PROXY
STATEMENT
PSB
Holdings, Inc.
40
Main Street
Putnam,
Connecticut 06260
(860)
928-6501
ANNUAL
MEETING OF STOCKHOLDERS
November
7, 2008
This
Proxy Statement is furnished in connection with the solicitation of proxies on
behalf of the Board of Directors of PSB Holdings, Inc. (the “Company”) to be
used at the Annual Meeting of Stockholders of the Company (the “Annual
Meeting”), which will be held at the Community Room of Quinebaug Valley
Community College, located at 742 Upper Maple Street, Danielson, Connecticut, on
Friday, November 7, 2008, at 11:00 a.m., Connecticut Time, and all adjournments
of the Annual Meeting. The accompanying Notice of Annual Meeting of
Stockholders, this Proxy Statement and the Revocable Proxy are first being
mailed to stockholders on or about October 2, 2008.
Stockholders
who execute proxies in the form solicited hereby retain the right to revoke them
in the manner described below. Unless so revoked, the shares
represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of
Directors of the Company will be voted in accordance with the directions given
thereon.
Where no
instructions are indicated, validly executed proxies will be voted “FOR” the
proposals set forth in this Proxy Statement. If any other matters are
properly brought before the Annual Meeting, the persons named in the
accompanying proxy will vote the shares represented by such proxies on such
matters in such manner as shall be determined by a majority of the Board of
Directors.
A proxy
may be revoked at any time prior to its exercise by sending written notice of
revocation to the Secretary of the Company at the address shown above, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you
are a stockholder whose shares are not registered in your own name, you will
need appropriate documentation from your record holder to vote personally at the
Annual Meeting. The presence at the Annual Meeting of any stockholder
who had returned a proxy shall not revoke such proxy unless the stockholder
delivers his or her ballot in person at the Annual Meeting or delivers a written
revocation to the Secretary of the Company prior to the voting of such
proxy.
VOTING PROCEDURES AND METHODS
OF COUNTING VOTES
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Holders
of record of the Company’s common stock, par value $0.10 per share, as of the
close of business on September 17, 2008 (the “Record Date”) are entitled to one
vote for each share then held. As of the Record Date, the Company had
6,943,125 shares of common stock issued and 6,530,509 shares outstanding,
3,729,846 of which were held by Putnam Bancorp, MHC (the “Mutual Holding
Company”), and 2,800,663 of which were held by stockholders other than the
Mutual Holding Company. The presence in person or by proxy of a
majority of the total number of shares of common stock outstanding and entitled
to vote is necessary to constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes will be counted for
purposes of determining that a quorum is present. In the event there are not
sufficient votes for a quorum, or to approve or ratify any matter being
presented at the time of the Annual Meeting, the Annual Meeting may be adjourned
in order to permit the further solicitation of proxies. However, the presence by
proxy of the Mutual Holding Company’s shares will assure a quorum is present at
the Annual Meeting.
In
accordance with the provisions of the Company's Charter, record holders of
common stock who beneficially own in excess of 10% of the outstanding shares of
common stock (the "Limit") are not entitled to any vote with respect to the
shares held in excess of the Limit. The Limit does not apply to
shares of common stock held by the Mutual Holding Company.
As to the
election of directors, the Proxy Card being provided by the Board of Directors
enables a stockholder to vote FOR the election of the three nominees proposed by
the Board, to WITHHOLD AUTHORITY to vote for the nominees being proposed, or to
vote FOR ALL EXCEPT one or more of the nominees being
proposed. Directors are elected by a plurality of votes cast, without
regard to either broker non-votes or proxies as to which authority to vote for
the nominees being proposed is withheld.
As to the
ratification of Shatswell, MacLeod & Company, P.C. as the Company’s
independent registered public accounting firm, by checking the appropriate box,
a stockholder may: (i) vote FOR the ratification; (ii) vote AGAINST the
ratification; or (iii) ABSTAIN from voting on the ratification. The
ratification of this matter shall be determined by a majority of the shares
present and voting, without regard to broker non-votes or proxies marked
ABSTAIN.
Management
of the Company anticipates that the Mutual Holding Company, the majority
stockholder of the Company, will vote all of its shares in favor of all the
matters set forth above. If the Mutual Holding Company votes all of
its shares in favor of the election of the three nominees proposed by the Board
and in favor of the ratification of Shatswell, MacLeod & Company, P.C. as
the Company’s independent registered public accounting firm, the approval of
each such proposal would be assured.
Proxies
solicited hereby will be returned to the Company and will be tabulated by an
Inspector of Election designated by the Board of Directors of the
Company.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
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Persons
and groups who beneficially own in excess of 5% of the common stock are required
to file certain reports with the Securities and Exchange Commission (the “SEC”)
regarding such ownership. The following table sets forth, as of the
Record Date, the shares of common stock beneficially owned by each person who
was the beneficial owner of more than 5% of the Company’s outstanding shares of
common stock, and all directors and executive officers of the Company as a
group.
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Amount
of Shares
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Owned
and Nature
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Percent
of Shares
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of
Beneficial
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of
Common Stock
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Name
and Address of Beneficial Owners
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Ownership
(1)
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Outstanding
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Principal
Stockholders:
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Putnam
Bancorp, MHC ………………………………………
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3,729,846
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57.1
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%
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40
Main Street
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Putnam,
Connecticut 06260
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Putnam
Bancorp, MHC (2)……………………………………
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4,253,820
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65.1
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%
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and
all Directors and Executive Officers
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as
a group (9 persons)
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40
Main Street
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Putnam,
Connecticut 06260
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(1)
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For
purposes of this table, a person is deemed to be the beneficial owner of
shares of common stock if he has shared voting or investment power with
respect to such security, or has a right to acquire beneficial ownership
at any time within 60 days from the Record Date. As used herein, “voting
power” is the power to vote or direct the voting of shares, and
“investment power” is the power to dispose of or direct the disposition of
shares. The table includes all shares held directly as well as
by spouses and minor children, in trust and other indirect ownership, over
which shares the named individuals effectively exercise sole or shared
voting and investment power.
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(2)
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The
Company’s executive officers and directors are also executive officers and
directors of Putnam Bancorp, MHC. Excluding shares held by
Putnam Bancorp, MHC, the Company’s executive officers and directors owned
an aggregate of 523,974 shares, or 8.0% of the outstanding
shares.
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PROPOSAL
1—ELECTION OF DIRECTORS
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The
Company’s Board of Directors consists of nine members, and is divided into three
classes, with one class of directors elected each year. Directors of the Company
are generally elected to serve for a three-year period and until their
respective successors have been elected and qualified. The Nominating Committee
of the Board of Directors has nominated three individuals to stand for election
as directors, each to serve for the period set forth following their name and
until their successor has been elected and shall qualify. The nominees are Mary
E. Patenaude (three-year term), Robert J. Halloran, Jr. (three-year term) and
Jitendra K. Sinha (three-year term). Each nominee is prepared to
serve, if elected; each nominee is currently a member of the Board of
Directors.
