UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

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Bar Harbor Bankshares

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BAR HARBOR BANKSHARES   

82 Main Street

Bar Harbor, ME 04609

April 9, 20157, 2016

Dear Shareholder:

The 2015 Annual2016Annual Meeting of the Shareholders of Bar Harbor Bankshares will be held at 11:00 a.m. EDT on Tuesday, May 19, 201517, 2016, at the Bar Harbor Club located at 111 West Street in Bar Harbor, Maine.  Our directors and officers join me in inviting you to attend this meeting and the reception following. The Notice of Annual Meeting, Proxy Statement and Proxy Card are enclosed, along with the Company’s 20142015 Summary Annual Report and Annual Report on Form 10-K.

The accompanying Notice of Annual Meeting of Shareholders describes matters to be acted upon at the Annual Meeting. Please give these materials your prompt attention. In addition to the formal items of business, management will report on the operations and activities of Bar Harbor Bankshares and Bar Harbor Bank & Trust, and you will have an opportunity to ask questions.

The Board of Directors has determined that an affirmative vote on the matters to be considered at the Annual Meeting is in the best interests of Bar Harbor Bankshares and its shareholders and unanimously recommends a vote “FOR” Proposals 1, 2, 3, 4 and 5.3. We ask that you complete, sign, date and mail promptly the enclosed proxy card in the return envelope, or use telephone or internet voting, to ensure that your shares are represented and voted at the meeting.  Shareholders who attend the Annual Meeting may withdraw their proxy and vote in person if they wish to do so. Your vote is extremely important, so please act at your earliest convenience.

We look forward to seeing you on May 19, 2015.17, 2016.  Please join us for the reception even if you are unable to attend the business meeting.

Very truly yours,

/s/ Curtis C. Simard

Curtis C. Simard

President and

Chief Executive Officer

Enclosures

BAR HARBOR BANKSHARES

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 19, 201517, 2016

     Notice is hereby given that the Annual Meeting of the Shareholders of Bar Harbor Bankshares (the “Annual(“the Annual Meeting”) will be held at the Bar Harbor Club at 111 West Street in Bar Harbor, Maine, on Tuesday, May 19, 2015,17, 2016, at 11:00 a.m. EDT to consider and act upon the following proposals:

1.

Election of 1211 persons to serve as directors for a term of one year;

2.

Approval of a non-binding, advisory resolution on the compensation of the Named Executive Officers (“Say on Pay”);

3.

Ratification of the appointment of KPMGRSM US LLP as our independent registered public accounting firm for the year ending December 31, 2015;2016;

4.

Approval of the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2015;

5.

Approval of an amendment to our Articles of Incorporation, as amended, to increase the number of shares of common stock authorized for issuance from 10,000,000 shares to 20,000,000; and

6.

Consideration of any other business as may properly come before the Annual Meeting or any adjournment thereof.

The Board of Directors has fixed the close of business on March 24, 201522, 2016 as the record date for determining the shareholders of the Company entitled to receive notice of, and to vote at, the Annual Meeting (the “Record(“the Record Date”).  Only shareholders of record of the Company’s common stock at the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting.  

Your vote is important.  You are urged to sign and return the enclosed proxy in the postage prepaid envelope as promptly as possible whether or not you plan to attend the meeting in person. You may also deliver your vote by telephone or Internet by following the instructions on your proxy card or voting instructions form.   Submitting a proxy or voting instructions will not prevent you from attending the Annual Meeting and voting in person, provided that you withdraw your proxy. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from the record holder.

A list of shareholders entitled to vote at the Annual Meeting will be available for inspection by any shareholder of Bar Harbor Bankshares at any time prior to or during the Annual Meeting or any adjournment thereof.

By Order of the Board of Directors

/s/ Marsha C. Sawyer

Marsha C. Sawyer, Clerk

April 9, 2015

7, 2016

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19, 201517, 2016

The proxy statement, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 20142015 and our 20142015 Summary Annual Report are available free of charge on the Shareholder Relations section of our websitewww.bhbt.com.  

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TABLE OF CONTENTS

BAR HARBOR BANKSHARES

82 Main Street

Bar Harbor, ME

ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD TUESDAY, MAY 19, 201517, 2016

PROXY STATEMENT

Information Aboutabout the Annual Meeting

General

This proxy statement is furnished to the shareholders of Bar Harbor Bankshares (the “Company”(“the Company”) in connection with the solicitation of proxies on behalf of the Board of Directors (the “Board”(“the Board”) for use at the Annual Meeting. The Annual Meeting will be held on Tuesday, May 19, 2015,17, 2016, at 11:00 a.m. EDT at the Bar Harbor Club located at 111 West Street in Bar Harbor, Maine. The official Notice of the Annual Meeting of Shareholders accompanies this Statement. A Form of Proxy for use at the meeting and a return envelope for the proxy are enclosed.

The Notice of Annual Meeting, proxy statement, and proxy card were first mailed to the Company’s shareholders on or about April 9, 20157, 2016 to solicit proxies for the Annual Meeting.

In absence of specific instructions to the contrary, shares represented by properly executed proxies received by the Company, including unmarked proxies, will be voted “FOR” Proposals 1, 2, 3, 4 and 5.3.  Except for procedural matters incidental to the conduct of the Annual Meeting, the Board does not know of any matters other than those described in the Notice of Annual Meeting of Shareholders that are to come before the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in the proxy will vote the shares represented by such proxy on such matters as determined by a majority of the Board.  

Record Date; Quorum

Only shareholders of record as of March 24, 2015ofMarch 22, 2016 will be entitled to notice of, to attend, and to vote at, the Annual Meeting. As of the Record Date, 5,958,6276,010,473 shares of the Company’s common stock, $2.00 par value, were outstanding and entitled to vote at the Annual Meeting. The presence at the Annual Meeting, either in person or by proxy, of the holders of not less than a majority of the shares entitled to vote at any meeting will constitute a quorum.  If there is no quorum, the holders of a majority of shares present at the Annual Meeting in person or represented by proxy may adjourn the Annual Meeting to another date.

Voting Rights

Each share is entitled to cast one vote for each matter to be voted on at the Annual Meeting. Cumulative voting is not permitted.

Required Vote

Proposal 1: Election of Directors. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.

Proposal 2: Approval of a Non-binding Advisory Resolution on the Compensation of the Named Executive Officers.  The approval of this proposal will require that a majority of votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote be cast “FOR” this proposal.

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Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm. The approval of this proposal will require that a majority of votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote be cast “FOR” this proposal.

Proposal 4: Approval of the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2015.  The approval of the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2015 will require that a majority of votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote be cast “FOR” this proposal.

Proposal 5: Approval of an Amendment to the Company’s Articles of Incorporation to Increase the Authorized Shares of Common Stock.  The approval of the amendment will require that a majority of all the votes entitled to be cast on this proposal be voted “FOR” the proposal.

Effect of Broker Non-Votes and Abstentions

A broker non-vote occurs when a broker or other nominee holder, such as a bank, submits a proxy representing shares that another person actually owns, and that person has not provided specific voting instructions to the broker or other nominee holder. Brokers who hold their customers’ shares in “street name” may, under the applicable rules of the exchange and other self-regulatory organizations of which the brokers are members, sign and submit proxies for such shares and may vote such shares on routine matters, which typically include the ratification of the appointment of our independent registered public accounting firm. The election of directors is no longer considered “routine.” Proposals 1 2, 4 and 52 are considered “non-routine” and Proposal 3 is considered “routine.”

