| (a) | | Base Salary and Benefits.The executive compensation program provides base salaries and benefits, which include health and life insurance programs, a 401(k) retirement program, and vacation awards to compensate executive officers for capablebenefits.Base Salary and Benefits Our executive compensation program provides base salaries and benefits, which include health and life insurance programs, a 401(k) retirement program and vacation awards to compensate executive officers for the performance of core duties and responsibilities associated with their positions. The Compensation Committee reviews base salaries annually in the context of the comparative industry information, as described above. The Compensation Committee also considers the specific contributions of the individual executive officer and the officer’s opportunity for professional growth, as well as market factors, when it sets and adjusts base salaries. In addition, the Compensation Committee considers the prevailing economic climate, our overall performance and our most current business plan. Upon performance evaluations and the advice and market salary data supplied by PM&P, the Compensation Committee made performance and market adjustments resulting in the 2014 and 2015 approved base salaries for the NEOs as follows: | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | 2013 Base Salary ($) | | | 2014 Base Salary ($) | | | Percentage of Base Increase 2013 Over 2014 (%) | | | 2015 Base Salary ($) | | | Percentage of Base Increase 2014 over 2015 (%) | | Curtis C. Simard | | | 375,000 | | | | 412,500 | | | | 10.00 | | | | 438,000 | | | | 6.18 | | | | | | | | Gerald Shencavitz | | | 221,711 | | | | 255,000 | | | | 15.01 | | | | 275,000 | | | | 7.84 | �� | | | | | | | Richard B. Maltz1 | | | — | | | | 220,000 | 2 | | | — | | | | 255,000 | 3 | | | 15.91 | | | | | | | | Stephen M. Leackfeldt | | | 182,310 | | | | 208,000 | 4 | | | 14.09 | | | | 225,000 | | | | 8.17 | | | | | | | | Gregory W. Dalton | | | 182,310 | | | | 190,000 | | | | 4.22 | | | | 203,000 | | | | 6.84 | | | | | | | | Michael W. Bonsey5 | | | 182,310 | | | | 203,000 | | | | 10.19 | | | | — | | | | — | |
1. | Mr. Maltz was appointed to his positions with the Company effective September 1, 2014. |
2. | This figure represents Mr. Maltz’s annualized base salary for 2014 for comparative purposes. His actual paid base salary was $67,692. |
3. | Mr. Maltz assumed the responsibility of the comparative industry information, as described above. The Committee also considers the specific contributions of the individual executive officer and the officer’s opportunity for professional growth, as well as market factors, when it sets and adjusts base salaries. In addition, the Committee considers the prevailing economic climate, the overall performance of the Company, and its most current business plan. | | | | | Upon performance evaluations and the advice and market salary data supplied by Pearl Meyer & Partners, the Committee made performance and market adjustments to the 2008 base salaries for NEOs as follows:Information Systems function. |
| | | | | | | | | | | | | | | | | | | 2007 Base | | 2008 Base | | 2008 | | | Named Executive | | Salary | | Salary | | Increase | | Percentage | Joseph M. Murphy President and CEO of Bar Harbor Bankshares and Bar Harbor Bank & Trust | | $ | 258,440 | | | $ | 273,946 | | | $ | 15,506 | | | | 6.00 | % | Gerald Shencavitz EVP, CFO and Treasurer of Bar Harbor Bankshares and EVP, CFO, and COO of Bar Harbor Bank & Trust | | $ | 174,000 | | | $ | 174,000 | 1 | | | N/A | | | | N/A | | Michael W. Bonsey SVP, Credit Administration of Bar Harbor Bank & Trust | | $ | 104,000 | | | $ | 116,000 | | | $ | 12,000 | | | | 11.54 | % | Gregory W. Dalton SVP, Business Banking of Bar Harbor Bank & Trust | | $ | 117,106 | | | $ | 132,000 | | | $ | 14,894 | | | | 12.72 | % | Daniel A. Hurley III President of Bar Harbor Trust Services and SVP of Bar Harbor Bank & Trust | | $ | 126,500 | | | $ | 126,500 | 2 | | | N/A | | | | N/A | |
| | | 1 | 4. | Mr. Shencavitz’s salary was adjusted in December 2007 to $174,000 in recognitionLeackfeldt assumed the responsibility of his promotion to Executive Vice President. No further adjustment was made to his 2008 compensation.Bank Operations. |
| 2 | 5. | Mr. Hurley was provided a one time payment in lieu of a base salary adjustment for 2008 to allow the company to realign its internal equity with new comparative salary information.Bonsey resigned his position effective June 13, 2014. |
16 Short-term, Annual Incentive Cash Compensation Program During 2014, nine senior managers including the NEOs, participated in an annual cash incentive compensation plan developed under the guidance of PM&P. The program is designed to provide meaningful incentives tied to our annual initiatives to optimize profitability, growth, excellence in individual performance, and to promote teamwork among its participants. This plan was approved by the Board for 2014 and is detailed below. | (b) | | Short-term, Annual Incentive Cash Compensation Program.During 2008, nine senior managers including NEOs, Messrs. Murphy, Shencavitz, Bonsey, Dalton, and Hurley participated in an annual cash incentive compensation plan developed under the guidance of Pearl Meyer & Partners. The philosophy of the Compensation Committee was to set reasonable base salaries and allow for the potential of meaningful incentives tied to the Company’s short-term initiatives to optimize profitability, growth, excellence in individual performance, and to promote teamwork among its participants. This plan was approved by the Company’s Board of Directors for 2008 and is detailed below: | | | | | Incentive Payout Opportunity | | | | | Incentive Payout Opportunity.Each participant had a target incentive opportunity based on their role. The target incentive reflected a percentage of base salary determined to be consistent with competitive market practices. Actual awards varied based on achievement of specific goals. The opportunity reflects a range of potential awards. Actual awards ranged from 0% (for not achieving minimal performance) to 150% of target (for exceptional performance). The table below summarizes the incentive ranges for the 2014 plan year. | | | | | | | | | | | | | | | | | 2014 Short-Term Incentive Opportunities | | Role | | Below Threshold | | | Threshold (50% of Target Percentage) | | | Target (100%) | | | Stretch (150% of Target Percentage) | | President /CEO | | | 0 | % | | | 15.00 | % | | | 30.00 | % | | | 45.00 | % | EVP & CFO | | | 0 | % | | | 10.00 | % | | | 20.00 | % | | | 30.00 | % | EVP | | | 0 | % | | | 8.75 | % | | | 17.50 | % | | | 26.25 | % |
Program Trigger. In order for the Annual Incentive Program to ‘activate’ or turn on, we needed to achieve at least $12,260 in Net Income to Common Shareholders for 2014. 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, 2014 we reported record net income of $14,613 compared with $13,183 for the year ended December 31, 2013, representing an increase of $1,430 or 10.85%. 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. The table below provided the guidelines for the allocation of each participant’s incentives for each performance component. | | | | | Position | | Bar Harbor Bankshares/Team Performance | | Individual Performance | President/CEO (Simard) | | 75% | | 25% | EVP/CFO (Shencavitz) | | 70% | | 30% | EVP/CRO – Staff (Maltz)1 | | 50%-55% | | 45%-50% | EVP – Staff (Leackfeldt) | | 50%-55% | | 45%-50% | EVP – Line (Dalton) | | 30% | | 70% |
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 2014 were increased Net Income and a managed Efficiency Ratio. The 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. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Curtis C. Simard | | | | | | | | | | | | | | | | | | | President and CEO | | | | | | | | | | | | | | | | | | | Eligible Salary | | $ | 412,500 | | | | Eligible Salary | | | $ | 412,500 | | | | Eligible Salary | | | $ | 412,500 | | Incentive Threshold (%) | | | 15.00 | % | | | Incentive Target (%) | | | | 30.00 | % | | | Incentive Stretch (%) | | | | 45.00 | % | Incentive Threshold ($) | | $ | 61,875 | | | | Incentive Target ($) | | | $ | 123,750 | | | | Incentive Stretch ($) | | | $ | 185,625 | | | | Performance Goals | | | Payment Range1 | | Incentive Measures | | Threshold | | | Target | | | Stretch | | | Weight | | | Threshold | | | Target | | | Stretch | | Net Income ($ thousands) | | $ | 12,260 | | | $ | 13,183 | | | $ | 14,501 | | | | 50.00 | % | | | 7.50 | % | | | 15.00 | % | | | 22.50 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 58.10 | % | | | 56.10 | % | | | 54.10 | % | | | 25.00 | % | | | 3.75 | % | | | 7.50 | % | | | 11.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Past Dues2 | | | 225bps | | | | 200bps | | | | 150bps | | | | 8.34 | % | | | 1.25 | % | | | 2.50 | % | | | 3.75 | % | Charge offs2 | | | 30bps | | | | 25bps | | | | 20bps | | | | 8.33 | % | | | 1.25 | % | | | 2.50 | % | | | 3.75 | % | NPL+OREO2 | | | 225bps | | | | 175bps | | | | 125bps | | | | 8.33 | % | | | 1.25 | % | | | 2.50 | % | | | 3.75 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTALS | | | | | | | | | | | 100.00 | % | | | 15.00 | % | | | 30.00 | % | | | 45.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gerald Shencavitz | | | | | | | | | | | | | | | | | | | EVP and CFO | | | | | | | | | | | | | | | | | | | Eligible Salary | | $ | 255,000 | | | | Eligible Salary | | | $ | 255,000 | | | | Eligible Salary | | | $ | 255,000 | | Incentive Threshold (%) | | | 10.00 | % | | | Incentive Target (%) | | | | 20.00 | % | | | Incentive Stretch (%) | | | | 30.00 | % | Incentive Threshold ($) | | $ | 25,500 | | | | Incentive Target ($) | | | $ | 51,000 | | | | Incentive Stretch ($) | | | $ | 76,500 | | | | Performance Goals | | | Payment Range1 | | Incentive Measures | | Threshold | | | Target | | | Stretch | | | Weight | | | Threshold | | | Target | | | Stretch | | Net Income ($ thousands) | | $ | 12,260 | | | $ | 13,183 | | | $ | 14,501 | | | | 50.00 | % | | | 5.00 | % | | | 10.00 | % | | | 15.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 58.10 | % | | | 56.10 | % | | | 54.10 | % | | | 20.00 | % | | | 2.00 | % | | | 4.00 | % | | | 6.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Net Invest. Income | | $ | 15,892 | | | $ | 16,216 | | | $ | 17,838 | | | | 10.00 | % | | | 1.00 | % | | | 2.00 | % | | | 3.00 | % | Inv Yield Percentile Against Peer | | | 48th | | | | 50th | | | | 75th | | | | 20.00 | % | | | 2.00 | % | | | 4.00 | % | | | 6.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTALS | | | | | | | | | | | 100.00 | % | | | 10.00 | % | | | 20.00 | % | | | 30.00 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richard B. Maltz3 Executive Vice President and Chief Risk Officer | | | | | | | | | | | | | | | | | | | Eligible Salary3 | | $ | 67,692 | | | | Eligible Salary | | | $ | 67,692 | | | | Eligible Salary | | | $ | 67,692 | | Incentive Threshold (%) | | | 8.75 | % | | | Incentive Target (%) | | | | 17.50 | % | | | Incentive Stretch (%) | | | | 26.25 | % | Incentive Threshold ($) | | $ | 5,923 | | | | Incentive Target ($) | | | $ | 11,846 | | | | Incentive Stretch ($) | | | $ | 17,769 | | | | Performance Goals | | | Payment Range1 | | Incentive Measures | | Threshold | | | Target | | | Stretch | | | Weight | | | Threshold | | | Target | | | Stretch | | Net Income ($thousands) | | $ | 12,260 | | | $ | 13,183 | | | $ | 14,501 | | | | 30.00 | % | | | 2.63 | % | | | 5.25 | % | | | 7.88 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 58.10 | % | | | 56.10 | % | | | 54.10 | % | | | 20.00 | % | | | 1.75 | % | | | 3.50 | % | | | 5.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Avg. Commercial Loans | | $ | 462,805 | | | $ | 472,250 | | | $ | 519,475 | | | | 15.00 | % | | | 1.31 | % | | | 2.63 | % | | | 3.94 | % | Avg. Consumer Loans | | $ | 399,693 | | | $ | 407,850 | | | $ | 448,635 | | | | 10.00 | % | | | 0.88 | % | | | 1.75 | % | | | 2.63 | % | Past Dues2 | | | 225bps | | | | 200bps | | | | 150bps | | | | 8.33 | % | | | 0.73 | % | | | 1.46 | % | | | 2.19 | % | Charge offs2 | | | 30bps | | | | 25bps | | | | 20bps | | | | 8.33 | % | | | 0.73 | % | | | 1.46 | % | | | 2.18 | % | NPL+OREO2 | | | 225bps | | | | 175bps | | | | 125bps | | | | 8.34 | % | | | 0.72 | % | | | 1.45 | % | | | 2.18 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTALS | | | | | | | | | | | 100.00 | % | | | 8.75 | % | | | 17.50 | % | | | 26.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen M. Leackfeldt | | | | | | | | | | | | | | | | | | | Executive Vice President | | | | | | | | | | | | | | | | | | | Eligible Salary | | $ | 208,000 | | | | Eligible Salary | | | $ | 208,000 | | | | Eligible Salary | | | $ | 208,000 | | Incentive Threshold (%) | | | 8.75 | % | | | Incentive Target (%) | | | | 17.50 | % | | | Incentive Stretch (%) | | | | 26.25 | % | Incentive Threshold ($) | | $ | 18,200 | | | | Incentive Target ($) | | | $ | 36,400 | | | | Incentive Stretch ($) | | | $ | 54,600 | | | | Performance Goals | | | Payment Range1 | | Incentive Measures | | Threshold | | | Target | | | Stretch | | | Weight | | | Threshold | | | Target | | | Stretch | | Net Income ($ thousands) | | $ | 12,260 | | | $ | 13,183 | | | $ | 14,501 | | | | 30.00 | % | | | 2.63 | % | | | 5.25 | % | | | 7.88 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 58.10 | % | | | 56.10 | % | | | 54.10 | % | | | 25.00 | % | | | 2.19 | % | | | 4.38 | % | | | 6.56 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Retail Deposits | | $ | 528,398 | | | $ | 539,182 | | | $ | 593,100 | | | | 10.00 | % | | | 0.88 | % | | | 1.75 | % | | | 2.63 | % | Deposit Rate | | | 0.51 | | | | 0.50 | | | | 0.49 | | | | 10.00 | % | | | 0.88 | % | | | 1.75 | % | | | 2.63 | % | Avg. Cons. Loans | | $ | 399,693 | | | $ | 407,850 | | | $ | 448,635 | | | | 10.00 | % | | | 0.88 | % | | | 1.75 | % | | | 2.63 | % | Past Dues2 | | | 225bps | | | | 200bps | | | | 150bps | | | | 5.00 | % | | | 0.43 | % | | | 0.88 | % | | | 1.30 | % | Charge offs2 | | | 30bps | | | | 25bps | | | | 20bps | | | | 5.00 | % | | | 0.43 | % | | | 0.87 | % | | | 1.31 | % | NPL+OREO2 | | | 225bps | | | | 175bps | | | | 125bps | | | | 5.00 | % | | | 0.43 | % | | | 0.87 | % | | | 1.31 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTALS | | | | | | | | | | | 100.00 | % | | | 8.75 | % | | | 17.50 | % | | | 26.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gregory W. Dalton | | | | | | | | | | | | | | | | | | | Executive Vice President | | | | | | | | | | | | | | | | | | | Eligible Salary | | $ | 190,000 | | | | Eligible Salary | | | $ | 190,000 | | | | Eligible Salary | | | $ | 190,000 | | Incentive Threshold (%) | | | 8.75 | % | | | Incentive Target (%) | | | | 17.50 | % | | | Incentive Stretch (%) | | | | 26.25 | % | Incentive Threshold ($) | | $ | 16,625 | | | | Incentive Target ($) | | | $ | 33,250 | | | | Incentive Stretch ($) | | | $ | 49,875 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Performance Goals | | | | | | | | | | | | | | Payment Range1 | | Incentive Measures | | Threshold | | | Target | | | Stretch | | | Weight | | | Threshold | | | Target | | | Stretch | | Net Income ($ thousands) | | $ | 12,260 | | | $ | 13,183 | | | $ | 14,501 | | | | 20.00 | % | | | 1.75 | % | | | 3.50 | % | | | 5.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Efficiency Ratio | | | 58.10 | % | | | 56.10 | % | | | 54.10 | % | | | 10.00 | % | | | 0.88 | % | | | 1.75 | % | | | 2.63 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Avg. Commercial Loans | | $ | 462,805 | | | $ | 472,250 | | | $ | 519,475 | | | | 35.00 | % | | | 3.06 | % | | | 6.13 | % | | | 9.19 | % | Avg. Non Personal Deposits Past Dues2 | | $
| 176,765
225bp |
| | $
| 180,372
200bp |
| | $
| 198,409
150bp |
| |
| 15.00
6.66 | %
% | |
| 1.31
0.58 | %
% | |
| 2.63
1.17 | %
% | |
| 3.94
1.75 | %
% | Charge offs2 | | | 30bps | | | | 25bps | | | | 20bps | | | | 6.67 | % | | | 0.58 | % | | | 1.16 | % | | | 1.75 | % | NPL+OREO2 | | | 225bps | | | | 175bps | | | | 125bps | | | | 6.67 | % | | | 0.59 | % | | | 1.16 | % | | | 1.74 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | TOTALS | | | | | | | | | | | | | | | 100.00 | % | | | 8.75 | % | | | 17.50 | % | | | 26.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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 base salary determinedthe average outstanding loans. The average outstanding loan figure for this calculation is measured by averaging the actual outstanding loans at each month end. |
3. | Mr. Maltz was appointed to be consistent with competitive market practices. Actual awards variedhis positions effective September 1, 2014 and received a pro-rated payment based on achievementhis 2014 earned compensation. |
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: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Percentage of Base (%) | | | Total Payout ($) | | | Net Income ($) | | | Efficiency Ratio ($) | | | Credit Asset Quality1 ($) | | | Loan and Deposit Growth ($) | | | Individual Goals ($) | | Curtis C. Simard | | | 43.88 | | | | 180,984 | | | | 92,812 | | | | 41,765 | | | | 46,407 | | | | — | | | | — | | Gerald Shencavitz | | | 29.34 | | | | 74,807 | | | | 38,250 | | | | 13,770 | | | | — | | | | — | | | | 22,787 | 2 | Richard B. Maltz3 | | | 23.32 | | | | 15,785 | | | | 5,334 | | | | 3,198 | | | | 4,434 | | | | 2,819 | | | | — | | Stephen M. Leackfeldt | | | 22.09 | | | | 45,946 | | | | 16,390 | | | | 12,284 | | | | 8,154 | | | | 7,288 | | | | 1,830 | 4 | Gregory W. Dalton | | | 21.67 | | | | 41,168 | | | | 9,975 | | | | 4,495 | | | | 9,956 | | | | 16,742 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Totals | | | | | | | 358,690 | | | | 162,761 | | | | 75,512 | | | | 68,951 | | | | 26,849 | | | | 24,617 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. | The asset quality measures for Past Dues and Non-Performing Loans + Other Real Estate Owned are calculated using a 12 month average of specific goals. The opportunity reflects a range of potential awards. Actual awards ranged from 0% (for not achieving minimal performance) to 150% of target (for exceptional performance). The table below summarizes the incentive rangesmonth-end actual data for the 2008 plancalendar 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. |
2008 Short-Term Incentive Targets
| | | | | | | | | | | | | | | | | | | | | | | Threshold | | Target | | Stretch | Role | | Below Threshold | | (50% of Target) | | (100%) | | (150% of Target) | CEO/President | | | 0 | % | | | 12.50 | % | | | 25.00 | % | | | 37.50 | % | EVP | | | 0 | % | | | 10.00 | % | | | 20.00 | % | | | 30.00 | % | SVP | | | 0 | % | | | 7.50 | % | | | 15.00 | % | | | 22.50 | % |
Incentive Plan Measures
| | | Each participant had predefined performance goals used to determine their short-term incentive award. There were two performance categories: BHB Team and Individual. BHB 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 role/level in the Company. | | | | | The table below provided the guidelines for the allocation of participant’s incentives for each performance component |
| | | | | | | | | Position | | BHB/Team Performance | | Individual Performance | CEO/President | | | 75 | % | | | 25 | % | EVP | | | 65 | % | | | 35 | % | SVP — Line | | | 30 | % | | | 70 | % | SVP — Staff | | | 50 | % | | | 50 | % |
| | | BHB Performance | | | | | BHB Team performance goals for 2008 were increased Net Income and a decreased Efficiency Ratio. The table below shows the specific performance goal at Threshold, Target (budget) and Stretch for 2008. |
17
| | | | | | | | | | | | | Company Performance | | 2008 Performance Goals | Measures | | Threshold | | Target | | Stretch | Net Income (to be adjusted for Visa IPO gain) | | | 7,496 | | | 7,577 (budget) | | | 8,407 | | Efficiency Ratio | | 63.7 (budget) | | 62.6 (2007) | | | 61.6 | |
| | | Individual Performance | | | | | In addition to the BHB’s Team performance goals, participants had 2 — 3 individual goals that focused on either department/team performance (e.g. lending growth, deposit growth, budget constraint) and/or individual performance on assigned strategic projects. The mix of these goals varied by role. A minimum achievement of threshold level performance was required for the plan to pay for each component. | | | | | Plan Trigger | | | | | In order for the Annual Incentive Plan to ‘activate’ or turn on, the Company needed to achieve at least $7,496 in Net Income representing an increase of 4.77% over 2007 Net Income. If BHB did not meet this level, the plan would not pay out any awards for the year, regardless of performance on other goals. | | | | | The Company achieved Net Income of $7,731 or an 8.07% increase over 2007. |
2008 Incentive Payment Summary
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Credit | | Loan and | | | | | Percentage | | Total | | Net | | Efficiency | | Asset | | Deposit | | Individual | Named | | Of Base | | Payout | | Income | | Ratio | | Quality | | Growth | | Goals | Executive | | (%) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | Joseph M. Murphy | | | 21 | | | | 57,968 | | | | 26,937 | | | | 20,546 | | | | 10,485 | | | | 0 | | | | 0 | | Gerald Shencavitz | | | 23 | | | | 39,907 | | | | 11,197 | | | | 10,440 | | | | 0 | | | | 0 | | | | 18,270 | 1 | Michael W. Bonsey | | | 13 | | | | 15,533 | | | | 3,734 | | | | 5,220 | | | | 2,664 | | | | 3,915 | | | | 0 | | Gregory W. Dalton | | | 17 | | | | 22,157 | | | | 2,834 | | | | 2,970 | | | | 2,424 | | | | 13,929 | | | | 0 | | Daniel A. Hurley III | | | 11 | | | | 13,509 | | | | 2,714 | | | | 2,846 | | | | 0 | | | | 0 | | | | 7,949 | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Totals | | | | | | | 149,074 | | | | 47,416 | | | | 42,022 | | | | 15,573 | | | | 17,844 | | | | 26,219 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 1 | 2. | Mr. Shencavitz earned $6,525$7,487 for exceeding investment income targets, $6,525and $15,300 for placing in the 75th percentile on investment yield measured against peer, and $5,220 for his oversight and leadership on five assigned strategic projects completed in 2008peers for a total incentive payment of $18,270$22,787 in this category. |
| 2 | 3. | Mr. HurleyMaltz was appointed to his positions with the Company effective September 1, 2014 and received a pro-rated payment based on his 2014 earned $7,949compensation. |
4. | Mr. Leackfeldt received $1,830 for exceeding income projectionsdeposit rate management. |
Mr. Bonsey resigned from his positions effective June 13, 2014, and did not receive an annual incentive award payment. Details of the above are disclosed in Threshold, Target and Stretch (maximum) categories in the “Grants of Plan-Based Awards” table under the heading “Executive Compensation Tables” found elsewhere in this proxy statement. Long-term Incentives Equity Plans. Since adopting our Stock Option Plan in 2000, we have provided our officers and managers, including our NEOs, with an equity-based compensation component in the form of stock options. This compensation component is used to align the interest of our participating officers and managers, particularly its executive officers, with those of its shareholders over a long-term horizon and to serve as a retention tool. We granted options upon date of hire or promotion for qualified individuals, and from time to time for special recognition. We award all grants at the closing market price of the business day of the enabling vote by the Board. The Board also sets the vesting schedule, which is typically over a period of three to seven years. The Stock Option Plan adopted in 2000 may no longer issue stock options grants and the grants made under the Stock Option Plan of 2000 to NEOs and other management members are nearing expiration. Members of the management team periodically exercise these maturing options. The Board adopted the 2009 Plan, which was approved by shareholders at the May 2009 Annual Meeting, under which equity grants may currently be issued. Information pertaining to outstanding options and equity awards are disclosed in the “Outstanding Equity Awards at Fiscal Year-end” table under the heading “Executive Compensation Tables” found elsewhere in this proxy statement. The Board voted to include a Long-Term Incentive Program for senior management members in our total compensation program in 2013. PM&P assisted the Compensation Committee in the plan design and appropriate reward levels. The program is designed to be made up of three-year rolling plans utilizing shares made available through the 2009 Plan. Grants may be given in time-vested restricted stock, performance-vested restricted stock, or a combination of both. The purpose of the program is to align executives’ interests with shareholder interests, increase executive stock ownership, ensure sound risk management by providing a balanced view of performance and reward over a longer time horizon, and position our total compensation offerings to be competitive with the market to attract and retain strong talent needed to drive our success. The Board approved plans covering the 2013-2015 and the 2014-2016 time periods. Nine senior managers, including NEOs Simard, Shencavitz, Maltz, Leackfeldt and Dalton, participate in the current plan. Target reward opportunities are based on role. Equity rewards are calculated as a percentage of 2014 base salary to determine the number of shares available for awards. | | | | | | | | | | | | | | | | | | | Long-Term Incentive Targets | | Role | | Grant | | Below Threshold | | | Threshold (50% of Target Percentage) | | | Target (100%) | | | Stretch (150% of Target Percentage) | | President /CEO | | Time-vested | | | | | | | N/A | | | | 15.00 | % | | | N/A | | | | Performance | | | 0 | % | | | 7.50 | %1 | | | 15.00 | %1 | | | 22.50 | %1 | EVP & CFO | | Time-vested | | | | | | | N/A | | | | 13.75 | % | | | N/A | | | | Performance | | | 0 | % | | | 6.88 | % | | | 13.75 | % | | | 20.63 | % | EVP | | Time-vested | | | | | | | N/A | | | | 12.50 | % | | | N/A | | | | Performance | | | 0 | % | | | 6.25 | % | | | 12.50 | % | | | 18.75 | % |
1. | The Board voted Mr. Simard, as part of his employment contract, an increased percentage payout for the reorganized Bar Harbor Financial Services function. |
| | | Details of the above payments disclosed into Threshold, Target, and Stretch categories can be found on page 27. | | | (c) | | Stock Option Plan.Since adopting its Stock Option Plan in 2000, the Company has provided its officers and managers, including its NEOs, with a share-based compensation component in the form of stock options. This compensation component is used to align the interest of the Company’s participating officers and managers, particularly its executive officers, with those of its Shareholders over a long-term horizon and to serve as a retention tool. The Company grants options upon date of hire or promotion for qualified individuals, and from time to time for special recognition. The Company awards all grants at the closing market price of the business day of the enabling vote by the Company’s Board of Directors. The Board of Directors also sets the vesting schedule, which is typically over a period of three to seven years. The Company did not grant any stock options to its NEOs in 2008. |
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| (d) | | Benefits, Retirement and Post Termination Compensation Elements.The Company provides for all employees meeting minimum age and service requirements a 401(k) benefit retirement plan. In addition, the Company provides a nonqualified, noncontributory, defined-benefit plan, (“SERP”) for certain highly compensated officers. Currently, the Chief Executive Officer and Executive Vice President/Chief Financial Officer are the only two NEOs that participate in the SERP. The Company’s 401(k) plan has imbedded regulatory ceilings that limit the two most senior executives from deferring amounts sufficient to provide for a reasonable, final average salary retirement benefit. The Company utilizes its SERP plan as a vehicle to assist in funding the Chief Executive Officer’s and Executive Vice President/Chief Financial Officer’s total retirement program. | | | | | The Company also maintains change in control agreements for NEOs Murphy, Shencavitz, Bonsey, Dalton and Hurley. No golden parachute payments will be made under these agreements to the extent that such payments are prohibited by applicable law due to the Company’s participation in the U.S. Treasury’s Capital Purchase Program. | | | | | The agreements were in effect for the 2008 reporting year and provided for the payment of their salary and other specified benefits for a period of twelve to twenty-four months in the event of both a change of control of the Company and subsequent termination (or constructive termination) within set timeframes after a change of control, unless such termination was for cause. These specific payments and timeframes were establishedperformance shares under the advice of a compensation consultant2013-2015 Plan. His target was increased from 15.00% to 30.00%, his Threshold from 7.50% to 15.00%, and employment attorney as representative of similar type agreements in the industry. | | | | | The Committee believes that the Company’s SERPhis Stretch from 22.50% to 45.00% for this plan and change in control agreements are advisable to provide a competitive total compensation plan to attract and retain the employment of NEOs that are a party to the agreements.only. |
The Board voted both time-vested restricted shares and performance shares for the 2013-2015 and the 2014-2016 Plans. Fifty percent of the grants to each participant were voted in time-vested with a third of the shares vesting in each of the years covered by the plans. Grants were voted contingent upon continued employment and with a hold restriction of one year. At the time of vesting, sufficient shares may be withheld to cover the executive’s tax liabilities. The Board voted the remaining 50% of the shares in performance-vested shares to be awarded at the end of the three year measurement and upon attainment of the performance goal. Relative Return on Assets (ROA) measured against the SNL $750 to $3B Bank Index peer group will determine the performance award for the current plan. In addition to relative ROA, there is a Total Shareholder Return (TSR) modifier to further align shareholder interest. If the TSR calculation for the same performance measurement period is negative, a payout cannot exceed Threshold regardless of the relative ROA performance results. Benefits, Retirement and Post-Termination Compensation Elements We provide a 401(k) plan for all employees meeting minimum age and service requirements. In addition, we maintain a SERP for the Executive Vice President and CFO and he is the only NEO that participates in the SERP. Messrs. Murphy and Shencavitz were the only authorized participants (the “Participants”) in the SERP as of December 31, 2014. Under the SERP, the Participants are eligible to receive upon most termination events, disability, or death, an individually defined benefit payment based upon a predetermined vesting schedule. No plan benefits are payable to these individuals if they are terminated for cause as defined in the document. Upon full vesting (defined as age 68 for Mr. Murphy and age 65 for Mr. Shencavitz) and the Participant’s retirement, then monthly payments of $11,200 and $8,583, respectively will be paid under the SERP to the participant (or their beneficiary) for a period of 240 months. There are also provisions under the SERP for reduced monthly payments in the event of an earlier retirement by these individuals. Following his retirement, Mr. Murphy began receiving $2,621 per month based on his vested benefit prior to the implementation of Section 409A which delayed payment of a portion of his benefit for a six month period. Mr. Murphy became eligible for his full monthly benefit of $11,200 beginning in February 2014. Mr. Shencavitz had a vested monthly benefit amount of $5,583 as of December 31, 2014. The SERP benefit for Mr. Shencavitz will fully vest upon a change of control of the Company (as such term is defined in the SERP). This is a legacy program and we do not anticipate future participants under this program. We also maintain an employment agreement with NEO Simard and change in control agreements for NEOs Shencavitz, Maltz, Leackfeldt and Dalton. Mr. Bonsey’s change in control agreement terminated in connection with his resignation, which was effective June 13, 2014. These agreements provide for, among other things, the payment of their salary and other specified benefits for a period of 12 to 24 months in the event of both a change of control of the Company and subsequent termination (or constructive termination) within set timeframes after a change in control, unless such termination was for cause. These specific payments and timeframes were established under the advice of a compensation consultant and employment attorney as representative of similar type agreements in the industry. The Compensation Committee feels that these agreements are necessary to provide a competitive total compensation plan to attract and retain the employment of the NEOs who are a party to the agreements. Other Compensation and Benefits In addition to the foregoing, all our executive officers of the company are entitled to participate in certain group health, dental, disability and term life insurance benefits. In accordance with Companyour policy, all such benefits are generally available to employees of the Company and its subsidiaries. Stock Ownership Guidelines The Bylaws of the Company require that each director own a minimum of 500 shares no later than one year following their initial election to the Board. In addition, the Board has implemented a policy requiring each director to own a minimum of five times his or her annual cash retainer. Ownership must be attained within five years of a director’s initial election and may include their 500 qualifying shares. All current Director-nominees exceed this ownership requirement. Director nominee, Daina Hill, if elected, will have up to one year to purchase her initial 500 shares and up to five years to attain the minimum ownership requirements. While manymost of the Company’s executive officers have significanthold Company stock, holdings, the Company does not have specific guidelines regarding stock ownership for its NEOs at this time. The Board has implemented retention periods on equity issued under the Company’s Long Term Incentive Program for its NEOs. However, the Company encourages stock ownership and reviews overall ownership levels on a periodic basis.Hedging and Pledging All directors and employees (including NEOs) are prohibited from engaging in any speculative transaction designed to hedge or offset any decrease in market value of our securities, including hedging of our stock. We also prohibit any pledging of our securities in a margin account and restricts all other pledging of any of our securities by requiring directors and employees to obtain the prior approval of the Audit Committee before entering into any such agreement in a financial arrangement. Our Insider Trading Policy further prohibits directors and employees from short-swing transactions and trading in Company securities at a time when they are in possession of insider information. Compliance with Internal Revenue Code Section 409A Our compensation plans subject to Section 409A of the Internal Revenue Code was enacted in 2005 and provides that if a service provider is entitled to nonqualified deferred compensation benefits that are subject to Section 409A, and such benefits do not comply with Section 409A, the service provider would be subject to adverse tax treatment, including accelerated income recognition and a potential 20% tax penalty. The Company has modified its affected compensation plansoperated to comply with the Section 409A tax provisions because the Company’s NEOs meet the definition of a service provider under Section 409A. Participation in the U.S. Treasury’s Capital Purchase Program
Capital Purchase Program Participation
In January 2009, the Company issued and sold preferred stock and a warrant to purchase common stock for an aggregate purchase price of $18,751,000 to the U.S. Treasury under the Capital Purchase Program. Under the terms of the purchase agreement, for as long as the U.S. Treasury holds any Company securities acquired under the purchase agreement or the warrant, the Company must ensure that its compensation, bonus, incentive and other benefit plans, arrangements and agreements, including golden parachute and severance and employment agreements, with respect to its senior executive officers, as such term is defined in the Emergency Economic Stabilization Act of 2008 (“EESA”), comply with Section 111(b) of the EESA and applicable guidance and regulations under EESA
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promulgated by the U.S. Treasury. Each such officer consented to and waived any claims against both the U.S. Treasury and the Company with respect to any amendments or modifications to their compensation or benefits required for the company to so comply.