The table
below sets forth certain information as of September 17, 2008 regarding the
current members of the Company’s Board of Directors and the nominees, including
the terms of office of Board members. It is intended that the proxies
solicited on behalf of the Board of Directors (other than proxies in which the
vote is withheld as to one or more nominees) will be voted at the Annual Meeting
for the election of the nominees identified below. If a nominee is
unable to serve, the shares represented by all such proxies will be voted for
the election of such substitute as the Board of Directors may
determine. At this time, the Board of Directors knows of no reason
why any of the nominees would be unable to serve if elected. Except
as indicated herein, there are no arrangements or understandings between any
nominee or continuing director and any other person pursuant to which such
nominee or continuing director was selected.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED IN THIS
PROXY STATEMENT.
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Shares
of
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Common
Stock
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Beneficially
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Owned
on
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Positions
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Director
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Current
Term
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Record
Date
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Percent
of
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Name
(1)
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Age
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Held
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Since
(2)
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to
Expire
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(3)
(4) (5)
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Class
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NOMINEES
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Mary
E. Patenaude
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63
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Director
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1991
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2008
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37,240
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(6)
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0.6%
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Robert
J. Halloran, Jr.
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54
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Director,
President and
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2006
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2008
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36,519
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(7)
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0.5%
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Chief
Financial Officer
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Jitendra
K. Sinha
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59
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Director
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2007
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2008
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7,000
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(8)
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0.1%
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DIRECTORS
CONTINUING IN OFFICE
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Charles
W. Bentley, Jr.
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55
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Director
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2006
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2010
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95,789
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(9)
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1.5%
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Paul
M. Kelly
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57
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Director
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1993
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2010
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59,225
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(10)
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0.9%
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Charles
H. Puffer
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57
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Director
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1984
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2010
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58,815
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0.9%
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Thomas
A. Borner
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54
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Chairman
of the Board and
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1987
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2009
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188,428
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(11)
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2.9%
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Chief
Executive Officer
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Richard
A. Loomis
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50
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Director
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2002
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2009
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35,358
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(12)
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0.5%
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John
P. Miller
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50
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Director
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2006
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2009
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5,600
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0.1%
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523,974
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8.0%
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(1)
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The
mailing address for each person listed is 40 Main Street, Putnam,
Connecticut 06260. Each of the persons listed is also a
director of Putnam Bancorp, MHC, which owns the majority of the Company’s
issued and outstanding shares of common
stock.
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(2)
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Except
for Mr. Sinha, Mr. Bentley, Mr. Miller and Mr. Halloran, reflects initial
appointment to the Board of Trustees of the mutual predecessor to Putnam
Bank.
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(3)
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Except
as otherwise noted in these footnotes, the nature of beneficial ownership
for shares reported in this table is sole voting and investment
power.
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(4)
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Included
in the shares beneficially owned by the listed individuals are options to
purchase shares of Company stock, which are exercisable within 60 days of
November 7, 2008, as follows: Mr. Borner –
36,744; Mr. Kelly – 14,289; Mr. Loomis –
6,123; Ms. Patenaude – 14,289; Mr. Puffer –
14,289; Mr. Halloran – 20,412; Mr. Miller –
600; Mr. Bentley – 600.
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(5)
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Included
in the shares beneficially owned by the listed individuals includes shares
of restricted stock, which were granted under the PSB Holdings, Inc. 2005
Stock-Based Incentive Plan, as follows: Mr. Borner –
34,021; Mr. Kelly – 9,526; Mr. Loomis –
4,083; Ms. Patenaude – 9,526; Mr. Puffer –
9,526; Mr. Halloran – 9,526; Mr. Miller –
1,000; Mr. Bentley –
1,000.
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(6)
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Includes
6,275 shares held in Trust.
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(7)
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Includes
1,281 allocated shares held in
ESOP.
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(8)
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Includes
7,000 shares held jointly with Mr. Sinha’s
spouse.
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(9)
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Includes
22,640 shares held by Mr. Bentley’s
spouse.
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(10)
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Includes
5,410 shares held in Trust.
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(11)
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Includes
1,415 allocated shares under the Putnam Bank Employee Stock Ownership Plan
("ESOP") and 25,000 shares held by Mr. Borner's
spouse.
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(12)
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Includes
1,889 shares in Trust.
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The
principal occupation during the past five years of each director and nominee for
director is set forth below. All such persons have held their present
positions for five years unless otherwise stated.
Directors
Charles W.
Bentley, Jr.
is Owner and Chief Executive Officer of Colt's Plastics
Company, Inc. in Dayville, Connecticut, where he has been employed for the last
thirty-five years. Colt's Plastics is recognized as a global market leader in
the plastics industry.
Thomas A.
Borner
is Chairman of the Board and Chief Executive Officer of the
Company and of Putnam Bank. Mr. Borner has served as a Director and Chairman of
the Board of the Company since its formation in 2003, as a director of the Bank
since 1987 and as Chairman of the Board of the Bank since 1992. In
addition, Mr. Borner was Interim Chief Executive Officer of the Bank from 1999
to 2000. Since October 2005, Mr. Borner has been principal of the law
offices of Thomas A. Borner, located in Putnam, Connecticut. Prior to
October 2005, Mr. Borner served as "of counsel" to the law firm of Borner Scola
Hill Baruti Vancini & Smith, located in Putnam, Connecticut.
Robert J.
Halloran, Jr.
is President and Chief Financial Officer of Putnam Bank and
the Company. He joined Putnam Bank and the Company in 2004 and, until his
appointment as President in June 2006, served as Senior Vice President and Chief
Financial Officer of Putnam Bank and Vice President and Treasurer of the
Company. Prior to joining Putnam Bank and the Company, Mr. Halloran served as
Chief Financial Officer of Commerce Bank & Trust Company.
Paul M.
Kelly
is the
Treasurer of Kelly’s Tire, Inc., an automotive tire retail business, located in
Putnam, Connecticut.
Richard A.
Loomis
is
the owner and operator of Loomis Real Estate located in Putnam,
Connecticut.
John P.
Miller
is the President and Owner of the National Chromium Company, Inc.,
a metal finishing company that specializes in chromium and nickel coatings,
servicing accounts across the United States. Mr. Miller, an MBA, also serves as
Adjunct Instructor of Business Management at Quinebaug Valley Community College,
located in Danielson, Connecticut.
Mary E.
Patenaude
is
the owner and sole proprietor of Pomfret Spirit Shoppe, located in Pomfret,
Connecticut.
Charles H.
Puffer
is the owner and operator of Leschke-Puffer Insurance Agency,
Inc., located in Putnam, Connecticut.
Jitendra K.
Sinha
is
owner and operator of Putnam Supermarket, Inc., located in Putnam,
Connecticut.
Section
16(a) Beneficial Ownership Reporting Compliance
The
common stock of the Company is registered with the SEC pursuant to Section 12(b)
of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). Officers and directors of the Company and beneficial owners of
greater than 10% of the Company’s common stock (“10% beneficial owners”) are
required to file reports on Forms 3, 4 and 5 with the SEC disclosing beneficial
ownership and changes in beneficial ownership of the common
stock. SEC rules require disclosure in the Company’s Proxy Statement
or Annual Report on Form 10-KSB of the failure of an officer, director or 10%
beneficial owner of the Company’s common stock to file a Form 3, 4, or 5 on a
timely basis. Based on the Company’s review of such ownership
reports, Director Sinha was late in filing a Form 3, and the Company believes
that no other officer or director of the Company failed to timely file such
ownership reports for the fiscal year ended June 30, 2008.