The inspector of election will treat abstentions and broker non-votes as shares that are present and entitled to vote for purposes of determining the presence of a quorum.  Abstentions and broker non-votes, if they occur in connection with Proposals 1, 2 and 3, 4 or 5, will not, in the case of Proposals 1, 2 and 3, be counted as “votes” and will have no effect on the proposals. However, abstentions will have the effect of votes against Proposals 4 and 5.  

Broker non-votes, if they occur in connection with Proposals 1, 2, 3, 4 or 5, will not, in the case of Proposals 1, 2, 3 and 4, be counted as votes and will have no effect on the proposals.  However, broker non-votes will have the effect of votes against Proposal 5.  

Voting Procedures

Voting by Mail.   Shareholders can ensure that their shares are voted at the Annual Meeting by completing, signing, dating and mailing the enclosed proxy card in the enclosed, postage prepaid envelope.  

Voting by Telephone or the Internet.   If you choose to vote by telephone or the Internet, instructions to do so are set forth on the enclosed proxy card.  If you vote by telephone or the Internet, you do not have to mail in your proxy card, but your vote must be received by the voting deadline set forth on the proxy card.

Voting in Person.  You may attend the Annual Meeting and vote in person.

If your shares are held by a bank, broker, or other nominee, please follow the instructions provided with your proxy materials supplied by your bank or broker.  

If you sign the proxy card, but do not make specific choices, the proxy will vote your shares “FOR” Proposals 1, 2 3, 4 and 53 as set forth in the Notice of Annual Meeting of Shareholders.

If any other matters are properly presented at the Annual Meeting, the proxy will be voted with respect to any such matter by the proxy holders in accordance with the recommendations of the Board. As of the date

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of this proxy statement, it is not anticipated that any matters will be presented at the Annual Meeting other than those set forth in the accompanying Notice of the Annual Meeting of Shareholders.  

Revocability of Proxies

Any shareholder who executes and delivers a proxy has the right to revoke it at any time before it is exercised. Revocation may be made prior to the Annual Meeting by (i) filing a written revocation with our Company Clerk, (ii) entering a new vote over the Internet or by telephone, (iii) by submitting a duly executed proxy card bearing a later date, or (iv) by revoking the proxy personally at the Annual Meeting prior to the voting of the proxy. If your shares are held in street name, you should follow the instructions of your broker, bank or nominee regarding the revocations of proxies.  

Your personal attendance at the Annual Meeting does not revoke your proxy. Your last vote, prior to or at the Annual Meeting, is the vote that will be counted.

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Solicitation of Proxies   

Proxies are being solicited by the Board principally through the mail. The Board and management of the Company may also solicit proxies personally, or by telephone, e-mail, or facsimile transmission. The Company will bear the cost of soliciting proxies from its shareholders.   In addition to using the mail, proxies may be solicited by personal interview, telephone, and electronic communication.  The Company requests that bank, brokerage houses, other institutions, nominees, and fiduciaries forward their proxy soliciting material to their principals and obtain authorization for the execution of proxies.   Officers and other employees of the Company and its wholly owned bank subsidiary, Bar Harbor Bank & Trust (“BHBT”), acting on the Company’s behalf may solicit proxies personally.   The Company may pay compensation for soliciting proxies, and will, upon request pay the standard charges and expenses of banks, brokerage houses, other institutions, nominees and fiduciaries for forwarding proxy materials to and obtaining proxies from their principals.   In addition, the Company has engaged Alliance Advisors to assist in the solicitation of the proxies for a fee of $6,000 plus reimbursement of customary expenses.  The entire expense of solicitation which include the costs of preparing, assembling, and mailing the proxy materials will be borne by the Company.

Obtaining an Annual Report on Form 10-K

The Company will provide without charge upon the written request of any shareholder a copy of the proxy statement and our Annual Report on Form 10-K, including the financial statements and the financial statement schedules, required to be filed with the Securities and Exchange Commission (“the SEC”) for the fiscal year ended December 31, 2014.2015. Requests should be directed to Bar Harbor Bankshares, Attn:  Shareholder Relations, 82 Main Street, Bar Harbor, Maine  04609.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be Held on May 19, 201517, 2016

This proxy statement, along with the our Annual Report on Form 10-K for the fiscal year ended December 31, 20142015 and our 20142015 Summary Annual Report are available free of charge on the Shareholder Relations section of our websitewww.bhbt.com.

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PROPOSAL 1

ELECTION OF DIRECTORS

At the Annual Meeting of Shareholders, 1211 director-nominees will stand for election to serve until the 20162017 Annual Meeting of Shareholders and until each director’s successor is elected and qualified. Each director-nominee has consented to serve, and to the use of his or her name in this proxy statement. 11Ten of the 12eleven director-nominees currently serve on the Board with the exception of Daina H. Hill,David M. Colter, who is a new director nominee this year.   Messrs. Carter, HannahDodge and Murphy,Colwell, directors of the Company since 2003, 20061987 and 2002,1991, respectively, will not stand for re-election this year pursuant to the age restriction contained in our Bylaws.

The Board has determined the majorityall but one of the director-nominees are “independent directors” as required in accordance with applicable laws, regulations, and NYSE MKT LLC (formerly the American Stock Exchange or “AMEX” and hereinafter “NYSE MKT”) listing requirements. The exception is director-nominee Curtis C. Simard who currently serves as President and Chief Executive Officer (“CEO”) of the Company.  Mr. Simard is not a member of the Audit, Compensation, or Governance Committees.

For additional information on each nominee, please see the section entitled “Directors and Executive Officers” located elsewhere in this proxy statement.

Vote Required

Directors will be elected by a plurality of the votes cast at the Annual Meeting by the holders of shares present or represented by proxy and entitled to vote on the election of directors. Plurality means that the individuals who receive the largest number of “FOR” votes will be elected as directors. If you do not vote for a nominee, or you indicate “WITHHOLD” for any nominee on your proxy card, your vote will not count “FOR” or “AGAINST” the nominee. You may not vote your shares cumulatively in the election of directors.  Brokers do not have discretionary authority to vote shares on this proposal without direction from the beneficial owner.  Therefore, broker non-votes will have no effect on the vote.

Our Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE ELECTION OF THE 12ELEVEN PERSONS NOMINATED AS DIRECTORS IN THE PROXY.  

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PROPOSAL 2

NON-BINDING, ADVISORY RESOLUTION ON THE COMPENSATION

OF OUR NAMED EXECUTIVE OFFICERS

The Securities Exchange Act of 1934, as amended, (the “Exchange(“the Exchange Act”) requires us to provide shareholders an opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officers, referred to as NEOs, as disclosed in this proxy statement.  This vote does not address any specific item of compensation, but rather the overall compensation of our NEOs and our compensation philosophy, policies and practices, as disclosed in this proxy statement.  Shareholders requested through their 2011 vote to have the opportunity to express their opinion on the overall compensation program through this non-binding voting mechanism on an annual basis.  

The Company’s NEOs in this proxy statement are Curtis C. Simard, Gerald Shencavitz, Michael W. Bonsey, Richard B. Maltz, Gregory W. Dalton and Stephen M. Leackfeldt.  Mr. Bonsey resigned from his positions effective June 13, 2014 and Mr. Maltz was appointed on September 1, 2014.  The compensation of our NEOs is disclosed in the “Compensation Discussion and Analysis” section, the summary compensation table and the other related tables and narrative disclosure contained elsewhere in this proxy statement. As discussed in those disclosures, the Board believes that our executive compensation philosophy, policies, and procedures provide a strong link between each NEO’s compensation and our short- and long-term performance. The objective of our executive compensation program is to provide compensation which is competitive based on our performance and aligned with the long-term interests of our shareholders.