As a result of the Company’s participation in the Capital Purchase Program and in accordance with the EESA as originally enacted, the company amended, the benefits plans and agreements in which any of the senior executive officers (who are also the named executive officers) could receive payments upon termination or change in control. The amendments cover the period required by Section 111(b) of the EESA and applicable guidelines and regulations that prohibit any “golden parachute payment” as defined under Section 280G of the Code. Under Section 280G as modified by the EESA, “golden parachute payment” is defined generally to mean any payment made on account of any severance from employment by reason of involuntary termination or in connection with any bankruptcy filing, insolvency or receivership, to the extent that the aggregate present value of such payments equals or exceeds three times the named executive officer’s average annual compensation for the five years prior to the severance from employment. However, see “2009 EESA Amendments” below for additional information on changes to the definition of the term “golden parachute payment.”
Policy on Internal Revenue Code Section 162(m). The Company intends for all incentive compensation paid to the named executive officers to be fully deductible for federal income tax purposes. Section 162(m) of the Code disallows publicly-tradedpublicly traded companies from receiving a tax deduction on compensation paid to executive officers in excess of $1 million unless, among other things, the compensation meets the requirements for performance-based compensation. In structuring the compensation programs and in determining executive compensation, the Compensation Committee takes into consideration the deductibility limit for compensation and the performance-based requirements of Section 162(m). To date, noneNone of the compensation paid to any executive offers haveour employees exceeded this limit on deductibility. As a result of the Company’s participation in the Capital Purchase Program, for as long as the U.S. Treasury holds any Company securities acquired under the purchase agreement or the warrant, the deduction limit for remuneration paid to the senior executive officers during any taxable year will be $500,000 instead of $1 million and must be computed without regard to “performance-based” compensation and certain deferrals of income.
dollar threshold during 2014.Clawback ProvisionCEO Employment Agreement..
As a result of the Company’s participation in the Capital Purchase Program, the Company is required to provide for the recovery of any incentive or bonus payments paid to senior executive officers during the period that the U.S. Treasury holds any Company securities acquired under the purchase agreement or the warrant which are based on financial criteria later proven to be materially inaccurate. Accordingly, the Company has amended or modified each applicable incentive or other benefit plan to so provide. Each of the senior executive officers consented to and waived any claims against the U.S. Treasury and the Company with respect to such amendments and modifications.
2009 EESA Amendments
The American Recovery and Reinvestment Act of 2009 (“ARRA”), enacted on February 17, 2009, has materially amended Section 111 of EESA. In addition to making other changes, the ARRA restricts the amount of bonuses that can be paid to our NEOs, requires the Compensation Committee to conduct a risk assessment of all employee benefit programs twice a year, and our CEO and CFO to certify compliance with Section 111 of EESA as amended by the ARRA. Furthermore, the ARRA has amended the definition of a “golden parachute payment” generally to include any payment on account of an NEO’s departure from the employer. U.S. Treasury guidance will be needed to clarify whether this completely prohibits the payment of severance, whether or not in a change of control situation. The Company may be required to make changes to its compensation and benefit programs applicable to our NEOs based on the determination it makes in the coming weeks and months regarding the scope of actions required to comply with amended Section 111 of EESA. Compensation 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
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Compensation Committee recommended to the Board of Director members that the Compensation Discussion and Analysis be included in its Annual Report on Form 10-K and this Proxy Statement.
Risk Assessment
In accordance with the EESA, the Compensation Committee certifies that it will, prior to April 16, 2009, review with its designated senior risk officer the incentive compensation arrangements applicable to the Company’s “senior executive officers” (as defined pursuant to the Section 111 of the Emergency Economic Stabilization Act of 2008), which includes each of the NEOs. The Compensation Committee will make reasonable efforts prior to April 16, 2009 to ensure that such arrangements do not encourage senior executive officers to take unnecessary and excessive risks that threaten the value of the Company and Bar Harbor Bank & Trust. April 16, 2009 is ninety (90) days from the date of the Company’s initial receipt of Capital Purchase Program funds.
Robert M. Phillips, Chair
Jacquelyn S. Dearborn
Peter Dodge
Lauri E. Fernald
Constance C. Shea
(This space intentionally left blank)
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EXECUTIVE COMPENSATION
2008 Summary Compensation Table
The following table discloses compensation for the years ended December 31, 2008, 2007 and 2006, received by the Company’s principal executive officer, principal financial officer, and three other most highly compensated executive officers (the “NEOs”). The Company, or the subsidiary by which he was employed, paid compensation for each named executive officer.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change in Pension | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Value and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Nonqualified | | | | | | | | | | | | | | | | | | | | | | | | | | | Non-Equity | | Deferred | | | | | | | | | | | | | | | | | | | Stock | | Option | | Incentive Plan | | Compensation | | All Other | | | Name and Principal | | | | | | Salary1 | | Bonus | | Awards | | Awards2 | | Compensation | | Earnings3 | | Compensation4 | | Total | Position | | Year | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | Joseph M. Murphy | | | 2008 | | | | 273,946 | | | | | | | | | | | | 7,664 | | | | 57,968 | | | | 222,690 | | | | 21,579 | | | | 583,847 | | President and CEO | | | 2007 | | | | 258,440 | | | | 0 | | | | 0 | | | | 49,956 | | | | 32,305 | | | | 201,145 | | | | 20,999 | | | | 562,845 | | of Bar Harbor | | | 2006 | | | | 258,440 | | | | 0 | | | | 0 | | | | 49,956 | | | | 0 | | | | 175,028 | | | | 22,391 | | | | 505,815 | | Bankshares and Bar Harbor Bank & Trust | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gerald Shencavitz | | | 2008 | | | | 174,000 | | | | | | | | | | | | 17,029 | | | | 39,907 | | | | 56,966 | | | | 9,724 | | | | 297,626 | | EVP, CFO and | | | 2007 | | | | 153,351 | | | | 0 | | | | 0 | | | | 18,466 | | | | 19,169 | | | | 51,518 | | | | 7,807 | | | | 250,311 | | Treasurer of Bar | | | 2006 | | | | 149,347 | | | | 0 | | | | 0 | | | | 15,547 | | | | 0 | | | | 43,555 | | | | 11,560 | | | | 220,009 | | Harbor Bankshares and EVP, CFO, and COO of Bar Harbor Bank & Trust | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael W. Bonsey | | | 2008 | | | | 116,000 | | | | | | | | | | | | 6,559 | | | | 15,533 | | | | | | | | 5,017 | | | | 143,109 | | SVP, Credit | | | 2007 | | | | 104,000 | | | | 0 | | | | 0 | | | | 10,191 | | | | 13,004 | | | | 0 | | | | 4,563 | | | | 131,758 | | Administration of | | | 2006 | | | | 102,003 | | | | 0 | | | | 0 | | | | 6,969 | | | | 0 | | | | 0 | | | | 7,568 | | | | 116,540 | | Bar Harbor Bank & Trust | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gregory W. Dalton | | | 2008 | | | | 132,000 | | | | 7,536 | 5 | | | | | | | 6,559 | | | | 22,157 | | | | | | | | 4,980 | | | | 173,232 | | SVP, Business | | | 2007 | | | | 111,343 | | | | 0 | | | | 0 | | | | 8,841 | | | | 13,918 | | | | 0 | | | | 5,092 | | | | 139,194 | | Banking of Bar | | | 2006 | | | | 105,007 | | | | 0 | | | | 0 | | | | 4,847 | | | | 0 | | | | 0 | | | | 7,925 | | | | 117,779 | | Harbor Bank & Trust | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel A. Hurley III | | | 2008 | | | | 126,500 | | | | 8,019 | 6 | | | | | | | 12,818 | | | | 13,509 | | | | | | | | 6,452 | | | | 167,298 | | President, Bar | | | 2007 | | | | 126,500 | | | | 0 | | | | 0 | | | | 12,514 | | | | 15,813 | | | | 0 | | | | 6,308 | | | | 161,135 | | Harbor Trust | | | 2006 | | | | 124,497 | | | | 0 | | | | 0 | | | | 8,519 | | | | 0 | | | | 0 | | | | 8,336 | | | | 141,352 | | Services and SVP of Bar Harbor Bank & Trust | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 1 | | Included in base salary amounts disclosed above for each named executive officer are monies they deferred pursuant to the Company’s 401(k) Plan, which allows employees of the Company and its wholly owned subsidiaries to defer up to 50% of their compensation, subject to applicable limitations in section 401(k) of the Internal Revenue Code of 1986, as amended, and amounts deferred pursuant to the Company’s Section 125 Cafeteria plan providing health, life, and disability insurance benefits. | | 2 | | The amounts included in the “Option Awards” column are the amounts of compensation cost recognized by the Company in fiscal 2008 related to stock option awards in prior fiscal years, as described in Financial Accounting Standards No. 123(R). For a discussion of valuation assumptions, see Note 13 to the Company’s 2008 Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. | | 3 | | The amounts in this column reflect the changes in value of the Company’s nonqualified, noncontributory, defined-benefit supplemental executive retirement program between December 31, 2006, December 31, 2007, and December 31, 2008. | | 4 | | Other Annual Compensation includes match and contribution amounts into the Company’s 401(k) plan in the same formula and schedule as available to all other employees and imputed life insurance amounts on group term insurance in excess of the allowable $50,000, non-taxable IRS limit. | | 5 | | One time payment for $7,536 ($5,000 net) in recognition of competitive market pressure pending full comparative salary review. | | 6 | | One time payment for $8,019 ($5,000 net) in lieu of 2008 base salary adjustment. |
The NEOs also participate in certain group life, health, disability insurance, and medical reimbursement plans, not disclosed in the Summary Compensation Table, that are generally available to all employees and do not discriminate in scope, terms, and operation.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All Other Compensation Detail | | | | | | | | | | | | | Employer 401(k) | | | | | | | | | | | | | | | | | Contribution Match | | Club | | Spousal | | Imputed Life | | | | | | | | | | | and Contribution | | Dues | | Travel | | Insurance | | Other1 | | TOTAL | Name | | Year | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | Joseph M. Murphy | | | 2008 | | | | 9,000 | | | | 960 | | | | 695 | | | | 7,647 | | | | 3,277 | | | | 21,579 | | | | | 2007 | | | | 9,145 | | | | 925 | | | | 1,111 | | | | 6,858 | | | | 2,960 | | | | 20,999 | | | | | 2006 | | | | 16,176 | | | | 895 | | | | 1,116 | | | | 1,629 | | | | 2,575 | | | | 22,391 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gerald Shencavitz | | | 2008 | | | | 7,536 | | | | 0 | | | | 685 | | | | 665 | | | | 838 | | | | 9,724 | | | | | 2007 | | | | 6,143 | | | | 0 | | | | 622 | | | | 284 | | | | 758 | | | | 7,807 | | | | | 2006 | | | | 9,555 | | | | 0 | | | | 395 | | | | 969 | | | | 641 | | | | 11,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael W. Bonsey | | | 2008 | | | | 4,529 | | | | 0 | | | | 0 | | | | 488 | | | | 0 | | | | 5,017 | | | | | 2007 | | | | 4,047 | | | | 0 | | | | 77 | | | | 439 | | | | 0 | | | | 4,563 | | | | | 2006 | | | | 7,139 | | | | 0 | | | | 0 | | | | 429 | | | | 0 | | | | 7,568 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gregory W. Dalton | | | 2008 | | | | 4,836 | | | | 0 | | | | 0 | | | | 144 | | | | 0 | | | | 4,980 | | | | | 2007 | | | | 4,632 | | | | 350 | | | | 0 | | | | 110 | | | | 0 | | | | 5,092 | | | | | 2006 | | | | 7,442 | | | | 0 | | | | 385 | | | | 98 | | | | 0 | | | | 7,925 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel A. Hurley III | | | 2008 | | | | 6,009 | | | | 0 | | | | 0 | | | | 443 | | | | 0 | | | | 6,452 | | | | | 2007 | | | | 5,262 | | | | 0 | | | | 0 | | | | 1,046 | | | | 0 | | | | 6,308 | | | | | 2006 | | | | 7,788 | | | | 0 | | | | 0 | | | | 548 | | | | 0 | | | | 8,336 | |
| | | 1 | | Includes applicable Medicare (1.45%) gross up amounts on the SERP benefits amounting to $3,277 for Mr. Murphy and $838 Mr. Shencavitz. |
The Company provides non-cash perquisites that do not exceed $10,000 in the aggregate for any individual and are not included in the reported figures. Benefits not disclosed in the table above are ofde minimusvalue such as incidental service fee waivers on deposit accounts, the purchase of traveler’s checks, or safe deposit rental fees.
NARRATIVE DISCUSSION AND ANALYSIS OF SUMMARY COMPENSATION TABLE
The Committee believes the following information and discussion is useful to the reader in understanding the information set forth in the above Summary Compensation Table.
The following sections contain a discussion of executive compensation terms and payment of which may be superseded under the EESA as modified by the ARRA. For a detailed description of the restrictions, please see discussion on page 20.
Chief Executive Officer Employment Agreement
The Company previously2013, we entered into a written employment agreement originally dated January 3, 2003, with Mr. Joseph M. Murphy, its Chief Executive Officer (“CEO”). On November 7, 2003, the Company amended its original written employment agreement with Mr. Murphy in connection with adoption of the Company’s Supplemental Executive Retirement ProgramSimard, as President and Change in Control Agreement. On November 19, 2008, the Company’s Board of Directors amended and restated Mr. Murphy’s original employment AgreementCEO (the “CEO Employment Agreement”) primarily for the purpose of complying with Internal Revenue Code Section 409A by: making clear that reimbursement of expenses and timing thereof is not subject to liquidation or exchange for another benefit; references to the CEO’s Supplemental Executive Retirement Plan were updated; provided for a six (6) month delay for payment of benefit payments after a separation from service as required by Section 409A; amending the definition of “Good Reason” to include separation from service as required by Section 409A; amending the definition of a disability to conform to Section 409A; and removing the change in control provisions applicable to the CEO. The amended and restated CEO Employment Agreement supersedes and replaces the original CEO Employment Agreement.
. The CEO Employment Agreement provides for the payment of an annual base salary to the CEOhim of not less than $273,946.00 to be$375,000 paid in substantially equal installments in accordance with the Company’sour compensation 23
policies and procedures on the pay dates established by the Companyus for itsour senior executive officers. The base salary shall be reviewed annually by the Compensation Committee of the Company’s Board of Directors and shall be adjusted at the Company’s sole discretion. The CEO shallHe also participateparticipates in any short-term, long-term, or other performance compensation planplans agreed upon by the parties during the term of the CEO Employment Agreement in concert with the Company’sour evolving goals and objectives. The restated CEO Employment Agreement is for an initialhas a term of two (2) years with provisions for automatic extensions of one (1) year each in the absence of notice from the Companyus of itsour intention not to extend the term of the CEO Employment Agreement. The initial termCEO Employment Agreement also provides for a payment in the event of Mr. Simard’s involuntary termination without cause or voluntary termination for good reason of a lump sum payment of two times his salary plus medical, dental and vision benefits for himself and his eligible dependents. This payment shall be reduced to a one times multiplier in the event the CEO Employment Agreement commenced on January 3, 2007, and continued through January 3, 2009, unless sooner terminated. Neither the Company nor the CEO has given notice of termination, and, therefore, the Employment Agreement has been extended by its terms through January 3, 2010. Mr. Murphy’s original Employment Agreementis not renewed. With limited exceptions, it also provided, with limited exceptions,allows for a severance payment to the CEOhim in the event his employment is terminated within one (1) year prior to or following certain events defined to constitute a change in control of the Company. On November 19, 2008, the Board of Directors of the Company approved an amended Change in Control, Confidentiality Agreement and Noncompetition Agreement with Mr. Murphy which amended and replaced the prior change in control and noncompete provisions contained in Mr. Murphy’s original CEO Employment Agreement. The changes were adopted primarily to comply with Internal Revenue Code Section 409A by clarifying that the date of termination is the date of separation from service; providing for a six month delay in payments, and amending the definition of good reason for termination of employment and amending the definition of disability. The agreement also provides, with limited exceptions, for a severance payment to the CEO in the event his employment is terminated within one (1)year prior to or following certain events defined to constitute a change in control of the Company. This severance payment resulting from a termination of employment (constructive termination) following a change in control is equal to two (2) times the CEO’shis base annual salary, incentive compensation payments earned and any accrued but unused vacation time. In addition, if Mr. Murphy’sSimard had any unvested stock options and supplemental executive retirement benefits willoptions/grants they would vest in accordance with the terms of the plans under which they were granted and vest fully upon a change in control. As in his prior arrangement, inAny payments due him would be reduced to the eventextent necessary to ensure that Mr. Murphy becomesno portion of such payment will be non-deductible by us under Code Section 280G or will be subject to an excise tax on payments made under his agreements and various benefit plans in connection with a change in control, he will be reimbursed for payment of such amounts upon such time as the assumptions and calculations have been prepared, reviewed, and confirmedimposed by a nationally recognized accounting firm.
Mr. Murphy’s Change in ControlCode Section 4999.The CEO Employment Agreement also contains restrictions on competition by the CEOrestricts Mr. Simard’s ability to compete with the Companyus during the term beginning on December 16, 2008 and for a period of one (1) year following the cessation of the CEO’shis employment with the Companyus regardless of reason. Both the Committee and the Board of Directors have reviewed and approved the amended and restated CEO Employment Agreement and the Change in Control provisions applicable to the CEO. Both of these Agreements have been timely amended to comply with Section 409A of the Internal Revenue Code of 1986, and the regulations promulgated thereunder. Both Agreements have also been amended to prohibit the making of any golden parachute payments while participating in the U. S. Treasury Capital Purchase Program.
reason within a 150 air mile radius from Bar Harbor, Maine.Compensation of the Chief Executive OfficerCEO. On an annual basis, the Compensation Committee reviews the existing compensation plan for the Company’s Chief Executive Officer, Joseph M. Murphy (the “CEO”).our CEO. The Compensation Committee reviews thishis compensation plan in the context of the Company’sour overall performance, the achievement of certain financial and non-financial goals and the judgment of the entire Board of Directors as to the quality of the CEO’shis leadership. In addition, the Compensation Committee compares the CEO’swill compare his compensation to CEOs of the Company’sour Compensation Peer Group and salary survey information for comparable positions. In making these comparisons, the Compensation Committee takeswill take into account appropriate differences in the size, business model, and financial performance of the other banking institutions. In accordance with the CEO’sCEO Employment Agreement, with the Company, theCompensation Committee reviews the CEO’shis base salary no less often than annually and may recommend an increase in his base salary to the Board of Directors at the Compensation Committee’s sole discretion. During 2008, CEO Murphy’s base salary was adjusted 6% based on preliminary competitive data provided by the Company’s Compensation Consultant, Pearl Meyer & Partners. 24
As further discussed below, the CEOMr. Simard participated in the structured annual incentive cash compensation plan provided to all executive officers. During 2008,2014, Mr. Murphy receivedSimard earned an award amounting to $180,984.During 2014, the Compensation Committee granted Mr. Simard 304 shares of time-vested restricted stock with a paymentvalue on the grant date of $57,968 under$11,336 as part of his agreed upon 2014 compensation. He is required to hold the Company’s short term, annual incentive compensation program. The Committee did notshares for a minimum of one year from the grant the CEO any additional stock options in 2008.
The CEOdate. Mr. Simard is a member of the Board of Directors of the Company and its subsidiaries.Board. He does not receive any director fees for participating in the activities of these Boards.
the Board.Other Change in Control, Confidentiality and Non-competition AgreementsNon-Competition Agreements. The Company We entered into a Change in Control, Confidentiality and Non-competition Agreement with the Company’s Executive Vice President and Chief Financial Officer, Mr. Gerald Shencavitz. This agreement provides Mr. Shencavitz with severance of both salary and benefits for a period of eighteen (18)18 months in the event of both a change of control of the Company and subsequent termination (or constructive termination) within twelve (12)12 months after a change of control, unless such termination was for cause. In addition, Mr. Shencavitz’s stock options, equity grants, and supplemental executive retirement benefits will vest in accordance with the terms of the plans under which they were granted and vest fully upon a change in control. In the event that Mr. Shencavitz becomes subject to an excise tax on payments made under his agreements and various benefit plans in connection with a change in control, he will be reimbursed for payment of such amounts upon such time as the assumptions and calculations have been prepared, reviewed, and confirmed by a nationally recognized accounting firm. The Agreement has been timely amended to comply with Section 409A of the Internal Revenue Code of 1986, and the regulations promulgated thereunder. The Agreement has also been amended to prohibit the making of any golden parachute payments while participating under the U. S. Treasury Capital Purchase Program.
The Company hasWe have also entered into Change in Control, Confidentiality and Non-Competition Agreements with Bar Harbor Trust Services President, Daniel A. Hurley III, and the Bank’s SeniorBHBT’s Executive Vice Presidents, Michael W. Bonsey andRichard B. Maltz, Gregory W. Dalton and Stephen M. Leackfeldt along with fivesix other senior managers.employees. Their agreements provide for severance of both salary and benefits for a period of twelve (12)12 months in the event of both a change of control of the Company and subsequent termination (or constructive termination) within twelve (12)12 months of a change of control, unless such termination was for cause. The Agreements have been timely amended to complyCompany’s Change in Control, Confidentiality and Non-Competition Agreement with Section 409A of the Internal Revenue Code of 1986, and the regulations promulgated thereunder. The Agreements of NEOs Mssrs.Mr. Bonsey Dalton, and Hurley have been further amended to prohibit the making of any golden parachute payments while participating under the U. S. Treasury Capital Purchase Program. terminated in connection with his resignation, effective June 13, 2014.All of these agreements were entered into as part of a total compensation program to attract and/or retain qualified executives and not entered into in response to any effort known to the Board of Directors by any party or entity to acquire control of the Company. Incentive Cash CompensationCompensation. During 2008,2014 NEOs, Messrs. Murphy,Simard, Shencavitz, Bonsey,Maltz, Dalton and HurleyLeackfeldt participated in an annual cash incentive compensation program with two tiersa combination of team and individual goals representing opportunities for incentive payments. ThisMr. Bonsey forfeited his payment under this plan was approved by the Company’s Boardas of Directors in 2008. The voted plan document allows for tiered payments basedhis resignation on Threshold, Target, and Stretch measures with a plan trigger of requiring the Company to achieve at least a Net Income figure of $7,496 before any payments would be approved or paid. The $7,496 figures represented a 4.77% increase over the Company’s 2007 Net Income. The CompanyJune 13, 2014. We paid out a total of $149,074$358,690 in February 2015 to its NEOs. our remaining NEOs based on the 2014 measurement period.The altering, inflating, and/or inappropriate manipulation of performance/financial results or any other infraction of recognized ethical business standards will subject any participant to disciplinary action up to and including termination of employment. In addition, any incentive compensation as provided by the plan to which the participant would otherwise be entitled will be revoked or subject to “clawback”. “claw back.”The plan is based on a balance of multiple measures, layered oversight, and reasonable ceilings for exceptional performance. These two basic plan features structure the plan to discourage excessive risk and rewards. The Compensation Committee will further reviewreviewed the plan design in 2009 to insure it is in complianceline with the further provisions placed on incentive compensation plans by the Company’s participation under the Capital Purchase Program. 25
best practices for risk. Executive Compensation TablesSummary Compensation TableOther Compensation and Benefits
In addition to the foregoing, all executive officers of the Company are entitled to participate in certain group health, dental, and term life insurance benefits. In accordance with Company policy, all such benefits are generally available to employees of the Company and its subsidiaries.