Board
Independence
The Board
of Directors has determined that, except for Messrs. Borner and Halloran, each
member of the Board is an “independent director” within the meaning of Rule
4200(a)(15) of the NASDAQ corporate governance listing
standards. Messrs. Borner and Halloran are not considered independent
because they serve as executive officers of the Company. In
determining the independence of the independent directors listed above, the
Board of Directors reviewed the following transactions, which are not required
to be reported under “—Transactions With Certain Related Persons,”
below:
Mary E.
Patenaude: $37,632 Loan relationship
Charles
H. Puffer: $9,158 Loan relationship and Leschke-Puffer
Insurance Agency, Inc. received commissions totaling $32,826 for writing Putnam
Bank’s medical insurance, workers’ compensation, life insurance and long-term
disability policies during the fiscal year ended June 30, 2008.
Meetings
and Committees of the Board of Directors
General
.
The business of
the Company is conducted at regular and special meetings of the full Board and
its standing committees. In addition, the “independent” members of the Board of
Directors (as defined in the listing standards of the NASDAQ Stock Market) meet
in executive session at least annually and held three meetings during fiscal
2008. The standing committees consist of the Compensation Committee
and the Audit Committee. During the year ended June 30, 2008, the Board of
Directors of the Company held 24 meetings regular meetings. No member
of the Board or any committee thereof attended fewer than 75% of the aggregate
of: (i) the total number of meetings of the Board of Directors (held during the
period for which he has been a director); and (ii) the total number of meetings
held by all committees of the Board on which he or she served (during the
periods that he or she served).
While the
Company has no formal policy on director attendance at annual meetings of
stockholders, all directors are encouraged to attend. Each of the then-current
directors attended last year’s Annual Meeting of Stockholders.
Compensation
Committee
. The Compensation Committee of the Board of
Directors is responsible for developing compensation guidelines and for
recommending the compensation for the Chief Executive Officer, President and
Chief Financial Officer and other senior executive officers. The
Compensation Committee consists of directors Richard A. Loomis, Charles W.
Bentley, Jr. and Charles H. Puffer. No member of the Compensation Committee is a
current or former officer or employee of PSB Holdings, Inc., Putnam Bank or any
subsidiary. Each member of the Compensation Committee is considered
“independent” as defined in the NASDAQ corporate governance listing standards.
The Compensation Committee met two times during the fiscal year ended June 30,
2008
.
The
Compensation Committee does not operate under a written charter.
The
Company’s philosophy is to align executive compensation with the interests of
stockholders and to determine appropriate compensation levels that will enable
the Company to meet the following objectives:
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To
attract, retain and motivate an experienced, competent executive
management team;
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·
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To
reward the executive management team for the enhancement of stockholder
value based on our annual earnings performance and the market price of our
stock;
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·
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To
provide compensation rewards that are adequately balanced between
short-term and long-term performance
goals;
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·
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To
encourage ownership of Company common stock through stock-based
compensation at all levels of management;
and
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·
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To
maintain compensation levels that are competitive with other financial
institutions, and particularly those in the Company’s peer group based on
asset size and market area.
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The
Compensation Committee considers a number of factors in its decisions regarding
executive compensation, including, but not limited to, the level of
responsibility and performance of the individual executive officers, the overall
performance of the Company and a peer group analysis of compensation paid at
institutions of comparable size and complexity. The Compensation
Committee also considers the recommendations of the Chief Executive Officer with
respect to the compensation of executive officers other than the Chief Executive
Officer. The Compensation Committee and the Chief Executive Officer
review the same information in connection with this recommendation.
The base
salary levels for the Company’s executive officers are set to reflect the duties
and levels of responsibilities inherent in the position and to reflect
competitive conditions in the banking business in the Company’s market
area. Comparative salaries paid by other financial institutions are
considered in establishing the salary for the given executive
officer. The Compensation Committee has utilized bank compensation
surveys compiled by the America’s Community Bankers as well as other surveys
prepared by trade groups and independent benefit consultants. In
setting the base salaries, the Compensation Committee also considers a number of
factors relating to the executive officers, including individual performance,
job responsibilities, experience level, ability and the knowledge of the
position. These factors are considered subjectively and none of the
factors are accorded a specific weight.
Nomination
Procedures.
The Board of Directors of the Company has not
established a separate standing Nomination Committee of the Board. Instead,
nominations for director must be approved by a majority of the Board of
Directors and a majority of the independent directors of the Board of
Directors. The Board of Directors believes that it is the
responsibility of the entire Board of Directors to participate in the
identification, evaluation, recruitment and selection of qualified directors
and, therefore, has not delegated this function to a committee of the
Board. PSB Holdings, Inc. relies upon NASDAQ’s “Controlled Company
Exemption” from the independence requirements with respect to nominating
committees for companies with majority stockholders. PSB Holdings,
Inc. is a “Controlled Company” because more than 50% of its shares of common
stock are owned by Putnam Bancorp, MHC. The Board of Directors,
acting as the Nomination Committee, met once during the year ended June 30,
2008.
The Board
of Directors intends to identify nominees by first evaluating the current
members of the Board of Directors willing to continue in
service. Current members of the Board with skills and experience that
are relevant to the Company’s business and who are willing to continue in
service are first considered for re-nomination, balancing the value of
continuity of service by existing members of the Board with that of obtaining a
new perspective. If any member of the Board does not wish to continue
in service, or if the Board decides not to re-nominate a member for re-election,
or if the size of the Board is increased, the Board would solicit suggestions
for director candidates from all Board members. In addition, the
Board may engage a third party to assist in the identification of director
nominees. During the year ended June 30, 2008, the Company did not
pay a fee to any third party to identify or evaluate or assist in identifying or
evaluating potential nominees for director. The Board would seek to identify a
candidate with consideration of the following criteria:
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Contributes
to the range of talent, skill and expertise appropriate for the
Board;
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·
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Financial,
regulatory and business experience, knowledge of banking and financial
services industries;
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·
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Familiarity
with the operations of public companies and ability to understand
financial statements;
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·
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Familiarity
with the Company’s market area and participation and ties to local
businesses and local civic, charitable and religious
organizations;
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·
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The
ability to represent the best interests of the stockholders of the Company
and the best interests of Putnam
Bank;
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·
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The
ability to devote sufficient time and energy to the performance of his or
her duties;
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·
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Independence
under applicable SEC and listing definitions;
and
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·
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Current
equity holdings in the Company.
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Finally,
if a nominee is sought for service on the audit committee, the financial and
accounting expertise of a candidate, including whether the individual qualifies
as an audit committee financial expert, would be taken into
account.
Procedures for
the Recommendation of Director Nominees by Stockholders
.