We are asking our shareholders to indicate their support of our NEOs’ compensation as described in this proxy statement. This proposal will be presented at the Annual Meeting as a resolution in substantially the following form:  

RESOLVED, on an advisory basis, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the “Compensation Discussion and Analysis” section, compensation tables and narrative discussion, is hereby APPROVED.

Vote Required

The approval of the non-binding, advisory resolution on the compensation of our NEOs will require that a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote be cast “FOR” this proposal. In addition, an abstention shall not constitute a vote cast and will have no effect on the vote. Brokers do not have discretionary authority to vote shares on this proposal without direction from the beneficial owner. Therefore, broker non-votes will have no effect on the vote.

Our Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THIS PROPOSAL.

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PROPOSAL 3

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM –INFORMATIN–INFORMATION ON INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has appointed KPMGRSM US LLP as the Company’s principal independent registered public accounting firm for the fiscal year ending December 31, 2015.2016. We are asking our shareholders to ratify the appointment of KPMGRSM US LLP as our independent registered public accounting firm as a matter of good corporate governance. If the Company’s shareholders do not ratify the appointment, the Audit Committee will reconsider whether to retain KPMGRSM US LLP. Even if the appointment is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines such a change would be in the best interest of the Company and its shareholders.

On August 4, 2015, the Audit Committee of the Board of Directors dismissed KPMG, LLP as its independent accountant, and approved the appointment of RSM US LLP (formerly McGladrey LLP) as the Company’s independent public accountants.

KPMG was notified of this action on August 4, 2015. The reports of KPMG on the Company’s audited consolidated financial statements as of and for the fiscal years ended December 31, 2014 and 2013 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

During the fiscal years ended December 31, 2014 and 2013, and the interim period preceding the dismissal of KPMG on August 4, 2015, there have been no disagreements between the Company and KPMG on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement(s), if not resolved to the satisfaction of KPMG, would have caused it to make reference to the subject matter of the disagreement(s) in connection with its prior reports and [(ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K..

The Company provided KPMG with a copy of the above disclosures and requested that KPMG furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above statements. A copy of KPMG’s letter dated August 6, 2015 is filed as Exhibit 16.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 6, 2015.

In deciding to recommend the engagement of RSM US LLP to the Board of Directors, the Audit Committee reviewed auditor independence and existing commercial relationships with RSM US LLP, and concluded that RSM US LLP had no commercial relationships with the Company that would impair its independence. During the fiscal years ended December 31, 2014 and 2013, and in the subsequent interim period through August 4, 2015, neither the Company nor anyone acting on its behalf has consulted with RSM US LLP on any matters or events set forth in Item 304(a) (2) of Regulation S-K.

We anticipate that a representative from KPMGRSM US LLP will be present and available to respond to questions or make a statement at the Annual Meeting.

Vote Required

The ratification of KMPG,RSM US LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20152016 will require that a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote be cast “FOR” this proposal. An abstention shall not constitute a vote cast, and will have no effect on the vote.  Broker non-votes, if any, will also have no effect on the vote.

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Our Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMGRSM US LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2015.2016.   

Independent Registered Public Accounting Firm Fees and Services

The reports of RSM US LLP and KPMG LLP on the Company’s consolidated financial statements as of December 31, 20142015 and 20132014 and for the three-year period ending on December 31, 2014,2015, and on internal control over financial reporting as of December 31, 2014,2015, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.

The following table summarizes KPMG LLP’s audit fees for 2014 and 2013, respectively:through August, 2015.   RSM US LLP assumed the responsibilities as the Company’s independent registered public accounting firm on August 4, 2015.   Their 2015 fees from that date through December 31, 2015 are detailed below:

(1)1.

These services were related to an employee benefit plan audit.

Pre-Approval Policies and Procedures

The Audit Committee’s policies and procedures require the Audit Committee Chair to pre-approve all audits and non-audit services and report such pre-approvals to the Audit Committee at its next regularly scheduled meeting.

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No services were rendered for financial information systems design and implementation or internal audit.

The Audit Committee has considered the compatibility of the non-audit services furnished by the Company’s auditing firm with the firm’s need to be independent.

The Audit Committee pre-approved 100% of the services performed by RSM US LLP and KPMG LLP pursuant to the policies outlined above.

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PROPOSAL 4
APPROVAL OF THE BAR HARBOR BANKSHARES AND
SUBSIDIARIES EQUITY INCENTIVE PLAN OF 2015

Upon recommendation of our Compensation and Human Resources Committee (the “Compensation Committee”), the Board has adopted the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2015 (the “2015 Plan”) for employees and directors of the Company and its subsidiaries, subject to the approval of the 2015 Plan by our shareholders at the Annual Meeting.  The Board has proposed approval of the 2015 Plan by the shareholders to replace the Bar Harbor Bankshares 2009 Equity Incentive Plan (the “2009 Plan”).  If the shareholders approve the 2015 Plan, the 2009 Plan will be frozen, and no additional awards will be granted thereunder.

The Board believes that share-based compensation can play an important role in our success by enhancing our ability to attract, retain, and motivate certain persons who make (or are expected to make) important contributions to the Company by providing such persons with an opportunity to benefit from increases in the value of a share of our common stock through the grant of certain share-based awards and thereby better aligning the interests of such persons with those of our shareholders.

The Board believes that the proposed 2015 Plan will help the Company to achieve its goals by keeping our incentive compensation program competitive with those of other similar companies.  Accordingly, the Board believes that the 2015 Plan is in the best interests of the Company and its shareholders and recommends that the shareholders approve the 2015 Plan.

This Proposal 4 is not conditioned on the approval of any other proposal.

Vote Required

The approval of the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2015 will require that a majority of the votes cast at the Annual Meeting by the holders of shares present in person or represented by proxy and entitled to vote be cast “FOR” this proposal.  Abstentions will have the effect of votes against Proposal 4.  A broker non-vote will have no effect on the proposal.

Our Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE PROPOSED 2015 PLAN.

Equity Awards Outstanding and Available  

The following table sets forth the aggregate information of our equity compensation plans in effect as of December 31, 2014. There are no compensation plans under which equity securities may be issued that have not been approved by our shareholders.

1.

Peter Dodge served as a director of the Company from 1987 through 2000 and then again from 2003 to present.

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Executive Officers   

Set forth below is a list of our NEOs, including their ages and positions with us and our subsidiaries, BHBT and BHTS, all as of March 24, 2015:22, 2016:

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1.

Mr. Maltz was appointed to his positions effective September 1, 2014.

2.

Mr. Bonsey resigned from his positions effective June 13, 2014.

Our Bylaws provide that the executive officers be elected annually by the Board and the President and CEO, Chairperson and Vice Chairperson, if any, shall serve at the pleasure of the Board and until their successors have been chosen and qualified. All other officers serve at the pleasure of the Board and the CEO. There are no arrangements or understanding between any of the directors, executive officers, or any other persons pursuant to which the above directors have been selected as directors or any of the above officers have been selected as officers. There are no “family relationships” as defined by the SEC, between any director, executive officer, or person nominated or chosen by us to become a director or executive officer.

Business Experience

The principal occupation and business experience for at least the last five years for each director, nominee, and executive officer is set forth below. None of the organizations discussed below, except for BHBT and BHTS, are affiliated with us.