2008 Grants of Plan-Based Awards
The following table outlinesdiscloses compensation for the outstanding equityyears ended December 31, 2014, 2013 and non-equity awards at fiscal year-end held2012 received by NEOs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | All other | | All other | | | | | | | | | | | Estimated Future Payouts | | | | | | | | | | | | | | Stock Awards; | | Option Awards; | | | | Grant Date | | | | | | | Under Non-Equity Incentive | | Estimated Future Payouts Under | | Number of | | Number of | | Exercise or Base | | Fair Value | | | | | | | Plan Awards | | Equity Incentive Plan Awards | | shares of Stock or | | Securities | | Price of Option | | of Stock | | | | | | | ThreshOld1 | | Target2 | | MaxiMum3 | | Threshold | | Target | | Maximum | | units | | Underlying | | Awards | | and Option | Name | | Grant Date | | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | ($) | | Options (#) | | ($/Sh) | | Awards ($) | (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | | (k) | | (l) | Joseph M. Murphy | | | 2008 | | | | 31,072 | | | | 6,350 | | | | 20,546 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gerald Shencavitz | | | 2008 | | | | 11,197 | | | | 0 | | | | 28,710 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael W. Bonsey | | | 2008 | | | | 4,785 | | | | 1,613 | | | | 9,135 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gregory W. Dalton | | | 2008 | | | | 3,790 | | | | 5,002 | | | | 13,365 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel A. Hurley III | | | 2008 | | | | 2,714 | | | | 7,949 | | | | 2,846 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | Plan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
the NEOs. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position (a) | | Year (b) | | | Base Salary Received1 ($) (c) | | | Bonus ($) (d) | | | Stock Awards2 ($) (e) | | | Non- Equity Incentive Plan Compensation ($) (g) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings3 ($) (h) | | | All Other Compensation4 ($) (i) | | | Total ($) (j) | | Curtis C. Simard | | | 2014 | | | | 412,500 | | | | 50,000 | 5 | | | 154,707 | | | | 180,984 | | | | — | | | | 23,402 | | | | 821,593 | | President & CEO of the Company and BHBT. | | | 2013 | | | | 197,596 | | | | 50,000 | 5 | | | 208,377 | | | | 83,781 | | | | — | | | | 13,836 | | | | 553,590 | | | | | | | | | | | Gerald Shencavitz | | | 2014 | | | | 255,000 | | | | — | | | | 87,685 | | | | 74,807 | | | | 183,693 | | | | 17,813 | | | | 618,998 | | EVP, CFO and Treasurer of the Company and EVP, CFO and COO of BHBT | | | 2013 | | | | 217,001 | 6 | | | — | | | | 70,401 | | | | 61,520 | | | | 84,029 | | | | 11,575 | | | | 433,287 | | | | 2012 | | | | 215,253 | | | | — | | | | 3,967 | | | | 57,705 | | | | 169,907 | | | | 10,279 | | | | 457,122 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richard B. Maltz | | | 2014 | | | | 67,692 | 7 | | | 25,000 | 8 | | | 81,934 | | | | 15,785 | | | | — | | | | 542 | | | | 190,953 | | EVP and Chief Risk Officer of BHBT 11 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen M. Leackfeldt | | | 2014 | | | | 208,000 | | | | — | | | | 65,020 | | | | 45,946 | | | | — | | | | 12,445 | | | | 331,411 | | EVP, Retail Banking and Operations of BHBT | | | 2013 | | | | 178,430 | 9 | | | — | | | | 52,652 | | | | 42,060 | | | | — | | | | 10,026 | | | | 283,168 | | | | 2012 | | | | 177,000 | | | | — | | | | 1,960 | | | | 39,987 | | | | — | | | | 9,629 | | | | 228,576 | | | | | | | | | | | Gregory W. Dalton | | | 2014 | | | | 190,000 | | | | — | | | | 59,374 | | | | 41,168 | | | | — | | | | 11,528 | | | | 302,070 | | EVP, Business Banking of BHBT | | | 2013 | | | | 178,430 | 10 | | | — | | | | 52,652 | | | | 38,290 | | | | — | | | | 10,385 | | | | 279,757 | | | | 2012 | | | | 177,000 | | | | — | | | | 1,960 | | | | 37,109 | | | | — | | | | 8,625 | | | | 224,694 | | | | | | | | | | | Michael W. Bonsey | | | 2014 | | | | 103,414 | 11 | | | — | | | | — | 12 | | | — | | | | — | | | | 6,301 | | | | 109,715 | | Former EVP, Chief Risk Officer of BHBT | | | 2013 | | | | 172,583 | 13 | | | — | | | | 50,276 | | | | 39,515 | | | | — | | | | 9,794 | | | | 272,168 | | | | 2012 | | | | 169,000 | | | | — | | | | 1,960 | | | | 37,450 | | | | — | | | | 7,701 | | | | 216,111 | |
1. | | Included in salary amounts disclosed in (c) above for each NEO are monies they deferred pursuant to our 401(k) Plan, which allows our employees and employees of our wholly owned subsidiaries to defer monies from their compensation, subject to applicable limitations in Code Section 401(k), and amounts deferred pursuant to our Section 125 Cafeteria Plan providing health, life, and disability insurance benefits. Employees, including NEOs, are paid on a bi-weekly basis most calendar years. |
1 | 2. | Amounts in this column represent cash awardsthe aggregate grant date fair value of restricted stock granted to individual named executives for achieving Threshold limitsNEOs as part of their 2012 compensation adjustments, a stock award of $24,970 made to Mr. Simard pursuant to his employment agreement, and grants made to NEOs under the previously described annual incentiveLong Term Incentive Plans are computed at the probable level and in accordance with FASB ASC Topic 718 and are materially consistent with those used to calculate the stock awards, which are set forth in Footnote 14 to our audited consolidated financial statements contained in our Form 10-K for the year ended December 31, 2014. Amounts payable under the 2014 grants for the Long-Term Incentive Plan at the probable level to Messrs. Simard, Shencavitz, Maltz, Leackfeldt, Dalton and Bonsey would be $154,707, $87,685, $81,934, $65,020, $59,374 and $0, respectively. Amounts payable under the Long Term Incentive Plan at Stretch to Messrs. Simard, Shencavitz, Maltz, Leackfeldt, Dalton and Bonsey would be $154,707, $87,685, $81,934, $65,020, $59,374 and $0, respectively. |
3. | The amounts in this column reflect the changes in value of the SERP between December 31, 2014, December 31, 2013 and December 31, 2012 in accordance with FASB ASC Topic 715, details which are set forth in Footnote 15 to our audited consolidated financial statements contained in our Form 10-K for the year ended December 31, 2014. Amounts for 2012, 2013 and 2014 primarily reflect changes in the applicable discount rate. |
4. | Other Annual Compensation includes match and contribution amounts into our 401(k) plan in the same formula and schedule as available to all other employees and such other items imputed life insurance amounts on group term insurance in excess of the allowable $50,000, non-taxable IRS limit. Please see the table below for 2008further detail. |
5. | Mr. Simard received a sign-on bonus of $100,000 with $50,000 payable in 2013 and the remaining $50,000 in 2014 as provided for their various assigned measures.in his employment agreement upon joining the Company. |
6. | Mr. Shencavitz’s base salary was adjusted from $215,259 to $221,711 effective October 2013. The $217,001 represents the actual blended base salary he received for the calendar year 2013. |
27. | Mr. Maltz was appointed to his positions effective September 1, 2014. This figure represents his pro-rata share of his $220,000 annualized base salary. |
8. | Mr. Maltz received a sign on bonus in the amount of $25,000. |
9. | Mr. Leackfeldt’s base salary was adjusted from $177,000 to $182,310 effective October 2013. The disclosed base salary amounts represent the actual blended base salary he received for the 2013 calendar year. |
10. | Mr. Dalton’s base salary was adjusted from $177,000 to $182,310 effective October 2013. The disclosed base salary amounts represent the actual blended base salary he received for the 2013 calendar year. |
11. | This amount reflects the pro-rata compensation paid through June 13, 2014, the effective date of Mr. Bonsey’s resignation. |
12. | Mr. Bonsey resigned effective June 13, 2014 and did not receive any grants under the 2014-2016 Long Term Incentive Plan. |
13. | Mr. Bonsey’s base salary was adjusted from $169,000 to $182,310 effective October 2013. The disclosed base salary amounts represent the actual blended base salary he received for the 2013 and 2011 calendar years. |
The NEOs also participate in certain group life, health and disability insurances and medical reimbursement plans not disclosed in the Summary Compensation Table that are generally available to all employees and do not discriminate in scope, terms and operation. The table below provides detail on the amounts comprising the column entitled “All Other Compensation” contained in the Summary Compensation Table for 2014. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Employer 401(k) Contribution Match and Contribution ($) | | | Club Dues ($) | | | Spousal Travel ($) | | | Automobile Allowance ($) | | | Miscellaneous1 ($) | | | Imputed Life Insurance ($) | | | SERP ($) | | | Total ($) | | Curtis C. Simard | | | 10,400 | | | | 1,225 | | | | 997 | | | | 10,000 | | | | 240 | | | | 540 | | | | — | | | | 23,402 | | Gerald Shencavitz | | | 10,400 | | | | — | | | | — | | | | — | | | | — | | | | 3,574 | | | | 3,839 | 2 | | | 17,813 | | Richard B.Maltz3 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 542 | | | | — | | | | 542 | | Stephen M. Leackfeldt | | | 10,005 | | | | — | | | | — | | | | — | | | | — | | | | 2,440 | | | | — | | | | 12,445 | | Gregory W. Dalton | | | 9,142 | | | | 375 | | | | 873 | | | | — | | | | 240 | | | | 898 | | | | — | | | | 11,528 | | Michael W. Bonsey4 | | | 5,507 | | | | — | | | | — | | | | — | | | | 120 | | | | 674 | | | | — | | | | 6,301 | |
1. | This column represents amounts received by the NEO for incentives participating in our wellness program. |
2. | This amount represents the applicable Medicare gross up (1.45%) amount on Mr. Shencavitz’s future SERP benefit. |
3. | Mr. Maltz was appointed to his positions effective September 1, 2014. |
4. | Mr. Bonsey resigned from his positions effective June 13, 2014. |
We provide non-cash perquisites that do not exceed $10,000 in the aggregate for any individual and are not included in the reported figures. Benefits not disclosed in the table above are of de minimis value such as incidental service fee waivers on deposit accounts or safe deposit rental fees. Grants of Plan-Based Awards The following table sets forth information regarding plan-based awards granted to the NEOs during the last fiscal year under the 2014 Annual Incentive Plan. Amounts disclosed are based on 2014 eligible salaries received by the participants. The time-vested grants under the 2014-2015 Long Term Plan is shown under Target and the range of the possible performance award are also disclosed for each participant. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards1 | | | Estimated Future Payouts Under Equity Incentive Plan Awards2 | | | All other Stock Awards; Number of shares of Stock or units3 (#) | | Name(a) | | Plan Name | | Grant Date (b) | | | Threshold ($) (c) | | | Target ($) (d) | | | Maximum ($) (e) | | | Threshold (#) (f) | | | Target (#) (g) | | | Maximum (#) (h) | | | (i) | | Curtis C. Simard | | 2014 Annual Plan | | | | | | | 61,875 | | | | 123,750 | | | | 185,625 | | | | — | | | | — | | | | — | | | | — | | | | 2014-2016 Long-Term Plan | | | 07/22/2014 | | | | — | | | | — | | | | — | | | | 1,112 | | | | 2,225 | | | | 3,338 | | | | 2,225 | | | | | | | | | | | | Gerald Shencavitz | | 2014 Annual Plan | | | | | | | 25,500 | | | | 51,000 | | | | 76,500 | | | | — | | | | — | | | | — | | | | — | | | | 2014-2016 Long-Term Plan | | | 07/22/2014 | | | | — | | | | — | | | | — | | | | 630 | | | | 1,261 | | | | 1,892 | | | | 1,261 | | | | | | | | | | | | Richard B. Maltz4 | | 2014 Annual Plan | | | | | | | 5,923 | | | | 11,846 | | | | 17,769 | | | | — | | | | — | | | | — | | | | — | | | | 2013-2015 and 2014- 2016 Long-Term Plan | | | 09/23/2014 | | | | — | | | | — | | | | — | | | | 582 | | | | 1,165 | | | | 1,748 | | | | 1,091 | | Stephen M. Leackfeldt | | 2014 Annual Plan | | | | | | | 18,200 | | | | 36,400 | | | | 54,600 | | | | — | | | | — | | | | — | | | | — | | | | 2014-2016 Long-Term Plan | | | 07/22/2014 | | | | — | | | | — | | | | — | | | | 467 | | | | 953 | | | | 1,403 | | | | 935 | | Gregory W. Dalton | | 2014 Annual Plan | | | | | | | 16,625 | | | | 33,250 | | | | 49,875 | | | | — | | | | — | | | | — | | | | — | | | | 2014-2016 Long-Term Plan | | | 07/22/2014 | | | | — | | | | — | | | | — | | | | 427 | | | | 854 | | | | 1,281 | | | | 854 | |
1. | The Annual Incentive Program detail in columns (c), (d), and (e) is for the calendar year ended December 31, 2014. |
2. | Amounts in this columncolumns (f), (g), and (h) represent cash awards to individual named executives for achieving Target limitsthe number of performance shares payable under the previously described annual incentive planLong-Term Incentive Plans. See the following table for 2008 for their various assigned measures.additional detail. |
| 3 | 3. | Amounts in this column (i) represent cash awardsthe number of time-vested shares granted to individual named executives for achieving Stretch or Maximum limitsNEOs under the previously described annual incentive planLong Term Incentive Plans |
4. | Mr. Maltz was appointed to his positions with the Company effective September 1, 2014 and his participation for 2008 for their various assigned measures.the 2014 time period was pro-rated. |
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2008 Outstanding Equity Awards at Fiscal Year-End
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | | | | | | | | | Equity | | | | | | | | | | | | | | | | | | Equity | | | | | | | | | | | | | Incentive Plan | | | | | | | | | | Number | | Market | | Incentive | | Equity Incentive | | | Number of | | Number of | | Awards; Number of | | | | | | | | | | of Shares | | Value of | | Plan Awards; | | Plan Awards; | | | Securities | | Securities | | Securities | | | | | | | | | | or Units | | Shares or | | Number | | Market or Payout | | | Underlying | | Underlying | | Underlying | | | | | | | | | | of | | Units of | | of Unearned Shares, | | Value of Unearned | | | Unexercised | | Unexercised | | Unexercised | | Option | | Option | | Stock That | | Stock That | | Units or Other | | Shares, Units or | | | Options | | Options | | Unearned | | Exercise | | Expiration | | Have Not | | Have Not | | Rights That Have | | Other Rights That | | | Exercisable | | Unexercisable | | Options | | Price | | Date | | Vested | | Vested | | Not Vested | | Have Not Vested | Name | | ($) | | ($) | | (#) | | ($) | | | | | | (#) | | ($) | | (#) | | ($) | (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) | Joseph M. Murphy | | | 90,000 | 1 | | | 0 | | | | 0 | | | | 16.05 | | | | 2/25/2012 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gerald | | | 5,426 | | | | 0 | | | | 0 | | | | 15.40 | | | | 6/20/2011 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Shencavitz | | | 5,000 | | | | 0 | | | | 0 | | | | 18.50 | | | | 8/20/2012 | | | | | | | | | | | | | | | | | | | | | 5,000 | | | | 0 | | | | 0 | | | | 22.70 | | | | 9/16/2013 | | | | | | | | | | | | | | | | | | | | | 800 | | | | 1,600 | 2 | | | 0 | | | | 33.00 | | | | 1/23/2017 | | | | | | | | | | | | | | | | | | | | | 1,000 | | | | 4,000 | | | | 0 | | | | 31.50 | | | | 12/18/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Michael W. | | | 6,140 | | | | 0 | | | | 0 | | | | 15.40 | | | | 6/20/2011 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Bonsey | | | 3,000 | | | | 0 | | | | 0 | | | | 18.50 | | | | 8/20/2012 | | | | | | | | | | | | | | | | | | | | | 800 | | | | 1,600 | 3 | | | 0 | | | | 33.00 | | | | 1/23/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gregory W. Dalton | | | 5,625 | | | | 0 | | | | 0 | | | | 15.40 | | | | 6/20/2011 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | 800 | | | | 1,600 | 4 | | | 0 | | | | 33.00 | | | | 1/23/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel A. | | | 5,740 | | | | 4,260 | 5 | | | 0 | | | | 27.00 | | | | 9/21/2014 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Hurley III | | | 800 | | | | 1,600 | | | | 0 | | | | 33.00 | | | | 1/23/2017 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name (a) | | Number of Securities Underlying Unexercised Options Exercisable (#) (b) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) (c) | | | Equity Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned Options (#) (d) | | | Option Exercise Price ($) (e) | | | Option Expiration Date (f) | | | Number of Shares or Units of Stock That Have Not Vested (#) (g) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) (h) | | | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i) | | | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) | | Curtis C. Simard | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3,788 | 1 | | | 121,216 | | | | 9,454 | 2 | | | 302,528 | | | | | | | | | | | | Gerald Shencavitz | | | 3,600 | | | | — | | | | — | | | | 22.00 | | | | 1/23/2017 | | | | 2,090 | 3 | | | 66,880 | | | | 3,760 | 4 | | | 120,320 | | | | 6,852 | | | | — | | | | — | | | | 21.00 | | | | 12/18/2017 | | | | | | | | | | | | | | | | | | | | | 648 | | | | — | | | | — | | | | 21.00 | | | | 12/18/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Richard B. Maltz5 | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1,091 | 6 | | | 34,912 | | | | 1,748 | 7 | | | 55,936 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Stephen M. Leackfeldt | | | 2,600 | | | | — | | | | — | | | | 22.00 | | | | 1/23/2017 | | | | 1,556 | 8 | | | 49,792 | | | | 2,800 | 9 | | | 89,600 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Gregory W. Dalton | | | 3,600 | | | | — | | | | — | | | | 22.00 | | | | 1/23/2017 | | | | 1,475 | 10 | | | 47,200 | | | | 2,678 | 11 | | | 85,696 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. | | | 1 Joseph M. Murphy
| | All options grantedAmounts in column (g) represent 1,523, 1,523, and 742 time-vested shares, respectively, vesting in 2015, 2016, and 2017. The amount in column (h) represents the total value of those shares at the December 31, 2014 closing price of $32.00 per share for Mr. Murphy have vested | | | | 2 Gerald Shencavitz
| | 800 options vested on January 23, 2009 and the last 800 on January 23, 2010 for a total of 1,600
1,000 options will vest on December 18, 2009, December 18, 2010, December 18, 2011, and December 18, 2012 for a total of 4,000 | | | | 3 Michael W. Bonsey
| | 800 options vested on January 23, 2009 and the last 800 on January 23, 2010 for a total of 1,600 | | | | 4 Gregory W. Dalton
| | 800 options vested on January 23, 2009 and the last 800 on January 23, 2010 for a total of 1,600 | | | | 5 Daniel A. Hurley III
| | 1,420 options vest on September 21, 2009, September 21, 2010, and September 21, 2011 for a total of 4,260
800 options vested on January 23, 2009 and the last 800 on January 23, 2010 for a total of 1,600Simard. |
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2. | Amounts in column (i) and (j) represent the performance shares and their dollar value, respectively, if paid at Stretch for Mr. Simard. |
3. | Amounts in column (g) represent 836, 834, and 420 time-vested shares, respectively, vesting in 2015, 2016, and 2017. The amount in column (h) represents the total value of those shares at $32.00 per share for Mr. Shencavitz. |
4. | Amounts in column (i) and (j) represent the performance shares and their dollar value, respectively if paid at Stretch for Mr. Shencavitz. |
5. | Mr. Maltz was appointed to his positions with the Company effective September 1, 2014. |
6. | Amounts in column (g) represent 212, 561, and 318 time-vested shares, respectively, vesting in 2015, 2016, and 2017. The amount in column (h) represents the total value of those shares at $32.00 per share for Richard B. Maltz. |
7. | Amounts in column (i) and (j) represent the performance shares and their dollar value, respectively if paid at Stretch for Mr. Maltz. |
8. | Amounts in column (g) represent 623, 621, and 312 time-vested shares, respectively, vesting in 2015, 2016, and 2017. The amount in column (h) represents the total value of those shares at $32.00 per share for Stephen M. Leackfeldt. |
9. | Amounts in column (i) and (j) represent the performance shares and their dollar value, respectively if paid at Stretch for Mr. Leackfeldt. |
10. | Amounts in column (g) represent 596, 594, and 285 time-vested shares, respectively, vesting in 2015, 2016, and 2017. The amount in column (h) represents the total value of those shares at $32.00 per share for Mr. Dalton. |
11. | Amounts in column (i) and (j) represent the performance shares and their dollar value, respectively, if paid at Stretch for Mr. Dalton. |
2008 Option Exercises and Stock Vested Table
| | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | | Number of Shares | | Value Realized | | Number of Shares | | Value Realized | Name | | Acquired on Exercise | | on Exercise | | Acquired on Vesting | | on Vesting | | | (#) | | ($) | | (#) | | ($) | (a) | | (b) | | (c) | | (d) | | (e) | Joseph M. Murphy | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Gerald Shencavitz | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Michael W. Bonsey | | | 250 | | | | 4,088 | | | | 0 | | | | 0 | | Gregory W. Dalton | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Daniel A. Hurley III | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name (a) | | Number of Shares Acquired on Exercise (#) (b) | | | Value Realized on Exercise ($) (c) | | | Number of Shares Acquired on Vesting1 (#) (d) | | | Value Realized on Vesting1 ($) (e) | | Curtis C. Simard | | | 0 | | | | 0 | | | | 456 | | | | 11,336 | | Gerald Shencavitz | | | 0 | | | | 0 | | | | 415 | | | | 10,329 | | Richard B. Maltz2 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Stephen M. Leackfeldt | | | 0 | | | | 0 | | | | 311 | | | | 7,719 | | Gregory W. Dalton | | | 0 | | | | 0 | | | | 311 | | | | 7,719 | | Michael W. Bonsey3 | | | 0 | | | | 0 | | | | 297 | | | | 7,388 | |
1. | This represents the number and dollar value, respectively, of restricted vested shares issued to NEOs under the 2013-2015 Long Term Incentive Program. These shares must be held for a minimum of one year after issue. The number of acquired shares has been adjusted for the three-for-two split payable May 19, 2014. |
2. | Mr. Maltz was appointed to his positions effective September 1, 2014. |
3. | Mr. Bonsey resigned from his positions effective June 13, 2014. |
Pension Benefits The table below shows at December 31, 2008,2014 the present value of accumulated benefits payable to each of the NEOs, including the number of years of service credited to each such named executive officer,NEO, under the Supplemental Executive Retirement PlanSERP and using interest rate assumptions consistent with those used in Company financial statements. Additional information regarding the Supplemental Executive Retirement PlanSERP benefits follows the table. | | | | | | | | | | | | | | | Present Value of | | | | | | | Number of Years of | | Accumulated | | Payments During | | | | | Credited Service | | Benefits | | Last Fiscal Year | Name | | Plan Name | | (#) | | ($) | | ($) | (a) | | (b) | | (c) | | (d) | | (e) | | | Bar Harbor Bankshares | | | | | | | | | Supplemental Executive | | 71 | | 1,143,983 | | 0 | Joseph M. Murphy | | Retirement Plan | | | | | | | | | Bar Harbor Bankshares | | | | | | | | | Supplemental Executive | | 71 | | 312,331 | | 0 | Gerald Shencavitz | | Retirement Plan | | | | | | | Michael W. Bonsey | | N/A | | 0 | | 0 | | 0 | Gregory W. Dalton | | N/A | | 0 | | 0 | | 0 | Daniel A. Hurley III | | N/A | | 0 | | 0 | | 0 |
| | | | | | | | | | | | | | | | | Name(a) | | Plan Name (b) | | | Number of Years of Credited Service (#) (c) | | | Present Value of Accumulated Benefits ($) (d)1 | | | Payments During Last Fiscal Year ($) (e) | | Curtis C. Simard | | | N/A | | | | — | | | | — | | | | — | | Gerald Shencavitz | | | SERP | | | | 13 | 2 | | | 1,339,920 | | | | — | | Richard B. Maltz3 | | | N/A | | | | — | | | | — | | | | — | | Stephen M. Leackfeldt | | | N/A | | | | — | | | | — | | | | — | | Gregory W. Dalton | | | N/A | | | | — | | | | — | | | | — | | Michael W. Bonsey4 | | | N/A | | | | — | | | | — | | | | — | |
1. | The figures shown are determined as of the plan’s measurement date during 2014 under FASB ASC Topic 715 for purposes of our audited financial statements. For the discount rate and other assumptions used for this purpose, please refer to Note 13 in the Notes to Consolidated Financial Statements attached to the Annual Report on Form 10-K for the year ended December 31, 2014. |
2. | Years of credited service are determined by the vesting schedule contained within the Plan and not years of employment with the Company. |
3. | Mr. Maltz was appointed to his positions effective September 1, 2014. |
4. | Mr. Bonsey resigned from his positions effective June 13, 2014. |
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PENSION TABLE NARRATIVE
Supplemental Executive Retirement
The Company maintains a nonqualified, noncontributory, defined-benefit; supplemental executive retirement program (the “SERP”) for certain highly compensated executive employees. Messrs. Murphy and Shencavitz were the only authorized participants (the “Participants”) in the SERP as of December 31, 2008. Under the SERP the Participants are eligible to receive upon most termination events, disability, or death, an individually defined benefit payment based upon a predetermined vesting schedule. No plan benefits are payable to these individuals if they are terminated for cause as defined in the document.
Upon Normal Retirement Age, defined as age 68 for Mr. Murphy and age 65 for Mr. Shencavitz, monthly payments of $11,200 and $8,583, respectively will be paid under the SERP to the named executives (or their beneficiary) for a period of 240 months. There are also provisions under the SERP for reduced monthly payments in the event of an early retirement by any of these individuals. As of December 31, 2008, Messrs. Murphy and Shencavitz have vested monthly benefits of $8,030 and $2,166, respectively.
SERP benefits for both participants will fully vest upon a defined change of control of the Company. The SERP has been timely amended to comply with Section 409A of the Internal Revenue Code of 1986 and the regulations promulgated thereunder. The terms and payment of compensation under the SERP may be superseded under the EESA as modified by the ARRA. For a detailed description of the restrictions, please see discussion on page 20.