The Board of
Directors has adopted procedures for the submission of recommendations for
director nominees by stockholders. If a determination is made that an
additional candidate is needed for the Board, the Board of Directors will
consider candidates submitted by the Company’s stockholders. Stockholders can
submit qualified names of candidates for director by writing to our Corporate
Secretary, at 40 Main Street, Putnam, Connecticut 06260. The
Corporate Secretary must receive a submission at least 90 days prior to the
anniversary date of the mailing of the proxy statement relating to the preceding
year’s annual meeting of stockholders. The submission must include the following
information:
|
·
|
the
name and address of the stockholder as they appear on the Company’s books,
and number of shares of the Company’s common stock that are owned
beneficially by such stockholder (if the stockholder is not a holder of
record, appropriate evidence of the stockholder’s ownership will be
required);
|
|
|
|
|
·
|
the
name, age, address and contact information for the candidate, as well as a
statement of the candidate’s occupation or employment; and
|
|
|
|
|
·
|
a
written consent that the candidate is willing to be considered and willing
to serve as a director if nominated and
elected.
|
There have been no material changes to
these procedures since they were previously disclosed in the proxy statement for
the Company’s 2007 annual meeting of stockholders.
Submissions
that are received and that meet the criteria outlined above are forwarded to the
Chairman of the Board for further review and consideration. A
nomination submitted by a stockholder for presentation by the stockholder at an
annual meeting of stockholders must comply with the procedural and informational
requirements described in this Proxy Statement under the heading “Stockholder
Proposals.”
Stockholder
Communications with the Board
.
A stockholder of
the Company who wishes to communicate with the Board or with any individual
director may write to the Corporate Secretary of the Company, 40 Main Street,
Putnam, Connecticut 06260, Attention: Board
Administration. The letter should indicate that the author is a
stockholder and if shares are not held of record, should include appropriate
evidence of stock ownership. Depending on the subject matter,
management will:
|
|
forward
the communication to the director or directors to whom it is
addressed;
|
|
|
|
|
·
|
attempt
to handle the inquiry directly, for example where it is a request for
information about the Company or a stock-related matter; or
|
|
|
|
|
·
|
not
forward the communication if it is primarily commercial in nature, relates
to an improper or irrelevant topic, or is unduly hostile, threatening,
illegal or otherwise inappropriate.
|
At each
Board meeting, management will present a summary of all communications received
since the last meeting that were not forwarded and make those communications
available to the directors.
The Audit
Committee
.
The
Audit Committee consists of directors Paul M. Kelly, Charles W. Bentley, Jr. and
John P. Miller. Each member of the Audit Committee is considered “independent”
as defined in the NASDAQ corporate governance listing standards and under SEC
Rule 10A-3. The Board of Directors has determined that director Paul M. Kelly
qualifies as an “audit committee financial expert” as that term is defined by
the rules and regulations of the SEC. The duties and responsibilities of the
Audit Committee include, among other things:
|
·
|
retaining,
overseeing and evaluating an independent registered public accounting firm
to audit the Company’s annual financial
statements;
|
|
·
|
in
consultation with the independent auditors and the internal auditor,
reviewing the integrity of the Company’s financial reporting processes,
both internal and external;
|
|
·
|
approving
the scope of the audit in advance;
|
|
·
|
reviewing
the financial statements and the audit report with management and the
independent auditors;
|
|
·
|
considering
whether the provision by the external auditors of services not related to
the annual audit and quarterly reviews is consistent with maintaining the
auditor’s independence;
|
|
·
|
reviewing
earnings and financial releases and quarterly reports filed with the
SEC;
|
|
·
|
consulting
with the internal audit staff and reviewing management’s administration of
the system of internal accounting
controls;
|
|
·
|
approving
all engagements for audit and non-audit services by the independent
auditors; and
|
|
·
|
reviewing
the adequacy of the Audit Committee
charter.
|
The Audit
Committee met five times during the fiscal year ended June 30,
2008. The Audit Committee reports to the Board on its activities and
findings. The Board of Directors has adopted a written charter for
the Audit Committee, which is available at the Company’s website at
www.putnambank.com.
Audit
Committee Report
The following Audit Committee Report is
provided in accordance with the rules and regulations of the SEC. Pursuant to
such rules and regulations, this report shall not be deemed “soliciting
material,” filed with the SEC, subject to Regulation 14A or 14C of the SEC or
subject to the liabilities of Section 18 of the Securities and Exchange Act of
1934, as amended.
The Audit Committee has prepared the
following report for inclusion in this Proxy Statement:
As part of its ongoing activities, the
Audit Committee has:
|
·
|
Reviewed
and discussed with management the Company’s audited consolidated financial
statements for the fiscal year ended June 30,
2008;
|
|
·
|
Discussed
with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, Communications with Audit
Committees, as amended; and
|
|
·
|
Received
the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed with the independent
auditors their independence.
|
Based on the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited consolidated financial statements be included in the Company’s
Annual Report on Form 10-KSB for the fiscal year ended June 30,
2008.
This report shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
This report has been provided by the
Audit Committee:
Paul M. Kelly
Charles W. Bentley, Jr.
John P. Miller
Code
of Ethics
The Company has adopted a Code of
Ethics that is applicable to the Company’s officers, directors and employees,
including its principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing similar
functions. The Code of Ethics is available on the Company’s website at
www.putnam
bank
.com
. Amendments to
and waivers from the Code of Ethics will also be disclosed on the Company’s
website.
Executive
Compensation
The
following table sets forth for the years ended June 30, 2008 and 2007 certain
information as to the total remuneration paid by us to Mr. Borner, who serves as
Chairman and Chief Executive Officer, and the only other highly compensated
executive officer of the Company other than Mr. Borner (“Named Executive
Officers”).
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
incentive
plan
|
|
|
deferred
|
|
|
All
other
|
|
|
|
|
Name
and principal
|
|
|
|
|
|
|
|
|
|
Stock
awards
|
|
|
Option
|
|
|
compensation
|
|
|
compensation
|
|
|
compensation
|
|
|
|
|
position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
($)
(1)
|
|
|
awards
($) (1)
|
|
|
($)
(4)
|
|
|
earnings
($)(2)
|
|
($)
(3)
|
|
|
Total
($)
|
|
Thomas
A. Borner,
|
|
2008
|
|
|
186,923
|
|
|
|
0
|
|
|
|
72,125
|
|
|
|
24,454
|
|
|
|
40,000
|
|
|
|
2,493
|
|
|
|
28,912
|
|
|
|
354,907
|
|
Chairman
and Chief
|
|
2007
|
|
|
163,942
|
|
|
|
0
|
|
|
|
72,124
|
|
|
|
24,454
|
|
|
|
30,000
|
|
|
|
8,769
|
|
|
|
29,197
|
|
|
|
328,486
|
|
Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
J. Halloran, Jr.,
|
|
2008
|
|
|
152,885
|
|
|
|
0
|
|
|
|
20,195
|
|
|
|
13,585
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
20,091
|
|
|
|
231,756
|
|
President
and Chief
|
|
2007
|
|
|
135,500
|
|
|
|
0
|
|
|
|
20,195
|
|
|
|
13,585
|
|
|
|
25,000
|
|
|
|
0
|
|
|
|
19,089
|
|
|
|
213,369
|
|
Financial
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects
the amount expensed in accordance with Statement of Financial Accounting
Standards No. 123(R) during fiscal 2008 and 2007 with respect to awards of
restricted stock and stock options granted to each of the Named Executive
Officers. For a discussion of the assumptions used to establish
the valuation of the restricted stock awards and stock options, reference
is made to “Note 10 – Stock-Based Compensation” included in the Audited
Financial Statements filed as part of our Annual Report on Form 10-KSB for
the Year Ended June 30, 2008.
|
(2)
|
Reflects
the “above-market” portion of interest earned on deferred compensation,
calculated in accordance with SEC regulations as that amount of interest
in excess of 120% of the monthly federal long-term rate of 4.80% as of
June 2007.
|
(3)
|
The
compensation represented by the amounts for 2008 set forth in the All
Other Compensation column for the Named Executive Officers is detailed in
the following table.