Director Nominees

Matthew L. Caras.  Mr. Caras resides in Arrowsic, Maine.  He is an owner in Leaders LLC providing professional merger, acquisition, and advisory services principally to privately owned companies.  He is also a trained mediator and neutral negotiation facilitator.  He previously practiced law at Verrill Dana LLP located in Portland, Maine.  He is a member of the Maine Bar. In addition, he serves on the Planning Board for the Town of Arrowsic. The Company believes that given his professional background and legal expertise in commercial transactions along with his business knowledge of Cumberland and Sagadahoc counties, he provides valuable perspective to the Board as the Company expands its customer service area in Maine.

Thomas A. Colwell.David M. Colter.  Mr. ColwellColter resides in Deer Isle,Hampden, Maine.  He is President and CEO of GAC Chemical Corporation in Searsport, Maine.  GAC manufactures and distributes industrial, specialty, and fine inorganic and organic chemicals.  Prior to joining GAC and moving to Maine, he worked for Ernst & Young in Ohio where he obtained his CPA license.  While in Ohio, he served on the former President of Colwell Bros. Inc. (lobster pounding)board, Executive Committee and retired from that position as of December 31, 2006. He is a directorTreasurer of the Lobster Institute, a past directorRonald McDonald House of NW Ohio.  Community involvement upon moving to Maine included the Maine Lobster Pound AssociationBoy Scouts of America (DistrictChairman – Waldo District) and the Penobscot East Resource Center (non-profit).  His knowledge of this specialized industry and the working waterfront provides a unique understanding to the Board of this important segment of business lending for a community bank operating on the coast of Maine. He also served as Chairman of the Board of the Company for five years before becoming its Vice Chairman in 2009.Bangor

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Peter Dodge.  Mr. Dodge resides in Blue Hill, Maine.  HeRegion Leadership Institute.  Currently he is President, Insurance Agent,active with the Maine State Chamber of Commerce serving as a board member, and majority ownerthe University of Peter Dodge Agency d/b/a Merle B. Grindle Agency, John R. Crooker Agency,Maine Pulp and The Endicott Agency, providing insurance services from locations in Blue Hill, Bucksport,Paper Foundation serving as Treasurer and Castine. He has been a member of the Board since 1987 and is the longest serving director which enables him to bring a historical, long-term perspective and leadership to the Board. He has served as Chairperson of the Company’s Loan, Audit and Compensation Committees at various times duringExecutive Committees.  In addition to his tenure, before accepting the position of Chairperson of the Company in May 2009. He is past President of the Independent Insurance Agents of Maine. He hasCPA certification, he also served as Past President of George Stevens Academy and isholds a former board member of Blue Hill Memorial Hospital, both located in Blue Hill.                                                                                                                       Chartered Global Management Accountant (CGMA) designation.

Martha T. Dudman.  Ms. Dudman resides in Northeast Harbor, Maine.  She is a fundraising consultant and published author. She is past President and General Manager of Dudman Communications Corporation and Corporate President from 1990 to 1999, operating a group of radio stations in Ellsworth and Bangor. She currently serves as Senior Counsel GFA with Gary Friedmann & Associates effective 2011, and held the same position from 1999 to 2006, providing fundraising consulting services to nonprofits throughout the State of Maine.  She has been awarded membership in the Deborah Morton Society, recognizing women of high distinction in their careers and public service and whose leadership in civic, cultural, and social causes has been exceptional.  She serves on several non-profit boards and as President of the Northeast Harbor Library, serving in this position from 2010 through the present. She has servedserves on the Board of Selectmen for the Town of Mount Desert since 2011.  Ms. Dudman’s extensive experience in business management, public relations, marketing and sales provide her with unique insight into the Company’s operations and challenges.

Lauri E. Fernald.  Ms. Fernald resides in Mount Desert, Maine. She is a Certified Funeral Service Practitioner, President and an owner in Jordan-Fernald headquartered in Mount Desert. She is also Managing Partner of Jordan Family Properties LLC, L.E. Fernald LLC, and 125 Franklin Street LLC, operating as real estate holding companies.  She serves on the finance committee of Hospice Volunteers of Hancock County, and is Treasurer of the Parish of St. Mary and St. Jude Episcopal Church of Northeast Harbor and ChairSeal Harbor, and a committee member of the Maine Coast Healthcare Foundation.Memorial Hospital Foundation Council.  She is also a member of the Woodbine Cemetery Association of Ellsworth, the Brookside Cemetery Corp. of Mount Desert and Maine Community Foundation Hancock County Committee. Because of her commercial and community service experience, she brings a depth of knowledge to the Board about the markets in which the Company operates.  

Daina H. Hill.Ms. Hill resides in Lincolnville, Maine.   She has been the owner of the Inn at Sunrise Point located in Lincolnville since 2008.   She is a retired practicing attorney specializing in the field of banking and financial services.   Before relocating to Maine she was employed as General Counsel and Managing Director of U.S. Trust Corporation, U.S. Trust Company of New York and U.S. Trust Company N.A. from May 2002 through October 2006.   Prior to her time at U. S. Trust she served as Vice President and a senior and division general counsel at Citibank N.A. from 1987 to 2002 in its Emerging Markets and then itsit’s Private Banking Division. She servespreviously served on the Town of Lincolnville’s Budget Committee, is a Director at Home Counselors Inc., a private not-for-profit, a current member and past Director and Treasurer of the Penobscot Bay Chamber of Commerce, and a member of the Lincolnville Business Group. The Board believes her hospitality background along with her legal background in the financial services industry will provide valuable guidance to the Board as we continue to grow.

Clyde H. Lewis.  Mr. Lewis resides in Sullivan, Maine.  He retired in February 2012 as Vice President, General Manager, and an owner in Morrison Chevrolet Inc., of Ellsworth. He previously served as a member of the Executive Board of the Downeast Family YMCA, as President of the Ellsworth Chamber of Commerce, and past Master of the Lygonia Masonic Lodge.   He is a member of the Anah Temple and Hancock County Shrine Clubs and holds the Assistant Treasurer Chair for the Mount Desert Island Lions Club. He also currently serves as Chairman of the Planning Board for the Town of Sullivan. His business acumen and his knowledge of and contacts with residents and customers from the large geographic area surrounding Ellsworth brings unique market intelligence to the Board.

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Constance C. Shea.  Mrs. Shea resides in Mount Desert, Maine.   She is a Real Estate Broker and a former owner in Sylvia Shea, Inc. d/b/a Lynam Real Estate Agency, Bar Harbor, Maine. Mrs. Shea is also the owner of a commercial real estate property located in Bar Harbor. She serves as a member of the Investment Committee of the YWCA MDI located in Bar Harbor, Maine.  She has been involved with the real estate brokerage business since 1989. Her perspective of year-round and seasonal real estate markets

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provides valuable insights into real estate trends in our major markets, especially Mount Desert Island, which is important to the activities of the Director’s Loan Committee.   

Curtis C. Simard.  Mr. Simard resides in Mount Desert, Maine.  He was elected President and CEO of BHBT on June 17, 2013 and assumed the responsibilities of President and CEO of the Company on August 10, 2013 following the retirement of Mr. Murphy.  Prior to joining the Company, he served as Senior Vice President and Managing Director of Corporate Banking for TD Bank. He was with TD Bank and its predecessor companies starting in 2002. He also was affiliated with First New Hampshire Bank and its successor, Citizens Bank from 1992 to 2002 working on various business initiatives.  He serves as a Trustee of the Abbe Museum and Maine Coast Memorial Hospital.  He is a Corporator of Eastern Maine Coast Memorial Hospital.Health Systems and member of the Board of Directors at the Seal Cove Auto Museum and the Ellsworth Business Development Corporation. He also serves on the Executive Committee of Maine Bankers Association.  His positions as President and CEO of the Company and his day to day leadership of the Company provide him with extensive knowledge of the Company’s opportunities, challenges and operations.