Potential Payments upon Termination or Change in Control The Company hasWe have entered into change in control agreements and maintainsmaintain certain benefit plans that require itus to provide compensation to executive officers in the event of a termination of employment or a change in control. The tables below set forth the amount and types of compensation payable to each executive officer upon voluntary termination without good reason, involuntary termination without cause, voluntary termination for good reason, termination for cause, death, disability, retirement, or termination after a change in control. The amounts assume a hypothetical termination of employment effective as of December 31, 2008,2014 and include estimates of the amounts which would be paid to the executives in each specified circumstance. The actual amounts to be paid can only be determined at the time of an executive’s actual separation. The agreements have been timely amended to comply with Section 409A ofWe did not summarize and quantify the Internal Revenue Code of 1986 and the regulations promulgated thereunder. The terms and payment of compensation under the agreements may be superseded under the EESA as modifiedestimated payments for Mr. Bonsey because he was no longer employed by the ARRA. For a detailed description of the restrictions, please see discussionus on page 20. December 31, 2014.Payments Made Upon Voluntary Termination Without Good Reason.Reason.RegardlessUpon termination of the manner in which NEOs Messrs. Murphy, Shencavitz, Bonsey, Dalton, and Hurley may terminate their employment with the Company, theyus, Messrs. Simard, Shencavitz, Dalton, Maltz and Leackfeldt would be entitled to receive amounts earned during their term of employment pursuant to Companyour policies, programs and benefit plans bulleted directly below.as follows: Salary earned through the date of termination; | • | | Salary earned through the date of termination | | | • | | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination | | | • | | Any incentive earned but not yet paid for the fiscal year ending prior to the year of termination | | | • | | Earned but unused vacation pay if terminated prior to December 31 of any year | | | • | | All vested stock options | | | • | | Amounts contributed and vested under the Company 401(k) Plan | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination;Messrs. MurphyAny incentive earned but not yet paid for the fiscal year ending prior to the year of termination;
Earned but unused vacation pay if terminated prior to December 31 of any year; All vested stock options unless they will be working for a competitor; and Amounts contributed and vested under our 401(k) Plan. Mr. Shencavitz would be entitled to the payments and benefits above plus: Vested benefits through theirhis date of termination payable under the Company’s SERP Plan SERP.29
Payments Made Upon Involuntary Termination by Bar Harbor Banksharesthe Company Without Cause or by the Executive for Good Reason.Messrs. Murphy,Simard, Shencavitz, Bonsey, Dalton, Maltz and HurleyLeackfeldt would be entitled to the payments and benefits below.as follows:Salary earned through the date of termination; | • | | Salary earned through the date of termination | | | • | | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination | | | • | | Any incentive earned but not yet paid for the fiscal year ending prior to the year of termination | | | • | | Earned but unused vacation pay if terminated prior to December 31 of any year | | | • | | All vested stock options | | | • | | Amounts contributed and vested under the Company 401(k) Plan | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination;Messrs. MurphyAny incentive earned but not yet paid for the fiscal year ending prior to the year of termination;
Earned but unused vacation pay if terminated prior to December 31 of any year; All vested stock options and grants; and Amounts contributed and vested under our 401(k) Plan. Mr. Shencavitz would be entitled to the payments and benefits above plus: Vested benefit amounts payable under the Company’s SERP PlanSERP. Mr. MurphySimard would also be entitled to the payments and benefits above plus: Lump sum payment of two times base salary; and | • | | Lump sum payment of two times base salary | | | • | | All vested stock options would become exercisable | | | • | | Health and welfare benefits for 24 months |
Mr. Murphy would also be entitled to the following paymentsMedical, dental, and vision benefits in addition to those listed above if his termination occurs with the twelve month prior or twelve months following a change of control eventfor 24 months.
| • | | All unvested SERP payments would become vested | | | • | | Any unvested stock options would become vested, however, Mr. Murphy did not have any unvested options as of December 31, 2008 |
Payments Made Upon a Termination for Cause.Messrs. Murphy,Simard, Shencavitz, Bonsey, Dalton, Maltz and HurleyLeackfeldt would be entitled to the payments and benefits below: | • | | Salary earned through the date of termination; Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination; Earned but unused vacation pay if terminated prior to December 31 of any year; Amounts contributed and vested under our 401(k) Plan; All vested and unexercised stock options and grants would be forfeited; and Any incentive earned but not yet paid for the fiscal year ending prior to the year of termination would be forfeited. Mr. Shencavitz would be entitled to the payments and benefits above; however, all vested and unvested benefits under the SERP would be forfeited. Payments Made Upon Death or Disability. In the event of the death or disability of termination | | | • | | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination | | | • | | Earned but unused vacation pay if terminated prior to December 31 of any year | | | • | | Amounts contributed and vested under the Company’s 401(k) Plan | | | • | | All vested and unexercised stock options would be forfeited | | | • | | Any incentive earned but not yet paid for the fiscal year ending prior to the year of termination will be forfeited. |
Messrs. MurphySimard, Shencavitz, Dalton, Maltz or Leackfeldt each would be eligible to receive the following payments and benefits:Salary earned through the date of death or disability; Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of death or disability; Any incentive earned but not yet paid for the fiscal year ending prior to the year of death or disability; Earned but unused vacation pay in the event of death or disability through date of event; All vested stock options would become exercisable by the executive, or in the case of death, by their estate; Amounts contributed and vested under our 401(k) Plan; and Life insurance proceeds and/or disability payments under our general benefit plans are paid to the executive or their beneficiary by a third party insurance provider pursuant to policy provisions. Mr. Shencavitz would be entitled to the payments and benefits above plus: All vested and unvested benefitsVested benefit amounts, as of the date of disability, would be payable under the Company’s SERP Plan wouldor such amounts will be forfeitedpayable under the SERP to his beneficiaries or estate in the event of death.
Payments Made Upon Death or Disability.Retirement.In the event of the death or disability of Messrs. Murphy, Mr. Simard, Shencavitz, Bonsey, Dalton, Maltz and Hurley each would be eligible to receive the following payments and benefits: | • | | Salary earned through the date of death or disability | | | • | | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of death or disability | | | • | | Any incentive earned but not yet paid for the fiscal year ending prior to the year of death or disability | | | • | | Earned but unused vacation pay in the event of death or disability through date of event |
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| • | | All vested stock options would become exercisable by the executive, or in the case of death, by their estate | | | • | | Amounts contributed and vested under the Company 401(k) Plan | | | • | | Life insurance proceeds and/or disability payments under the Company’s general benefit plans are paid to the executive or their beneficiary by a third party insurance provider pursuant to policy provisions. |
Messrs. Murphy and Shencavitz would be entitled to the payments and benefits above plus:
| • | | Vested benefit amounts, as of the date of disability, would be payable under the Company’s SERP Plan | | | • | | Fully vested benefit amount would be payable under the Company’s SERP Plan to their beneficiary or estate in the event of death |
Payments Made Upon Retirement.Messrs. Murphy, Shencavitz, Bonsey, Dalton, and HurleyLeackfeldt would be eligible for the following payments and benefits: Salary earned through the date of retirement; | • | | Salary earned through the date of retirement | | | • | | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of retirement | | | • | | Any incentive earned but not yet paid for the fiscal year ending prior to the year retirement | | | • | | Earned but unused vacation pay as of retirement date | | | • | | All vested stock options would be available for exercise | | | • | | Amounts contributed and vested under the Company 401(k) Plan | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of retirement;Any incentive earned but not yet paid for the fiscal year ending prior to the year retirement; Pro-rata share of any incentive earned for the fiscal year of retirement; Earned but unused vacation pay as of retirement date; All vested stock options would be available for exercise; and Amounts contributed and vested under our 401(k) Plan. In addition, Messrs. Murphy andMr. Shencavitz would be eligible for: Vested benefit amounts payable under the Company’s SERP PlanSERP. Payments and Benefits Due Upon a Change in Control.Control.Messrs. Murphy,Simard, Shencavitz, Bonsey, Dalton, Maltz and HurleyLeackfeldt would be eligible for the following payments and benefits: Salary earned through the date of termination; | • | | Salary earned through the date of termination | | | • | | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination | | | • | | Any incentive earned but not yet paid for the fiscal year ending prior to the year in which the change of control occurs | | | • | | Earned but unused vacation pay as of termination date | | | • | | Reimbursement of reasonable and necessary expenses incurred in connection with employment through the date of termination; Any incentive earned but not yet paid for the fiscal year ending prior to the year in which the change of control occurs; Earned but unused vacation pay as of termination date; All vested stock options along with unvested options would be available for exercise | | | • | | Amounts contributed and vested under the Company’s 401(k) Plan |
Messrs. Bonsey, Dalton and Hurley would be eligible for:available for exercise;
Amounts contributed and vested under our 401(k) Plan; Twelve12 months of base salary and specified benefits if terminated as a result of the change of control
and specified health and welfare benefits for Messrs. MurphyMaltz, Leackfeldt, and Shencavitz would be eligible for:Dalton; and Fully vested benefit amounts payable under the Company’s SERP Plan
In addition, Messrs. Murphy and Shencavitz would be eligible for:
Severance consisting of base salary and specified benefits of twenty-four24 months for Mr. MurphySimard and eighteen18 months for Mr. Shencavitz upon a termination (or constructive termination) within defined time limits detailed within their agreementsagreements. Mr. Shencavitz would be eligible for: Fully vested benefit amounts payable under the SERP; and tax Tax gross up payments, if applicable applicable.31(This space intentionally left blank)
The following table describes the potential payments toJoseph M. MurphyCurtis C. Simard, President and Chief Executive Officer,CEO, upon an assumed termination of employment or change in control as of December 31, 2008. The following potential payments may be reduced under certain circumstances due to restrictions imposed by virtue of the Company’s participation in the U.S. Treasury’s Capital Purchase Program. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary | | Involuntary | | Voluntary | | | | | | | | | | | | | | | | | | Termination | | | Termination | | Termination | | Termination | | Termination | | Termination | | Termination | | | | | | After a | | | Without Good | | Without | | For Good | | for | | Upon | | Upon | | | | | | Change in | | | Reason | | Cause | | Cause | | Cause | | Death | | Disability | | Retirement | | Control | Payments and Benefits | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | Cash Severance Note A | | | 0 | | | | 547,892 | | | | 547,892 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 547,892 | | Pro Rata Bonus/Incentive Note B | | | 47,230 | | | | 47,230 | | | | 47,230 | | | | 0 | | | | 47,230 | | | | 47,230 | | | | 47,230 | | | | 47,230 | | Vested Stock Options/SARs Note C | | | 873,000 | | | | 873,000 | | | | 873,000 | | | | 0 | | | | 873,000 | | | | 873,000 | | | | 873,000 | | | | 873,000 | | Accelerated Stock Options/SARs Note C | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Health Care Benefits Note D | | | 0 | | | | 0 | 1 | | | 0 | 1 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 23,513 | | Vested Pension Benefits Note E | | | 1,927,200 | | | | 1,927,200 | 2 | | | 1,927,200 | 2 | | | 0 | | | | 1,927,200 | | | | 1,927,200 | | | | 1,927,200 | | | | 1,927,200 | | Accelerated Pension BenefitsNote E | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 760,800 | | | | 0 | | | | 0 | | | | 760,800 | | Nonqualified Deferred Compensation Note F | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Life Insurance Proceeds/ Disability Benefits Note G | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 500,000 | | | | 156,000 | | | | 0 | | | | 0 | | Other Perquisites Note H | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Tax Gross-Up Note I | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 421,312 | 3 | | | | | | | | | | | | | | | | | Total | | | 2,847,430 | | | | 3,395,322 | | | | 3,395,322 | | | | 0 | | | | 4,108,230 | | | | 3,003,430 | | | | 2,847,430 | | | | 4,600,947 | | | | | | | | | | | | | | | | | |
2014. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments and Benefits | | Voluntary Termination Without Good Reason ($) | | | Involuntary Termination Without Cause1 ($) | | | Voluntary Termination For Good Reason1 ($) | | | Termination for Cause ($) | | | Termination Upon Death ($) | | | Termination Upon Disability ($) | | | Retirement ($) | | | Termination After a Change in Control ($) | | Cash Severance Note A | | | — | | | | 825,000 | | | | 825,000 | | | | — | | | | 0 | | | | 0 | | | | 0 | | | | 825,000 | | Pro Rata Bonus/Incentive Note B | | | 180,984 | | | | 180,984 | | | | 180,984 | | | | — | | | | 180,984 | | | | 180,984 | | | | 180,894 | | | | 180,984 | | Stock Options/SARs Note C | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Accelerated Stock Options/SARs Note D | | | — | | | | — | | | | — | | | | — | | | | — | 2 | | | — | 2 | | | — | 2 | | | 322,880 | | COBRA Eligible Benefits Note E | | | — | | | | 42,230 | 1 | | | 42,230 | 1 | | | — | | | | — | | | | — | | | | — | | | | 42,230 | | Pension Benefits/SERP Note��F | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Nonqualified Deferred Compensation Note G | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Life Insurance Proceeds/Disability Benefits Note H | | | — | | | | — | | | | — | | | | — | | | | 500,000 | | | | 180,000 | | | | — | | | | — | | Other Perquisites Note I | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 180,984 | | | | 1,048,214 | | | | 1,048,214 | | | | — | | | | 680,984 | | | | 360,984 | | | | 180,894 | | | | 1,371,094 | 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. | | Under certain termination circumstances leading up to or following a Change of Control, Mr. Simard may eligible for two times salary and COBRA eligible benefits. |
1 | 2. | In the event of a termination of employment due to death, retirement or long term disability Mr. Murphy was terminated involuntarily withinSimard (or his estate) would be eligible for a time periodpro-rata share of one year prior to or one year following a changean award from the 2013-2015 and 2014-2016 Long Term Incentive Plans. However, payments would be calculated at the end of control event hethe performance periods and due on the same schedule as with other participants. These amounts cannot be determined nor would receive $23,513they be payable as of December 31, 2014 used for this illustration purpose. |
3. | Any payments due the executive in benefit continuation funds. | | 2 | | If Mr. Murphy terminates his employment on or after his Early Retirement Date and prior to his Normal Retirement Date and within three years after a Change in Controland if he terminates employment for Good Reason or is terminated Without Cause, then will be reduced to the amountextent necessary to ensure that no portion of his SERP benefit would acceleratesuch payment will be non-deductible to his full vested benefit of $2,688,000. | | 3 | | Gross-Up plus excise tax. This number becomes $572,560, if the Company pays theunder Code Section 280G or will be subject to excise taxes in permitted installment payments (rather than a lump sum).tax imposed by Code Section 4999. |
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The following table describes the potential payments toGerald Shencavitz, Executive Vice President, Chief Financial OfficerCFO and Treasurer of Bar Harbor Banksharesthe Company and Executive Vice President, Chief Financial Officer,CFO, and Chief Operating Officer of Bar Harbor Bank & Trust,BHBT, upon an assumed termination of employment or change in control as of December 31, 2008. The following potential payments may be reduced under certain circumstances due to restrictions imposed by virtue of the Company’s participation in the U.S. Treasury’s Capital Purchase Program. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary | | Involuntary | | Voluntary | | | | | | | | | | | | | | | | | | Termination | | | Termination | | Termination | | Termination | | Termination | | Termination | | Termination | | | | | | After a | | | Without Good | | Without | | For Good | | for | | Upon | | Upon | | | | | | Change in | | | Reason | | Cause | | Cause | | Cause | | Death | | Disability | | Retirement | | Control | Payments and Benefits | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | Cash Severance Note A | | | 0 | | | | 0 | 1 | | | 0 | 1 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 261,000 | | Pro Rata Bonus/Incentive Note B | | | 33,087 | | | | 33,087 | | | | 33,087 | | | | 0 | | | | 33,087 | | | | 33,087 | | | | 33,087 | | | | 33,087 | | Vested Stock Options/SARs Note C | | | 107,659 | | | | 107,659 | | | | 107,659 | | | | 0 | | | | 107,659 | | | | 107,659 | | | | 107,659 | | | | 107,659 | | Accelerated Stock Options/SARs Note C | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Health Care Benefits Note D | | | 0 | | | | 0 | 1 | | | 0 | 1 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 16,514 | | Vested Pension Benefits Note E | | | 519,840 | | | | 519,840 | 2 | | | 519,840 | 2 | | | 0 | | | | 519,840 | | | | 519,840 | | | | 519,840 | | | | 519,840 | | Accelerated Pension Benefits Note E | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 1,540,080 | | | | 0 | | | | 0 | | | | 1,540,080 | | Nonqualified Deferred Compensation Note F | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Life Insurance Proceeds/ Disability Benefits Note G | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 175,000 | | | | 105,000 | | | | 0 | | | | 0 | | Other Perquisites Note H | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Tax Gross-Up Note I | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 593,709 | 3 | | | | | | | | | | | | | | | | | Total | | | 660,586 | | | | 660,586 | | | | 660,586 | | | | 0 | | | | 2,375,666 | | | | 765,586 | | | | 660,586 | | | | 3,071,889 | | | | | | | | | | | | | | | | | |
2014. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments and Benefits | | Voluntary Termination Without Good Reason ($) | | | Involuntary Termination Without Cause1 ($) | | | Voluntary Termination For Good Reason1 ($) | | | Termination for Cause ($) | | | Termination Upon Death ($) | | | Termination Upon Disability ($) | | | Retirement ($) | | | Termination After a Change in Control ($) | | Cash Severance Note A | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 382,500 | | Pro Rata Bonus/Incentive Note B | | | 74,807 | | | | 74,807 | | | | 74,807 | | | | — | | | | 74,807 | | | | 74,807 | | | | 74,807 | | | | 74,807 | | Stock Options/SARs Note C | | | 118,500 | | | | 118,500 | | | | 118,500 | | | | — | | | | 118,500 | | | | 118,500 | | | | 118,500 | | | | 118,500 | | Accelerated Stock Options/SARs Note D | | | — | | | | — | | | | — | | | | — | | | | — | 2 | | | — | 2 | | | — | 2 | | | 147,072 | | COBRA Eligible Benefits Note E | | | — | | | | — | 1 | | | — | 1 | | | — | | | | — | | | | — | | | | — | | | | 30,826 | | Pension Benefits Note F | | | 1,339,920 | | | | 1,339,920 | | | | 1,339,920 | 3 | | | — | | | | 1,339,920 | | | | 1,339,920 | | | | 1,339,920 | | | | 1,339,920 | | Nonqualified Deferred Compensation Note G | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 720,000 | | Life Insurance Proceeds/ Disability Benefits Note H | | | — | | | | — | | | | — | | | | — | | | | 500,000 | | | | 153,000 | | | | — | | | | — | | Other Perquisites Note I | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Tax Gross-Up | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 373,074 | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 1,533,227 | | | | 1,533,227 | | | | 1,533,227 | | | | — | | | | 2,033,227 | | | | 1,686,227 | | | | 1,533,227 | | | | 3,186,699 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. | | Under certain termination circumstances leading up to or following a Change of Control, Mr. Shencavitz may eligible for one and a half time salary and COBRA eligible benefits. |
1 | 2. | In the event of a termination of employment due to death, retirement or long term disability Mr. Shencavitz was terminated involuntarily within(or his estate) would be eligible for a time periodpro-rata share of one year prior to or one year following a changean award from the 2013-2015 and 2014-2016 Long Term Incentive Plans. However, payments would be calculated at the end of control event, hethe performance periods and due on the same schedule as with other participants. These amounts cannot be determined nor would receive $261,000 in base salary and $16,514 in benefit continuation funds.they be payable as of December 31, 2014 used for this illustration purpose. |
| 2 | 3. | If Mr. Shencavitz terminates his employment on or after his Early Retirement Date and prior to his Normal Retirement Date and within three years after a Change in Control,and if he terminates employment for Good Reason or is terminated without Cause, then the amount of his SERP benefit shall accelerate to his full vested benefit and this figure would be $2,059,920. |
| 34. | | Gross-UpGross-up plus excise tax. This numbergross up amount becomes $899,495,$471,512, if the Company pays the excise taxes in permitted installment payments (rather than a lump sum). The actual total excise tax with prepayment would be $143,195.This is a grandfathered benefit for Mr. Shencavitz and will not be offered to any other existing or future Company executive. Amounts paid under this gross-up provision would not be deductible by the Company or any successor thereto. |
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The following table describes the potential payments toMichael W. BonseyRichard B. Maltz, SeniorExecutive Vice President Credit Administrationand Chief Risk Officer of Bar Harbor Bank & Trust,the Company and of BHBT, upon an assumed termination of employment or change in control as of December 31, 2008. The following potential payments may be reduced under certain circumstances due to restrictions imposed by virtue of the Company’s participation in the U.S. Treasury’s Capital Purchase Program. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination | | | Involuntary | | | Voluntary | | | | | | | | | | | | | | | | | | | Termination | | | | Without | | | Termination | | | Termination | | | | | | | | | | | Termination | | | | | | | After a | | | | Good | | | Without | | | For Good | | | Termination | | | Termination | | | Upon | | | | | | | Change in | | | | Reason | | | Cause | | | Cause | | | for Cause | | | Upon Death | | | Disability | | | Retirement | | | Control | | Payments and Benefits | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | Cash Severance Note A | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 116,000 | | Pro Rata Bonus/Incentive Note B | | | 10,986 | | | | 10,986 | | | | 10,986 | | | | 0 | | | | 10,986 | | | | 10,986 | | | | 10,986 | | | | 10,986 | | Vested Stock Options/SARs Note C | | | 85,299 | | | | 85,299 | | | | 85,299 | | | | 0 | | | | 85,299 | | | | 85,299 | | | | 85,299 | | | | 85,299 | | Accelerated Stock Options/SARs Note C | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Health Care Benefits Note D | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 11,842 | | Pension Benefits Note E | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Nonqualified Deferred Compensation Note F | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Life Insurance Proceeds/ Disability Benefits Note G | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 232,000 | | | | 69,600 | | | | 0 | | | | 0 | | Other Perquisites Note H | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Tax Gross-Up Note I | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 96,285 | | | | 96,285 | | | | 96,285 | | | | 0 | | | | 328,285 | | | | 165,885 | | | | 96,285 | | | | 224,127 | | | | | | | | | | | | | | | | | | | | | | | | | | |
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2014.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments and Benefits | | Voluntary Termination Without Good Reason ($) | | | Involuntary Termination Without Cause ($) | | | Voluntary Termination For Good Reason ($) | | | Termination for Cause ($) | | | Termination Upon Death ($) | | | Termination Upon Disability ($) | | | Retirement ($) | | | Termination After a Change in Control ($) | | Cash Severance Note A | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 220,000 | | Pro Rata Bonus/Incentive Note B | | | 15,785 | | | | 15,785 | | | | 15,785 | | | | — | | | | 15,785 | | | | 15,785 | | | | 15,785 | | | | 15,785 | | Stock Options/SARs Note C | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Accelerated Stock Options/SARs Note D | | | — | | | | — | | | | — | | | | — | | | | — | 1 | | | — | 1 | | | — | 1 | | | 72,192 | | COBRA Eligible Benefits Note E | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18,487 | | Pension Benefits Note F | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Nonqualified Deferred Compensation Note G | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Life Insurance Proceeds/ Disability Benefits Note H | | | — | | | | — | | | | — | | | | — | | | | 500,000 | | | | 132,000 | | | | — | | | | — | | Other Perquisites Note I | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 15,785 | | | | 15,785 | | | | 15,785 | | | | 0 | | | | 515,785 | | | | 147,785 | | | | 15,785 | | | | 326,464 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. | In the event of a termination of employment due to death, retirement or long term disability Mr. Maltz (or his estate) would be eligible for a pro-rata share of an award from the 2013-2015 and 2014-2016 Long Term Incentive Plans. However, payments would be calculated at the end of the performance periods and due on the same schedule as with other participants. These amounts cannot be determined nor would they be payable as of December 31, 2014 used for this illustration purpose. |
2. | Any payments due the executive in a Change in Control will be reduced to the extent necessary to ensure that no portion of such payment will be non-deductible to the Company under Code Section 280G or will be subject to excise tax imposed by Code Section 4999. |
The following table describes the potential payments toGregory W. DaltonStephen M. Leackfeldt, SeniorExecutive Vice President, BusinessRetail Banking and Operations of Bar Harbor Bank & Trust,BHBT, upon an assumed termination of employment or change in control as of December 31, 2008. The following potential payments may be reduced under certain circumstances due to restrictions imposed by virtue of the Company’s participation in the U.S. Treasury’s Capital Purchase Program. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination | | | Involuntary | | | Voluntary | | | | | | | | | | | | | | | | | | | Termination | | | | Without | | | Termination | | | Termination | | | | | | | | | | | Termination | | | | | | | After a | | | | Good | | | Without | | | For Good | | | Termination | | | Termination | | | Upon | | | | | | | Change in | | | | Reason | | | Cause | | | Cause | | | for Cause | | | Upon Death | | | Disability | | | Retirement | | | Control | | Payments and Benefits | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | Cash Severance Note A | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 132,000 | | Pro Rata Bonus/Incentive Note B | | | 16,983 | | | | 16,983 | | | | 16,983 | | | | 0 | | | | 16,983 | | | | 16,983 | | | | 16,983 | | | | 16,983 | | Stock Options/SARs Note C | | | 58,219 | | | | 58,219 | | | | 58,219 | | | | 0 | | | | 58,219 | | | | 58,219 | | | | 58,219 | | | | 58,219 | | Accelerated Stock Options/SARs Note C | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Health Care Benefits Note D | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 11,697 | | Pension Benefits Note E | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Nonqualified Deferred Compensation Note F | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Life Insurance Proceeds/ Disability Benefits Note G | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 132,000 | | | | 79,200 | | | | 0 | | | | 0 | | Other Perquisites Note H | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Tax Gross-Up Note I | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 75,202 | | | | 75,202 | | | | 75,202 | | | | 0 | | | | 207,202 | | | | 154,402 | | | | 75,202 | | | | 218,899 | | | | | | | | | | | | | | | | | | | | | | | | | | |
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35
2014.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments and Benefits | | Voluntary Termination Without Good Reason ($) | | | Involuntary Termination Without Cause ($) | | | Voluntary Termination For Good Reason ($) | | | Termination for Cause ($) | | | Termination Upon Death ($) | | | Termination Upon Disability ($) | | | Retirement ($) | | | Termination After a Change in Control ($) | | Cash Severance Note A | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 208,000 | | Pro Rata Bonus/Incentive Note B | | | 45,946 | | | | 45,946 | | | | 45,946 | | | | — | | | | 45,946 | | | | 45,946 | | | | 45,946 | | | | 45,946 | | Stock Options/SARs Note C | | | 26,000 | | | | 26,000 | | | | 26,000 | | | | — | | | | 26,000 | | | | 26,000 | | | | 26,000 | | | | 26,000 | | Accelerated Stock Options/SARs Note D | | | — | | | | — | | | | — | | | | — | | | | — | 1 | | | — | 1 | | | — | 1 | | | 109,504 | | COBRA Eligible Benefits Note E | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,120 | | Pension Benefits Note F | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Nonqualified Deferred Compensation Note G | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Life Insurance Proceeds/ Disability Benefits Note H | | | — | | | | — | | | | — | | | | — | | | | 416,000 | | | | 124,800 | | | | — | | | | — | | Other Perquisites Note I | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 71,946 | | | | 71,946 | | | | 71,946 | | | | 0 | | | | 487,946 | | | | 196,746 | | | | 71,946 | | | | 396,570 | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. | In the event of a termination of employment due to death, retirement or long term disability Mr. Leackfeldt (or his estate) would be eligible for a pro-rata share of an award from the 2013-2015 and 2014-2016 Long Term Incentive Plans. However, payments would be calculated at the end of the performance periods and due on the same schedule as with other participants. These amounts cannot be determined nor would they be payable as of December 31, 2014 used for this illustration purpose. |
2. | Any payments due the executive in a Change in Control will be reduced to the extent necessary to ensure that no portion of such payment will be non-deductible to the Company under Code Section 280G or will be subject to excise tax imposed by Code Section 4999. |