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
on
unvested
|
|
|
Profit
|
|
|
Total
all
|
|
|
|
401(k)
plan
|
|
|
ESOP
|
|
|
insurance
|
|
|
restricted
|
|
|
sharing
|
|
|
other
|
|
|
|
contributions
|
|
|
contributions
|
|
|
premiums
|
|
|
stock
|
|
|
contributions
|
|
|
compensation
|
|
Thomas
A. Borner
|
|
$
|
2,032
|
|
|
$
|
6,420
|
|
|
$
|
360
|
|
|
$
|
6,600
|
|
|
$
|
13,500
|
|
|
$
|
28,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
J. Halloran, Jr.
|
|
$
|
1,794
|
|
|
$
|
5,322
|
|
|
$
|
360
|
|
|
$
|
1,848
|
|
|
$
|
10,767
|
|
|
$
|
20,091
|
|
(4)
|
Amounts
included in the “Non-equity incentive plan compensation” column are based
on the Company’s incentive plan, which is discussed below under “Incentive
Plan”.
|
Benefit
Plans
Insurance
Plan
.
Putnam Bank
provides its full-time officers and employees with health and life
insurance.
Deferred
Compensation Retirement Plan.
Putnam Bank maintains a deferred
compensation retirement plan for the benefit of directors designated by the
board to participate in the plan. The plan was frozen as of July 1,
2004, and no further contributions have been made to the plan since that
date. Prior to July 1, 2004, a participant was allowed to defer a
portion of his annual compensation in the form of a percentage or dollar
amount. The election, once made for a plan year, was irrevocable for
that plan year. Deferrals under the plan are credited to an account for the
participant. In its discretion, Putnam Bank was entitled to make a
contribution to the account of any participant for any plan year. As
of each valuation date, the participants’ accounts have been credited with an
investment return equal to the New York prime rate of interest, compounded
monthly.
Participants
are fully vested in their accounts at all times. The participant’s
account will be distributed to the participant (or the participant’s beneficiary
in the event of death) in periodic installments (at least annually) as elected
by the participant or the participant’s beneficiary. In the event the
annual installment exceeds $10,000, the maximum distribution period will be ten
years. In the event the participant’s account is less than $10,000,
distribution will be made in a lump sum. Distribution will be made
within 60 days of a participant’s normal or late retirement. In the
event of termination of service due to disability, distribution will be made
within 60 days following the close of the plan year in which termination of
service occurs. In the event a participant terminates service for any
reason other than normal retirement, disability or death, distribution will
commence within the later of 60 days following the close of the plan year in
which the participant terminates service or 60 days after the participant’s
election to commence payment is delivered to the plan
administrator. In the event of a participant’s death prior to
termination of service, the participant’s account will be distributed to his or
her beneficiary. If the participant dies after termination of service
but prior to the complete distribution of his account balance, the undistributed
balance will be distributed to the participant’s beneficiary in annual
installments over three years unless the beneficiary elects
otherwise.
In 2004,
the deferred compensation retirement plan was amended to permit the directors to
elect to invest their existing account balance in common stock of the
Company. A rabbi trust was established and holds only the shares of
Company common stock acquired by the plan.
Incentive Plan.
On an annual basis,
Putnam
Bank may establish a pool of money for a discretionary incentive compensation
plan for the benefit of its employees, including the Named Executive
Officers. The Board of Directors is responsible for formulating an
amount to be distributed, based upon Putnam Bank’s performance. To be
eligible for an award, a participant must be employed by April 1 of the plan
year and must remain employed through the date of disbursement. For
the year ended June 30, 2008, the Named Executive Officers received bonuses of
approximately 19.1% of their respective base salaries.
Outstanding
Equity Awards at Year End
. The following table sets forth
information with respect to outstanding equity awards as of June 30, 2008 for
the Named Executive Officers.
OUTSTANDING
EQUITY AWARDS AT JUNE 30, 2008 (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
awards
|
|
Stock
awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
incentive
plan
|
|
|
|
Equity
|
|
|
|
|
|
Equity
|
awards:
|
|
|
|
incentive
plan
|
|
|
|
|
|
incentive
plan
|
market
or
|
|
|
|
awards:
|
|
|
|
|
|
awards:
|
payout
value
|
|
Number
of
|
Number
of
|
number
of
|
|
|
|
|
|
number
of
|
of
unearned
|
|
securities
|
securities
|
securities
|
|
|
|
Number
of
|
Market
value
|
unearned
shares,
|
shares,
units
|
|
underlying
|
underlying
|
underlying
|
|
|
|
shares
or units
|
of
shares or
|
units
or other
|
or
other rights
|
|
unexercised
|
unexercised
|
unexercised
|
Option
|
Option
|
|
of
stock that
|
units
of stock
|
rights
that
|
that
have
|
|
options
|
options
|
unearned
|
exercise
|
expiration
|
|
have
not
|
that
have not
|
have
not
|
not
vested
|
Name
|
exercisable
(#)
|
unexercisable
(#)
|
options
(#)
|
price
($)
|
date
|
|
vested
(#)
|
vested
($)
|
vested
(#)
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
Thomas
A. Borner
|
24,496
|
36,742
|
-------
|
10.60
|
11/07/15
|
|
20,412
|
183,504
|
-------
|
-------
|
Robert
J. Halloran, Jr.
|
13,608
|
20,413
|
-------
|
10.60
|
11/07/15
|
|
5,715
|
51,378
|
-------
|
-------
|
(1)
|
All
equity awards noted in this table were granted pursuant to the PSB
Holdings, Inc. 2005 Stock-Based Incentive Plan, which was approved by
stockholders on October 21, 2005, and represent all awards held at June
30, 2008 by the Named Executive Officers. On November 7, 2005,
the Named Executive Officers were granted shares of restricted stock and
stock options. Shares of restricted stock vest at a rate of 20%
per year commencing on November 7, 2006. Stock options vest at
a rate of 20% per year commencing on November 7, 2006, have an exercise
price of $10.60, the closing price on the date of grant, and expire ten
years from the date of grant.
|
Stock
Benefit Plans
Employee Stock
Ownership Plan and Trust
. The Board of Directors of Putnam
Bank has adopted an employee stock ownership plan. Employees who are
at least 21 years old with at least one year of employment with Putnam Bank are
eligible to participate. The employee stock ownership plan trust has borrowed
funds from the Company and used those funds to purchase 257,062 shares of
Company common stock. Collateral for the loan is the common stock
purchased by the employee stock ownership plan. The loan is being repaid
principally from Putnam Bank discretionary contributions to the employee stock
ownership plan over a period of up to 20 years. The loan documents
provide that the loan may be repaid over a shorter period, without penalty for
prepayments. The interest rate for the loan is a floating rate equal to the
prime rate. Shares purchased by the employee stock ownership plan are
held in a suspense account for allocation among participants as the loan is
repaid.
