director
Nomination Process. The Nominating and Corporate Governance
Committee adheres to the following process when identifying and evaluating
individuals to be nominated for election to the Board of Directors:
Identification. For
purposes of identifying nominees for the Board of Directors, the Nominating and
Corporate Governance Committee relies on personal contacts of committee members
and other members of the Board of Directors as well as its knowledge of members
of Naugatuck Valley Savings’ local communities. The Nominating and
Corporate Governance Committee will also consider director candidates
recommended by stockholders in accordance with the policy and procedures set
forth below. The Nominating and Corporate Governance Committee has
never used an independent search firm to identify nominees.
Evaluation. In
evaluating potential nominees, the Nominating and Corporate Governance Committee
determines whether the candidate is eligible and qualified for service on the
Board of Directors by evaluating the candidate under the selection criteria set
forth above. In addition, the Nominating and Corporate Governance
Committee will conduct a check of the individual’s background and interview the
candidate.
Consideration of
Recommendations by Stockholders. It is the policy of the
Nominating and Corporate Governance Committee of the Board of Directors to
consider director candidates recommended by stockholders who appear to be
qualified to serve on the Company’s Board of Directors. The
Nominating and Corporate Governance Committee may choose not to consider an
unsolicited recommendation if no vacancy exists on the Board of Directors and
the Nominating and Corporate Governance Committee does not perceive a need to
increase the size of the Board of Directors. In order to avoid the
unnecessary use of the Nominating and Corporate Governance Committee’s
resources, the Nominating and Corporate Governance Committee will consider only
those director candidates recommended in accordance with the procedures set
forth below.
Procedures to be
Followed by Stockholders. To submit a recommendation of a director
candidate to the Nominating and Corporate Governance Committee, a stockholder
should submit the following information in writing, addressed to the Chairman of
the Nominating and Corporate Governance Committee, care of the Corporate
Secretary, at the main office of the Company:
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1.
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The
name of the person recommended as a director
candidate;
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2.
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All
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Regulation
14A under the Securities Exchange Act of 1934, as
amended;
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3.
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The
written consent of the person being recommended as a director candidate to
being named in the proxy statement as a nominee and to serving as a
director if elected;
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4.
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As
to the stockholder making the recommendation, the name and address, as
they appear on the Company’s books, of such stockholder; provided,
however, that if the stockholder is not a registered holder of the
Company’s common stock, the stockholder should submit his or her name and
address along with a current written statement from the record holder of
the shares that reflects ownership of the Company’s common stock;
and
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5.
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A
statement disclosing whether such stockholder is acting with or on behalf
of any other person and, if applicable, the identity of such
person.
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In order for a director candidate to be
considered for nomination at the Company’s annual meeting of stockholders, the
recommendation must be received by the Nominating and Corporate Governance
Committee at least 120 calendar days before the date the Company’s proxy
statement was released to stockholders in connection with the previous year’s
annual meeting, advanced by one year.
Director
Compensation – For the 2009 Fiscal Year
The following table provides the
compensation received by individuals who served as non-employee directors of the
Company during the 2009 fiscal year.
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Name
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Fees
Earned
or
Paid
in
Cash
(1)
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Stock
Awards
(2)
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Option
Awards
(3)
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All
Other Compensation
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Total
($)
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Carlos
S. Batista
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$ |
66,200 |
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$ |
— |
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$ |
— |
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$ |
2,093 |
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$ |
68,293 |
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Frederick
A. Dlugokecki
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20,625 |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
20,625 |
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|
Richard
M. Famiglietti
|
|
|
48,800 |
|
|
|
— |
|
|
|
— |
|
|
|
3,408 |
|
|
|
52,208 |
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|
Ronald
D. Lengyel
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|
|
28,500 |
|
|
|
— |
|
|
|
— |
|
|
|
4,670 |
|
|
|
33,170 |
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|
James
A. Mengacci
|
|
|
46,500 |
|
|
|
— |
|
|
|
— |
|
|
|
1,282 |
|
|
|
47,782 |
|
|
Michael
S. Plude
|
|
|
49,100 |
|
|
|
— |
|
|
|
— |
|
|
|
1,772 |
|
|
|
50,872 |
|
|
Camilo
P. Vieira
|
|
|
43,300 |
|
|
|
— |
|
|
|
— |
|
|
|
1,282 |
|
|
|
44,582 |
|
|
Jane
H. Walsh
|
|
|
45,400 |
|
|
|
— |
|
|
|
— |
|
|
|
2,747 |
|
|
|
48,147 |
|
|
(1)
|
Includes
fees earned for service with Naugatuck Valley Savings, Naugatuck Valley
Financial and Naugatuck Valley Mutual Holding Company. Also
includes $10,000 supplemental payment credited under the Deferred
Compensation Plan for Directors.
|
|
(2)
|
The
aggregate number of unvested restricted stock award shares held in trust
for each non-employee director at fiscal year end was 1,490 shares, except
for Ms. Walsh, for whom 2,800 shares were held in trust at fiscal year
end.
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(3)
|
The
aggregate number of options held by each non-employee director at fiscal
year end was 18,630, except for Ms. Walsh, who held 22,000 options at
fiscal year end.
|
Cash Retainer and
Meeting Fees for Non-Employee Directors. Naugatuck Valley
Savings maintains a standard compensation arrangement for its non-employee
directors and committee members that is comprised of annual retainers for board
service, board meeting attendance and committee meeting
attendance. For the fiscal 2009 year, directors were paid $7,500
($11,500 for Chairman) in an annual retainer for board service, $500 per board
meeting attended (regular or special) and $400 per committee meeting
attended. The Chairman of the Board also received $400 per month as
Asset/Liability Committee liaison.