The following table describes the potential payments toDaniel A. Hurley IIIGregory W. Dalton, President of Bar Harbor Trust Services and SeniorExecutive Vice President, Business Banking of Bar Harbor Bank & Trust,BHBT, upon an assumed termination of employment or change in control as of December 31, 2008. The following potential payments may be reduced under certain circumstances due to restrictions imposed by virtue of the Company’s participation in the U.S. Treasury’s Capital Purchase Program. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Voluntary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Termination | | | Involuntary | | | Voluntary | | | | | | | | | | | | | | | | | | | Termination | | | | Without | | | Termination | | | Termination | | | | | | | | | | | Termination | | | | | | | After a | | | | Good | | | Without | | | For Good | | | Termination | | | Termination | | | Upon | | | | | | | Change in | | | | Reason | | | Cause | | | Cause | | | for Cause | | | Upon Death | | | Disability | | | Retirement | | | Control | | Payments and Benefits | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | Cash Severance Note A | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 126,500 | | Pro Rata Bonus/Incentive Note B | | | 8,550 | | | | 8,550 | | | | 8,550 | | | | 0 | | | | 8,550 | | | | 8,550 | | | | 8,550 | | | | 8,550 | | Stock Options/SARs Note C | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Accelerated Stock Options/SARs Note C | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Health Care Benefits Note D | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 5,040 | | Pension Benefits Note E | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Nonqualified Deferred Compensation Note F | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Life Insurance Proceeds/ Disability Benefits Note G | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 253,000 | | | | 75,900 | | | | 0 | | | | 0 | | Other Perquisites Note H | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Tax Gross-Up Note I | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 8,550 | | | | 8,550 | | | | 8,550 | | | | 0 | | | | 261,550 | | | | 84,450 | | | | 8,550 | | | | 140,090 | | | | | | | | | | | | | | | | | | | | | | | | | | |
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36
2014.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Payments and Benefits | | Voluntary Termination Without Good Reason ($) | | | Involuntary Termination Without Cause ($) | | | Voluntary Termination For Good Reason ($) | | | Termination for Cause ($) | | | Termination Upon Death ($) | | | Termination Upon Disability ($) | | | Retirement ($) | | | Termination After a Change in Control ($) | | Cash Severance Note A | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 190,000 | | Pro Rata Bonus/Incentive Note B | | | 41,168 | | | | 41,168 | | | | 41,168 | | | | — | | | | 41,168 | | | | 41,168 | | | | 41,168 | | | | 41,168 | | Stock Options/SARs Note C | | | 36,000 | | | | 36,000 | | | | 36,000 | | | | — | | | | 36,000 | | | | 36,000 | | | | 36,000 | | | | 36,000 | | Accelerated Stock Options/SARs Note D | | | — | | | | — | | | | — | | | | — | | | | — | 1 | | | — | 1 | | | — | 1 | | | 104,320 | | COBRA Eligible Benefits Note E | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 16,403 | | Pension Benefits Note F | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Nonqualified Deferred Compensation Note G | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | Life Insurance Proceeds/ Disability Benefits Note H | | | — | | | | — | | | | — | | | | — | | | | 380,000 | | | | 114,000 | | | | — | | | | — | | Other Perquisites Note I | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 77,168 | | | | 77,168 | | | | 77,168 | | | | 0 | | | | 457,168 | | | | 191,168 | | | | 77,168 | | | | 387,891 | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. | In the event of a termination of employment due to death, retirement or long term disability Mr. Dalton (or his estate) would be eligible for a pro-rata share of an award from the 2013-2015 and 2014-2016 Long Term Incentive Plans. However, payments would be calculated at the end of the performance periods and due on the same schedule as with other participants. These amounts cannot be determined nor would they be payable as of December 31, 2014 used for this illustration purpose. |
2. | Any payments due the executive in a Change in Control will be reduced to the extent necessary to ensure that no portion of such payment will be non-deductible to the Company under Code Section 280G or will be subject to excise tax imposed by Code Section 4999. |
| | | Notes | | | | | | A | | Cash Severance. Twenty-four months of severance would have been payable to Mr. Murphy if his employment was terminated by Bar Harbor Bankshares for any reason other than cause, death, disability, or retirement as defined in his written CEO Employment Agreement.Severance. Severance payable to all other executives represents a payment due upon a hypothetical change in control event and their subsequent termination under the terms of their agreements.agreements 24 months of severance would have been payable to Mr. Simard if his employment was terminated by us for any reason other than cause, death, disability, or retirement as defined in his written CEO Employment Agreement. Mr. Shencavitz’s payment stream under his severance agreement would be for 18 months. Payments disclosed represent twelve12 months of salary for Bonsey, Dalton,each of Maltz, Leackfeldt and Hurley and eighteen months for Shencavitz.Dalton. | | | | B | | Pro Rata Bonus. Bonuses/Incentive amounts earned in 2008 were paid in two installments.Bonus. The amount disclosed above represents the bonus/incentive amounts due for 2014 but not yet paid, to each executive on December 31, 2008.2014. These amounts were paid in 2009.February 2015. The full amount of incentive payments earned for the fiscal year 20082014 has also been disclosed in the “Summary Compensation Table for 2008” on page 22 of this Proxy statement.Table.” | | | | C | | Stock Options/SARs.SARs. The price per share of Bar Harbor Bankshares common stock on December 31, 2008, was $25.75, representing the closing per share price on the NYSE AmexMKT exchange for that date. Murphy would have been entitled to exercise vested options under all categories listed except a Voluntary Termination with Good Reason and a change in control whereby all of his unvested options would have fully vested. If Mr. Murphy and Mr. Shencavitz were terminated involuntarily and without cause within one year prior to or following a change in control event, their unvestedour common stock options would have become fully vested. Shencavitz, Bonsey, Dalton, and Hurley would have been entitled to all vested options as ofon December 31, 2008, except in2014 was $32.00. All options for participants are either completely vested or of no value when measured against the event of a change in control whereby all unvested options would have fully vested.$32.00 closing per share price on December 31, 2014. Disclosed amounts would have been realized if the executive actually exercised the vested options in the manner provided for by the Company’s stock option plan and award agreement at the December 31, 2008,2014 market price. In the event of a termination of employment, the executive (or the executive’s estate in the event of death) would have had the right to exercise vested stock options for a set period as specified under the plan document. All executives would have forfeited the right to exercise vested or unvested options if they had been releasedterminated for cause. No amounts are reported under | | | D | | Stock Options/SARs Accelerated. Figures on this line item represent the accelerated line item. All options for participants are either completely vested orvalue of no value when measured againstunvested stock options/SARs in the $25.75 closing per share priceevent of acceleration due to a change of control event occurring on December 31, 2008.2014. Performance Shares were calculated at Target for purposes of this Table. | | | | D E | | Health Insurance.COBRA Eligible Benefits. The amount disclosed represents the cost of continued health, life,dental, and disabilityvision coverage for a period of twenty-four24 months for Murphy, eighteenSimard, 18 months for Shencavitz, and twelve12 months for Bonsey,Maltz, Dalton and Hurley as provided in their respective agreements.Leackfeldt. | | | | E F | | Pension Benefits/SERP.SERP. Amounts disclosed represent vested amounts as of December 31, 2008,2014, payable to Murphy and Shencavitz (or theirhis beneficiary/estate) over the twenty-year20-year benefit period provided for under the Company’sour plan document. Amounts disclosed under Involuntary Without Cause and Voluntary With Good Reason for Murphy as well as under Change in Control for both Murphy andMr. Shencavitz representrepresents the full vesting of their benefitshis benefit under the program to be paid over the same 20-year period. Amounts disclosed do not reflect vested balances for each executive as part of the Company-sponsoredour 401(k) plan under which participation is generally available to all employees. The Company carriesWe carry a term life insurance policiespolicy on Murphy andMr. Shencavitz in the amountsamount of $1,350,000 and $1,200,000 respectively, to help defray costs of thesethis pension benefitsbenefit should eitherhe die while employed by the Company,us, but prior to full vestingrecognition of these benefits.required accounting entries. | | | | F G | | Nonqualified Deferred Compensation Plan.Plan. No named executiveNEO participated under a Nonqualified Deferred Compensation Plan as of December 31, 2008.2014 with the exception of the SERP set forth in Note F. | | | | G H | | Life Insurance Proceeds/Disability Benefits.Benefits. Amounts represent benefits payable by a third partythird-party insurer (UNUM) to the designated executives or their beneficiaries under Company-sponsoredour life and disability programs. These life and disability insurance programs were generally available to all employees of the Company.our employees. The Disabilitydisability amount quoted is representative ofrepresents a 12 month, disability paid benefit.benefit with a cap of $15,000 per month. Total benefits due would be dependent upon the severity, the length of a disability, and insurance policy interpretation. | | | | H I | | Other Perquisites.Perquisites. Not applicable to Bar Harbor Bankshares. | | | | I
| | Tax Gross-Ups. In the event of the hypothetical change in control of Bar Harbor Bankshares on December 31, 2008, and the subsequent termination (or constructive termination) as detailed in their individual change in control agreements, and Murphy and Shencavitz were subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, an additional payment would be made to restore them to the after-tax position they would have been in if the excise tax had not been imposed and such excess parachute payments exceeded 110% of three times the executive’s “base amount,” as defined in Section 280G of the Internal Revenue Code. In the event this 110% threshold is not met, the excess parachute payments will be reduced so they do not exceed three times the executive’s base amount. Amounts paid under this Gross-Up provision are not tax deductible by the Company or any successor thereto.Company. |
37
(This space is intentionally left blank) COMPENSATION OF DIRECTORS DIRECTOR COMPENSATION
Independent Directors of the Company, Bar Harbor Bank & Trust,BHBT and Bar Harbor Trust ServicesBHTS were paid by a combination of fees for meetings attended supplemented by quarterly stipends. A fee of $500 was paid to boardBoard members for each meeting of the Company and its subsidiary company boards attended and each committee meeting attended. Members of the Board received $500 when the Company and the BankBHBT held joint meetings. The Chairperson historically has not received a fee for attending a Committee meeting for which he was not a voting member. The Board voted in August, 2008 to compensatecompensated the Chairperson (or the Vice Chairperson in his stead) for attendance at any Committee meeting even though they are not a voting member on all committees through September 30, 2014. Beginning October 1, 2014, the Chairperson (or the Vice Chairperson in their stead) was compensated at one-half of the meeting fee for attendance at committee meeting.meetings of which they were not a voting member. The fee paid for attendance at the Company’s Annual Meeting was also $500 per member. Audit Committee members received $600 for each Audit Committee meeting they attended. In addition, each director,Director, with the exception of the Chairperson of the Board, and theVice Chairperson of the Board and the Chairpersons of the Audit Committee, Governance Committee and the Compensation Committee, received a quarterly stipend of $1,000.$1,500, which increased to $2,000 as of October 1, 2014. The Board Chairperson received a quarterly stipend of $3,500, which increased to $4,500 as of October 1, 2014, the Vice Chairman received a quarterly stipend of $2,500, which increased to $3,000 as of October 1, 2014, and the Chairpersons of the Audit, Governance, and Compensation Committees each received a $2,000 stipend per quarter through September 30, 2014, which increased to $3,000, $2,500 and the Audit Chairperson received a $1,500 stipend per quarter. | | | | | | | | | | | Meeting Fees | | Quarterly Retainer | | | ($) | | ($) | Chairperson of the Board | | | | | | | 2,500 | | Chairperson of the Audit Committee | | | | | | | 1,500 | | All other Directors | | | | | | | 1,000 | | Audit Committee Attendance | | | 600 | | | | | | All other meetings, including Annual Meeting | | | 500 | | | | | |
Meetings$2,500, respectively, as of the Board of Directors of the Company are held monthly. Director Murphy, who also serves as an officer of the Company, does not receive directors’ fees.
The Company receivedOctober 1, 2014. | | | | | | | | | | | | | | | January through September Quarterly Stipend (Annualized) | | | October through December Quarterly Stipend (Annualized) | | | November, 2014 Stock Grant | | Meeting Fees | Chairman of the Board | | $ | 3,500 | | | $ | 4,500 | | | Shares up to a | | $500 for Board, | | | ($ | 14,000 | ) | | ($ | 18,000 | ) | | market value of | | Executive, Governance, | | | | | | | | | | | $8,000 | | and Compensation | | | | | | | | | | | | | $300 for Audit | | | | | | | | | | | | | $250 for Trust and | | | | | | | | | | | | | Loan | Vice Chairman of the Board | | $ | 2,500 | | | $ | 3,000 | | | Shares up to a | | | | | ($ | 10,000 | ) | | ($ | 12,000 | ) | | market value of | | | | | | | | | | | | | $8,000 | | | Audit Chair | | $ | 2,000 | | | $ | 3,000 | | | Shares up to a | | | | | ($ | 8,000 | ) | | ($ | 12,000 | ) | | market value of | | | | | | | | | | | | | $8,000 | | | Governance Chair | | $ | 2,000 | | | $ | 2,500 | | | Shares up to a | | | | | ($ | 8,000 | ) | | ($ | 10,000 | ) | | market value of | | | | | | | | | | | | | $8,000 | | | Compensation Chair | | $ | 2,000 | | | $ | 2,500 | | | Shares up to a | | | | | ($ | 8,000 | ) | | ($ | 10,000 | ) | | market value of | | | | | | | | | | | | | $8,000 | | | All other Directors | | $ | 1,500 | | | $ | 2,000 | | | Shares up to a | | | | | ($ | 6,000 | ) | | ($ | 8,000 | ) | | market value of | | | | | | | | | | | | | $8,000 | | | Audit Committee Attendance | | | | | | | | | | | | $600 (no change) | All other meetings and Annual Meeting | | | | | | | | | | | | $500 (no change) |
We review a comparative summary of director compensation in August, 2008. Overall the Board’s compensation retainer and fee structure is below the 25th percentile of peer banks. However due to a larger number than average directors, the Company’s total board compensation places it at the median of its peer group. The Compensation Consultant, Pearl Meyer & Partnersannually prepared by PM&P. PM&P recommended that the Board consider including equity compensation as part of its compensation mix. No action has been takenmix on this recommendation,an ongoing basis. In November 2014, each independent director was awarded 265 restricted shares of our common stock under the 2009 Plan. This grant was made in lieu of an increase in the cash portion of their fees and as part of an overall market adjustment in director compensation. These restricted share certificates are fully vested, but held in the proposed Bar Harbor Banksharesour possession, and Subsidiaries Equity Incentive Planmay not be sold, transferred or gifted by directors until three months after they leave the service of 2009 does allow for the granting of equity grants to directors if the Board wishes to consider at a future date. (This space intentionally left blank)
38Board.
20082014 Director Compensation TableThe following table details the total compensation paid to all directors from Bar Harbor Bankshares, Bar Harbor Bank & Trust,the Company, BHBT and Bar Harbor Trust ServicesBHTS during the 20082014 fiscal year. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Change in | | | | | | | | | | | | | | | | | | | | | | | Pension Value | | | | | | | | | | | | | | | | | | | | | | | and | | | | | | | Fees | | | | | | | | | | | | | | Nonqualified | | | | | | | Earned or | | | | | | | | | | Non-Equity | | Deferred | | | | | | | Paid in | | Stock | | Option | | Incentive Plan | | Compensation | | All Other | | | | | Cash | | Awards | | Awards | | Compensation | | Earnings | | Compensation | | Total | | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | (a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | Thomas A. Colwell | | | 27,700 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 27,700 | | Robert C. Carter | | | 15,500 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 15,500 | | Jacquelyn S. Dearborn | | | 20,500 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 20,500 | | Peter Dodge | | | 25,500 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 25,500 | | Martha T. Dudman | | | 21,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 21,000 | | Lauri E. Fernald | | | 20,500 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 20,500 | | Gregg S. Hannah | | | 20,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 20,000 | | Clyde S. Lewis | | | 16,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 16,000 | | Joseph M. Murphy | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | Robert M. Phillips | | | 22,500 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 22,500 | | Constance C. Shea | | | 22,500 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 22,500 | | Kenneth E. Smith | | | 25,500 | 1 | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 25,500 | 1 | Scott C. Toothaker | | | 20,000 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 20,000 | | David B. Woodside | | | 19,500 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | 19,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Totals | | | 276,700 | | | | | | | | | | | | | | | | | | | | | | | | 276,700 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | Name (a) | | Fees Earned or Paid in Cash ($) (b) | | | Restricted Stock Awards1 ($) (c) | | | All Other Compensation ($) (g) | | | Total ($) (h) | | Peter Dodge | | | 40,800 | | | | 7,977 | | | | — | | | | 48,777 | | Thomas A. Colwell | | | 23,500 | | | | 7,977 | | | | 500 | | | | 31,977 | | Matthew L. Caras | | | 13,700 | | | | 7,977 | | | | — | | | | 21,677 | | Robert C. Carter | | | 20,000 | | | | 7,977 | | | | — | | | | 27,977 | | Martha T. Dudman | | | 21,900 | | | | 7,977 | | | | — | | | | 29,877 | | Lauri E. Fernald | | | 19,400 | | | | 7,977 | | | | — | | | | 27,377 | | Gregg S. Hannah | | | 20,900 | | | | 7,977 | | | | — | | | | 28,877 | | Clyde S. Lewis | | | 20,000 | | | | 7,977 | | | | — | | | | 27,977 | | Joseph M. Murphy | | | 24,000 | | | | 7,977 | | | | — | | | | 31,977 | | Robert M. Phillips | | | 8,834 | | | | — | | | | — | | | | 8,834 | | Constance C. Shea | | | 22,000 | | | | 7,977 | | | | — | | | | 29,977 | | Curtis C. Simard | | | — | | | | — | | | | — | | | | 0 | | Kenneth E. Smith2 | | | 26,000 | | | | 7,977 | | | | 500 | | | | 34,477 | | Scott C. Toothaker | | | 22,800 | | | | 7,977 | | | | — | | | | 30,777 | | David B. Woodside | | | 21,300 | | | | 7,977 | | | | — | | | | 29,277 | | | | | | | | | | | | | | | | | | | Totals | | | 305,134 | | | | 103,701 | | | | 1,000 | | | | 409,835 | | | | | | | | | | | | | | | | | | |
1. | | Represents the value of 265 restricted shares granted on November 18, 2014 to each independent director as part of their compensation calculated at the closing price on the day of the grant. |
1 | 2. | Director Kenneth E. Smith deferred a portion of his compensation under a Non QualifiedNon-Qualified Deferred Compensation arrangement. This deferred arrangement is funded entirely by the director and the funds are invested and remain in the name of the Company until the director withdraws them upon his resignation, retirement, or termination from Board membership. Director Smith assumes the investment risk on these funds and holds the status of an unsecured creditor of the Company for the payment of these deferred fees at a future date. |
Compensation Committee Interlocks and Insider ParticipationVOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The Compensation and Human Resources Committee is comprisedfollowing table sets forth information with respect to the beneficial ownership of Company directors Phillips, Dearborn, Dodge, Fernald, and Shea. Noneour common stock as of March 10, 2015 by: (i) each person or entity known by us to own beneficially more than 5% of the Companyoutstanding common stock calculated on the outstanding shares on March 10, 2015; (ii) each current director and nominee for election to the Board; (iii) our NEOs; and (iv) all executive officers serveand directors as a membergroup. We had 5,958,521 shares of common stock outstanding as of March 10, 2015. The information provided is based on our records and on information furnished by the persons listed. We are not aware of any arrangement that could at a subsequent date result in a change in control of the Company. | | | | | | | | | | | | | Name of Beneficial Owners | | Title of Class | | Amount of Beneficial Ownership1 | | | Footnotes | | Percent of Class | | | | | | | 5% or more beneficial owners | | | | | | | | | | | | | None | | | | | | | | | | | | | | | | | | Directors/Nominees: | | | | | | | | | | | | | Matthew L. Caras | | Common | | | 4,421 | | | — | | | * | | Robert C. Carter | | Common | | | 6,082 | | | 2,11,12 | | | * | | Thomas A. Colwell | | Common | | | 9,431 | | | 3,11 | | | * | | Peter Dodge | | Common | | | 10,372 | | | 4,11 | | | * | | Martha T. Dudman | | Common | | | 6,709 | | | 11 | | | * | | Lauri E. Fernald | | Common | | | 4,169 | | | 11 | | | * | | Gregg S. Hannah | | Common | | | 2,482 | | | 11,13 | | | * | | Daina H. Hill (Nominee) | | Common | | | — | | | — | | | * | | Clyde H. Lewis | | Common | | | 11,297 | | | 5,11 | | | * | | Joseph M. Murphy | | Common | | | 95,303 | | | 6,11,14,17 | | | 1.6 | | Constance C. Shea | | Common | | | 4,731 | | | 7,11 | | | * | | Curtis C. Simard (Director and NEO) | | Common | | | 4,963 | | | 11,17 | | | * | | Kenneth E. Smith | | Common | | | 5,163 | | | 8,11 | | | * | | Scott G. Toothaker | | Common | | | 4,732 | | | 9,11 | | | * | | David B. Woodside | | Common | | | 4,433 | | | 10,11 | | | * | | | | | | | NEOs: | | | | | | | | | | | | | Gerald Shencavitz | | Common | | | 19,206 | | | 17 | | | * | | Richard Maltz | | Common | | | — | | | 15,17 | | | * | | Stephen M. Leackfeldt | | Common | | | 4,978 | | | 17 | | | * | | Gregory W. Dalton | | Common | | | 9,470 | | | 17 | | | * | | Michael W. Bonsey | | Common | | | 12,861 | | | 16,17 | | | * | | Total Ownership of all directors, NEOs, and specified Trust shares of the Company as a group 20 persons | | | | | 267,003 | | | 18 | | | 4.48 | % |
1. | The number of shares beneficially owned by the persons set forth above is determined under the rules of Section 13 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, an individual is considered to beneficially own any shares of common stock if he or she directly or indirectly has or shares, (i) voting power, which includes the power to vote or to direct the voting of the shares, or (ii) investment power, which includes the power to dispose or direct the disposition of shares. Unless otherwise indicated, an individual has sole voting power and sole investment power with respect to the indicated shares. All individual holdings amounting to less than 1% of issued and outstanding common stock are marked with an (*). |
2. | Includes 2,250 shares over which voting and dispositive powers are shared jointly with Mr. Carter’s spouse. |
3. | Includes 6,750 shares over which voting and dispositive powers are shared jointly with Mr. Colwell’s spouse. |
4. | Includes 2,250 shares over which voting and dispositive powers are shared jointly with Mr. Dodge’s spouse |
5. | Includes 9,177 shares over which voting and dispositive powers are shared jointly with Mr. Lewis’ spouse. |
6. | Includes 30,902 shares over which voting and dispositive powers are shared jointly with Mr. Murphy’s spouse. |
7. | Includes 3,749 shares over which voting and dispositive powers are shared jointly with Mrs. Shea’s spouse. |
8. | Includes 3,377 shares over which voting and dispositive powers are shared jointly with Mr. Smith’s spouse. |
9. | Includes 801 shares owned by Mr. Toothaker’s children and 2,000 shares over which voting and dispositive powers are shared with Mr. Toothaker’s spouse. |
10. | Includes 3,380 shares over which voting and dispositive powers are shared jointly with Mr. Woodside’s spouse. |
11. | Ownership figures for directors include 500 director-qualifying shares owned by each person indicated. |
12. | Director Carter will not stand for re-election under age restrictions in our Bylaws. |
13. | Director Hannah will not stand for re-election under age restrictions in our Bylaws. |
14. | Director Murphy will not stand for re-election under age restrictions in our Bylaws. |
15. | Mr. Maltz was appointed to his positions with the Company effective September 1, 2014 |
16. | Mr. Bonsey resigned his positions effective June 13, 2014. |
17. | The table above includes (a) shares that Mr. Murphy as a former CEO and the executives own directly, (b) shares over which NEOs have voting power of fully vested shares under the Company’s 401(k) Plan, (c) stock options for common stock granted pursuant to the Company’s equity incentive plan which are exercisable within 60 days of the Record Date, and (d) time-vested shares to be issued to the executives within 60 days under the 2013-2015 Long-term incentive plan. These ownership positions are set forth in the table below: |
| | | | | | | | | | | | | | | | | Name | | Direct (a) | | | 401(k) Plan (b) | | | Exercisable Options (c) | | | Time-Vested Restricted Shares (d) | | Curtis C. Simard | | | 4,052 | | | | 130 | | | | 0 | | | | 781 | | Gerald Shencavitz | | | 582 | | | | 7,109 | | | | 11,100 | | | | 415 | | Richard Maltz | | | — | | | | — | | | | — | | | | — | | Stephen M. Leackfeldt | | | 2,067 | | | | — | | | | 2,600 | | | | 311 | | Gregory W. Dalton | | | 424 | | | | 5,135 | | | | 3,600 | | | | 311 | | Joseph M. Murphy | | | 47,199 | | | | 48,104 | | | | — | | | | — | | Michael W. Bonsey | | | 8,589 | | | | 4,272 | | | | — | | | | — | |
18. | Total beneficial ownership includes 46,200 (0.78%) shares of common stock held by two trusts, which, for purposes of voting, are allocated equally among the directors present at the Annual Meeting under the terms of the respective trust instruments. No director has any other beneficial interest in these shares. These trusts are denominated for purposes of this proxy statement as the “Parker Trust” and the “The Fred & Hattie Lynam Private Foundation” formerly known as the Lynam Trust. |
The Parker Trust was established in 1955 in perpetuity. BHTS, the Company’s second tier non-depository trust services company located in Ellsworth, Maine, is the sole Trustee, with full powers, of this trust benefiting the Mt. Heights Cemetery in Southwest Harbor, Maine. The Fred & Hattie Lynam Private Foundation, formerly known as the Lynam Trust, was established in 1942 in perpetuity to benefit Mount Desert Island charities and later expanded to provide scholarships to graduates of Mount Desert Island High School. BHTS is the sole Trustee, with full powers, and administers the trust with the assistance of an established Grant and Scholarship Committee made up of members of the Board and community representatives. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires the Company’s officers, directors, and persons who own more than 10% of a compensation committee of any other company that has an executive officer serving as a memberregistered class of the Company’s Boardequity securities (collectively “Section 16 Persons”) to file initial reports of Directors. Noneownership and reports of changes of ownership with the executive officers serveSEC and the NYSE MKT. Section 16 Persons are required by the Commission regulations to furnish the Company with copies of all Section 16(a) forms they file. To our knowledge, based solely on review of such reports provided to us and written representations, all reports were filed timely as required except for: On February 12, 2014, a memberlate Form 4 was filed to report a purchase of the board200 shares by Mr. Clyde Lewis on February 6, 2014. On February 10, 2015, a Form 5 was filed to report a purchase of directors of any other company that has an executive officer serving as a member of the Committee. 39 2,000 shares by Mr. Clyde Lewis on May 29, 2014.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transactions with Management and Others We administer related party transactions (if any) under our Related Party Transaction Policy, which addresses compliance to NYSE MKT Rule 120 and Item 404 (a) of Regulation S-K. This policy provides for Audit Committee oversight of related party transactions that exceed a de minimis lifetime income statement impact of $25,000 (except for loan transactions, which for the Company and its subsidiaries are administered pursuant to Federal Regulation O, as described more fully below). Any transactions that qualify under this policy are reviewed by the Audit Committee (or another acceptable Board Committee, or the full Board) for pre-approval. Other than the Somesville Lease described below, and loans offered in the ordinary course of business and approved by the BHBT Board, we had no related party transactions. The Company hasRelated Party Transaction Policy is approved annually by the Board and administered by management of BHBT.We have entered into a long-term lease for its new Bankour BHBT branch located in Somesville, Maine, effective February 1, 2006 (the “Somesville Lease”). The Somesville Lease has an initial terminterim renewals of five years and five months. During the first year of the Somesville Leasepresent term the base rent was Sixty Thousand Dollars ($60,000.00), pro-rated for any partial lease year.runs through 2016. During each subsequent lease year the base rent is increased using a formula tied to certain changes in the consumer price index. During 2008,2014, the lease payments totaled Sixty Three Thousand Two Hundred Twenty One Dollars ($63,221).$81,665 and the Company estimates that an approximately $85,500 will be due under the terms of the lease through its renewal date of June, 2016. In addition to base rent, the BankBHBT is responsible to pay as “additional rent” certain defined real estate taxes as well as certain operating expenses, and other costs, charges, and expenses associated with the premises. The “Landlord” under the Somesville Lease is A. C.A.C. Fernald Sons Inc., a Maine corporation. Mr. Robert B. Fernald of Mount Desert, Maine, is a shareholder, director, and officer of A. C. Fernald Sons Inc. and is the father of Company director Lauri E. Fernald. Lauri E. Fernald does not own any stock or hold any corporate office or other position with A. C.A.C. Fernald Sons Inc. and has no direct or indirect interest in the Somesville Lease other than her familial relationship with Mr. Robert B. Fernald. Except as set forth above and with regard to “Indebtedness of Management” described below, none of the director- nomineesdirector-nominees or NEOs of the Company or of any of its subsidiaries engaged during 20082014 in any transaction with the Company or any of its subsidiaries, in which the amount involved exceeded $120,000. The Company administers related party transactions (if any) under its Related Party Transaction Policy, which policy addresses compliance to NYSE Amex Rule 120. This policy provides for Board Audit Committee oversight of related party transactions that exceed ade minimuslifetime income statement impact of $25,000 (except for loan transactions, which for the Company and its subsidiaries are administered pursuant to Federal Regulation O, as described more fully below). Any transactions that qualify under this policy are reviewed by the Board Audit Committee (or another acceptable Board committee, or the full Board of Directors) for approval prior to being contractually bound by the Company. Other than the lease disclosed and described herein, and loans offered in the ordinary course of business and approved by the Bar Harbor Bank & Trust Board of Directors, the Company had no related party transactions. The Related Party Transaction Policy is approved annually by the Board of Directors and administered by management of the Bank.