Contributions
to the employee stock ownership plan and shares released from the suspense
account in an amount proportional to the repayment of the employee stock
ownership plan loan will be allocated among employee stock ownership plan
participants on the basis of compensation in the year of allocation. Benefits
under the plan vest at the rate of 20% per year, starting upon completion of
three years of credited service, and will be fully vested upon completion of
seven years of credited service, with credit given to participants for years of
credited service with Putnam Bank’s mutual predecessor prior to the adoption of
the plan. A participant’s interest in his account under the plan
fully vests in the event of termination of service due to a participant’s early
or normal retirement, death, disability, or upon a change in control (as defined
in the plan). Vested benefits are payable in the form of common stock
and/or cash. Putnam Bank’s contributions to the employee stock ownership plan
are discretionary, subject to the loan terms and tax law
limits. Therefore, benefits payable under the employee stock
ownership plan cannot be estimated. Pursuant to SOP 93-6, the Company
records compensation expense each year in an amount equal to the fair market
value of the shares released from the suspense account. In the event
of a change in control, the employee stock ownership plan will
terminate.
Stock-Based
Incentive Plan
.
The Company has adopted the PSB Holdings, Inc. 2005 Stock-Based Incentive
Plan (the “Incentive Plan”), to provide officers, employees and directors of the
Company or the Bank with additional incentives to share in the growth and
performance of the Company. The Incentive Plan was approved by
stockholders on October 21, 2005.
The
Incentive Plan authorizes the issuance of up to 476,298 shares of Company common
stock pursuant to grants of incentive and non-statutory stock options, stock
appreciation rights, reload options, and restricted stock awards, provided that
no more than 136,085 shares may be issued as restricted stock awards, and no
more than 340,213 shares may be issued pursuant to the exercise of stock
options.
Employees
and outside directors of the Company or its subsidiaries are eligible to receive
awards under the Incentive Plan.
The
Incentive Plan provides for awards in the form of stock options, reload options
(“Reload Options”), and restricted stock awards. Stock options
granted under the Incentive Plan may be either “Incentive Stock Options” as
defined under Section 422 of the Internal Revenue Code or stock options not
intended to qualify as such (“non-statutory stock
options”). The Reload Options entitle the option holder, who
has delivered shares that he or she owns as payment of the exercise price for
option stock, to a new option to acquire additional shares equal in amount to
the shares he or she has traded in. Reload Options may also be granted to
replace option shares retained by the employer for payment of the option
holder’s withholding tax. The option price at which additional shares
of stock can be purchased by the option holder through the exercise of a Reload
Option is equal to the market value of the previously owned stock at the time it
was surrendered. The option period during which the Reload Option may
be exercised expires at the same time as that of the original option that the
holder has exercised.
Pursuant
to the Incentive Plan, on November 7, 2005, options to purchase 23,815 shares
were granted to each non-employee director of the Company, except director
Richard A. Loomis, who was granted options to purchase 10,206
shares. All such options were granted with an exercise price of
$10.60 per share, the fair market value of the underlying shares on the date of
the award. Awards vest in equal installments at a rate of 20% per
year commencing on November 7, 2006. Pursuant to the Incentive
Plan, on May 25, 2007, options to purchase 3,000 shares were granted to director
John P. Miller and Charles W. Bentley, Jr. All such options were
granted with an exercise price of $10.70 per share, the fair market value of the
underlying shares on the date of the award. Awards vest in equal
installments at a rate of 20% per year commencing on May 25,
2008. Awards will be 100% vested upon termination of employment due
to death or disability, or following a change of control.
Pursuant
to the Incentive Plan, on November 7, 2005, 9,526 shares of restricted stock
were awarded to each non-employee director of the Company, except director
Loomis, who was granted 4,083 shares. The market value per share of
the common stock was $10.60 on the date of the grant, and as of such date the
aggregate value of the 9,526 shares awarded to each outside director was
$100,976, and the aggregate value of the shares awarded to director Loomis was
$43,280. Awards vest in equal installments at a rate of 20% per year commencing
on November 7, 2006. Pursuant to the Incentive Plan, on
May 25, 2007, 1,000 shares of restricted stock were awarded to directors John P.
Miller and Charles W. Bentley, Jr. The market value per share of the
common stock was $10.70 on the date of the grant, and as of such date the
aggregate value of the 1,000 shares awarded to each outside director was
$10,700. Awards vest in equal installments at a rate of 20% per year commencing
on May 25, 2008. Awards will be 100% vested upon termination of
employment due to death or disability, or following a change of
control.
Set forth
below is information as of June 30, 2008 regarding equity compensation
plans. Other than the ESOP, the Company does not have any equity
compensation plans that were not approved by its stockholders.
|
Number
of Securities to be
|
|
|
|
Issued
upon Exercise of
|
|
Number
of Securities
|
|
Outstanding
Options and
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Weighted
Average
|
Remaining
Available for
|
Plan
|
Rights
|
Exercise
Price
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Issuance
under the Plans
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Equity
compensation plans
|
|
|
|
approved
by stockholders
|
390,115
(1)
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$10.62
(2)
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86,183
(3)
|
|
|
|
|
Equity
compensation plans
|
|
|
|
not
approved by stockholders
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-------
|
-----
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-------
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Total
|
390,115
(1)
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$10.62
(2)
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86,183
(3)
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_____________
(1)
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Includes
120,368 shares of restricted stock and 269,747 options to purchase shares
of common stock awarded under the Incentive
Plan.
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(2)
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Relates
to 269,747 outstanding stock
options.
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(3)
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Includes
15,717 shares of restricted stock available for future issuance and 70,466
options to purchase shares of common stock under the Incentive
Plan.
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Directors’
Compensation
The following table sets forth for the
year ended June 30, 2008 certain information as to the total remuneration paid
to directors other than Mr. Borner and Mr. Halloran.
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DIRECTOR
COMPENSATION TABLE FOR THE YEAR ENDED JUNE 30, 2008
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Non-equity
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Nonqualified
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Fees
earned
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Stock
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|
Option
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|
incentive
plan
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deferred
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All
other
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|
or
paid in
|
|
awards
|
|
awards
|
|
compensation
|
compensation
|
compensation
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Name
|
cash
($)
|
|
($)
(1)
|
|
($)
(1)
|
|
($)
|
earnings
($)
|
($)
|
|
|
|
|
|
|
|
|
|
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Charles
W. Bentley, Jr.
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19,050
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|
2,140
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(3)
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934
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(3)
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0
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0
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0
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Paul
M. Kelly
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18,850
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20,195
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(4)
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9,510
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(4)
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0
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16
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0
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Charles
H. Puffer
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18,800
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20,195
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(5)
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9,510
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(5)
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0
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589
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0
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Richard
A. Loomis
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18,550
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8,656
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(6)
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4,075
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(6)
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0
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84
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0
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John
P. Miller
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18,400
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2,140
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(7)
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934
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(7)
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0
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0
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0
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Mary
E. Patenaude
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17,600
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20,195
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(8)
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9,510
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(8)
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0
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8
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0
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Jitendra
K. Sinha
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10,650
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0
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0
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0
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0
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0
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Maurice
P. Beaulac (9)
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7,600
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42,562
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(9)
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0
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0
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0
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0
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Totals:
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129,500
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116,083
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34,473
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0
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697
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0
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(1)
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Reflects
the amount expensed in accordance with Statement of Financial Accounting
Standards No. 123(R) during fiscal 2008 with respect to awards of
restricted stock and stock options granted to each
Director. For a discussion of the assumptions used to establish
the valuation of the restricted stock awards and stock options, reference
is made to “Note 10 – Stock-Based Compensation” included in the Audited
Financial Statements filed as part of our Annual Report on Form 10-KSB for
the Year Ended June 30, 2008.