Non-employee directors of Naugatuck
Valley Financial receive $500 quarterly retainers, and audit committee members
receive $400 per audit committee meeting attended. Non-employee
directors of Naugatuck Valley Mutual Holding Company receive a $500 annual
retainer.
Deferred
Compensation Plan. Naugatuck Valley Financial Corporation and
Naugatuck Valley Savings and Loan sponsor a deferred compensation plan for
directors. Benefits under the plan consist of amounts previously
deferred under a predecessor plan and current deferrals of board remuneration
that would have otherwise been payable in cash. In addition, the
deferred compensation plan provides supplemental benefits in the event of a
change in control or upon a director’s death (before age 70), termination of
service due to disability (before age 70) or the removal or failure to reelect a
participating director for reasons other than cause (as such term is defined in
the plan). The benefit payable upon death or due to the directors
termination as a result of his removal or failure to be re-elected (other than
for cause) decreases by $10,000 each year while the director remains in
service. The following table outlines the Company-provided benefits
to which the directors would have been entitled under the deferred compensation
plan as of December 31, 2009:
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Name
|
|
Death
Benefit/
Removal
or Failure to
Reelect
for Reasons
Other
than Cause
|
|
|
Disability
|
|
|
Change
in Control
|
|
|
Carlos
S. Batista
|
|
$ |
120,000 |
|
|
$ |
150,000 |
|
|
$ |
300,000 |
|
|
Frederick
A. Dlugokecki
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Richard
M. Famiglietti
|
|
|
120,000 |
|
|
|
150,000 |
|
|
|
300,000 |
|
|
Ronald
D. Lengyel
|
|
|
120,000 |
|
|
|
150,000 |
|
|
|
300,000 |
|
|
James
A. Mengacci
|
|
|
220,000 |
|
|
|
250,000 |
|
|
|
500,000 |
|
|
Michael
S. Plude
|
|
|
120,000 |
|
|
|
150,000 |
|
|
|
300,000 |
|
|
Jane
H. Walsh
|
|
|
50,000 |
|
|
|
70,000 |
|
|
|
140,000 |
|
|
Camilo
P. Vieira
|
|
|
120,000 |
|
|
|
150,000 |
|
|
|
300,000 |
|
Board
and Committee Meetings
During the year ended December 31,
2009, the Board of Directors of the Company met five times and the Board of
Directors of Naugatuck Valley Savings met thirty-two times. No
director of Naugatuck Valley Savings or the Company attended fewer than 75% of
the total meetings of the respective Board of Directors and committees on which
such director served.
Director
Attendance at Annual Meeting of Stockholders
The Board of Directors encourages
directors to attend the annual meeting of stockholders. All directors
attended the 2009 annual meeting of stockholders.
Code
of Ethics and Business Conduct
Naugatuck
Valley Financial has adopted a Code of Ethics and Business Conduct that is
designed to ensure that the Company’s directors, executive officers and
employees meet the highest standards of ethical conduct. The Code of
Ethics and Business Conduct requires that the Company’s directors, executive
officers and employees avoid conflicts of interest, comply with all laws and
other legal requirements, conduct business in an honest and ethical manner and
otherwise act with integrity and in the Company’s best
interest. Under the terms of the Code of Ethics and Business Conduct,
directors, executive officers and employees are required to report any conduct
that they believe in good faith to be an actual or apparent violation of the
Code.
REPORT
OF THE AUDIT COMMITTEE
The Company’s management is responsible
for the Company’s internal controls and financial reporting
process. The independent registered public accountants (“independent
accountants”) are responsible for performing an independent audit of the
Company’s consolidated financial statements and issuing an opinion on the
conformity of those financial statements with generally accepted accounting
principles. The Audit Committee oversees the Company’s internal
controls and financial reporting process on behalf of the Board of
Directors.
In this context, the Audit Committee
has met and held discussions with management and the independent
accountants. Management represented to the Audit Committee that the
Company’s consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Audit Committee has reviewed
and discussed the consolidated financial statements
with
management and the independent accountants. The Audit Committee
discussed with the independent accountants matters required to be discussed by
Statement on Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1 AV Section 380), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T, including the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial
statements.
In addition, the Audit Committee has
received the written disclosures and the letter from the independent accountants
required by applicable requirements of the Public Company Accounting Oversight
Board regarding the independent accountant’s communications with the Audit
Committee concerning independence, and has discussed with the independent
accountants the independent accountants’ independence. In concluding
that the auditors are independent, the Audit Committee considered, among other
factors, whether the non-audit services provided by the auditors were compatible
with their independence.
The Audit Committee discussed with the
Company’s independent accountants the overall scope and plans for their
audit. The Audit Committee meets with the independent accountants,
with and without management present, to discuss the results of their
examination, their evaluation of the Company’s internal controls, and the
overall quality of the Company’s financial reporting.
In performing all of these functions,
the Audit Committee acts only in an oversight capacity. In its
oversight role, the Audit Committee relies on the work and assurances of the
Company’s management, which has the primary responsibility for financial
statements and reports, and of the independent accountants who, in their report,
express an opinion on the conformity of the Company’s financial statements to
generally accepted accounting principles. 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 accountants 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 consolidated financial
statements has been carried out in accordance with the standards of the Public
Company Accounting Oversight Board (United States) or that the Company’s
independent accountants are in fact “independent.”
In reliance on the reviews and
discussions referred to above, the Audit Committee has recommended to the Board
of Directors, and the Board has approved, that the audited consolidated
financial statements be included in the Company’s Annual Report on Form 10-K for
the year ended December 31, 2009 for filing with the Securities and Exchange
Commission.
The
Audit Committee
Michael
S. Plude, Chairman
Carlos S.