Kenneth E. Smith.  Mr. Smith resides in Bar Harbor, Maine. He has been owner and Innkeeper of Manor House Inn since 2003 and was the former owner of Wonder View Inn, both lodging facilities located in Bar Harbor, Maine. The hospitality industry is a critical segment of the local economy and BHBT’s commercial loan portfolio. His experience and expertise of over 40 years in the field are highly valued by the Board. He is a former Chairperson and long-time member of the Bar Harbor Town Council. He currently serves as a Commissioner of the Bar Harbor Housing Authority, a member of the Town’s Cruise Ship Committee, a member of Anah Shrine, and a long time member and past President of the Bar Harbor Rotary Club.

Scott G. Toothaker.  Mr. Toothaker resides in Ellsworth, Maine.   He is a Principal and Vice Presidentshareholder of Melanson Heath & Co., PC, a CPA firm with an office located in Ellsworth, which specializes in professional services to small businesses and entrepreneurs throughout New England.   He holds an MBA from the University of Maine and an MST from Bentley College.  A practicing CPA, he is well suited in his role as Chairperson of the Company’s Audit Committee.

David B. Woodside.  Mr. Woodside resides in Bar Harbor, Maine.   He is CEO and Director of The Acadia Corporation, a locally owned company operating retail shops, a restaurant, and lodging facility on Mount Desert Island. He received his BS degree in Business Administration from the University of Maine in 1974.   He has owned several small businesses in the area and has been employed at The Acadia Corporation since 1976.   He has also served on numerous local non-profit boards, the Bar Harbor Town Council, and as past President of the Bar Harbor Rotary Club and Bar Harbor Chamber of Commerce. He served for many years as Vice Chair of the National Park Hospitality Association, representing the diverse companies providing visitor hospitality services in National Parks across the country.  His in-depth knowledge of the retail and hospitality industries both in Maine and across the country provides significant expertise to the board in these important segments of the Maine economy.  

Current Directors Who are Not Standing for Re-Election Due to Age Restrictions in the Company By-laws

Robert C. Carter.Peter Dodge.  Mr. CarterDodge resides in Machias, Maine. He presently operates Carter Enterprises, a rental management business also located in Machias. He is a former game warden for the Maine Department of Inland Fisheries.  Mr. Carter previously owned and operated Helen’s Restaurant and Machias Motor Inn for 12 and 20 years, respectively.

Gregg S. Hannah.  Mr. Hannah resides in Surry, Maine.  He is a past Associate Professor of Business Management at Nichols College in Dudley, Massachusetts. He taught courses in marketing, investment management, and corporate strategy.   He also served as a Trustee of the Connecticut State University System and was Chairman of the Finance Committee and served on the Executive Committee for several years. Mr. Hannah was employed in a professional investment capacity from 1973 to 1987 and

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is a Chartered Financial Analyst.  Mr. Hannah is also an Emeritus Trustee, and former Treasurer, of the Hancock County Trustees of Public Reservations, the governing board of the Woodlawn Museum, Gardens, and Park in Ellsworth.   He also served as a Trustee of George Stevens Academy in Blue Hill, for six years.  

Joseph M. Murphy.  Mr. Murphy resides in Mount Desert, Maine.  He is the former owner, President, and Insurance Agent of Peter Dodge Agency d/b/a Merle B. Grindle Agency, John R. Crooker Agency, and The Endicott Agency, providing insurance services from locations in Blue Hill, Bucksport, and Castine. He retired CEOand sold this business as of the Company and BHBT.December 31, 2015.

Thomas A. Colwell.  Mr. Murphy has over 35 years of banking experience at the executive level with community banksColwell resides in Connecticut (Centerbank), Delaware (WSFS Bank) and Maine (BHBT).   He previously served as Chairman of the Maine Banker’s Association.Deer Isle, Maine.   He is athe former board memberPresident of the Abbe MuseumColwell Bros. Inc. (lobster pounding) and the Friendsretired from that position as of Acadia.  He is currently a board member of the Maine Sea Coast Mission in Bar Harbor and a Corporator of Maine Coast Memorial Hospital in Ellsworth.  December 31, 2006.

Executive Officers

Curtis C. Simard.  For a summary of Mr. Simard’s business experience, refer to the “Director Nominees” section immediately above.

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Gerald Shencavitz.  Mr. Shencavitz resides in Mount Desert, Maine.  He has served as Executive Vice President, Chief Financial Officer (“CFO”), and Treasurer of the Company since December 2007. Prior to his promotion in December 2007 to Executive Vice President, he served as CFO and Treasurer of the Company since June 2001. He has served as Executive Vice President, CFO, and Chief Operating Officer of BHBT since his promotion in December 2007. He was CFO, Senior Vice President and Chief Operating Officer of BHBT between June 2001 and December 2007. He serves as Treasurer of BHTS, an office he has held since 2001.  

Richard B. Maltz.  Mr. Maltz resides in Hampden, Maine.   He has served as the Company’s Executive Vice President & Chief Risk Officer since September 1, 2014.  He previously served as Executive Vice President & Chief Risk Officer of Bangor Savings Bank in Bangor as well as in other executive capacities at that institution since 1999.  Mr. Maltz is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.

Stephen M. Leackfeldt. Mr. Leackfeldt resides in Harrington, Maine.  He has served as Executive Vice President of Retail Banking and Operations since 2011.   From 2001 through October 2011 he served as Senior Vice President of Retail Banking and Consumer Lending of BHBT.  He is the owner of State Cinemas located in Calais and serves as a member of the Board of the Sunrise County Economic Council.Calais.

Gregory W. Dalton. Mr. Dalton resides in Mount Desert, Maine.  He has served as Executive Vice President of Business Banking of BHBT since October 2011.  He was Senior Vice President of BHBT’s Business Banking function from 2000 through October 2011. He is also a minority owner in both the Bar Harbor Jam Co. and its real estate holding companies, Blueberry Partners LLC and Triangle Development LLC located in Bar Harbor.  He serves as a Board member of Acadia Fire Youth Soccer and North Center Tennis and Fitness.  He has also served as Vice Chair of the MDI YMCA and serves in several other local youth focused, non-profit organizations including The Katahdin Area Council of the Boy Scouts of America and the Neighborhood House in Northeast Harbor.  

Michael W. Bonsey

(This space intentionally left blank)

.  Mr. Bonsey is the former Executive Vice President and Chief Risk Officer of BHBT.  He was appointed to those roles in October 2011 and resigned effective June 13, 2014.   He was Senior Vice President of Credit Administration of BHBT from December 2001 through October 2011. Additionally, he served as Vice President of Credit Administration from 2000 through December 2001.

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CORPORATE GOVERNANCE

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CORPORATE GOVERNANCE

Board of Directors

The Board oversees our business and monitors the performance of our management. In accordance with our corporate governance procedures, the Board does not involve itself in our day-to-day operations. Our executive officers and management oversee the day-to-day operations. Our directors fulfill their duties and responsibilities by attending regular meetings of the Board, which are held on a monthly basis. Our directors also discuss business and other matters with key executives and our principal external advisers (legal counsel, auditors, financial advisors and other consultants).