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(2)
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Reflects
the “above-market” portion of interest earned on deferred compensation,
calculated in accordance with SEC regulations as that amount of interest
in excess of 120% of the monthly federal long-term rate of 4.80% as of
June 2007.
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(3)
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At
June 30, 2008, Mr. Bentley had 600 vested stock options outstanding, 2,400
unvested stock options and 800 unvested shares of restricted common
stock.
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(4)
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As
of June 30, 2008, Mr. Kelly had 9,526 vested stock options outstanding,
14,289 unvested stock options and 5,715 unvested shares of restricted
common stock.
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(5)
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As
of June 30, 2008, Mr. Puffer had 9,526 vested stock options outstanding,
14,289 unvested stock options and 5,715 unvested shares of restricted
common stock.
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(6)
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As
of June 30, 2008, Mr. Loomis had 4,082 vested stock options outstanding,
6,124 unvested stock options and 2,449 unvested shares of restricted
common stock.
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(7)
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As
of June 30, 2008, Mr. Miller had 600 vested stock options outstanding,
2,400 unvested stock options and 800 unvested shares of restricted common
stock.
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(8)
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As
of June 30, 2008, Ms. Patenaude had 9,526 vested stock options
outstanding, 14,289 unvested stock options and 5,715 unvested shares of
restricted common stock.
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(9)
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Mr.
Beaulac retired effective November 2, 2007. As of June 30,
2008, Mr. Beaulac had 23,815 vested stock options outstanding, no unvested
stock options and no unvested shares of restricted common
stock.
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The
Company currently pays no fees for service on the Board of Directors or Board
committees. Putnam Bank pays each non-employee director an annual
retainer of $8,000 and $300 for each board meeting that he/she
attends. All non-employee Board committee members receive a fee of
$150 for each committee meeting attended except that committee chairpersons
receive a fee of $200 for each committee meeting attended. Putnam Bank paid fees
totaling $129,500 to directors for the fiscal year ended June 30,
2008.
Transactions
with Certain Related Persons
All
transactions between the Company and its executive officers, directors, holders
of 10% or more of the shares of its common stock and affiliates thereof, are on
terms no less favorable to the Company than could have been obtained by it in
arm’s-length negotiations with unaffiliated persons. Such
transactions must be approved by a majority of the independent directors of the
Company not having any interest in the transaction. In the ordinary
course of business, Putnam Bank makes loans available to its directors, officers
and employees. These loans are made in the ordinary course of
business on substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable loans with persons
not related to Putnam Bank. Management believes that these loans
neither involve more than the normal risk of collectibility nor present other
unfavorable features.
Section
402 of the Sarbanes-Oxley Act of 2002 generally prohibits an issuer from: (1)
extending or maintaining credit; (2) arranging for the extension of credit; or
(3) renewing an extension of credit in the form of a personal loan for an
officer or director. There are several exceptions to this general
prohibition, one of which is applicable to the
Company. Sarbanes-Oxley does not apply to loans made by a depository
institution that is insured by the FDIC and is subject to the insider lending
restrictions of the Federal Reserve Act. All loans to Putnam Bank’s
directors and officers are made in conformity with the Federal Reserve Act and
applicable regulations.
In
accordance with the listing standards of the NASDAQ Stock Market, any
transactions that would be required to be reported under this section of this
Proxy Statement must be approved by our audit committee or another independent
body of the board of directors. In addition, any transaction with a
director is reviewed by and subject to approval of the members of the board of
directors who are not directly involved in the proposed transaction to confirm
that the transaction is on terms that are no less favorable as those that would
be available to us from an unrelated party through an arms-length
transaction.
PROPOSAL 2—RATIFICATION OF
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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The Audit
Committee of the Board of Directors of the Company has approved the engagement
of Shatswell, MacLeod & Company, P.C. to be the Company’s independent
registered public accounting firm for the 2009 fiscal year, subject to the
ratification of the engagement by the Company’s stockholders. Stockholder
ratification of the selection of Shatswell, MacLeod & Company,
P.C. is required by the Company’s Bylaws. At the Annual
Meeting, stockholders will consider and vote on the ratification of the
engagement of Shatswell, MacLeod & Company, P.C. for the Company’s fiscal
year ending June 30, 2009.
On July 16, 2008, the Audit Committee
of the Company dismissed Whittlesey & Hadley, P.C. as the Company’s
principal accountants. The dismissal was effective on September 9,
2008, the date of issuance of the audit report for the Company’s audited
financial statement.
The audit reports of Whittlesey &
Hadley, P.C. on the consolidated financial statements of the Company as of and
for the years ended June 30, 2008 and 2007 did not contain an adverse opinion or
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles.
During the fiscal years ended June 30,
2008 and 2007 and the subsequent interim period through September 9, 2008, there
were no: (1) disagreements with Whittlesey & Hadley, P.C. on any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to Whittlesey &
Hadley, P.C.’s satisfaction, would have caused Whittlesey & Hadley, P.C. to
make reference in connection with its opinion to the subject matter, or (2)
reportable events under Item 304(a)(1)(v) of Regulation S-K.
The Company requested that Whittlesey
& Hadley, P.C. furnish it with a letter addressed to the SEC stating whether
or not Whittlesey & Hadley, P.C. agreed with the above statements with
respect to Whittlesey & Hadley, P.C. A copy of Whittlesey &
Hadley, P.C.’s letter to the SEC dated September 11, 2008 was previously filed
as an exhibit to the Current Report on Form 8-K, filed with the SEC on September
15, 2008.
On July 16, 2008, the Company engaged
Shatswell, MacLeod & Company, P.C. as the Company’s new principal
accountants for the fiscal year ending June 30, 2009. The engagement
was approved by the Audit Committee of the Board of Directors of the
Company. During the fiscal years ended June 30, 2008 and 2007, and
the subsequent interim period prior to the engagement of Shatswell, MacLeod
& Company, P.C., the Company did not consult with Shatswell, MacLeod &
Company, P.C. regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K.
A
representative of Whittlesey & Hadley, P.C. is expected to attend the
Meeting to respond to appropriate questions and to make a statement, if deemed
appropriate. A representative of Shatswell, MacLeod & Company,
P.C. is not expected to attend the Meeting.
Audit
Fees
. The fees for professional services rendered by
Whittlesey & Hadley, P.C. (the “Independent Auditor”) for the audit of the
Company’s annual financial statements and for the review of the consolidated
financial statements included in the Company’s quarterly reports on Form 10-QSB
were $109,150 for 2008 and $103,000 for 2007.
Audit-Related
Fees
. During the past two fiscal years, there were no
aggregate fees for professional services by the Independent Auditor that were
reasonably related to the performance of the audit.
Tax
Fees
. During the past two fiscal years, the fees for
professional services by the Independent Auditor for tax services such as tax
advice, tax planning, tax compliance and the review of tax returns were $11,500
for 2008 and $9,000 for 2007. All tax fees by the Independent Auditor during
2008 were pre-approved by the Audit Committee.