Batista
Richard
M. Famiglietti
STOCK
OWNERSHIP
The following table provides
information as of April 9, 2010 about the persons and entities known to
Naugatuck Valley Financial to be the beneficial owners of more than 5% of the
Company’s outstanding common stock. A person or entity may be
considered to beneficially own any shares of common
stock over which the person or entity has, directly or indirectly, sole or
shared voting or investing power.
|
Name
and Address
|
|
|
|
Number
of
Shares
Owned
|
|
Percent
of
Common
Stock
Outstanding
(1)
|
|
|
|
|
|
|
|
Naugatuck
Valley Mutual Holding Company(2)
333
Church Street
Naugatuck,
Connecticut 06770
|
|
4,182,407
|
|
59.6%
|
|
(1)
|
Based
on 7,022,659 shares of the Company’s common stock outstanding and entitled
to vote as of April 9, 2010.
|
|
(2)
|
The
members of the Board of Directors of Naugatuck Valley Financial and
Naugatuck Valley Savings also constitute the Board of Directors of
Naugatuck Valley Mutual Holding
Company.
|
The following table provides
information as of April 9, 2010 about the shares of Naugatuck Valley Financial
common stock that may be considered to be beneficially owned by each director,
nominee for director, named executive officer listed in the Summary Compensation Table,
and 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, none of the shares listed are
pledged as security and each of the named individuals has sole voting power and
sole investment power with respect to the number of shares shown.
|
Name
|
|
Number
of
Shares
Owned
(1)(2)
|
|
|
Number
of
Shares
That
May
Be
Acquired
within
60
Days of
Exercising
Options
|
|
|
Total
|
|
|
Percent
of
Common
Stock
Outstanding
(3)
|
|
|
Dominic
J. Alegi, Jr.
|
|
|
26,668 |
(4) |
|
|
17,600 |
|
|
|
44,268 |
|
|
|
* |
|
|
Carlos
S. Batista
|
|
|
24,066 |
(5) |
|
|
14,904 |
|
|
|
38,970 |
|
|
|
* |
|
|
Frederick
A. Dlugokecki
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
* |
|
|
Richard
M. Famiglietti
|
|
|
14,834 |
|
|
|
14,904 |
|
|
|
29,738 |
|
|
|
* |
|
|
Mark
S. Graveline
|
|
|
7,221 |
|
|
|
6,600 |
|
|
|
13,821 |
|
|
|
* |
|
|
James
A. Mengacci
|
|
|
13,658 |
(6) |
|
|
14,904 |
|
|
|
28,562 |
|
|
|
* |
|
|
Michael
S. Plude
|
|
|
9,781 |
(7) |
|
|
14,904 |
|
|
|
24,685 |
|
|
|
* |
|
|
John
C. Roman
|
|
|
35,198 |
|
|
|
29,600 |
|
|
|
64,798 |
|
|
|
* |
|
|
Camilo
P. Vieira
|
|
|
8,907 |
(8) |
|
|
14,904 |
|
|
|
23,811 |
|
|
|
* |
|
|
Jane
H. Walsh
|
|
|
22,320 |
(9) |
|
|
17,600 |
|
|
|
39,920 |
|
|
|
* |
|
|
All
directors and executive
officers
as a group (12 persons)
|
|
|
210,019 |
|
|
|
168,320 |
|
|
|
378,339 |
|
|
|
5.3 |
% |
|
(1)
|
Includes
shares of unvested restricted stock held in trust as part of the Naugatuck
Valley Financial Corporation 2005 Equity Incentive Plan with respect to
which individuals have voting but not investment power as follows: Mr.
Alegi—2,800 shares, Messrs. Batista, Famiglietti, Mengacci, Plude and
Vieira—1,490 shares each, Mr. Roman—4,400 shares, Ms. Walsh—2,800 shares,
Mr. Graveline—1,600 shares, and for all executive officers not
individually listed in the table—4,800
shares.
|
|
(2)
|
Includes
shares allocated to the accounts of individuals under the Bank’s ESOP with
respect to which individuals have voting but not investment power as
follows: Mr. Alegi—3,409 shares, Mr. Graveline—2,274 shares, Mr.
Roman—5,348 shares, Ms. Walsh—1,335 shares, and for all executive officers
not individually listed in the table—5,585
shares.
|
|
(3)
|
Based
on 7,022,659 shares of the Company’s common stock outstanding and entitled
to vote as of April 9, 2010.
|
|
(4)
|
Includes
100 shares held by Mr. Alegi’s spouse and 400 shares held in custodian
accounts for Mr. Alegi’s
grandchildren.
|
|
(5)
|
Includes
300 shares held in three custodian accounts for Mr. Batista’s
grandchildren.
|
|
(6)
|
Includes
6,360 shares that are pledged as collateral for a third party
loan.
|
|
(7)
|
Includes
750 shares held by Mr. Plude’s spouse and 579 shares held by a partnership
controlled by Mr. Plude.
|
|
(8)
|
Includes
1,839 shares held in Mr. Vieira’s spouse’s individual retirement
account.
|
|
(9)
|
Includes
1,435 shares held in Ms. Walsh’s spouse’s individual retirement
account.
|
ITEMS
TO BE VOTED ON BY STOCKHOLDERS
Item
1 — Election of Directors
The Company’s Board of Directors
currently consists of eight members. 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, to serve for a three-year term and until his or her
successor has been elected and qualified, are Mr. James A. Mengacci and Ms. Jane
H. Walsh. The Board of Directors’ nominee for election this year, to
serve a two-year term and until his successor has been elected and qualified, is
Mr. Frederick A. Dlugokecki. All of the nominees are currently
directors of Naugatuck Valley Financial and Naugatuck Valley
Savings.