The Board held a total of 12 regular meetings, one special meeting, and one annual meeting during 2014.2015. Each director attended at least 75% of the total number of board and committee meetings that he or she was eligible to attend.

The Board encourages each director to attend its Annual Meeting. All of the Board’s members attended the 20142015 Annual Meeting.

Board Independence

Under the NYSE MKT corporate governance standards, set out in the NYSE MKT Company Guide (the “NYSE(“the NYSE MKT Rules”), at least a majority of the Board must be “independent directors” as defined in Section 803A of the NYSE MKT Rules. According to Section 803A, “independent director” means a person other than an executive officer or employee of the Company. In addition, to qualify as an “independent director,” the Board must affirmatively determine that the director does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  The Board has determined that all the named director-nominees listed in this proxy statement, with the exception of Mr. Simard, meet applicable independence standards under NYSE MKT Rules. Mr. Simard is not a member of the Audit, Compensation, or Governance Committees. 

Board Leadership Structure and Risk Oversight:  

The leadership structure of the Company is guided by its Governance Committee. The Company’s Governance Committee nominates individuals to serve as members of the Company’s Board of Directors, including any management directors. All director-nominees of the Company are considered “independent directors” except for the CEO of the Company. The Chairperson of the Board of Directors, as well as the Vice Chairperson of the Board, are both “independent directors”.  Management directors do not vote or serve as Chairs of any Board committees. The Governance Committee nominates persons to serve in the Chairperson and Vice Chairperson roles for election by the entire Board of Directors. The “independent directors” meet in executive session directly after Board meetings periodically to ensure that there is adequate oversight of Company management and to ensure that there is ample time to assess the Company’s activities separate from management. The Governance Committee believes this leadership structure is prudent and provides sufficient segregation and independence.

The Board of Directors provides oversight to the management of the Company's risk profile, including but not limited to internal controls over financial reporting, credit risk, interest rate risk, liquidity risk, operational risk, including cyber risk, reputational risk and compliance risk. The Board of Directors monitors and manages these risks through the activities of specialized Board committees and other committees in conjunction with management, internal audit, the independent registered public accounting firm, and other independent advisors. Some of the more significant risks and the Board’s oversight of those risks are described below.  

The Board manages credit risk through a Director’s Loan Committee, which operates at the BHBT level and meets at least monthly. This committee sets loan policy, establishes credit authorities, and approves or ratifies all extensions of credit to borrowers with loan relationships of $5,000,000 and greater.

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This Committee regularly reviews credit trends, delinquencies, non-performing loans, charged-off loans and management’s quarterly assessment of the adequacy of the Loan Loss reserve. The committee, in conjunction with the Audit Committee, reviews reports prepared by an independent Loan Review firm and those issued by the Internal Audit function to assist in their on-going assessment of credit risk.

The Asset and Liability Management Committee (“ALCO”), which comprises the entire senior management team and is chaired by the CFO, assists in the management of interest rate and liquidity risk.  This committee meets on a quarterly basis to review market interest rate trends and product pricing strategies.  ALCO utilizes an asset and liability management consultant, Darling Consulting Group, to review current trends, possible interest rate or liquidity risks in the balance sheet and prospective strategies typically over a two-year horizon using Darling Consulting Group’s proprietary modeling services.  The Chairperson of the Board attends these quarterly meetings and the findings and recommendations are reported to the full Board quarterly and the consultants meet with the Board at least twice a year. The Company's balance sheet position and risk mitigation strategies are reviewed by internal audit and the data verified by an outsourced specialist from M & M Consulting.

The Company’s Audit Committee meets quarterly and receives reports from its independent registered public accounting firm, the independent loan review consultants, and the Company's internal audit function. The internal auditor conducts an annual risk-based audit program and provides audit findings quarterly to the Audit Committee or to the Board of Directors.  

The Company has an Enterprise Risk Management Program that is administered on behalf of the Board of Directors by Executive Vice President and Chief Risk Officer Mr. Richard B. Maltz.   As part of the Enterprise Risk Management Program, information from the Bank’s lines of business is collected and analyzed to identify, monitor, track and report various risks within the organization.  The Company also established an Enterprise Risk Management committee that reviews and discusses on a quarterly basis BHBT’s bank-wide risk assessments.   The finalresulting risk assessments are aggregated, shared and discussed with the Board of Directors each quarter.at least annually.  The quarterly risk assessments are supplemented by regular reports from the Chief Risk Officer regarding emerging risks at monthly Board meetings.  In addition to this Risk Program, the Bank’s credit review, compliance,Credit Policy Review, Compliance, Information Systems, managed assetsOperations, Managed Assets, and information securityInformation and Physical Security departments report to Mr. Maltz.

The Board manages compensation, including incentive compensation risk, through its Compensation and Human Resources Committee. This Committee has engaged Pearl Meyer & Partners, LLC (“Pearl Meyer”) as independent compensation consultants to provide the Committee with both competitive market data and research into compensation best practices to guide the decisions of the Committee. To mitigate the inherent risks of incenting behaviors potentially adverse to the Company and its stakeholders, the Committee reviews compensation matters with the assistance of the Company’s Chief Risk Officer and the results are reviewed by the Board to ensure that incentive plans for senior officers and others do not encourage excessive risk-taking.

The Company believes that its risk management activities and procedures provide sufficient information to management and the Board of Directors to assist them in properly and adequately evaluating the Company’s compliance with its risk management programs and policies.  There can be no assurance that the Board’s risk oversight structure has identified and addressed every potential material risk and there may be additional risks that could arise in the Company’s business.   Both known and unknown risks could result in potentially material financial and/or business losses despite the Board’s efforts to oversee risk.

Committees

The Board has a standing Executive Committee, Audit Committee, Governance Committee and Compensation Committee.

Executive Committee.Our Bylaws provide that after each annual meeting of shareholders, the Board shall designate from among its members an Executive Committee with the authority to exercise all

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the powers of the Board in regard to ordinary operations of our business when the Board is not in session, subject to any specific vote of the Board. The Executive Committee is composed of directors Dodge, Colwell, Dudman, Shea, Simard, Smith, Toothaker and Woodside.  Mr. Smith replaced Mr. Robert Phillips who retired from the Board in May 2014.  Mr. Dodge serves as Chairperson. The Executive Committee held two meetings in 2014.2015.

Audit Committee.The Audit Committee is composed of directors Toothaker, Caras, Dudman, Fernald, Hannah and Woodside.   Mr. Caras joinedMs. Fernald served on the Audit Committee inuntil May, 2014 upon his election as a director.2015. Mr. Toothaker serves as Chairperson of the Committee. The Audit Committee met foursix times during 2014.2015. See “Appendix A” for the Report of the Audit Committee.  The Audit Committee Charter may be viewed on our website under the Shareholder Relations section atwww.bhbt.com.     

The Board has determined that the Audit Committee is solely composed of independent directors, in accordance with applicable NYSE MKT listing requirements and Rule 10A-3(b)(1) under the Exchange Act. The Audit Committee operates under a written charter, which has been adopted by the Audit Committee and the Board.  Audit Committee members do not accept any consulting, advisory or other compensatory fees (except directors’ fees) and are not affiliated with us (except as a director) or any of our subsidiaries. The Board has determined that each Audit Committee member is financially literate and that it has at least one “audit committee financial expert.”  Mr. Scott G. Toothaker, CPA, meets the criteria for an “audit committee financial expert” as defined in applicable SEC rules.