All Other
Fees
. There were no aggregate fees billed to the Company by
the Independent Auditor during the past two years that are not described
above.
The Audit
Committee considered whether the provision of non-audit services was compatible
with maintaining the independence of its independent registered public
accounting firm. The Audit Committee concluded that performing such
services in fiscal 2008 did not affect the independent registered public
accounting firm’s independence in performing its function as auditors of the
Company’s financial statements.
Policy
on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent
Auditor
The Audit
Committee’s policy is to pre-approve all audit and non-audit services provided
by the Company’s independent registered public accounting firm. These services
may include audit services, audit-related services, tax services and other
services. Pre-approval is generally provided for up to one year and
any pre-approval is detailed as to particular service or category of services
and is generally subject to a specific budget. The Audit Committee
has delegated pre-approval authority to its Chairman when expedition of services
is necessary. The independent registered public accounting firm and
management are required to periodically report to the full Audit Committee
regarding the extent of services provided by the independent registered public
accounting firm in accordance with this pre-approval, and the fees for the
services performed to date. All tax fees for the past two fiscal
years were pre-approved by the Audit Committee.
Vote
requirement and recommendation
In order
to ratify the selection of Shatswell, MacLeod & Company, P.C. as the
independent registered public accounting firm for the 2009 fiscal year, the
proposal must receive at least a majority of the votes cast “FOR” or “AGAINST”,
either in person or by proxy, in favor of such ratification.
The Audit Committee and the Board of
Directors recommend a vote “FOR” the ratification of
Shatswell, MacLeod & Company,
P.C., as the Company’s independent registered public accounting firm for the
2009 fiscal year.
In order
to be eligible for inclusion in the proxy materials for next year’s Annual
Meeting of Stockholders, any stockholder proposal to take action at such meeting
must be received at the Company’s executive office, 40 Main Street, Putnam,
Connecticut 06260, no later than June 4, 2009. Any such proposals shall be
subject to the requirements of the proxy rules adopted under the Exchange
Act.
The Board
of Directors is not aware of any business to come before the Annual Meeting
other than the matters described above in this proxy
statement. However, if any matters should properly come before the
Annual Meeting, it is intended that holders of the proxies will act as directed
by a majority of the Board of Directors, except for matters related to the
conduct of the Annual Meeting, as to which they shall act in accordance with
their best judgment. The Board of Directors intends to exercise its
discretionary authority to the fullest extent permitted under the Exchange
Act.
ADVANCE NOTICE OF BUSINESS TO
BE BROUGHT BEFORE AN ANNUAL
MEETING
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The
Bylaws of the Company provide an advance notice procedure for certain business
or nominations to the Board of Directors to be brought before an annual meeting.
In order for a stockholder to properly bring business before an annual meeting,
or to propose a nominee to the Board, the stockholder must give written notice
to the Secretary of the Company not less than five days prior to the date of the
annual meeting. No other proposal shall be acted upon at the annual
meeting. A stockholder may make any other proposal at the annual
meeting and the same may be discussed and considered, but unless stated in
writing and filed with the Secretary at least five days prior to the annual
meeting, the proposal will be laid over for action at an adjourned, special or
annual meeting taking place 30 days or more thereafter.
The date
on which the next Annual Meeting of Stockholders is expected to be held is
November 6, 2009. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the 2009 Annual
Meeting of Stockholders must be made in writing and delivered to the Secretary
of the Company no later than November 1, 2009.
The cost
of solicitation of proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of common stock. In addition to solicitations by
mail, directors, officers and regular employees of the Company may solicit
proxies personally or by telegraph or telephone without additional
compensation.
The
Company’s 2008 Annual Report to Stockholders has been mailed to all stockholders
of record as of the Record Date. Any stockholder who has not received
a copy of such Annual Report may obtain a copy by writing the
Company. Such Annual Report is not to be treated as a part of the
proxy solicitation material nor as having been incorporated herein by
reference.
A
COPY OF THE COMPANY’S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
JUNE 30, 2008, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD
DATE UPON WRITTEN OR TELEPHONIC REQUEST TO ROBERT J. HALLORAN, JR., CORPORATE
SECRETARY, PSB HOLDINGS, INC., 40 MAIN STREET, PUTNAM, CONNECTICUT 06260, OR
CALL AT (860) 928-6501.
BY ORDER OF THE BOARD OF
DIRECTORS
Robert J. Halloran, Jr.
Corporate Secretary
Putnam,
Connecticut
October
2, 2008
REVOCABLE
PROXY
PSB
HOLDINGS, INC.
ANNUAL
MEETING OF STOCKHOLDERS
November 7,
2008
The
undersigned hereby appoints the official proxy committee consisting of the Board
of Directors with full powers of substitution to act as attorneys and proxies
for the undersigned to vote all shares of common stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Stockholders (“Annual
Meeting”) to be held at the Community Room of Quinebaug Valley Community
College, located at 742 Upper Maple Street, Danielson, Connecticut on
November 7, 2008 at 11:00 a.m., Connecticut time. The official proxy
committee is authorized to cast all votes to which the undersigned is entitled
as follows:
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FOR
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VOTE
WITHHELD
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FOR
ALL
EXCEPT
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1.
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The
election as directors of all nominees listed below, each to serve for the
term specified after his or her name:
Mary
E. Patenaude (three-year term)
Robert
J. Halloran, Jr. (three-year term)
Jitendra
K. Sinha (three-year term)
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¨
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¨
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o
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INSTRUCTION:
To withhold authority to vote for any
individual
nominee, mark "For All Except" and write that
nominee's
name in the space provided below.
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FOR
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AGAINST
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ABSTAIN
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2.
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The
ratification of Shatswell, MacLeod & Company, P.C. as the
Company’s independent registered public accounting firm for the fiscal
year ending June 30, 2009.
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¨
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¨
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¨
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The
Board of Directors recommends a vote “FOR” Proposal 1 and Proposal
2.
THIS
PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY, IF SIGNED, WILL BE VOTED “FOR” PROPOSALS 1 AND 2. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED AS
DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT
TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE
ANNUAL MEETING.
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Should
the undersigned be present and elect to vote at the Annual Meeting or at any
adjournment thereof and after notification to the Secretary of the Company at
the Annual Meeting of the stockholder’s decision to terminate this proxy, then
the power of said attorneys and proxies shall be deemed terminated and of no
further force and effect. This proxy may also be revoked by sending
written notice to the Secretary of the Company at the address set forth on the
Notice of Annual Meeting of Stockholders, or by the filing of a later proxy
prior to a vote being taken on a particular proposal at the Annual
Meeting.
The
undersigned acknowledges receipt from the Company prior to the execution of this
proxy of notice of the Annual Meeting, a Proxy Statement dated October 2, 2008,
and audited financial statements.
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Dated:
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¨
Check Box
if You Plan
to
Attend Annual Meeting
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PRINT
NAME OF STOCKHOLDER
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PRINT
NAME OF STOCKHOLDER
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SIGNATURE
OF STOCKHOLDER
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SIGNATURE
OF STOCKHOLDER
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Please
sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full
title.
Please
complete and date this proxy and return it promptly
in
the enclosed postage-prepaid
envelope.
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