Unless you indicate on the proxy card
that your shares should not be voted for the nominees, the Board of Directors
intends that the proxies solicited by it will be voted for the election of the
Board’s nominees. If the nominees are unable to serve, the persons
named in the proxy card would vote your shares to approve the election of any
substitutes proposed by the Board of Directors. At this time, we know
of no reason why the nominees might be unable to serve. The Board of Directors recommends a
vote “FOR” the election of Messrs. James A. Mengacci and Frederick A. Dlugokecki
and Ms. Jane H. Walsh.
Information regarding the Board of
Directors’ nominees and the directors continuing in office is provided
below. Unless otherwise stated, each individual has held his or her
current occupation for the last five years. The age indicated for
each individual is as of December 31, 2009. The indicated period of
service as a director includes the period of service as a director of Naugatuck
Valley Savings.
Board
Nominees with Terms Ending in 2013
James A.
Mengacci has been the owner of
James A. Mengacci Associates LLC, a consulting firm, since
1999. Mr. Mengacci previously was the Secretary and Treasurer of
Fitzgerald Funeral Home, Inc. Age 51. Director since
1988.
Through his experiences an independent
business owner and as a treasurer of a local business, Mr. Mengacci brings
substantial management experience and tenure to the Board and can offer the
Board a unique perspective on the issues it faces.
Jane H.
Walsh served as Senior Vice
President of Naugatuck Valley Savings, Naugatuck Valley Financial and Naugatuck
Valley Mutual prior to her retirement in August 2007. Ms. Walsh has
served with Naugatuck Valley Savings for over 31 years. Age
66. Director since 2001.
As a result of Ms. Walsh’ tenure with
Naugatuck Valley Savings and Loan as Senior Vice President of Operations, she
affords the Board the opportunity to utilize her deep knowledge of and insight
into the institution, its market areas and operational risks.
Board
Nominee with Term Ending in 2012
Frederick A.
Dlugokecki is an attorney and has
maintained a private practice in Naugatuck, Connecticut focusing on real estate,
bankruptcy, estate planning and business and tax issues since 1987.
Mr. Dlugokecki’s experience as an
attorney focusing on practice areas related to the business of Naugatuck Valley
Savings provides the Board with significant knowledge applicable to the issues
facing the Board. As a solo practioner in the local area, Mr.
Dlugokecki also offers the Board valuable insight into the local business
community.
Directors
with Terms Ending in 2011
Carlos S.
Batista is a Vice President of Bristol, Inc., a division of Emerson
Process Management, a manufacturer and world-wide supplier of products and
services in the oil, gas, water, wastewater, process control and power
industries. Age 60. Director since 1999.
Mr. Batista has extensive management
level experience in a large company setting outside of the financial services
industry. Such management experience in a regulated industry has
exposed Mr. Batista to many of the issues facing public companies today,
particularly regulated entities, making Mr. Batista a valued component of a well
rounded board.
John C.
Roman has served as President and Chief Executive Officer of Naugatuck
Valley Financial and Naugatuck Valley Mutual since 2004 and has been President
and Chief Executive Officer of Naugatuck Valley Savings since
September 1999. Mr. Roman previously was the Vice President and
Chief Lending Officer of Naugatuck Valley Savings. Age
56. Director since 1999.
Since assuming the role of President
and Chief Executive Office of Naugatuck Valley Savings in 1999, Mr. Roman has
successfully completed a mutual to stock conversion and navigated the issues
facing public companies within the banking sector. Mr. Roman’s
knowledge of all aspects of the business and its history, combined with his
drive for responsible growth and excellence, position him well to continue to
serve as our President and Chief Executive Officer and as a Board
member.
Camilo P. Vieira
is a consultant with, and previously served as the President of, CM
Property Management, a property management firm. Mr. Vieira
previously served with IBM Corp. as a project and financial manager for over 30
years. Age 66. Director since 2002.
Through his experience at IBM, Mr.
Vieira brings substantial financial expertise, while his real estate management
provides further experience in matters directly related to the business of the
Company. Mr. Vieira’s varied experience in both real estate
management and project management and finance is an integral part of the board’s
composition.
Director
with Term Ending in 2012
Richard M.
Famiglietti has been the owner of CM Property Management, a property
management firm, since 2002. Previously, Mr. Famiglietti was a
Vice President of sales for Naugatuck Glass Company, a glass
fabricator. Age 62. Director since 2000.
Mr. Famiglietti’s experience as owner
of a property management company provides the Board with critical experience in
real estate matters, as well as, experience as a small business
owner. In addition, Mr. Famiglietti brings substantial management
experience and expertise in sales and marketing, specifically within the region
in which the Company conducts its business, through his experience as Vice
President of sales for Naugatuck Glass Company.
Item
2 — Ratification of the Independent Registered Public Accounting
Firm
The Audit Committee of the Board of
Directors has appointed Whittlesey & Hadley, P.C. to be the Company’s
independent registered public accounting firm for the 2010 fiscal year, subject
to ratification by stockholders. A representative of Whittlesey &
Hadley, P.C. is expected to be present at the annual meeting to respond to
appropriate questions from stockholders and will have the opportunity to make a
statement should he or she desire to do so.
If the ratification of the appointment
of the independent registered public accountants is not approved by a majority
of the shares represented at the annual meeting and entitled to vote, the Audit
Committee will consider other independent registered public
accountants.
The Board of Directors recommends that
stockholders vote “FOR” the ratification of the appointment of Whittlesey &
Hadley, P.C., the independent registered public accountants.