Indebtedness of Management The Company’s wholly owned subsidiary, Bar Harbor Bank & Trust (the “Bank”),BHBT offers to its directors, officers, principal shareholders and employees, and to businesses owned and/or controlled by those persons (collectively “insiders”), commercial and consumer loans in the ordinary course of its business. All loans made by the Company and its subsidiaries to insiders are regulated by the Company’s federal and state regulators under federal Regulation O (“Reg. O”). “Reg. O”Reg. O sets forth various practices and reporting requirements for loans to insiders. In addition, the Sarbanes-Oxley Act of 2002 permits banks and bank holding companies to extend credit to their directors and officers provided that such extensions of credit are (a) made or provided in the ordinary course of the consumer credit business of such issuer; (b) of a type that is generally made available to such issuer to the public; and (c) made by such issuer on market terms, or terms that are no more favorable than those offered by the issuer. All loans extended Further, NYSE MKT rules provide that related party transactions must be subject to appropriate review and oversight by the BankCompany’s Audit Committee or a comparable body of the Board.As of December 31, 2014, the outstanding loans by BHBT to insiders complyour director-nominees and NEOs amount to an aggregate of approximately $4,222,871 with Reg. O, the Sarbanes-Oxley Acta maximum availability limit of 2002, and NYSE Amex Rule 120.$6,138,809. They are offered under the same terms and conditions available to non-insiders, including but not limited to those terms and conditions related to the requirements for approval, the interest rates charged, the required repayment terms, and the required collateral, except that the Bank waives certain fees for all employees and directors when applying for consumer residential first mortgage loans secured by the related party’s primary residence.collateral. Further, the BankBHBT may, from time to time at the discretion of management, provide interest rate discounts, fee waivers or other pricing inducements to qualified employees and directors when doing so accomplishes or furthers an objective of the BankBHBT and/or the Company. No such programs are made available only to insiders. The terms and conditions of all loans, including those to insiders, and the process by which they are approved, is fully documented in the Bank’sBHBT’s written Loan Policy. The Loan Policy is approved annually by the Board of Directors and administered by management of the Bank.BHBT. Loans to insiders may not contain a higher level of risk, nor be 40
offered with terms and conditions more favorable, than loans to non-insiders with equivalent financial profiles (except for the favorable pricing programs previously described). We believe that all extensions of credit to Companyour insiders and executive officers satisfy the foregoing conditions. No suchextensions of credit transactions have involved more than normal risk of collectability or presented other unfavorable featuresfeatures.OTHER MATTERS Code of Ethics The Board has adopted a Code of Ethics that applies to all employees, officers, and no loans outstanding. Equity Compensation Plan Information
On October 3, 2000, the shareholders ofdirectors. The Code covers compliance with law; fair and honest dealings with the Company, approved the Bar Harbor Bankshareswith competitors, and Subsidiaries Incentive Stock Option Plan of 2000. The following table provides information as of December 31, 2008 with respectothers; fair and honest disclosure to the sharespublic; and procedures for compliance with the Code. Shareholders can review the Code of Common Stock that may be issued under the Company’s 2000 Incentive Stock Option Plan.
| | | | | | | | | | | | | | | Number of securities to | | | | | | | Number of securities | | | | be issued upon exercise | | | | | | | remaining available for | | | | of outstanding options, | | | Weighted average | | | issuance under equity | | | | warrants, and rights, net | | | exercise price of | | | compensation (excluding | | | | of forfeits and exercised | | | outstanding options, | | | securities referenced in | | | | shares | | | warrants, and rights | | | column (a) | | | | (a) | | | (b) | | | (c) | | Equity compensation plans approved by security holders | | | 288,572 | | | $ | 22.42 | | | | 23,829 | | Equity compensation plans not approved by security holders | | None | | | N/A | | | None | | | | | | | | | | | Total | | | 288,572 | | | $ | 22.42 | | | | 23,829 | | | | | | | | | | | |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The Company’s Audit Committee has approved the appointment of KPMG LLP as the Company’s principal independent registered public accountant for the fiscal year ending December 31, 2009.
The reports of KPMG LLPEthics on the Company’s consolidatedwebsite located at www.bhbt.com.We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to, or a waiver from, a provision of our Code of Ethics that applies to our principal executive officer, principal financial statements as of December 31, 2008, and 2007 and for the three-year period endingofficer, principal accounting officer, or persons performing similar functions, by posting such information on December 31, 2008, and on internal control over financial reporting as of December 31, 2008 and 2007, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. We anticipate a representative from KPMG LLP will be present and available to respond to questions or make a statement(s)our website at the Meeting.
Audit Fees
The following table summarizes KPMG LLP’s audit fees for 2008 and 2007 respectively:
| | | | | | | | | | | 2008 | | 2007 | Service | | ($) | | ($) | Audit Fees | | | 363,500 | | | | 367,000 | | Audit Related Fees | | | 21,650 | | | | 26,450 | | Tax Fees | | | 0 | | | | 0 | | All Other Fees | | | 0 | | | | 0 | | | | | | | | | | | TOTAL | | | 385,150 | | | | 393,450 | | | | | | | | | | |
| 1. | | Audit Fees.The aggregate fees billed for professional service rendered by the principal accountants KPMG LLP, for the audit of the Company’s annual financial statements and internal control over financial reporting, and review of the financial statements included in the Company’s Forms 10-Q for the years ended December 31, 2008, and 2007 were $363,500 and $367,000 respectively. | | | 2. | | Audit Related Fees.The aggregate fees billed for assurance and related services rendered by KPMG LLP related to the performance of the audit or review of the Company’s financial statements in the years ended December 31, 2008, and 2007 were $21,650 and $26,450 respectively. These services were related to an employee benefit plan audit. | | | 3. | | Tax Fees.The aggregate fees billed for professional service rendered by KPMG LLP for tax compliance, tax advice and tax planning in the years ended December 31, 2008, and 2007, were $0. The nature of the services comprising the fees disclosed under this category is preparation of federal tax returns and tax planning. | | | 4. | | All Other Fees.No services or charges were applicable to this category the years ended December 31, 2008, and 2007. |
The Audit Committee’s pre-approval 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.
No services were rendered for financial information systems design and implementationinternet address set forth above. We have not amended or internal audit.
The Company’s 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.
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Proposal III — Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2009
Our Board of Directors has adopted the 2009 Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2009 (the“2009 Plan”) for employees and directors of the Company and its subsidiaries, subject to the approval of the 2009 Plan by our shareholders.
The 2009 Plan is administered by the Compensation Committee as appointed by our Board of Directors (the “Committee”). The Committee, in its discretion, may grant stock-based awards, (including Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock, and Restricted Stock Units) to employees under the Plan. In practice, the Committee makes recommendation to the Full Board of Directors who then confirms (or rejects) the Committee’s recommendation. Directors are also eligible to receive awards under the 2009 Plan other than Incentive Stock Options.
Subject to adjustment for stock splits, stock dividends and similar events, the total number of shares of common stock that can be issued under the 2009 Plan over the 10 year period in which the plan will be in place is 175,000 shares of common stock; provided, however, that no more than 75,000 shares of such stock can be awarded in the form of Restricted Stock or Restricted Stock Units. Based solely upon the closing price of the Company’s common stock as reported on the NYSE Amex on March 20, 2009, the maximum aggregate market value of the securities to be issued under the 2009 Plan would be $3,850,000. The shares issued by the Company under the 2009 Plan may be authorized but un-issued shares, or shares reacquired by the Company. To the extent that awards under the 2009 Plan do not vest or otherwise revert to the Company, the shares of common stock represented by such awards may be the subject of subsequent awards.
Recommendation
Our Board of Directors believes that stock-based awards can play an important role in the success of the Company by enhancing the Company’s 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 the increases in value of the stock of the Company through the grant of certain stock-based awards and thereby better aligning the interests of such persons with those of the Company’s shareholders.
Our Board of Directors believes that the proposed 2009 Plan will help the Company to achieve its goals by keeping the Company’s incentive compensation program competitive with those of other companies. Accordingly, the Board of Directors believes that the 2009 Plan is in the best interests of the Company and its shareholders and recommends that the shareholders approve the 2009 Plan.
The Board of Directors recommends voting “FOR” the proposed 2009 Equity Incentive Plan.
Summary of the 2009 Plan
The following description of certain features of the 2009 Plan is intended to be a summary only. The summary is qualified in its entirety by the full text of the 2009 Plan that is attached hereto as Appendix C.
2009 Plan Administration. The 2009 Plan provides for administration by the Compensation Committee represented by not fewer than two independent directors (the “Administrator”), with membership appointed by the Board of Directors from time to time. The Administrator has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted to make any combination of awards to participants, and to determine the specific terms and conditions of each awards, subject to the provisions of the 2009 Plan. In practice, the Committee makes recommendations to the Full Board of Directors who then confirms (or rejects) the Committee’s recommendation. Directors are also eligible to receive awards under the 2009 Plan other than Incentive Stock Options.
Eligibility and Limitations on Grants. All employees and directors of the Company and its subsidiaries are eligible to participate in the 2009 Plan, subject to the discretion of the Administrator. The number of individuals potentially eligible to participate in the 2009 Plan is approximately 92 persons.
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The maximum Stock Award granted to any one individual will not exceed 20,000 shares of common stock (subject to adjustment for stock splits and similar events) for any calendar year.
Stock Options. Options granted under the 2009 Plan may be either Incentive Stock Options (“Incentive Options”) (within the meaning of Section 422 of the Code) or Non-Qualified Stock Options (“Non-Qualified Options”). Incentive Options may be granted only to employees of the Company or any Subsidiary. Options granted under the 2009 Plan will be Non-Qualified Options if they (i) fail to qualify as Incentive Options, (ii) are granted to a person not eligible to receive Incentive Options under the code, or (iii) otherwise so provide. Non-Qualified Options may be granted to persons eligible to receive Incentive Options and directors and other key persons.
Other Option Terms. The Administrator has authority to determine the terms of options granted under the 2009 Plan. Options are granted with an exercise price that is not less than the fair market value of the shares of common stock on the date of the option grant.
The terms of each option will be fixed by the Administrator and may not exceed ten years from the date of grant. The Administrator will determine at what time or times each option may be exercised subject to the terms of the Plan regarding exercise in the event of death, disability, or termination of employment. Options may be made exercisable in installments. In general, unless otherwise permitted by the Administrator, no option granted under the 2009 Plan is transferable by the optionee other than by will or by the laws of descent and distribution, and options may be exercised during the optionee’s lifetime only by the optionee.
Options granted under the 2009 Plan may be exercised for cash or, if permitted by the Administrator, by transfer to the Company of shares of common stock that are not then subject to restrictions under any Common Stock plan, or, if permitted by applicable laws and regulations, according to a deferred payment arrangement with an adequate rate of interest charged at the applicable federal rate.
To qualify as Incentive Options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to Incentive Options which first become exercisable in any one calendar year.
Stock Options Granted to Directors. The 2009 Plan provides that the Administrator, in its discretion, may grant Non-Qualified Options to directors, subject to the terms of the Plan.
Stock Appreciation Rights. The Administrator may award a Stock Appreciation Right. Upon exercise of the Stock Appreciation Right, the holder will be entitled to receive an amount equal to the excess of the fair market value on the date of exercise of one share of common stock over the fair market value on the grant date of one share of common stock. The total appreciation available to a Participant form any exercise of Stock Appreciation Rights shall be equal to the number of stock Appreciation Rights being exercised, multiplied by the amount of appreciation per Stock Appreciation Right determined under the preceding sentence. This amount may be paid in cash, common Stock, with a Company note, or a combination thereof, as determined by the Administrator.
Restricted Stock Awards. The Administrator may grant shares of common stock to any participant subject to such conditions and restrictions as the Administrator may determine. The vesting period shall be determined by the Administrator. If the participant terminates service prior to vesting, the participant will forfeit his or her award of restricted stock.
Restricted Stock Units. The Administrator may grant Restricted Stock Units to any participant subject to such conditions and restrictions as the Administrator may determine. The vesting period shall be determined by the Administrator. If the participant terminates service prior to vesting, the participant will forfeit his or her award of restricted stock. Upon vesting, the shares of Stock covered by the Restricted Stock Units will be transferred to the Participant as soon as administratively feasible but in no event later than 21/2 months following the close of the year during which the units vest in accordance with Section 409A of the Code.
Tax Withholding. Participants under the 2009 Plan are responsible for the payment of any federal, state or local taxes the Company is required by law to withhold upon any option exercise or vesting of other awards. Subject to approval by the Administrator, Participant may, in the discretion of the Committee, satisfy any federal, state, or local tax withholding obligation relating to the exercise or acquisition of Stock under a Stock Award or the
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exercise or acquisition of cash and/or Stock under a Stock Appreciation Right by any one of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold cash from the cash otherwise payable to the Participant as a result of the exercisewaivers of a Stock Appreciation Right, or (iii) delivering to the company owned and unencumbered sharesprovision of Stock.
Changeour Code of Control Provisions. The 2009 Plan provides that in the event a participant separates from the service of the Company other an as a result of Disability and other than for Cause, or the Participant separated his/her service for Good Reason; and the Participant’s separation from service occurs in anticipation of or after a Change in Control, as defined in the 2009 Plan, generally all Stock Options and Stock Appreciation Rights will automatically become fully exercisable and that the restrictions and conditions on all awards of Restricted Stock an Restricted Stock Units will automatically be deemed waived.
Adjustments for Stock Dividends, Mergers, etc. The 2009 Plan authorized the Administrator to make appropriate adjustments to the number of shares of common stock that are subject to the 2009 Plan and to any outstanding Stock Awards to reflect stock dividends, stock splits, and similar events.
Amendments and Termination. The Board of Directors may at any time amend or discontinue the 2009 Plan and the Administrator may at any time amend or cancel any outstanding award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect the rights under any outstanding awards without the holder’s consent. To the extent required by the Code to ensure that options granted under the 2009 Plan qualify as Incentive Options, the 2009 Plan amendments shall be subject to approval by our shareholders. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Options and/or Stock Appreciation Rights may not be amended to reduce the exercise price of outstanding Options and/or Stock Appreciation Rights or cancel outstanding Options and/or Stock Appreciation Rights in exchange for cash, other awards or Options and/or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Options and/or Stock appreciation Rights without stockholder approval.
New 2009 Plan Benefits
No grants have been made with respect to the shares of common stock to be reserved for issuance under the 2009 Plan. The number of shares of common stock that may be granted to employees and directors is indeterminable at this time; as such grants are subject to the discretion of the Administrator.
Tax Aspects under the U.S. Internal Revenue Code
The following discussion is intended to be a summary and is not a comprehensive description of the federal tax laws, regulations, and policies affecting the Company and recipients of awards that may be granted under the 2009 Plan. This summary does not address any state or local tax consequences. Any descriptions of the provisions of any law, regulation or policy are qualified in their entirety by reference to the particular law, regulation or policy. Any change in applicable law or regulation or in the policies of various taxing authorities may have a significant effect on this summary. The 2009 Plan is not a qualified plan under Section 401(a) of the Internal Revenue Code.
Incentive Options. No taxable income is generally realized by the optionee upon the grant or exercise of an Incentive Option. If shares of common stock issued to an optionee pursuant to the exercise of an Incentive Option are sold or transferred after two years from the date of grant and after one year from the date of exercise, the (i) upon sale of such shares, any amount realized in excess of the option price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (ii) there will be no deduction for the Company for federal income tax purposes. The exercise of an Incentive option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee. Under current law, an optionee will not have any additional FICA (Social Security) taxes upon exercise of an Incentive Option.
If shares of common stock acquired upon the exercise of an Incentive Option are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), generally (i) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of
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Ethics during 2014.
the fair market value of the shares of common stock at exercise (or, if less, the amount realized on a sale of such shares of common stock) over the option price thereof, and (ii) the Company will be entitled to deduct such amount. Special rules will apply where all or a portion of the exercise price of the Incentive Option is paid by tendering shares of common stock.
If an Incentive Option is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a Non-Qualified Option. Generally, an Incentive Option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reasons of disability). In the case of termination of employment by reason of death, the three moth rules dues not apply.
Non-Qualified Options. With respect to Non-Qualified Options under the 2009 Plan, no income is realized by the optionee at the time the option is granted. Generally (i) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the option price and the fair market value of the shares of common stock on the date of exercise, and the Company receives a tax deduction for the same amount, and (ii) at disposition, appreciation or depreciation after the date of exercise is treated as either short-term or long-term capital gain or loss depending on how long the shares of common stock have been held. Special rules will apply where all or a portion of the exercise price of the Non-Qualified Option is paid by tendering shares of common stock. Upon exercise, the optionee will also be subject to FICA taxes on the excess of the fair market value over the exercise price of the option.
Restricted Stock Awards or Restricted Stock Units.The stock awards under the 2009 Plan do not result in federal income tax consequences to either the Company or the award recipient. As a general rule, once the award is vested and the shares subject to the award are distributed, the award recipient will generally be required to include in ordinary income, for the taxable year in which the vesting date occurs, an amount equal to the fair market value of the shares on the vesting date.
Parachute Payments. The vesting of any portion of any option or other award that is accelerated due to the occurrence of a separation from service due to a change of control may cause a portion of the payments with respect to such accelerated awards to be treated as “parachute payments’ as defined in the Code. Any such parachute payments may be non-deductible to the Company, in whole or in part, and may subject the recipient to a non deductible 20% federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).
Limitation on the Company’s Deductions. As a result of Section 162(m) of the code, the Company’s deduction for certain awards under the 2009 Plan may be limited to the extent that a Covered Employee receives compensation in excess of $1,000,000 is such taxable year of the Company (other than performance-based compensation that otherwise meets the requirements of Section 162(m) of the Code).
As a result of the Company’s participation in the Capital Purchase Program, the deduction limit for remuneration paid to the senior executive officers (as such terms is defined under the Capital Purchase Program) during any taxable year will be $500,000 instead of $1,000,000, and must be computed without regard to the performance-based compensation exceptions of Section 162(m) of the Code.
Vote Required For Approval
If a quorum is present, this proposal will be approved if a majority of the votes cast on the proposal are voted in favor of approval. Proxies solicited by the Board will be voted for approval of the 2009 Plan unless a vote against the proposal or abstention is specifically indicated. This proposal is not conditioned on the approval of any other proposal.
The Board of Directors unanimously recommends a vote “FOR” this proposal.
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Proposal IV Advisory Proposal on the Company’s Executive Compensation Policies and Procedures.
The American Recovery and Reinvestment Act of 2009, signed into law on February 17, 2009, required participants in the Treasury’s Capital Purchase Program to permit a separate, non-binding shareholder vote to approve the compensation of executives, as disclosed pursuant to the compensation disclosure rules of the SEC (including the compensation discussion and analysis, the compensation tables, and any related material).
As a participant in the Capital Purchase Program, the Company is providing you the opportunity to endorse or not endorse the Company’s executive pay program and policies by voting on the following resolution:
“Resolved, that the shareholders approve the executive compensation philosophy, policies and procedures described in the Compensation Discussion and Analysis, and the application of the Company’s compensation philosophy, policies and procedures as reflected in the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this Proxy Statement.”
The Board of Directors believes that the Company’s compensation policies and procedures are designed to provide a strong link between each NEO’s compensation and the Company’s short and long-term performance. The objective of the Company’s compensation program is to provide compensation which is competitive, variable based on the Corporation’s performance and aligned with the long-term interests of shareholders.
Because your vote is advisory, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
The Board of Directors recommends that shareholders vote“FOR”approval of the advisory (non-binding) proposal on the Company’s executive compensation policies and procedures.
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OTHER MATTERS
ENCLOSED WITH THIS PROXY MAILING TO SHAREHOLDERS IS A copy of the Company’s Annual Report is being provided to each shareholder with this Proxy Statement. COPY OF THE COMPANY IS ALSO INCLUDINGCOMPANY’S 2014 SUMMARY ANNUAL REPORT AND A COPY OF THE ANNUAL REPORT BY THE COMPANY TO THE SECURITIES AND EXCHANGE COMMISSIONSEC ON FORM 10-K. THE FORM 10-K INCLUDINGINCLUDES CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES FOR THE LAST FISCAL YEAR IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. UPON WRITTEN REQUEST, SHAREHOLDERS MAY ALSO OBTAIN THE MOST RECENT ANNUAL DISCLOSURE STATEMENT THAT CONTAINS FINANCIAL INFORMATION COVERING THE LAST TWO YEARS. Any request for a copy of the Annual Disclosure Statement must contain a representation that the person making the request was a beneficial owner of Common Stock on March 23, 2009,24, 2015, which is the record dateRecord Date for this proxy solicitation. Requests should be addressed to: Marsha C. Sawyer, Clerk, Bar Harbor Bankshares, 82 Main Street, Bar Harbor, ME 04609. Nominations by Shareholders and Other Shareholder Proposals The CompanyOur Bylaws provide that the Companywe will consider nominees for election to the Board of Directors recommended by shareholders if made in the same manner provided for under the Companyour Bylaws with regard to typical Shareholdershareholder proposals. These procedures require in part, that to be timely, a shareholder’s notice shall be delivered to the Clerk at our principal executive offices no later than the close of business of the 120th day nor earlier than the close of business on the 150th day prior to the first anniversary of the preceding year’s Annual Meeting. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected): (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made, and the names and addresses of other shareholders known by the shareholder proposing such business to support such proposal, and the class and number of shares of our capital stock beneficially owned by such other shareholders; and (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on our books, and of such beneficial owner, and (ii) the class and number of shares of our common stock, which are owned beneficially and of record by such shareholder and such beneficial owner. Shareholder submitproposals submitted pursuant to Rule 14a-8 of the proposed nominationExchange Act for inclusion in writingour proxy statement and form of proxy for the 2016 Annual Meeting of Shareholders must be received by us no later than December 9, 2015. Any such proposal must also comply with the requirement as to form and substance established by the SEC for such a proposal to be included in the proxy statement and form of proxy. Proposals should be addressed to Marsha C. Sawyer, Clerk, Bar Harbor Bankshares, 82 Main Street, Bar Harbor, ME 04609, no less than 120 days prior to the anniversary date of the immediately preceding Annual Meeting or the date on which the next Annual Meeting is scheduled to occur (provided that notice of such date has been provided to the shareholders or has been publicly announced), whichever date is later. Any such notice shall set forth the reasons for considering such nominee, the name and address of the shareholder proposing the nominee, the number of shares of the Company’s capital stock beneficially owned by such shareholder and any material interest of the Shareholder in the matter proposed to be brought before the Annual Meeting.04609. If the Governance Committee determines that any Shareholdershareholder proposal (including a nomination for election of a director) was not made in a timely fashion or that information provided in the notice does not fulfill the information requirements set forth above in any material respects, such proposal shall not be presented for action at the Annual Meeting for which it is proposed. If a shareholder should propose a candidate, we anticipate that the Governance Committee would evaluate that candidate on the basis of the criteria noted above. Shareholders may submit proposals for consideration at the 2010 Annual Meeting, which presently is scheduled for May 18, 2010. In order to be included in the Company’s Proxy Statement and Form of Proxy relating to that meeting, such proposals must be received by the Company no later than December 8, 2009, which is 120 days in advance of the proposed mailing date of next year’s proxy materials. Proposals should be addressed to Marsha C. Sawyer, Clerk, Bar Harbor Bankshares, 82 Main Street, Bar Harbor, ME 04609.
Communication with Board of Directors TheOur shareholders and other interested persons who want to communicate with the Board, any individual director, the non-management directors as a group or any other group of Directors does not have a formal process for shareholders to send communications to the Board. In viewdirectors, can write to: Peter Dodge, Chairman of the infrequency of Shareholder communications to the Board of Directors, the Board does not believe that a formal process is necessary. c/o Marsha C. Sawyer, Clerk Bar Harbor Bankshares 82 Main Street Bar Harbor, ME 04609 Written communications addressed to the Board of Directors received by the Companyus from shareholders will be shared with the full Board of Directors no later than the next regularly scheduled Board meeting. 48
Code of Ethics
The Company Board of Directors has adopted a Code of Ethics that applies to all employees, officers, and directors. The Code covers compliance with law; fair and honest dealings with the Company, with competitors, and with others; fair and honest disclosure to the public; and procedures for compliance with the Code. Shareholders can review the Code of Ethics on the website located atwww.BHBT.com.
As of the date of this Proxy Statement,proxy statement, the Company’s Board of Directors knows of no matters that will be presented for consideration at the Annual Meeting other than as described in this Proxy Statement.proxy statement. If any other business, matter, or proposal shall properly come before the Annual Meeting and be voted upon, the enclosed proxies will be deemed to confer discretionary authority on the individuals named as proxies therein to vote the shares represented by such proxies as to any such matters. The persons named as proxies intend to vote or not to vote in accordance with the recommendation of the Company’s Board of Directors. Board. | | | | | By Order of the Board of Directors
| | | /s/ Marsha C. Sawyer | | | Marsha C. Sawyer, Clerk | | | | | | |
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REPORT OF THE AUDIT COMMITTEE 9, 2015To the Board of Directors of Bar Harbor Bankshares: In accordance with the Audit Committee Charter, the Audit Committee reviews the Company’s financial reporting process on behalf of the Board. Management is responsible for preparing the financial statements and for designing and implementing the reporting process, including the system of internal controls, and has represented to the Audit Committee that such financial statements were prepared in accordance with generally accepted accounting principles. The independent registered public accounting firm is responsible for expressing opinions on the conformity of those audited financial statements with U.S. generally accepted accounting principles. The Audit Committee has reviewed and discussed with management and the independent registered public accounting firm, together and separately, the Company’s audited consolidated financial statements as of andcontained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. 2014.The Audit Committee has discussed with the independent auditorsregistered public accounting firm the matters required to be discussed by professional standards. The In addition, the Audit Committee has receiveddiscussed with the independent registered public accounting firm the auditors’ independence from the Company and its management, including the matters in the written disclosures and letter which were received by the letterAudit Committee from the independent auditorsregistered public accounting firm as required by applicable requirements of the Public Company Accounting Oversight Board ( “PCAOB” ) regarding the independent accountant’s communications with the Audit Committee concerning independence. The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the auditor’s independence and hasconcluded that the auditors are independent.The Audit Committee reviewed and discussed with the independent accountantregistered public accounting firm any other matters required to be discussed by PCAOB Auditing Standards No 16, Communications with Audit Committees, including without limitation, the independent accountant’s independence. Basedauditors’ evaluation of the quality of the Company’s financial reporting, information relating to significant unusual transactions and the business rationale for such transactions, and evaluation of the Company’s ability to continue as a going concern.During 2014, the Audit Committee performed all its duties and responsibilities under the Audit Committee Charter. In addition, based on the reviewsreports and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements referred to aboveof the Company for 2014 be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. 2014, for filing with the SEC.Each of the members of the Audit Committee is independent as defined under the listing standards of NYSE Amex (formerly the American Stock Exchange)MKT as of December 31, 2008. 2014.The Board of Directors has determined that the Company has at least one “audit committee financial expert” serving on its Audit Committee. Mr. Scott G. Toothaker, CPA, meets the criteria for an “audit committee financial expert” and is “independent” within the meaning of the rules adopted by the NYSE AmexMKT pursuant to the Sarbanes-Oxley Act of 2002. Scott G. Toothaker, Chair
Martha T. Dudman
Lauri E. Fernald
Gregg S. Hannah
Kenneth E. Smith
David B. Woodside
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APPENDIX B
AUDIT COMMITTEE CHARTER
PURPOSE
The Audit Committee (the “Committee”) is appointedRespectfully submitted by the Board of Directors (the “Board”) of Bar Harbor Bankshares (the “Company”) to assist the Board in fulfilling its oversight responsibilities for: (1) the integrity of the Company’s financial statements; (2) the Company’s compliance with legal and regulatory requirements; (3) the independent auditor’s qualifications and independence; (4) the performance of the Company’s internal audit function and independent auditors; and (5) the system of internal controls and disclosure controls that management has established. The Committee shall prepare the “Audit Committee Report” required by the rules of the United States Securities and Exchange Commission (the “Commission”) to be included in the Company’s annual proxy statement.
COMPOSITION
The Committee will be comprised of at least three members of the Board of Directors. The members of the Committee shall be appointed annually by the Board and may be replaced or removed by the Board with or without cause. Resignation or removal of a Director from the Board, for whatever reason, shall automatically and without any further action constitute resignation or removal, as applicable, from the Committee. Any vacancy on the Committee, occurring for whatever reason, may be filled only by the Board. The Board shall designate one member of the Committee to be Chairperson of the Committee.
Each member of the Committee shall be financially literate (or shall become financially literate within a reasonable period of time after his or her appointment to the Committee), as such qualification is interpreted by the Board in its business judgment. One or more members of the Committee must either be “financially sophisticated” (determined in accordance with the guidelines published by NYSE Amex (formerly the American Stock Exchange and hereinafter “NYSE Amex”) or an “audit committee financial expert” (as such term is defined under the rules promulgated by the SEC).
No member of the Committee may simultaneously serve on the audit committee of more than three (3) issuers having securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), unless the Board determines that such simultaneous service would not impair the ability of such member to effectively serve on the Audit Committee
COMPENSATION
A member of the Committee may not, other than in his or her capacity as a member of the Committee, the Board or any other committee established by the Board, receive directly or indirectly any consulting, advisory or other compensatory fee from the Company. A member of the Committee may receive additional directors’ fees to compensate such member for the significant time and effort expended by such member to fulfill his or her duties as a Committee member.
MEETINGS
The Committee shall meet as often as it determines necessary, but no less frequently than quarterly. A majority of the members of the Audit Committee shall constitute a quorum for purposes of holding a meeting and the Committee may act by a vote of a majority of the members present at such meeting. The Chairperson of the Committee, in consultation with the other committee members, may determine the frequency and length of the Committee meetings and may set meeting agendas consistent with this Charter
The Committee may, at its discretion, meet in separate executive sessions with the Chief Executive Officer, Chief Financial Officer, independent auditor and internal auditor. All Committee members will strive to attend each meeting. The Committee may request that any officer or employee of the Company or the outside legal counsel or independent auditor attend a meeting of the Committee or to meet with any members of or consultants to the Committee.