The Audit Committee has the sole authority to appoint and replace the independent registered public accounting firm. The Audit Committee is responsible for the compensation and oversight of the independent registered public accounting firm and this firm reports directly to the Audit Committee. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to (i) the financial information to be provided to shareholders and the SEC, (ii) the review of quarterly financial statements, (iii) the system of financial reporting controls management has established, and (iv) the internal audit, external audit, and loan review processes.

Governance Committee.The Governance Committee is composed of directors Shea, Dodge, Colwell, Carter and Lewis. Ms. Fernald and Ms. Hill joined the Committee in May, 2015.  The Governance Committee met threesix times during 2014.2015. Mrs. Shea serves as Chairperson of the Committee. The Board has determined that each member of the Governance Committee is independent under NYSE MKT Rules.

The Governance Committee’s responsibilities include screening director candidates, recommending nominees to the full Board (including the slate of returning directors) to be elected each year, making recommendations concerning the size and composition of the Board, recommending Committee structure and membership, and sponsoring new director orientation and education. The Governance Committee has a written charter, which may be viewed on our website under the Shareholder Relations section atwww.bhbt.com.

The Governance Committee expects to identify nominees to serve as directors of the Company primarily by accepting and considering the suggestions and nominee recommendations made by directors, management, and shareholders. To date, the Governance Committee has not engaged any third parties to assist it in identifying candidates for the Board. The Governance Committee considers, among other things, the background, business and professional experience (including any requisite financial expertise or other special qualifications), current employment, community service, and other board service of its director-nominees, as well as racial, ethnic, and gender diversity of the Board as a whole. The Governance Committee generally considers a candidate’s qualifications in light of these broad criteria and assesses whether the candidate can make decisions on behalf of or while representing us in a manner consistent with our stated business goals and objectives. The Governance Committee will also consider the candidate’s “independent” status in accordance with applicable regulations and listing standards. The Governance Committee will consider nominees recommended by shareholders. Any shareholder wishing to nominate a candidate for director must follow the procedures for submission of proposals set forth in the section of this proxy statement entitled “Nominations by Shareholders.”

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Human Resources and Compensation Committee.The Compensation Committee reviews and considers recommendations from management, consultants, and directors concerning executive compensation policies, employee benefit plans, and salary administration programs, and reviews annually the performance of, and total compensation for, and recommends adjustments for, all of our executive officers and our subsidiaries. The deliberations of the Compensation Committee are reported to the Board for review and approval by the independent board members. The Compensation Committee has a written charter, which may be viewed on our website under the Shareholder Relations section atwww.bhbt.com.

The Compensation Committee is composed of directors Smith, Colwell, Dodge and Fernald.  Mr. Robert Phillips served as Chair until his retirement from the Board in May 2014.   Mr.Kenneth Smith has servedserves as Chairperson of the Compensation Committee since May 2014.Committee.  All members of the Compensation Committee are independent under NYSE MKT Rules. The Compensation Committee met ninefive times in 2014.2015.

Further information regarding the Compensation Committee can be found below in this proxy statement beginning under the caption “Role of the Compensation Committee.”

Compensation Committee Interlocks and Insider Participation

  No NEO serves as a member of a compensation committee of any other company that has an executive officer serving as a member of the Board.   No NEO serves as a member of the board of directors of any other company that has an executive officer serving as a member of the Compensation Committee.   

COMPENSATION OF EXECUTIVE OFFICERS

Report of Compensation and Human Resources Committee Report

The Compensation Committee has reviewed the Compensation Discussion and Analysis included in this proxy statement and has discussed it with members of management. Based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the 20142015 fiscal year, and the Board has approved such recommendation.

Respectfully submitted by the members of the Compensation Committee:

Kenneth E. Smith, Chair                                     Peter Dodge                                        

Thomas A. Colwell        

    Lauri E. Fernald    

Compensation Discussion and Analysis

This section discusses an overview and analysis of our compensation program and policies, the material compensation decisions made under those programs and policies with respect to our NEOs, and the material factors considered in making those decisions.  Later in this proxy statement under the heading “Executive Compensation Tables” is a series of tables containing specific information about the compensation earned or paid to the NEOs.

The discussion below is intended to aid understanding of the detailed information provided in those tables and put that information into context within the overall compensation program.  

Named Executive Officers

For 2014,2015, our NEOs are: President and CEO, Curtis C. Simard; CFO, Gerald Shencavitz; and our fourthree other most highly compensated policy making executive officers.  In 2014,2015, the other NEOs were former  Executive Vice President  and  Chief  Risk  Officer,  Michael  W.  Bonsey; current Executive Vice

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President and Chief Risk Officer, Richard Maltz; Executive Vice President – BusinessRetail Banking, Stephen M. Leackfeldt; and Gregory W. Dalton; andDalton,  Executive Vice President – Retail Banking, Stephen M. Leackfeldt.  Business Banking.

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Objectives of Our Compensation Program

The objective of our compensation program is to attract, retain, motivate, and reward NEOs and other executives who contribute to our financial and operational success, which ultimately builds value for our shareholders.  The Board believes that, in order to do this effectively, the program must:

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provide NEOs with total compensation opportunities at levels that are competitive for comparable positions at companies and banks with which it competes for talent;

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directly link a significant portion of total compensation to our achievement of performance goals in a way that proportionally rewards higher performance levels;

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provide upside opportunities for exceptional individual performance, which can result in differentiated compensation among NEOs based on performance; and

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closely align the NEOs’ interests with those of our shareholders by making stock-based incentives an element of the executive’s compensation.

Role of the Compensation Committee

The Compensation Committee oversees regulatory compliance for all of our compensation and benefit plans and administers the Company’s executive compensation programs. The Compensation Committee recommends these programs to the Board for approval by its independent board members at least annually and more frequently, if circumstances warrant. These programs are intended to provide a variety of competitive compensation components including base salaries, annual cash incentives, retirement programs, and traditional benefits.  In addition, we have sought to align the long-term interests of our executives, including the NEOs, with those of our shareholders by providing share-based incentives in the form of equity awards. The composition of the components may vary from year to year based on individual performance, our business plan, market conditions or other factors.

The Compensation Committee believes that our compensation policies and procedures are designed to provide a strong link between each NEO’s compensation and our short and long-term performance. The objective of our compensation program is to provide compensation which is competitive, variable based on our performance, and aligned with the long-term interests of our shareholders.

Shareholder “Say on Pay” Advisory Votes

Shareholders are entitled to annually vote on an advisory, non-binding resolution on our compensation policies and procedures.  Past shareholder votes have been overwhelmingly in favor of our programs and practices.

The May 20142015 “Say on Pay” voting results were as follows:

The Compensation Committee will continue to consider the outcome of future advisory, non-binding “Say on Pay” votes when reviewing and planning future executive compensation arrangements.

The Role of Compensation Consultants and the CompensationCommittee’s Evaluation of Conflicts of Interest

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components of our compensation program, including its stock option program, Supplemental Executive Retirement Plan (“SERP”), and incentive compensation arrangements.

During 2014, Compensation Committee Chair, Kenneth Smith, and Senior Vice President Sawyer attended a multi-day conference sponsored by Bank Director Magazine specifically targeted at Bank Executive & Board Compensation best practices.