Audit
Fees
The following table sets forth the fees
billed to the Company for the fiscal years ending December 31, 2009 and 2008 by
Whittlesey & Hadley, P.C.:
|
|
|
2009
|
|
|
2008
|
|
|
Audit
fees(1)
|
|
$ |
121,500 |
|
|
$ |
124,700 |
|
|
Audit
related fees
|
|
|
– |
|
|
|
– |
|
|
Tax
fees(2)
|
|
|
12,325 |
|
|
|
12,125 |
|
|
All
other fees(3)
|
|
|
13,101 |
|
|
|
5,965 |
|
|
|
(1)
|
Consists
of fees for professional services rendered for the audit of the
consolidated financial statements and the review of financial statements
included in quarterly reports on Form
10-Q.
|
|
|
(2)
|
Consists
of fees for tax return preparation, planning and tax
advice.
|
|
|
(3)
|
For
2009, consists of fees related to merger and acquisition
activities. For 2008, consists of fees related to the review of
the Company’s Sarbanes-Oxley compliance
program.
|
Policy
on Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee is responsible for
appointing and setting compensation and overseeing the work of the independent
public accountant. In accordance with its charter, the Audit
Committee approves, in advance, all audit and permissible non-audit services to
be performed by the independent public accountant to ensure that the independent
public accountant does not provide any non-audit services to the Company that
are prohibited by law or regulation.
In addition, the Audit Committee has
established a policy regarding pre-approval of all audit and permissible
non-audit services provided by the independent public
accountant. Requests for approval of services by the independent
public accountant under the auditor services policy must be specific as to the
particular services to be provided. The request may be made with
respect to either specific services or a type of service for predictable or
recurring services.
During the year ended December 31,
2009, all services provided by the independent public accountant were approved,
in advance, by the Audit Committee in compliance with these
procedures.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table provides
information concerning total compensation earned or paid to the principal
executive officer and the two other most highly compensated executive officers
of the Company who served in such capacities at December 31,
2009. These three officers are referred to as the “named executive
officers” in this proxy statement.
|
Name
and Principal
Position
|
Year
|
|
Salary
|
|
|
Bonus(1)
|
|
|
Stock
Awards
|
|
|
Option
Awards
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John
C.
Roman
|
2009
|
|
$ |
179,203 |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
– |
|
|
$ |
31,538 |
|
|
$ |
210,741 |
|
|
President
and CEO
|
2008
|
|
|
171,246 |
|
|
|
10,926 |
|
|
|
– |
|
|
|
– |
|
|
|
30,702 |
|
|
|
212,874 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominic
J. Alegi, Jr.
|
2009
|
|
|
115,386 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
11,376 |
|
|
|
126,762 |
|
|
Executive
Vice President
|
2008
|
|
|
109,921 |
|
|
|
6,293 |
|
|
|
– |
|
|
|
– |
|
|
|
10,586 |
|
|
|
126,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
S.
Graveline
|
2009
|
|
|
142,559 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
12,332 |
|
|
|
154,891 |
|
|
Senior
Vice President
|
2008
|
|
|
123,429 |
|
|
|
7,967 |
|
|
|
8,750 |
(2) |
|
|
1,514 |
(3) |
|
|
9,297 |
|
|
|
150,957 |
|
|
(1)
|
Bonus
amounts for 2008 have been restated to reflect bonuses earned during the
year.
|
|
(2)
|
This
amount reflects the aggregate grant date fair value for outstanding
restricted stock awards granted during the year, computed in accordance
with FASB ASC Topic 718. The amounts were calculated based on
the Company’s stock price as of the date of grant, which was
$8.75. When shares become vested and are distributed from the
trust in which they are held, the recipient will also receive an amount
equal to accumulated cash and stock dividends (if any) paid with respect
thereto, plus earnings thereon.
|
|
(3)
|
This
amount reflects the aggregate grant date fair value for outstanding stock
option awards granted during the year, computed in accordance with FASB
ASC Topic 718. For information on the assumptions used to
compute the fair value, see note 11 to the consolidated financial
statements. The actual value, if any, realized by an executive
officer from any option will depend on the extent to which the market
value of the common stock exceeds the exercise price of the option on the
date the option is exercised. Accordingly, there is no assurance that the
value realized by an executive officer will be at or near the value
estimated above.
|
Employment
Agreements. The Bank, the Company and Mr. Roman have entered
into an employment agreement with a two-year term. The Boards of
Directors may extend the term of the agreement for an additional year as of each
anniversary of the effective date of the agreement. The Board of
Directors last reviewed the employment agreement in November,
2009. At that time, the Boards of Directors extended the term of the
agreement to November, 2011. The Boards of Directors reviews Mr.
Roman’s base salary, currently $182,713, annually pursuant to the terms of the
agreement. In addition to establishing a base salary for Mr. Roman,
the agreement provides for, among other things, Mr. Roman’s participation in
certain benefit plans, including stock-based benefit plans.
The employment agreement restricts Mr.
Roman’s right to compete against the Bank for a period of one year following
termination of his employment for good reason or other than for cause (as
defined in the agreement). However, this provision does not apply if
the Company and the Bank have not renewed the term of Mr. Roman’s employment
agreement and he terminates his employment at a time when the remaining term of
the agreement is one year or less.
See “Other Potential Post-Termination
Benefits” for a discussion of the benefits and payments Mr. Roman may
receive under his employment agreement upon his retirement or termination of
employment.