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Board:
AUTHORITY
The Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:
| • | | Appoint, compensate, and oversee the work of the independent public accounting firm employed by the organization to conduct the annual independent audit of the Company’s consolidated financial statements. This firm will report directly to the Committee; | | | | Scott G. Toothaker, Chair | | Matthew L. Caras | | Lauri E. Fernald | | | Martha T. Dudman | • | Gregg S. Hannah | Resolve any disagreements between management and the independent auditor regarding financial reporting; | | | •David B. Woodside | | Pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (the “Act”) which are approved by the Committee prior to the completion of the audit; | | | • | | Retain independent counsel, accountants, or others to advise the Committee or assist in the conduct of an investigation; | | | • | | Seek any information it requires from employees—all of whom are directed to cooperate with the Committee’s requests—or external parties; | | | • | | Meet with Company officers, independent auditors, or outside legal counsel, as necessary; | | | • | | The Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that the decisions of such subcommittee to grant pre-approvals shall be presented to the full Committee for ratification at its next scheduled meeting; | | | • | | Approve assurance and consulting services performed by outsourced vendors used to complete the annual audit plan; | | | • | | Review the appointment, performance, replacement and compensation of the internal auditor. The internal auditor will report directly to the Committee Chairman and for administrative purposes to the Chief Executive Officer of the Company; and review and approve the scope and any significant changes to the annual internal audit and loan review plans. Evaluate the internal auditor’s risk assessment of the Company’s activities used in developing the annual audit plan. |
RESPONSIBILITIES
The Committee will be responsible for the following:
Review significant accounting and reporting principles, practices and procedures applied by the Company in preparing its financial statements and understanding their impact on the financial statements. These matters include:
| • | | Complex or unusual transactions and highly judgmental areas; | | | • | | Major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company’s selection or application of accounting principles; and | | | • | | The effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of the Company. |
Review analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods on the financial statements.
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APPENDIX B | • | | Review with management and the independent auditors the results of the audit, including any difficulties encountered. This review will include any restrictions on the scope of the independent auditor’s activities or on access to requested information, and any significant disagreements with management. | | | • | | Solicit the independent auditor’s judgment about the quality, not just the acceptability, of the Company’s accounting principles used in financial reporting. | | | • | | Discuss and review with management and the independent auditors the annual audited financial statements, related notes to the financial statements and financial information to be included in the Company’s annual report to shareholders and on Form 10-K and quarterly financial statements on Form 10-Q, including the Company’s disclosures underManagement’s Discussion and Analysis of Financial Condition and Results of Operations. | | | • | | Review disclosures made to the Committee by the Company’s Chief Executive Officer and Chief Financial Officer during their certification process for the Form 10-K and Form 10-Q about any significant deficiencies in the design or operation of internal controls or disclosure controls and any fraud involving management or other employees who have a significant role in the Company’s internal controls and disclosure controls and procedures. | | | • | | Review with management and the independent auditors any other required communications by the independent auditor under professional standards relating to the conduct of the audit and the quality of the Company’s accounting principles. If deemed appropriate after such review and discussion, recommend to the Board that the financial statements be included in the Company’s annual report on Form 10-K. | | | • | | The Committee shall discuss the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies, including, in general, the types of information to be disclosed and the types of presentation to be made (paying particular attention to the use of “pro forma” or “adjusted” non-GAAP information). |
| • | | Consider the effectiveness of the Company’s system of internal control, including information technology security and control. | | | • | | Understand the scope of internal and independent auditors’ review of internal control over financial reporting, and obtain reports on significant findings and recommendations, together with management’s responses. Discuss any relevant significant recommendations that the independent auditor may have, particularly those characterized as “reportable conditions.” The Committee will review responses of management to the reportable conditions from the independent auditor and receive follow-up reports on actions taken concerning the recommendations. |
| • | | Review with management the charter, plans, activities, staffing, and organizational structure of the internal audit function. | | | • | | Ensure there are no unjustified restrictions or limitations, and review and concur in the appointment, replacement, or dismissal of the Internal Auditor. | | | • | | Review the effectiveness of the internal audit function; including compliance with generally accepted internal auditing standards. | | | • | | On a regular basis, meet separately with the Internal Auditor to discuss any matters that the Committee or internal audit believes should be discussed privately. | | | • | | Receive reports of major findings from the Internal Auditor and evaluate management’s response in addressing the reported conditions. |
Review the independent auditors’ proposed audit scope and approach, including coordination of audit effort with internal audit. The review will include an explanation from the independent auditor of the factors considered by the independent auditor in determining the audit scope, including the major risk factors.
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Review the performance of the independent auditors, and exercise final approval on the appointment or discharge of the auditors. In performing this review, the Committee will at least annually, obtain and review a formal written report by the independent auditor describing and disclosing:
| • | | The firm’s internal quality-control procedures; | | | • | | Any material issues raised by the most recent internal quality-control review, or peer review of the firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years and any steps taken to deal with any such issues; and | | | • | | a letter from the independent auditor required by applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) regarding the independent auditor’s communications with the Committee concerning independence, and that the Committee has discussed with the independent auditor the independent auditor’s independence.. |
| • | | Ensure the rotation of the lead (or coordinating) independent audit partner having primary responsibility for the audit and the independent audit partner responsible for reviewing the audit as required by law. | | | • | | Ensure the requirements of PCAOB Rule 3526 are satisfied in connection with new and ongoing engagement of the independent auditor. | | | • | | Present its conclusions with respect to the independent auditor to the full Board. | | | • | | Recommend to the Board a clear policy for the hiring of employees or former employees of the independent auditor who participated in any capacity in the audit of the Company. | | | • | | The Committee shall meet privately with the independent auditor as it deems necessary but in no event less frequently than may be required by applicable PCAOB and NYSE Amex rules. |
| • | | Review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up (including disciplinary action) of any instances of noncompliance. | | | • | | Establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting procedures, internal accounting controls, or auditing matters; and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. | | | • | | Review the findings of any examinations by regulatory agencies, and any auditor observations. | | | • | | Periodically review the Company’s code of conduct to ensure that it is adequate and up-to-date. Review the process for communicating the code of conduct to Company personnel, and for monitoring compliance therewith. | | | • | | Obtain regular updates from management and company legal counsel regarding compliance matters. | | | • | | Review and assess the adequacy of the Committee charter annually, requesting Board approval for proposed changes, and ensure appropriate disclosure as may be required by applicable NYSE Amex Audit Committee requirements. The charter shall be published as an appendix to the proxy statement every three years. |
Reporting Responsibilities
Regularly report to the Board about Committee activities and issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the Company’s independent auditors, and the performance of the internal audit function.
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| • | | Provide an open avenue of communication between internal audit, the independent auditors, and the Board. | | | • | | Report annually to the shareholders, describing the Committee’s composition, responsibilities, and how they were discharged, and any other information required by applicable rule, including approval of non-audit services. | | | • | | Review any other reports the Company issues that relate to Committee responsibilities. |
| • | | Discuss with management the Company’s major policies with respect to risk assessment and risk management. | | | • | | Perform other activities or functions as assigned by law, the Company’s Articles of Incorporation, or by the Board. | | | • | | May institute and oversee special investigations as needed. | | | • | | Confirm annually that all responsibilities outlined in this policy have been carried out. | | | • | | Evaluate the Committee’s and individual members’ performance at least annually. |
Limitation of Audit Committee’s Role
While the Committee has the responsibilities and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Such responsibilities are the duty of management and, to the extent of the independent auditor’s audit responsibilities, the independent auditor. In addition, it is not the duty of the Committee to conduct investigations or to assure compliance with laws and regulations or the Company’s Code of Ethics
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APPENDIX C
BAR HARBOR BANKSHARES
And AND SUBSIDIARIES
EQUITY INCENTIVE PLAN of 2009 OF 2015Section 1Purpose. The purpose of this 2009 Equity Incentive Plan (the “Plan”), of Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2015 (the “Company”“Plan”), is to advance the interests of the Company and its stockholdersshareholders by enhancing the Company’s 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 the increases in value of the stock of the Company through the grant of certain Stock Awards, and Stock Appreciation Rights, as defined herein, and thereby better aligning the interests of such persons with those of the Company’s stockholders. shareholders.Section 2Definitions. “Affiliate”“Affiliate” means an entity that directly or through one or more intermediaries controls, is controlled by, or is under common control with the Company, as determined by the Committee. “Board”“Award” means a grant under the Plan of an Option, a Stock Appreciation Right, Restricted Stock, a Restricted Stock Unit, or cash. “Award Agreement” means the written agreement, in such written, electronic, or other form as determined by the Committee, between the Company and a Participant that evidences and sets forth the terms and conditions of an Award and is inclusive of an Option Agreement, a Restricted Stock Award Agreement, and a Restricted Stock Unit Agreement. Each Award Agreement shall be subject to the terms and conditions of the Plan. “Board” means the Board of Directors of the Company. “Cause”“Cause” means a conviction by a court of competent jurisdiction of a felony involving dishonesty or fraud on the part of the Participant in his/her relationship with the Company or an Affiliate. “Change“Change in Control”Control” means the occurrence of any one of the following events: (a) Any person, including a group (as such term is used in Section 13(d) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”))Act), becomes the beneficial owner (as determined pursuant to Rule 13d-3 under the Exchange1934 Act), directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities, other than as a result of an issuance of securities initiated by the Company in the ordinary course of its business; or (b) The Company is party to a Business Combination (as hereinafter defined) unless, following consummation of the Business Combination, more than fifty percent (50%) of the outstanding voting securities of the resulting entity are beneficially owned, directly or indirectly, by the holders of the Company’s outstanding voting securities immediately prior to the Business Combination in substantially the same proportions as those existing immediately prior to the Business Combination. For purposes of this Plan, a “Business Combination” means any cash tender or exchange offer, merger or other business combination, sale of stock, or sale of all or substantially all of the assets, or any combination of the foregoing transactions. For purposes of this Plan, a Change in Control shall exclude any internal corporate change, reorganization, or other such event, which occurred prior to or may occur following the dateEffective Date of this Plan. “Code”“Code” means the Internal Revenue Code of 1986, as amended. “Committee”“Committee” means the committee of the Board described inSection 3.1 of the Plan. “Continuous Service”“Company” means Bar Harbor Bankshares and any successors thereto. “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as an Employee or Director, is not interrupted or terminated. A Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in capacity in which the Participant renders services to the Company or an Affiliate. The Committee, in its sole discretion, may determine whether continuous serviceContinuous Service shall be considered interrupted in the case of any approved leave of absence including sick leave, military leave, or any other personal leave. 56
“Covered Employee”“Covered Employee” means a covered employee as defined in Section 162(m)(3) of the Code.
“Director”“Director” means a non-Employee member of the Board.. “Disability”Board.“Disability” shall mean a Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employeesEmployees. “Effective Date” means May 19, 2015, subject to approval of the Company or an Affiliate. “Employee”Plan by the Company’s shareholders on such date, the Plan having been approved by the Board on May 19, 2015.“Employee” means any natural person employed by the Company or any Affiliate. Mere service as a Director shall not constitute employment for purposes of the Plan. “Exchange”“Exchange” means any national or regional securities exchange or automated quotation system on which the Stock may from time to time be listed, quoted, or traded. “Fair“Fair Market Value”Value” on any date, means (i) if the Stock is listed on an Exchange, the closing price of a Share of Stock of the Company on the Exchange on which Shares of Stock are then trading, if any (or as reported on any composite index which includes such principal Exchange), on such date, or if Shares were not traded on such date, then on the next preceding date on which a trade occurred, or (ii) if Stock of the Company is not publicly traded on an Exchange, the value of the Stock of the Companya Share as determined by the Committee in good faith onby the basisreasonable application of objective criteria. “Gooda reasonable valuation method, in a manner consistent with Section 409A of the Code.“Good Reason” shall mean the occurrence of one or more of the following events arising without the consent of the Participant: (a) a material diminution in the Participant’s annual base salary; (b) a material diminution in the Participant’s authority, duties, or responsibilities; (c) a requirement that the Participant report to a corporate officer or employee instead of reporting directly to the board of directors of the Company; Board;(d) a material diminution in the budget over which the Participant retains authority; (e) a material change in the geographic location at which the Participant must perform his services; or (f) any other action or inaction that constitutes a material breach by the Company of any agreement under which the Participant provides services. In order for a separation from servicetermination of Continuous Service to occur for Good Reason, (1) the separation from servicetermination must occur within two (2) years following the initial existence of the event constituting Good Reason. Further,Reason; (2) the Participant must provide notice to the Company no later than ninety (90) days after the date of the initial occurrence of the condition or conditions alleged to give rise to Good Reason. In addition,Reason; and (3) the Participant must provide the Company a period of at least thirty (30) days during which the Company canmay remedy the condition or conditions alleged to give rise to Good Reason “Grant Date”Reason.“Grant Date” means the date aas of which the Committee approves the grant of an Award. “Incentive Stock Award or Stock Appreciation Right is granted by the Committee. “Incentive Stock Option”Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
“Nonstatutory“Nonstatutory Stock Option”Option” means an Option not intended to qualify as an Incentive Stock Option. 57
“Option”“Option” means an option to purchase one or more Shares at a specified exercise price granted to a Participant pursuant toSection 6 of the Plan. An Option may be an Incentive Stock Option or a Nonstatutory Stock Option.“Option granted pursuant to the Plan. “Option Agreement”Agreement” means a written agreement, in such written, electronic, or other form as determined by the Committee, between the Company and an Optionholder evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan.
“Optionholder”“Optionholder” means a personParticipant to whom an Option is granted pursuant to the Plan or, if applicable, such other person who holds an Option. “Participant”“Participant” means a person to whom a Stockan Award or Stock Appreciation Right is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding StockAward. A Participant is inclusive of an Optionholder. “Performance-Based Award” means an Award made subject to the achievement of performance goals (as provided inSection 10) over a Performance Period specified by the Committee. “Performance-Based Compensation” means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) for “qualified performance-based compensation” (within the meaning of Code Section 162(m)) paid to Covered Employees. Notwithstanding the foregoing, nothing in the Plan shall be construed to mean that an Award which does not satisfy the requirements for Performance-Based Compensation does not constitute performance-based compensation for other purposes, including the purposes of Code Section 409A. “Performance Measures” means measures as specified inSection 10 on which the performance goal or Stock Appreciation Right. “Restricted Stock”goals under Performance-Based Awards are based and which are approved by the Company’s shareholders pursuant to, and to the extent required by, the Plan in order to qualify such Performance-Based Awards as Performance-Based Compensation.“Performance Period” means the period of time during or over which the performance goals under Performance-Based Awards must be met in order to determine the degree of payout and/or vesting with respect to any such Performance-Based Awards. “Plan” means this Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2015, as amended from time to time. “Prior Plan” means the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2009, as amended from time to time. “Restricted Stock” means Shares granted to a Participant under pursuant toSection 7.17 of the Plan. “Restricted“Restricted Stock Award Agreement”Agreement” means a written agreement, in such written, electronic, or other form as determined by the Committee, between the Company and a holder of a Restricted Stock grantParticipant evidencing the terms and conditions of an individual Restricted Stock grant. Each Restricted Stock Award Agreement shall be subject to the terms and conditions of the Plan. “Restricted“Restricted Stock Unit”Unit” means a unitbookkeeping entry representing the equivalent of one (1) Share granted under to a Participant pursuant toSection 7.49 of the Plan which representsmay be settled, subject to the right to receive one hypothetical Shareterms and conditions of Stock. “Restrictedthe applicable Award Agreement, in Shares, cash, or a combination thereof.“Restricted Stock Unit Agreement”Agreement” means a written agreement, in such written, electronic, or other form as determined by the Committee, between the Company and a holder of a Restricted Stock Unit grantParticipant evidencing the terms and conditions of an individual Restricted Stock Unit grant. Each Restricted Stock Unit Agreement shall be subject to the terms and conditions of the Plan. “Shares”“Shares” means shares of Stock. If there has been an adjustment or substitution pursuant toSection 1114 of the Plan, the term “Shares” shall also include any shares of stock or other securities that are substituted for Shares or into which Shares are adjusted pursuant toSection 1114 of the Plan. “Stock”“Stock” means the common stock of the Company, par value $2.00, and such other securities of the Company as may be substituted for Stock pursuant toSection 1114 of the Plan. “Stock“Stock Appreciation Right” shall meanRight” means a right granted to receivea Participant pursuant toSection 8 of the Plan which may be settled, subject to the terms and conditions of the applicable Award Agreement, in Shares, cash, or Stock. “Stock Award” means an Option, a Restricted Stock Unit, and a right to acquire Restricted Stock.
“Stock Award Agreement”combination thereof.“Ten Percent Shareholder” means a Restricted Stock Award Agreement and a Restricted Stock Unit Agreement. “1933 Act”natural person who owns more than ten percent (10%) of the total combined voting power of all classes of voting stock of the Company, the Company’s parent (if any), or any of the Company’s Subsidiaries. In determining stock ownership, the attribution rules of Section 424(d) of the Code shall apply.“1933 Act” means the Securities Act of 1933, as amended from time to time. “1934 Act”“1934 Act” means the Securities Exchange Act of 1934, as amended from time to time. Section 3Administration of the Plan.Plan .3.1Administration Generally. The Plan shall be administered by a Committee of at least two (2) directors appointed by the Board or, at the discretion of the Board from time to time and as permitted by applicable law, the Plan may be administered by the Board. It is intended that at least twoEach member of the directors appointed to serve on the Committee shall be (a) a “non-employee directors”director” (within the meaning of Rule 16b-3 promulgated under the 1934 Act) and, (b) an “outside directors”director” (within the meaning of Code Section 162(m) and the regulations thereunder), and that any such members of(c) an independent director in accordance with the Committee who do not so qualify shall abstain from participating in any decision to make or administer Stock Awards and/or Stock Appreciation Rights that are made to eligible Participants who, at the time of consideration for such Stock Award and/or Stock Appreciation Right, (i) are persons subject to the short-swing profit rules of Section 16 of the 1934 Act, or (ii) are reasonably anticipated to become Covered Employees during the term ofany Exchange on which the Stock Award and/is listed, quoted, or Stock Appreciation Right.traded. The members of the Committee shall be appointed by, and may be changed at any time and from time to time in the discretion of, the Board. The Board may reserve for itself any or all of the authority and responsibility of the Committee under the Plan orand, subject to applicable law, may act as administrator of the Plan for any and all purposes. To 58
the extent the Board has reserved any authority and responsibility or during any time that the Board is acting as administrator of the Plan, it shall have all the powers of the Committee hereunder, and any reference herein to the Committee (other than in thisSection 3.1)3.1) shall include the Board. To the extent any action of the Board under the Plan conflicts with actions taken by the Committee, the actions of the Board shall control. 3.2Action and Interpretations by the Committee. For purposes of administering the Plan, the Committee may from time to time adopt rules, regulations, guidelines, and procedures for carrying out the provisions and purposes of the Plan and make such other determinations, not inconsistent with the Plan, as the Committee may deem appropriate. The Committee’s interpretation of the Plan, any Stock Awards and/or Stock Appreciation Rights granted under the Plan,Award, and any agreement Award Agreement and all decisions and determinations by the Committee with respect to the Plan, areany Award, and any Award Agreement shall be final, binding, and conclusive on all parties. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s or an Affiliate’s independent certified public accountants, Company counsel or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan. 3.3Authority of Committee.Except as provided below, the Committee has the exclusive power, authority, and discretion to: (a) Determine which of the persons eligible under the Plan shall be granted Stock Awards and/or Stock Appreciation Rights;Awards; how and when each Stock Award and/or Stock Appreciation Right shall be granted; what type or combination of types of Stock Awards and/or Stock Appreciation Rights shall be granted; the provisions of each Stock Award and/or Stock Appreciation Right granted (which need not be identical), including the time or times when a person shall be permitted to receive Company Stock, cash, or a combination thereof pursuant to a Stock Award or cash or Stock pursuant to a Stock Appreciation Right;an Award; and the number of Shares of Stock with respect to which a Stockan Award shall be granted to each person; (b) Construe and interpret the Plan, any Award, and the Stock Awards and/or Stock Appreciation Rights granted under it,any Award Agreement, and to establish, amend, and revoke rules and regulations for its administration. The Committee, in the exercise of this power, may correct any defect, omission, or inconsistency in the Plan or in any Stock Award Agreement, or Stock Appreciation Right agreement, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effective; (c) Amend the Plan, or a Stockany Award, or a Stock Appreciation Rightany Award Agreement as provided inSection 12; 15; and(d) Terminate or suspend the Plan as provided in Section 13; and (e) Exercise such powers and to perform such acts as the BoardCommittee deems necessary or expedient to promote the best interests of the Company which are not in conflict with the provisions of the Plan.
3.4Award Agreements. Each Stock Award shall be evidenced by an agreement.Award Agreement. Each agreementAward Agreement shall include such provisions, not inconsistent with the Plan, as may be specified by the Committee. Section 4Shares Subject to the Plan.Plan. 4.1Share Limit.Subject to the provisions inSection 1114 relating to adjustments upon changes in the Stock of the Company, the Stockmaximum number of the CompanyShares that may be issued pursuant to Stock Awards and Stock Appreciation Rights shall not exceed, in the aggregate, 175,000two hundred eighty thousand (280,000) Shares. Such Shares may be authorized and unissued Shares, treasury Shares, or any combination of the foregoing, as may be determined from time to time by the Board or by the Committee. Any of the Shares reserved and available for issuance under the Plan may be used for any type of Award under the Plan, and any or all of the Shares reserved for issuance under the Plan shall be available for issuance pursuant to Incentive Stock Options. 4.2Share Usage.Shares covered by an Award shall be counted as used as of which no more than 75,000the Grant Date for purposes of calculating the number of Shares of Stock canavailable for issuance underSection 4.1 and shall be awardedcounted against the Share limit set forth inSection 4.1 as Restricted Stock and/or Restricted Stock Units.one (1) Share for every one (1) Share subject to an Award. If any Stock Award shall for any reason expire or otherwise terminate or be settled in cash in lieu of Shares, in whole or in part, without having been exercised or settled in full, the Shares of Stock not acquired under such Stock Award shall revert to and again become available for issuance under the Plan. Notwithstanding the foregoing, the number of Shares available for issuance under the Plan will not be increased by the number of Shares (i) tendered, withheld, or subject to an Award granted under the Plan surrendered in connection with the purchase of Shares upon exercise of an Option, (ii) that were not issued upon the net settlement or net exercise of a Stock-settled Stock Appreciation Right granted under the Plan, (iii) deducted or delivered from payment of an Award granted under the Plan in connection with the Company’s tax withholding obligations as provided inSection 13.3, or (iv) purchased by the Company with proceeds from Option exercises. 4.3Individual Limits. (a) The maximum number of Shares of Stock that can be granted to an Employee or a Director pursuant to Awards under the Plan during a calendar year is 20,000. twenty thousand (20,000).(b) The maximum amount that may be paid as a cash-denominated Performance-Based Award (whether or not cash-settled) for a Performance Period of twelve (12) months or less to an Employee or a Director shall be one million dollars ($1,000,000), and the maximum amount that may be paid as a cash-denominated Performance-Based Award (whether or not cash-settled) for a Performance Period of greater than twelve (12) months to an Employee or a Director shall be one million dollars ($1,000,000). Section 5Eligibility for SpecificAwards. Awards other than Incentive Stock Awards.Options may be granted under the Plan to Employees and Directors. Incentive Stock Options may only be granted to Employees of the Company or an Affiliate. Stock Awards other than Incentive Stock Options may be granted to Employees and Directors. 59
a subsidiary (within the meaning of Code Section 424(f)).
Section 6Option Provisions. The Committee may grant Options pursuant to the Plan. Each Option shall be in such form and shall contain such terms and conditions as the Committee shall deem appropriate. All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the Grant Date, and, if certificates are issued, a separate certificate or certificates will be issued for the Shares of Stock purchased on exercise of each type of Option. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of each of the following provisions: (a)Term.Term. No Option shall be exercisable after the expiration of ten (10) years from the date it was granted. Grant Date.(b)Exercise Price of an Incentive Stock Option.. The per Share exercise price of each Incentive Stock Option shall not be less than 100%one hundred percent (100%) of the Fair Market Value of the Stock subject to the Optionone (1) Share on the Option Grant Date. (c)Exercise Price ofDate; provided, however, in the event that a Nonstatutory Stock Option. TheParticipant is a Ten Percent Shareholder, the per Share exercise price of each Nonstatutoryan Option granted to such Participant that is intended to be an Incentive Stock Option shall be not be less than 100%one hundred ten percent (110%) of the Fair Market Value of the Shares of Stock subject to the Optionone (1) Share on the Grant Date.
(d)(c)Consideration.Consideration. The purchaseexercise price of the Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash at the time the Option is exercised, or (ii) at the discretion of the BoardCommittee at the time of the grant of the Option (or subsequently in the case of a Nonstatutory Stock Option), by delivery to the BoardCompany of other Stock of the Company, or according to a deferred payment arrangement with the Optionholder, which arrangement shall charge an adequate rate of interest based on the applicable federal rate. (e)(d)Transferability of an Incentive Stock Option.. An Incentive Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the forgoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Committee, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option (f)Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the forgoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option.
(g)(e)Vesting Generally. The total number of Shares subject to an Option may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Options may vary. The provisions of thisSection 6(e) are subject to any Option provisions governing the minimum number of Shares of Stock as to which an Option may be exercised. (h)(f)Termination of Continuous Service.Service In. Unless otherwise provided in the Option Agreement, in the event an Optionholder’s Continuous Service terminates (other than uponon account of the Optionholder’s death or Disability), the Optionholder may exercise his or her Option (to the extent such Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (i) the date three (3) months following the termination of the Optionholder’s Continuous Service or (ii) the expiration of the term of the Option as set forth in the Option Agreement. If, after termination of the Optionholder’s Continuous Service, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall automatically terminate. (i)(g)Disability of Optionholder.Optionholder In. Unless otherwise provided in the Option Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent such Optionholder was entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date twelve (12) months following the termination of the Optionholder’s Continuous Service or (b) the expiration of the term of the Option as set 60
forth in the Option Agreement. If, after termination of the Optionholder’s Continuous Service, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall automatically terminate. (j)(h)Death of Optionholder.Optionholder In. Unless otherwise provided in the Option Agreement, in the event (a) an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death or (b) the Optionholder dies within the period (if any) specified in the Option Agreement during which the Optionholder may exercise his or her Option after the termination of the Optionholder’s Continuous Service for a reason other than death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance, or by a person designated to exercise the Option upon the Optionholder’s death pursuant toSection 6,6(d), but only within the period ending on the earlier of (a) the date eighteen (18) months following the Optionholder’s date of death (or such longer or shorter period specified in the Option Agreement), or (b) the expiration of the term of such Option as set forth in the Option Agreement. If, after the Optionholder’s death, the Option is not exercised within the time specified herein,in the Award Agreement, the Option shall automatically terminate. (i)Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined as of the Grant Date) of Shares with respect to which an Incentive Stock Option is exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company) exceeds one hundred thousand dollars ($100,000), all of the Incentive Stock Option or the portion thereof which exceeds such limit (according to the order in which the Incentive Stock Option was granted) shall be treated as a Nonstatutory Stock Option. Section 7Provisions of Stock Awards Other Than OptionsRestricted Stock.. 7.1Restricted Stock Award Agreements. The Committee may grant Restricted Stock pursuant to the Plan. Each Restricted Stock Award Agreement shall be in such form and shall contain such terms and conditions as the BoardCommittee shall deem appropriate (including, but not limited to, whether the Participant has the right to vote the Restricted Stock). The terms and conditions of theapplicable to Restricted Stock Award AgreementAgreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical, but each Restricted Stock Award Agreement shall include (through incorporation of provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions: (a) Shares of Stock granted under the Restricted Stock Award Agreement shall be subject to a vesting schedule to be determined by the Board. Committee.(b) In the event a Participant’s Continuous Service terminates before the Sharesall or a portion of Stock granted under the Restricted Stock Award Agreement vest,vests, the unvested sharesRestricted Stock shall be forfeited by the Participant without consideration. (c) The Participant may not transfer Shares ofRestricted Stock granted prior to the applicable vesting date. (d) The Participant has no right toshall not receive dividends on the Restricted Stock prior to the applicable vesting date. 7.2Delivery of Restricted Stock.Stock. Unless otherwise held in a trust and registered in the name of the trustee, reasonably promptly after the Grant Date with respect to shares of Restricted Stock, the Company shall cause to be issued a Stockstock certificate, registered in the name of the Participant to whom the Restricted Stock was granted, evidencing such Shares. Each such Stockstock certificate shall bear the following legend: “The transferability of this certificate and the shares of stock represented hereby are subject to the restrictions, terms, and conditions (including forfeiture provisions and restrictions against transfer) contained in the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 20092015 and agreement entered into between the registered owner of such shares and Bar Harbor Bankshares or its Affiliates. A copy of the Plan and agreement are on file in the office of the Clerk of Bar Harbor Bankshares.” Such legend shall not be removed until the Participant’s Shares vestRestricted Stock vests pursuant to the terms of the Plan and agreement.the Restricted Stock Award Agreement. Each certificate issued pursuant to thisSection 7.2, in connection with aan Award of Restricted Stock, Award, shall be held by the Company or its Affiliates, unless the Committee determines otherwise. 7.3Section 8Stock Appreciation Rights.Rights. The Committee may grant Stock Appreciation Rights pursuant to Participants.the Plan. Such Stock Appreciation Rights shall be evidenced by agreementsan Award Agreement in such form as the Committee shall from time to time approve. Such agreementsAward Agreement shall comply with, and be subject to, the following terms and conditions:
(a) No Stock Appreciation Right shall be exercisable after the expiration of ten (10) years from the Grant Date. 61
(b) A Participant shall exercise Stock Appreciation Rights, if at all, by giving written notice of such exercise to the Company. The date upon which such written notice is received by the Company shall be the exercise date for the Stock Appreciation Rights. (c) Each Stock Appreciation Right shall entitle a Participant to the following amount of appreciation — the excess of the Fair Market Value of a Share of Stock on the exercise date over the Fair Market Value of a Share of Stock on the Grant Date. The total appreciation available to a Participant from any exercise of Stock Appreciation Rights shall be equal to the number of Stock Appreciation Rights being exercised, multiplied by the amount of appreciation per Stock Appreciation Right determined under the preceding sentence. (d) In the discretion of the Committee, the total appreciation available to a Participant from an exercise of Stock Appreciation Rights may be paid to the Participant in the discretion of the Committee in Stock, in cash, with a Company note, or any combination of the foregoing. If paid in cash or with a Company note, the amount thereof shall be the amount of appreciation determined underSection 7.3(c)8(c), above. If paid in Stock, the number of Shares of Stock that shall be issued pursuant to the exercise of Stock Appreciation Rights shall be determined by dividing the amount of appreciation determined underSection 7.3(c)8(c), above, by the Fair Market Value of a Share of Stock on the exercise date of the Stock Appreciation Rights; provided, however, that no fractional shares shall be issued upon the exercise of Stock Appreciation Rights, unless otherwise approved by the Committee. (e) Adjustment to the number of Shares in the Plan and the price per Share pursuant to Section 11 below shall also be made to any Stock Appreciation Rights held by each Participant. Any termination, amendment, or revision of the Plan pursuant to Section 12 below shall be deemed a termination, amendment, or revision of Stock Appreciation Rights to the same extent. (f) A Stock Appreciation Right shall be transferable to the extent provided in the agreement.Award Agreement. If the Stock Appreciation Right does not provide for transferability, then the Stock Appreciation Right shall not be transferable except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Participant only by the Participant. Notwithstanding the forgoing,foregoing, the Participant may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party who, in the event of the death of the Participant, shall thereafter be entitled to exercise the Stock Appreciation Right.