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The Compensation Committee, under authority granted by its Charter, engages PM&PPearl Meyer to assist in reviewing our executive officer and director compensation packages.  Their 20142015 engagement included:

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providing current market-based total compensation guidelines to assist in establishing appropriate and ongoing base compensation and incentive compensation levels for our NEOs;

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providing on-going guidance on our short-term, annual cash incentive program positions in relationship to competitive plan design and payout opportunities to our strategic and long-term financial plans;

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providing on-going guidance and market comparisons for the long-term incentive program using equity grants to NEOs under the 2009 Plan;Company’s approved Equity plans;

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providing guidance on plan design and preliminary testing for the 2015 Plan;

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providing a comprehensive review of our compensation program for our directors; and

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recommending an updated, appropriate Compensation Peer Group (defined below) comparison for compensation purposes.

The Compensation Committee has assessed the relationships among PM&P,Pearl Meyer, the Company, the Compensation Committee, and the executive officers for independence and conflicts of interest.   In this assessment, the Compensation Committee reviewed the criteria set forth in the SEC’s Reg. 240.10C-1(b)(4) (i)-(vi) and such other criteria as it deemed appropriate.   Specifically, the Compensation Committee considered the following factors in its evaluation of its relationship with PM&P:Pearl Meyer:

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whether PM&PPearl Meyer provided any other services to us;

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how much compensation PM&PPearl Meyer has received from us for compensation consulting services, as a percentage to their total revenue;

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what policies and procedures have been adopted by PM&PPearl Meyer to prevent a conflict of interest;

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whether PM&PPearl Meyer has any business or personal relationship with a member of the Compensation Committee;

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whether PM&PPearl Meyer owns any of our stock; and

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whether PM&PPearl Meyer has any personal or business relationship with any of our executive officers.

The Compensation Committee did not identify any conflicts of interest with the engagement of PM&P.Pearl Meyer.  Additionally, PM&PPearl Meyer provided us documented assurances that they are confident their relationship with us meets the independence standards and they have identified no conflicts of interest.

The Compensation Committee, under authority granted by its Charter, further engaged Arthur Warren Associates to assist in the development of a long-term phantom stock program for a group of key-contributing officers.  

Role of Management in Establishing Compensation

On an annual basis Mrs. Marsha C. Sawyer, the SeniorExecutive Vice President of Human Resources, with the oversight of the CEO, provides the Compensation Committee with general information on executive officer compensation, including the NEOs. The Compensation Committee then reviews, discusses and considers this information and any recommendations.   Mrs. Sawyer assists in the administration of all executive compensation programs, prepares Compensation Committee and Board meeting materials and performs work as requested by the Compensation Committee, including working directly with the compensation consultant in preparation of peer analyses for the Compensation Committee’s consideration.  Mr. Simard, as our CEO, attends portions of the Compensation Committee’s meetings and

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meetings and makes recommendations on base salary, annual incentives and equity compensation for only the executive officers who report to the CEO position.  The Compensation Committee has the discretion to accept, reject or modify the CEO’s recommendations.  The CEO is not a member of the Compensation Committee and is not present for the executive sessions or for any discussion of regarding his own compensation.   

Market Benchmarking and Performance Comparisons

The Compensation Committee reviews and recommends to the Board’s independent members for approval of compensation programs, which it believes meet our ongoing needs to attract, motivate, and retain talented and qualified executives who have the ability to make a major contribution to the leadership and success of the Company. The Compensation Committee regularly reviews market information provided by PM&P.Pearl Meyer.  Primary data sources used in the benchmarking for the NEOs is the information publicly disclosed by a peer group of publicly traded banks and published surveys. The Compensation Committee reviews comparative compensation and benefit information contained in the public filings of this peer group which has been established for compensation comparison (the “Compensation(“the Compensation Peer Group”) using objective selection criteria.   The peer group consists of community banks of similar asset size (approximately between one-half and two times our asset size of $1.4$1.5 billion) as of November 2014.2015.  All the peer banks are located in the Northeast region and New York excluding New York City. The Compensation Committee believes this group provides an appropriate selection of publicly traded financial institutions representing the geographical area most probable to be considered for recruitment purposes.  Further, the Compensation Committee believes the Compensation Peer Group information discloses compensation programs of similarly situated executives in comparable institutions and they are a useful comparative tool for the Compensation Committee in establishing executive compensation programs and individual criteria for its executives including the NEOs. ThereFive financial institutions were no changesadded to the Compensation Peer Group membership2015 peer group and four from the prior year.2014 peer group were omitted due to size or merger and acquisition activity.

The members of the 20142015 peer group include:

1.

Approved base salary figures as of year-end 20142015 have been used for comparison purposes in this table.  

2.

Approved base salary figures at the end of 20142015 plus the amount paid to each NEO under the 20142015 Annual Incentive Program is used in this table for comparison purposes with the exception of Mr. Maltz.    purpose

3.

Mr.Messrs. Maltz was appointed to his positions with the Company effective September 1, 2014.  The amounts in the Base Salary and Total Cash columnsLeackfeldt have been annualized for comparison purposes against the peer data.  Mr. Maltz received $67,692 in base salary and $15,785 for an annual cash incentive payment for a total of $83,477 for the calendar year 2014.

Program Trigger.In order for the Annual Incentive Program to ‘activate’ or turn on, we needed to achieve at least $12,260$13,457 in Net Income to Common Shareholders for 2014.2015. If we did not meet this level, the plan would not pay out any awards for the year, regardless of performance on other goals. For the year ended December 31, 20142015 we reported record net income of $14,613$15,153 compared with $13,183$14,613 for the year ended December 31, 2013,2014, representing an increase of $1,430$540 or 10.85%3.69%.

Annual Incentive Program Measures.  Each participant had predefined performance goals to determine their short-term incentive award.  There were two performance categories: Bar Harbor Bankshares Team and Individual. Bar Harbor Bankshares Team performance was reflected by common goals for all participants. Individual goals reflected each participant’s individual contributions based on their role.  The specific allocations of goals were weighted to reflect the focus and contribution for each position in the Company.  

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The table below provided the guidelines for the allocation of each participant’s incentives for each performance component.component for 2015.

1.

Mr. Maltz was appointed to his positions effective September 1, 2014, and received a pro-rated portion of the annual incentive payout based on his time of service.

Mr. Bonsey resigned from his positions effective June 13, 2014, and did not participate in the 2014 program payout.

Bar Harbor Bankshares Performance.Bar Harbor Bankshares Team performance goals for 20142015 were increased Net Income and a managed Efficiency Ratio. The following table below shows the specific performance goals at Threshold, Target (budget or improvement over prior year measurements) and Stretch for each of the NEOs during 2014.2015.    

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1.

All Payment Range percentages rounded to two trailing decimals.

2.

The asset quality measures for Past Dues and Non-Performing Loans + Other Real Estate Owned are   calculated using a 12 month average of the month-end actual data for the calendar year.  The Charge off percentage is measured using the actual annual net charge offs as a percentage of the average outstanding loans.  The average outstanding loan figure for this calculation is measured by averaging the actual outstanding loans at each month end.

3.

The results of Mr. Maltz was appointed to his positions effective September 1, 2014 and received a pro-rated paymentMaltz’ s  project implementation measure are based on his 2014 earned compensation.a recommendation from the CEO and final approval by the Board of Director’s Compensation Committee

Mr. Bonsey resigned from his positions effective June 13, 2014, and did not receive a payment.

Annual Incentive Payment Summary.Below is a summary of the annual incentive awards paid during 2014:for 2015 performance:

1.

The asset quality measures for Past Dues and Non-Performing Loans + Other Real Estate Owned are calculated using a 12 month average of the month-end actual data for the calendar year.  The Charge off percentage is measured using the actual annual net charge offs as a percentage of the average outstanding.  The average outstanding for this calculation is measured by averaging the actual outstanding loans at each month end.

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