Outstanding
Equity Awards at December 31, 2009
The following table provides
information concerning unexercised stock options and restricted stock awards
that have not vested for each named executive officer outstanding as of
December 31, 2009.
|
|
|
Stock
Option Awards
|
|
Restricted
Stock Awards
|
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
|
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(1)
|
|
|
John
C. Roman
|
|
|
29,600 |
|
|
|
7,400 |
(2) |
|
$ |
11.10 |
|
07/26/2015
|
|
|
4,400 |
(3) |
|
$ |
25,256
|
|
|
Dominic
J. Alegi, Jr.
|
|
|
17,600 |
|
|
|
4,400 |
(2) |
|
|
11.10 |
|
07/26/2015
|
|
|
2,800 |
(3) |
|
|
16,072
|
|
|
Mark
S. Graveline
|
|
|
6,400 |
|
|
|
1,600 |
(2) |
|
|
11.10 |
|
07/26/2015
|
|
|
800 |
(3) |
|
|
4,592 |
|
|
|
|
|
200 |
|
|
|
800 |
(4) |
|
|
11.10 |
|
07/26/2018
|
|
|
800 |
(4) |
|
|
4,592 |
|
|
|
(1)
|
Based
upon the Company’s closing stock price of $5.74 at December 31,
2009.
|
|
|
(2)
|
The
stock options vest in five equal installments commencing one year from the
date of grant, which was July 26,
2005.
|
|
|
(3)
|
The
restricted stock awards vest on July 26,
2010.
|
|
|
(4)
|
The
stock options vest in five equal installments commencing one year from the
date of grant, which was July 26, 2008. The restricted stock
awards vest in four equal annual installments from July 26, 2010 to July
26, 2013.
|
Other
Potential Post-Termination Benefits
Payments Made
Upon Termination for Cause. Mr. Roman’s employment agreement
contains a narrow definition of cause for which Mr. Roman may be
terminated. If Mr. Roman is terminated for cause, he will receive his
base salary through the date of termination and retain the rights to any vested
benefits subject to the terms of the plan or agreement under which those
benefits are provided.
Payments Made
Upon Voluntary Termination and Termination without Cause or for Good
Reason. If Naugatuck Valley Financial terminates Mr. Roman’s
employment for reasons other than cause, or if he terminates voluntarily under
certain circumstances that constitute “good reason” as defined in the employment
agreement, Mr. Roman, or his beneficiary should he die prior to receipt of
payment, is entitled to a lump sum cash payment equal to his base salary for the
remaining term of the employment agreement, as well as the value of continued
benefits provided under tax-qualified and non-tax-qualified benefit plans for
the remaining term, based on the amounts received during the 12 months preceding
his termination. Mr. Roman is also entitled to continued medical,
dental, life and disability insurance coverage for the remaining term of the
agreement.
If Mr. Roman voluntarily terminates his
employment under circumstances that would not constitute good reason, he will be
entitled to receive his base salary through the date of termination and retain
the rights to any vested benefits subject to the terms of the plan or agreement
under which those benefits are provided.
Payments Made
Upon Disability. If Mr. Roman becomes disabled, he will
receive monthly disability pay equal to 75% of his base salary for a period
ending on the earliest to occur of: (1) his return to full-time
employment with Naugatuck Valley Savings; (2) his death; or (3) the attainment
of age 65, as well as continued medical, dental and life insurance coverage (for
Mr. Roman and his dependents) for the applicable disability
period. Disability benefits under the employment agreement are
reduced by payments made to Mr. Roman under any other company or bank-sponsored
disability program.
Messrs.
Roman, Alegi and Graveline are participants in the Naugatuck Valley Financial
Corporation 2005 Equity Incentive Plan. The plan provides that upon
termination due to disability, outstanding stock options and restricted stock
awards automatically vest and become exercisable and, in the case of options,
remain exercisable until the later of one year from the date of disability or
the expiration date of the stock options.
Payments Made
Upon Death. Upon Mr. Roman’s death, his employment agreement
terminates and his estate receives only unpaid compensation through the last day
of the month of his death.
Naugatuck Valley Savings has entered
into death benefit agreements with Messrs. Roman and Alegi. Under Mr.
Roman’s agreement, Mr. Roman’s beneficiary becomes entitled to a single lump sum
payment of $193,000 upon Mr. Roman’s death while still an employee of Naugatuck
Valley Savings, or $25,000 upon Mr. Roman’s death at any other
time. Under the agreement with Mr. Alegi, his beneficiary becomes
entitled to a single lump sum payment of $25,000 upon his death at any
time. In addition, under separate bank owned life insurance, the
beneficiaries of Messrs. Roman, Alegi and Graveline become entitled to an
additional lump sum payment of $25,000 upon the executive’s death at any
time.
The
Naugatuck Valley Financial Corporation 2005 Equity Incentive Plan provides that
upon termination due to death, outstanding stock options and restricted stock
awards automatically vest and become exercisable and, in the case of options,
remain exercisable until the later of one year from the date of death or the
expiration date of the stock options.
Payments Made
Upon a Change in Control. Under Mr. Roman’s employment
agreement, if he is involuntarily or constructively terminated within three
years of a change in control, as defined in the employment agreement, he is
generally entitled to receive a severance payment equal to three times his
average annual compensation (as defined in the employment agreement) over the
five preceding calendar years, as well as continued medical, dental, life
insurance and disability insurance for three years following termination of
employment.
The Bank
has entered into change in control agreements with Messrs. Alegi and
Graveline. The change in control agreements have three-year terms,
subject to annual renewal by the Board of Directors. The change in
control agreements provide Messrs. Alegi and Graveline with a severance benefit
upon termination in connection with a change in control (as defined in the
agreements). If Mr. Alegi or Mr. Graveline is terminated without
cause, or voluntarily resigns under circumstances specified in the change in
control agreements, following a change in control of Naugatuck Valley Financial
or Naugatuck Valley Savings, he will receive a severance payment equal to three
times his average annual taxable income for the five most recent taxable years.
Naugatuck Valley Savings will also continue medical, dental and life insurance
coverage for 36 months following termination of employment.
The benefits provided by Mr. Roman’s
employment agreement and the change in control agreements with Messrs. Alegi and
Graveline are limited to avoid adverse tax consequences to the Company and the
Bank under Sections 280G and 4999 of the Internal Revenue Code of
1986. The provisions provide that total payments and benefits to
Messrs. Roman, Alegi or Graveline that constitute “parachute payments” made in
connection with a change in control shall not equal or exceed in the aggregate
three times the individual’s average annual taxable income over the five
preceding taxable years.