(g)(f) The total number of Stock Appreciation Rights may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal. The Stock Appreciation Right may be subject to such other terms and conditions on the time or times when it may be exercised (which may be based on performance or other criteria) as the Committee may deem appropriate. The vesting provisions of individual Stock Appreciation Rights may vary. (h)(g) In the event a Participant’s Continuous Service terminates (other than upon the Participant’s death or Disability), the Participant may exercise his or her Stock Appreciation Rights (to the extent such Participant was entitled to exercise such Stock Appreciation Rights as of the date of termination) but only within such period of time ending on the earlier of (a) the date three (3) months following the termination of the Participant’s Continuous Service, or (b) the expiration of the term of the Stock Appreciation Rights as set forth in the agreement.Award Agreement. If, after termination of the Participant’s Continuous Service, the Participant does not exercise his or her Stock Appreciation Rights within the time specified in the agreement,Award Agreement, the Stock Appreciation Rights shall terminate. (i)(h) In the event that a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Stock Appreciation Rights (to the extent such Participant was entitled to exercise such Stock Appreciation Rights as of the date of termination) but only within such period of time ending on the earlier of (a) the date twelve (12) months following the termination of the Participant’s Continuous Service, or (b) the expiration of the term of the Stock Appreciation Rights as set forth in the agreement.Award Agreement. If, after termination, the Participant does not exercise his or her Stock Appreciation Rights within the time specified in the agreement,Award Agreement, the Stock Appreciation Rights shall terminate. 62
(j)(i) In the event (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the agreementAward Agreement after the termination of the Participant’s Continuous Service for a reason other than death, then the Stock Appreciation Rights may be exercised (to the extent the Participant was entitled to exercise such Stock Appreciation Rights as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Stock Appreciation Rights by bequest or inheritance, or by a person designated to exercise the Stock Appreciation Rights upon the death of the Participant pursuant toSection 7.3,8(e), but only within the period ending on the earlier of (a) the date eighteen (18) months following the date of death (or such longer or shorter period specified in the agreement)Award Agreement), or (b) the expiration of the term of such Stock Appreciation Rights as set forth in the agreement.Award Agreement. If, after death, the option isStock Appreciation Rights are not exercised within the time specified herein, the Stock Appreciation Rights shall terminate.
7.4Section 9Restricted Stock Unit AgreementsUnits. The Committee may grant Restricted Stock Units pursuant to the Plan. Each Restricted Stock Unit Agreement shall contain such terms and conditions as the BoardCommittee shall deem appropriate. The terms and conditions of theapplicable to Restricted Stock Unit AgreementAgreements may change from time to time, and the terms and conditions of separate Restricted Stock Unit Agreements need not be identical, but each Restricted Stock Unit Agreement shall include (through incorporation of provisions hereof by reference in the agreementAward Agreement or otherwise) the substance of each of the following provisions:
(a) Restricted Stock Units granted under the Restricted Stock Unit Agreement shall be subject to a vesting schedule to be determined by the Board. Committee.(b) In the event a Participant’s Continuous Service terminates before all or a portion of the Restricted Stock Units granted under the Restricted Stock Unit Agreement vest, the unvested unitsRestricted Stock Units shall be forfeited by the Participant without consideration. (c) The Participant may not transfer Restricted Stock Units granted prior to the applicable vesting date. (d) Upon vesting, the Shares of Stock covered by the Restricted Stock Units will be transferredsettled, subject to the Participantterms and conditions of the applicable Award Agreement, in Shares, cash, or a combination thereof, as soon as administratively feasible but in no event later than 2two and one half (21/⁄2) months following the close of the calendar year during which the unitsRestricted Stock Units vest in accordance with Section 409A of the Code. Section 810Performance-Based Awards. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Performance-Based Awards in such amounts and upon such terms as the Committee shall determine. The terms and conditions applicable to Performance-Based Awards may change from time to time, and the terms and conditions of separate Award Agreements need not be identical, but each Award Agreement for Performance-Based Awards shall include (through incorporation of provisions hereof by reference in the Award Agreement or otherwise) the substance of each of the following provisions: (a) Each grant of a Performance-Based Award shall have an initial cash value or an actual or target number of Shares that is established by the Committee as of the Grant Date. The Committee shall set performance goals in its discretion which, depending on the extent to which they are achieved, shall determine the value and/or number of Shares subject to a Performance-Based Award that will be paid out to the holder thereof. (b) After the applicable Performance Period has ended, the holder of a Performance-Based Award shall be entitled to receive a payout of the value earned under such Performance-Based Award by such Participant over such Performance Period. Payment of the value earned under Performance-Based Awards shall be made, as determined by the Committee, in the form, at the time, and in the manner described in the applicable Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, (i) may pay the value earned under Performance-Based Awards in the form of cash, Shares, other Awards, or a combination thereof, including Shares and/or Awards that are subject to any restrictions deemed appropriate by the Committee, and (ii) shall pay the value earned under Performance-Based Awards at the close of the applicable Performance Period, or as soon as administratively feasible after the Committee has determined that the performance goal or goals relating thereto have been achieved but in no event later than two and one half (2 1⁄2) months following the close of the calendar year in which such Performance Period ends. (c) If and to the extent that the Committee determines that a Performance-Based Award to be granted to a Covered Employee should constitute Performance-Based Compensation for purposes of Code Section 162(m), the grant, exercise, and/or settlement of such Performance-Based Award shall be contingent upon achievement of pre-established performance goals and other terms set forth in thisSection 10. (d) The performance goals for Performance-Based Awards shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee consistent with thisSection 10. Performance goals shall be objective and shall otherwise meet the requirements of Code Section 162(m), including the requirement that the level or levels of performance targeted by the Committee result in the achievement of performance goals being “substantially uncertain.” The Committee may determine that such Awards shall be granted, exercised, and/or settled upon achievement of any single performance goal or of two (2) or more performance goals. Performance goals may differ for Performance-Based Awards granted to any one Participant or to different Participants. Performance goals for any Performance-Based Award shall be established not later than the earlier of (a) ninety (90) days after the beginning of any Performance Period applicable to such Performance-Based Award, and (b) the date on which twenty-five percent (25%) of any Performance Period applicable to such Performance-Based Award has expired, or at such other date as may be required or permitted for compensation payable to a Covered Employee to constitute Performance-Based Compensation. (e) The performance goals upon which the vesting or payment of a Performance-Based Award to a Covered Employee that is intended to qualify as Performance-Based Compensation may be conditioned shall be limited to the following Performance Measures, with or without adjustment (including pro forma adjustments): (i) net earnings or net income; (ii) operating earnings; (iii) pretax earnings; (iv) earnings per share; (v) share price, including growth measures and total shareholder return; (vi) earnings before interest and taxes; (vii) earnings before interest, taxes, depreciation, and/or amortization; (viii) earnings before interest, taxes, depreciation, and/or amortization as adjusted to exclude any one or more of the following: (A) Stock-based compensation expense, (B) income from discontinued operations, (C) gain on cancellation of debt, (D) debt extinguishment and related costs, (E) restructuring, separation, and/or integration charges and costs, (F) reorganization and/or recapitalization charges and costs, (G) impairment charges, (H) merger-related events, (I) gain or less related to investments, (J) sales and use tax settlement, and (K) gain on non-monetary transactions; (ix) sales or revenue growth or targets, whether in general or by type of product, service, or customer; (x) gross or operating margins; (xi) return measures, including return on assets, capital, investment, equity, sales, or revenue; (xii) cash flow, including (A) operating cash flow, (B) free cash flow, defined as earnings before interest, taxes, depreciation, and/or amortization (as adjusted to exclude any one or more of the items that may be excluded pursuant to the Performance Measure specified in clause (viii) above) less capital expenditures, (C) levered free cash flow, defined as free cash flow less interest expense, (D) cash flow return on equity, and (E) cash flow return on investment; (xiii) productivity ratios; (xiv) costs, reductions in cost, and cost control measures; (xv) expense targets; (xvi) market or market segment share or penetration; (xvii) financial ratios as provided in credit agreements of the Company and its Affiliates; (xviii) working capital targets; (xix) completion of acquisitions or divestitures of businesses, companies, or assets; and (xx) any combination of the foregoing. (f) Performance under any of the foregoing Performance Measures (a) may be used to measure the performance of (i) the Company and Affiliates as a whole, (ii) the Company, Affiliates, or any combination thereof, or (iii) any one or more business units or operating segments of the Company and/or any Affiliate, in each case as the Committee, in its sole discretion, deems appropriate and (b) may be compared to the performance of one or more other companies or one or more published or special indices designated or approved by the Committee for such comparison, as the Committee, in its sole discretion, deems appropriate. The Committee shall also have the authority to provide for accelerated vesting of any Performance-Based Award based on the achievement of performance goals pursuant to the Performance Measures specified in thisSection 10. (g) The Committee may provide in any Performance-Based Award that any evaluation of performance may include or exclude any of the following events that occur during a Performance Period: (i) asset write-downs; (ii) litigation or claims, judgments, or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (iv) any reorganization or restructuring events or programs; (v) extraordinary, non-core, non-operating, or non-recurring items; (vi) acquisitions or divestitures; (vii) foreign exchange gains and losses; (viii) impact of shares of Stock purchased through share repurchase programs; (ix) tax valuation allowance reversals; (x) impairment expense; and (xi) environmental expense. To the extent such inclusions or exclusions affect Awards to Covered Employees that are intended to qualify as Performance-Based Compensation, such inclusions or exclusions shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility. (h) The Committee shall have the sole discretion to adjust Awards that are intended to qualify as Performance-Based Compensation, either on a formula or discretionary basis, or on any combination thereof, as the Committee determines consistent with the requirements of Code Section 162(m) for deductibility. In the event that applicable laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval, provided that the exercise of such discretion shall not be inconsistent with the requirements of Code Section 162(m). In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m) and base vesting on Performance Measures other than those set forth inSection 10(e). Section 11Covenants of the Company. During the term of the Stock Awards, the Company shall keep available at all times the number of Shares of Stock required to satisfy such Stock Awards. Section 912Use of Proceeds from Stock.Stock. Proceeds from the sale of Stock pursuant to Stock Awards shall constitute general funds of the Company. Section 1013Miscellaneous.Miscellaneous .13.110.1StockholderShareholder Rights. Unless otherwise provided in a Restricted Stockan Award Agreement or Restricted Stock Purchase Agreement, no Participant shall be deemed to be the holder of, or to have any rights of a holder with respect to, any Shares of Stock subject to such Stock Award unless and until such Participant has satisfied all requirements for exercise of the Stock Award pursuant to its terms as determined by the Committee. 10.213.2No Employment or Other Service Rights. Nothing in the Plan, any Award, or any instrument executed or Stock Award or Stock Appreciation Right granted pursuant theretoAgreement shall confer upon any Participant any right to continue to serve the Company or any Affiliate in theany capacity in effect at the time the Stock Award or Stock Appreciation Right was granted or shall affect the right of the Company or any Affiliate to terminate (i) the employment of an Employee, with or without notice and with or without cause,Cause, or (ii) the service of a Director pursuant to the bylaws of the Company (or of the applicable Affiliate) and applicable provisions of the Maine Business Corporation Act, as amended from time to time. 10.3Incentive Stock Option $100,000 Limitation. To the extent that the aggregate Fair Market Value (determined as of the Grant Date) of Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year (under all plans of the Company) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.
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10.413.3Withholding Obligations.Obligations. To the extent provided by the terms of a Stockan Award Agreement, or Stock Appreciation Right agreement, the Participant may, in the discretion of the Committee, satisfy any federal, state, or local tax withholding obligation relating to the exercise, or acquisition of Stock under a Stock Award or the exercisevesting, or acquisition of cash and/or Stock under a Stock Appreciation Rightan Award by any one of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (i) tendering a cash payment; (ii) authorizing the Company to withhold cash from the cash otherwise payable to the Participant as a result of the exercise or vesting of a Stock Appreciation Right, oran Award, (iii) delivering to the Company owned and unencumbered Shares of Stock.
Shares; or (iv) another procedure as set forth in an applicable Award Agreement.Section 1114Adjustments Upon Changes in Stock. 11.114.1Capitalization Adjustments. If any change is made in, or other event occurs with respect to, the Stock subject to the Plan, or subject to any Stock Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or other transaction not involving the receipt of consideration by the Company), the Plan will be appropriately adjusted in the maximum number of Shares subject to the Plan pursuant toSection 4, and the outstanding Stock Awards will be appropriately adjusted in the number of Shares and price per Share of Stock subject to such outstanding Stock Awards. The Committee shall make such adjustments, and its determination shall be final, binding, and conclusive. 11.214.2Dissolution or Liquidation.Liquidation. In the event of a dissolution or liquidation of the Company, other than a Change in Control, then all outstanding Stock Awards and Stock Appreciation Rights shall terminate immediately prior to the completion of such liquidation or dissolution. 11.314.3Other Transactions. In the event of a Change in Control or a merger, consolidation, or similar transaction where the Company is the surviving corporation but the sharesShares of the Company are converted or exchanged into other property by virtue of the transaction (each of the foregoing referred to as a “Transaction”“Transaction”), any surviving corporation or acquiring corporation shall assume any and all Stock Awards and Stock Appreciation Rights outstanding under the Plan or may substitute similar stock awards for Stock Awards outstanding under the Plan and similar stock appreciation rights for Stock Appreciation Rights under the Plan (it being understood that similar stock awards and stock appreciation rights include awards to acquire the same consideration paid to the stockholdersshareholders or the Company, as the case may be, pursuant to the Transaction). In the event the Company separates the Participant’s service otherContinuous Service terminates without Cause (other than as a result of Disability and other than for Cause,Disability) or the Participant separates his/her service for Good Reason;Reason and the Participant’s separation from servicetermination of Continuous Service occurs in anticipation of or after a Change in Control, the vesting of Stocksuch Participant’s Awards and Stock Appreciation Rights (and, if applicable, the time during which Stock Awards and Stock Appreciation Rights may be exercised) shall be accelerated in full to the later of (a) a date prior to the consummation of the Change Inin Control as the Committee shall determine (or, if the Committee shall not determine such a date, to the date that is five (5) days prior to the consummation of the Change in Control). and (b) the date of the Participant’s termination of Continuous Service. The Participant’s separation from servicetermination of Continuous Service shall be deemed to be in anticipation of a Change in Control if it occurs within the twelve (12) month period prior to the occurrence of the Change in Control. Section 1215Amendment of the Plan and Stock Awards and Stock Appreciation Rights. 12.1.15.1Amendment of the Plan.Plan. The Committee, at any time and from time to time, may amend the Plan. However, except as provided inSection 1114 relating to adjustments upon changes in stock,Stock, no amendment shall be effective unless approved by the stockholdersshareholders of the Company to the extent stockholdershareholder approval is necessary to satisfy the requirements of Section 422 of the Code or applicable stock exchangeExchange listing requirements. 15.212.2StockholderShareholder Approval. The Committee may, in its sole discretion, submit any other amendment to the Plan for stockholdershareholder approval. 12.315.3Contemplated Amendments. It is expressly contemplated that the Committee may amend the Plan in any respect the Committee deems necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options and/or to bring the Plan and/or Incentive Stock Options granted under it into compliance therewith. 64
12.415.4No Impairment of Rights. Rights under any Stock Award and Stock Appreciation Right granted before amendment of the Plan shall not be impaired by any amendment of the Plan unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing.
12.515.5Amendment of Stock Awards and Stock Appreciation Rights. The Committee, at any time and from time to time, may amend the terms of any one or more Stock Awards and/or Stock Appreciation Rights,outstanding Awards; provided, however, that the rights under any Stock Award and/or Stock Appreciation Right shall not be impaired by any such amendment unless (i) the Company requests the consent of the Participant and (ii) the Participant consents in writing. Except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding Options and/or Stock Appreciation Rights may not be amended to reduce the exercise price of outstanding Options and/or Stock Appreciation Rights or cancel outstanding Options and/or Stock Appreciation Rights in exchange for cash, other awards or Options and/or Stock Appreciation Rights with an exercise price that is less than the exercise price of the original Options and/or Stock Appreciation Rights without stockholdershareholder approval. Section 1316Termination or Suspension of the Plan. The CommitteeBoard may suspend or terminate the Plan at any time. Unless sooner terminated, the Plan shall terminate on the day before the tenth (10th) anniversary of the date the Plan is adopted by the Board or approved by the stockholdersshareholders of the Company, whichever is earlier. No Stock Awards or Stock Appreciation rights may be granted under the Plan while the Plan is suspended or after it is terminated. Suspension or termination of the Plan shall not impair rights and obligations under any Stock Award or Stock Appreciation Right granted while the Plan is in effect except with the written consent of the Participant. Section 1417Effective Date of the Plan.Plan. The Plan shall become effective as determined by the Board, but no Stock Award shall be exercised (or, in the case of a stock bonus or Stock Appreciation Right, shall be granted) unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within twelve (12) months before or after the date the Plan is adopted by the Board. Effective Date.Section 1518Fractional Shares.Shares. No fractional Shares shall be issued, and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down. Section 1619Government and Other Regulations.Regulations .(a) Notwithstanding any other provision of the Plan, no Participant who acquires Shares pursuant to the Plan may, during any period of time that such Participant is an affiliate of the Company (within the meaning of the rules and regulations of the Securities and Exchange Commission under the 1933 Act), sell such Shares, unless such offer and sale is made (i) pursuant to an effective registration statement under the 1933 Act, which is current and includes the Shares to be sold, or (ii) pursuant to an appropriate exemption from the registration requirement of the 1933 Act, such as that set forth in Rule 144 promulgated under the 1933 Act. (b) Notwithstanding any other provision of the Plan, if at any time the Committee shall determine that the registration, listing, or qualification of the Shares covered by a Stockan Award upon any Exchange or under any federal, state, or local law or practice, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Stock Award or the purchase or receipt of Shares thereunder, no Shares may be purchased, delivered, or received pursuant to such Stock Award unless and until such registration, listing, qualification, consent, or approval shall have been effected or obtained free of any condition not acceptable to the Committee. Any Participant receiving or purchasing Shares pursuant to a Stockan Award or Stock Appreciation Right shall make such representations and agreements and furnish such information as the Committee may request to assure compliance with the foregoing or any other applicable legal requirements. The Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to the Committee’s determination that all related requirements have been fulfilled. The Company shall in no event be obligated to register any securities pursuant to the 1933 Act or applicable state law or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation, or requirement. 65
(c) Notwithstanding any other provision of the Plan, any Awards or payments to a Participant by the Company, whether pursuant to this Plan or otherwise, are subject to and conditioned upon their compliance with applicable provisions of the Federal Deposit Insurance Act and any regulations promulgated thereunder.Section17Section 20Indemnification.Indemnification. To the extent allowable under applicable law, each member of the Committee shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which such member may be a party or in which he or she may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by such member in satisfaction of judgment in such action, suit, or proceeding against him or her provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Articlesarticles of Incorporationincorporation or Bylaws,bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
Section 1821No Limitations on Company Rights.Rights. The grant of any Stock Award or Stock Appreciation Right shall not in any way affect the right or power of the Company to make adjustments, reclassifications, or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part of its business or assets. The Plan shall not restrict the authority of the Company, for proper corporate purposes, to draft or assume Stock Awards, or Stock Appreciation Rights, other than under the Plan, to or with respect to any person. If the Committee so directs, the Company may issue or transfer Shares to an Affiliate, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Affiliate will transfer such Shares to a Participant in accordance with the terms of a Stockan Award or Stock Appreciation Right granted to such Participant and specified by the Committee pursuant to the provisions of the Plan. Section 1922Choice of Law.Law. The laws of the State of Maine shall govern all questions concerning the construction, validity, and interpretation of this Plan, without regard to conflicts of laws rules. Section 2023Section 409A Compliance. This Plan is intended to comply with the provisions of Section 409A of the Code. THIS PLAN is adopted by actionCode to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan will be interpreted and administered to be in compliance with Code Section 409A. Notwithstanding any provision of the Plan to the contrary, to the extent required to avoid accelerated taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6)-month period immediately following the Participant’s “separation from service” (within the meaning of Section 409A of the Code and the regulations promulgated thereunder) will instead be paid on the first payroll date after the six (6)-month anniversary of the Participant’s separation from service (or the Participant’s death, if earlier). Neither the Company, any Affiliate, the Board, nor the Committee will have any obligation to take any action to prevent the assessment of Directors at a meeting heldany excise tax or penalty on any Participant under Section 409A of the Code and neither the Company, any Affiliate, the Board, nor the Committee will have any liability to any Participant or other person for such tax or penalty.* * * To record adoption of the Plan by the Board as of March 17, 2009. 2015 and approval of the Plan by the Company’s shareholders as of May 19, 2015, the Company has caused its authorized officer to execute the Plan. | | | BAR HARBOR BANKSHARES | | | By: | | | | | | | Name: | | | | | Title: | | |
APPENDIX C ARTICLES OF AMENDMENT | | | | | | | | | DOMESTIC | | | | | | | | | BUSINESS CORPORATION | | | | | | | | | | /s/ Marsha C. Sawyer | | | | | | | | STATE OF MAINE | Corporate Clerk | | | | | | | | | | | | | | | | | ARTICLES OF | | | | | | | | | AMENDMENT | | | | | | | | | | | | | | | Deputy Secretary of State | | | | | | |
| | | | | | | | | | | | | | A True Copy When Attested By Signature | Bar Harbor Bankshares | | | | | | | | | (Name of Corporation) | | | | | |
| | | | | | | | | Deputy Secretary of State | | |
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Pursuant to 13-C MRSA §1006, the undersigned corporation executes and delivers the following Articles of Amendment:
| | | FIRST: | | The text of the amendment or the information required by 13-C MRSA §121.10.E as set forth inExhibit A attached, was adopted on (date) . | | | | | The amendment was duly approved as follows: (“X” one box only.) | | | | | ¨ by the incorporators – shareholder approval was not required OR | | | | | ¨ by the board of directors – shareholder approval was not required OR | | | | | ¨ by the shareholders in the manner required by this Act and by the articles of incorporation. | | | SECOND: | | If the amendment provides for an exchange, reclassification or cancellation of issued shares, provisions for implementing the amendment, if not contained in the amendment itself, are set forth in Exhibit or as follows: | | | THIRD: | | The effective date of the articles of amendment (if other than the date of filing of the articles of amendment) is . |
APPENDIX D
| | | | | | | | | DATED | | | | | | *By | | | | | | | | | | | (signature of any duly authorized person) | | | | | | | | | | | | | | | | | | | | | | | (type or print name and capacity) |
* | This document MUST be signed by any duly authorized officer OR the clerk. (13-C MRSA §121.5) |
Please remit your payment made payable to the Maine Secretary of State. | | | | | SUBMIT COMPLETED FORMS TO: | | CORPORATE EXAMINING SECTION, SECRETARY OF STATE, | | | 101 STATE HOUSE STATION, AUGUSTA, ME 04333-0101 | FORM NO.MBCA-9 (1 of 1) Rev. 8/1/2004 | | TEL. (207) 624-7752 |
EXHIBIT A ARTICLES OF AMENDMENT OF BAR HARBOR BANKSHARES The FIFTH Article of the Articles of Incorporation, as amended, of the Corporation, is hereby amended by replacing paragraph (a) of said FIFTH Article with the following: “(a) Common Stock. The corporation shall have the authority to issue 20,000,000 shares of common stock, par value $2.00 per share.” BAR HARBOR BANKSHARES 82 Main Street
Bar Harbor, ME 04609 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Thomas A. Colwell,Peter Dodge, Martha T. Dudman, and Lauri E. FernaldDavid B. Woodside as Proxies,the undersigned’s true and lawful proxies, each with power to appoint a substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all of the shares of Common Stockcommon stock of the Company held of record by the undersigned as of close of business on March 23, 200924, 2015 at the Annual Meeting of StockholdersShareholders to be held on May 19, 20092015 or at any adjournment thereof. (To be signed on the Reverse Side)
x
þPLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
| 1. | | To elect fourteentwelve (12) persons to serve as Directors for a term of one year. |
| | | | | | | | | Matthew L. Caras | | Clyde H. Lewis | | | | | Thomas A. Colwell | | Constance C. Shea | | | | | Peter Dodge | | Curtis C. Simard | | | | | Martha T. Dudman | | Kenneth E. Smith | | | | | Lauri E. Fernald | | Scott G. Toothaker | | | | | Daina H. Hill | | David B. Woodside | | |
| | | | | | | ¨ | | For all nominees | | | | | | | | | ¨ | | Withhold Authority for all nominees | | | | |
Thomas A. ColwellRobert C. CarterJacquelyn S. DearbornPeter DodgeMartha T. DudmanLauri E. FernaldGregg S. HannahClyde H. LewisJoseph M. MurphyRobert M. PhillipsConstance C. SheaKenneth E. SmithScott G. ToothakerDavid B. Woodside | 2. | | To setapprove a non-binding, advisory resolution on the numbercompensation of directors for the ensuing year at fourteen. Named Executive Officers of the Company (“Say on Pay”). | |
¨ For ¨ Against ¨ Abstain | 3. | To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2015. |
¨ For ¨ Against ¨ Abstain | 4. | To approve the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 20092015. | |
¨ For ¨ Against ¨ Abstain
| 4. | 5. | To approve an advisory (non-binding) proposal onamendment to the Company’s executive compensation policies and proceduresArticles 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 shares. | |
¨ For ¨ Against ¨ Abstain | 5. | 6. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
This proxy, when properly executed, will be voted on behalf of the undersigned stockholdershareholder in the manner directed herein.If no direction is given, this proxy will be voted in favor of ItemItems 2, 3, and 4 and 5, for the nominees listed in ItemsItem 1, and in accordance with the discretionrecommendation of managementthe Board with respect to any other matters which may come before the Meeting. PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENVELOPE PROVIDED. SIGNATURE DATE
SIGNATURE DATE
| | | | | | | | | NOTE:SIGNATURE | | Please sign exactly as name appears above. Only one joint tenant needs sign. When signing as attorney, executor, administrator, trustee, or guardian, or in any representative capacity, please give full title. | | | | DATE | | | | | | | | SIGNATURE | | | | | | DATE | | |
NOTE: Please sign exactly as name appears above. Only one joint tenant needs sign. When signing as attorney, executor, administrator, trustee, or guardian, or in any representative capacity, please give full title. |
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