The
Naugatuck Valley Financial Corporation 2005 Equity Incentive Plan provides that,
in the event of a change in control of Naugatuck Valley Financial or Naugatuck
Valley Savings, outstanding stock options and stock awards automatically vest
and become exercisable.
OTHER
INFORMATION RELATING TO
DIRECTORS
AND EXECUTIVE OFFICERS
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 the Company’s review of
copies of the reports it has received and written representations provided to it
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 Naugatuck Valley Financial common
stock during the year ended December 31, 2009.
Transactions
with Related Persons
Pursuant to the Company’s Audit
Committee Charter, the Audit Committee periodically reviews, no less frequently
than quarterly, a summary of Naugatuck Valley Financial’s transactions with
directors and executive officers of Naugatuck Valley Financial and with firms
that employ directors, as well as any other related person transactions, for the
purpose of recommending to the disinterested members of the Board of Directors
that the transactions are fair, reasonable and within Company policy and should
be ratified and approved. Also, in accordance with banking
regulations, the Board of Directors reviews all loans made to a director or
executive officer in an amount that, when aggregated with the amount of all
other loans to such person and his or her related interests, exceed the greater
of $25,000 or 5% of Naugatuck Valley Financial’s capital and surplus (up to a
maximum of $500,000) and such loan must be approved in advance by a majority of
the disinterested members of the Board of Directors. Additionally,
pursuant to the Company’s Code of Ethics and Business Conduct, all executive
officers and directors of Naugatuck Valley Financial must disclose any existing
or emerging conflicts of interest to the President and Chief Executive Officer
of Naugatuck Valley Financial. Such potential conflicts of interest
include, but are not limited to, the following: (i) Naugatuck Valley Financial
conducting business with or competing against an organization in which a family
member of an executive officer or director has an ownership or employment
interest and (ii) the ownership of more than 1% of the outstanding securities or
5% of total assets of any business entity that does business with or is in
competition with Naugatuck Valley Financial.
From time to time, Naugatuck Valley
Savings makes loans and extensions of credit to its executive officers and
directors, and members of their immediate families. The outstanding
loans made to our directors and executive officers, and members of their
immediate families, were made in the ordinary course of business, were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable loans with persons not related to
Naugatuck Valley Savings, and did not involve more than the normal risk of
collectibility or present other unfavorable features. As of December
31, 2009, these loans were performing according to their original
terms.
SUBMISSION
OF BUSINESS PROPOSALS AND
STOCKHOLDER
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 31, 2010. If next year’s annual
meeting is held on a date more than 30 calendar days from May 28, 2011, a
stockholder proposal must be received by a reasonable time before the Company
begins to print and mail its proxy solicitation material 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 30 days before the date of the annual meeting; provided that if less
than 40 days’ notice or prior public disclosure of the date of the annual
meeting is given to stockholders, such notice must be received not later than
the close of business on the 10th 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.
STOCKHOLDER
COMMUNICATIONS
The Company encourages stockholder
communications to the Board of Directors and/or individual
directors. Communications regarding financial or accounting policies
may be made in writing to the Chairman of the Audit Committee, at Naugatuck
Valley Financial Corporation, c/o Corporate Secretary, 333 Church Street,
Naugatuck, Connecticut 06770. Other communications to the Board of
Directors may be made in writing to the Chairman of the Nominating and Corporate
Governance Committee, James A. Mengacci, at Naugatuck Valley Financial
Corporation, c/o Corporate Secretary, 333 Church Street, Naugatuck, Connecticut
06770. Communications to individual directors may be made to such
director in writing to such director at Naugatuck Valley Financial Corporation,
c/o Corporate Secretary, 333 Church Street, Naugatuck, Connecticut
06770.
NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the
Availability of Proxy Materials for the Stockholders Meeting to be held on May
28, 2010.
The
Proxy Statement and Annual Report to Stockholders are available at:
www.nvsl.com/shareholder/report.aspx
MISCELLANEOUS
The Company will pay the cost of this
proxy solicitation. The Company will reimburse brokerage firms and
other custodians, nominees and fiduciaries for the reasonable expenses they
incur in sending proxy materials to the beneficial owners of Naugatuck Valley
Financial common stock. In addition to soliciting proxies by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telephone without receiving additional
compensation.
The Company’s Annual Report to
Stockholders has been mailed to persons who were stockholders as of the close of
business on April 9, 2010. Any stockholder who has not received a
copy of the Annual Report may obtain a copy by writing to the Corporate
Secretary of the Company. The Annual Report is not to be treated as
part of the proxy solicitation material or as having been incorporated in this
proxy statement by reference.
A copy of the Company’s Annual Report
on Form 10-K, without exhibits, for the year ended December 31, 2009, as filed
with the Securities and Exchange Commission, will be furnished without charge to
persons who were stockholders as of the close of business on April 9, 2010 upon
written request to Bernadette A. Mole, Naugatuck Valley Financial Corporation,
333 Church Street, Naugatuck, Connecticut 06770.
If you and others who share your
address own your shares in street name, your broker or other holder of record
may be sending only one annual report and proxy statement to your
address. This practice, known as “householding,” is designed to
reduce our printing and postage costs. However, if a stockholder
residing at such an address wishes to receive a separate Annual Report or proxy
statement in the future, he or she should contact the broker or other holder of
record. If you own your shares in street name and are receiving
multiple copies of our Annual Report and proxy statement, you can request
householding by contacting your broker or other holder of record.
Whether or not you plan to attend the
annual meeting, please vote by marking, signing, dating and promptly returning
the enclosed proxy card in the enclosed envelope.
|
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
Bernadette
A. Mole
|
|
|
Corporate
Secretary
|
Naugatuck,
Connecticut
April 30,
2010
REVOCABLE
PROXY
NAUGATUCK
VALLEY FINANCIAL CORPORATION
ANNUAL
MEETING OF STOCKHOLDERS
May
28, 2010
10:30
a.m., Eastern Time
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting:
The Proxy
Statement and Annual Report to Stockholders are available at:
www.nvsl.com/shareholder/report.aspx
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Carlos
S. Batista and Camilo P. Vieira, each 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 28, 2010, at 10:30 a.m. local time, in the
Community Room at Naugatuck Valley Savings and Loan’s main office at 333 Church
Street, Naugatuck, Connecticut, and at any and all adjournments of the meeting,
with all of the powers the undersigned would possess if personally present at
such meeting, as indicated to the right:
|
|
1.
|
The
election as director of all nominees listed (unless the “For All Except”
box is marked and the instructions below are complied
with).
|
For a three-year
term:
James A. Mengacci and Jane H.
Walsh
Frederick A. Dlugokecki
| |
FOR
|
WITHHOLD
|
FOR
ALL 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 Whittlesey & Hadley, P.C. as
independent registered public accountants of Naugatuck Valley Financial
Corporation for the fiscal year ending December 31,
2010.
|
| |
FOR
|
AGAINST
|
ABSTAIN
|
|
| |
¨
|
¨
|
¨
|
|
The Board of Directors recommends that
you vote “FOR” all nominees and the other listed proposal.
This proxy, properly signed and
dated, is revocable and will be voted as directed, but if no instructions are
specified, this proxy will be voted “FOR” all nominees and the proposal
listed. 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
proxies in their 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 Board of Directors to vote
with respect to the election of any person as director where the nominee is
unable to serve or for good cause will not serve and matters incident to the
conduct of the meeting.
Please
be sure to sign below and date this Proxy in the box provided.
Detach
above card, sign, date and mail in postage paid envelope provided.
NAUGATUCK
VALLEY FINANCIAL CORPORATION
The above
signed acknowledges receipt from the Company prior to the execution of this
proxy of a Notice of Annual Meeting of Stockholders, a Proxy Statement for the
Annual Meeting of Stockholders and 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.
VOTE AUTHORIZATION
FORM
I understand that First Bankers Trust
Services, Inc. (the “ESOP Trustee”), is the holder of record and custodian of
all shares of Naugatuck Valley Financial Corporation (the “Company”) common
stock under the Naugatuck Valley Savings and Loan Employee Stock Ownership
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 28, 2010.
You are authorized to vote my shares as
follows:
|
|
1.
|
The
election as director of all nominees listed (unless the “For All Except”
box is marked and the instructions below are complied
with).
|
For a three-year
term:
James A. Mengacci and Jane H.
Walsh
Frederick A. Dlugokecki
| |
FOR
|
WITHHOLD
|
FOR
ALL 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 Whittlesey & Hadley, P.C. as
independent registered public accountants of Naugatuck Valley Financial
Corporation for the fiscal year ending December 31,
2010.
|
| |
FOR
|
AGAINST
|
ABSTAIN
|
|
| |
¨
|
¨
|
¨
|
|
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES AND THE OTHER LISTED
PROPOSAL.
The ESOP Trustee is hereby authorized
to vote all shares of Company common stock allocated to me in its trust capacity
as indicated above.
Please
date, sign and return this form in the enclosed postage-paid envelope no later
than May 21, 2010.
VOTE AUTHORIZATION
FORM
I understand that Reliance Trust
Company (the “Trustee”) is the holder of record and custodian of all shares of
Naugatuck Valley Financial Corporation (the “Company”) common stock credited to
me under the Naugatuck Valley Savings and Loan Employee Savings Plan (the
“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 28, 2010.
You are authorized to vote my shares as
follows:
|
|
1.
|
The
election as director of all nominees listed (unless the “For All Except”
box is marked and the instructions below are complied
with).
|
For a three-year
term:
James A. Mengacci and Jane H.
Walsh
Frederick A. Dlugokecki
| |
FOR
|
WITHHOLD
|
FOR
ALL 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 Whittlesey & Hadley, P.C. as
independent registered public accountants of Naugatuck Valley Financial
Corporation for the fiscal year ending December 31,
2010.
|
| |
FOR
|
AGAINST
|
ABSTAIN
|
|
| |
¨
|
¨
|
¨
|
|
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES AND THE OTHER LISTED
PROPOSAL.
The Trustee is hereby authorized to
vote the shares credited to me in its trust capacity as indicated
above.
Please
date, sign and return this form in the enclosed postage-paid envelope no later
than May 21, 2010.
VOTE AUTHORIZATION
FORM
I understand that First Bankers Trust
Services, Inc. (the “Trustee”), is the holder of record and custodian of all
shares of Naugatuck Valley Financial Corporation (the “Company”) common stock
held in the Naugatuck Valley Financial Corporation 2005 Equity Incentive Plan
Trust. 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 28, 2010.
You are authorized to vote my shares as
follows:
|
|
1.
|
The
election as director of all nominees listed (unless the “For All Except”
box is marked and the instructions below are complied
with).
|
For a three-year
term:
James A. Mengacci and Jane H.
Walsh
Frederick A. Dlugokecki
| |
FOR
|
WITHHOLD
|
FOR
ALL 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 Whittlesey & Hadley, P.C. as
independent registered public accountants of Naugatuck Valley Financial
Corporation for the fiscal year ending December 31,
2010.
|
| |
FOR
|
AGAINST
|
ABSTAIN
|
|
| |
¨
|
¨
|
¨
|
|
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES AND THE OTHER LISTED
PROPOSAL.
The Trustee is hereby authorized to
vote all unvested shares of Company common stock awarded to me as indicated
above.
Please
date, sign and return this form in the enclosed postage-paid envelope no later
than May 21, 2010.
