SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ] File No. 0-14703
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for use of the
Comission Only, (as permitted
by Rule 14a-6(e)(2))
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NBT BANCORP INC.
(Name of Registrant as Specified in Its Charter)
KATHLEEN A. CALISHER
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box)
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22 (a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and indentify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date of
its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
NBT BANCORP INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
March 18, 1996
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that pursuant to call of its Directors,
the regular annual meeting of stockholders of NBT BANCORP INC. will be
held at the Norwich Senior High School auditorium located at Midland
Drive, Norwich, New York, on Saturday, April 20, 1996 at 11:00 a.m.,
for the purpose of considering and voting upon the following matters:
1. Election of Directors. To fix the number of directors at six and
elect the candidates listed in the Proxy Statement dated March 18,
1996.
2. Ratification of the Board of Directors' action of the selection
of independent public accountants for the year 1996.
3. Transaction of such Other Business as may properly come before the
Meeting or any adjournment thereof.
By order of the Board of Directors
Daryl R. Forsythe
President and Chief Executive Officer
Joe C. Minor
Vice President, Chief Financial
Officer and Treasurer
WE URGE YOU TO MARK, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY
AS POSSIBLE--WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.
IF YOU DO ATTEND THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY. ALSO,
YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE MEETING OR IN OPEN
MEETING UPON WRITTEN NOTIFICATION TO THE CHIEF EXECUTIVE OFFICER.
[THIS PAGE INTENTIONALLY LEFT BLANK]
NBT BANCORP INC.
52 SOUTH BROAD STREET
NORWICH, NEW YORK 13815
This Proxy Statement is being furnished by NBT Bancorp Inc. (the
"Company"), a Delaware corporation, to its stockholders, in connection
with the solicitation by the Board of Directors of proxies to be voted
at the Annual Meeting of Stockholders to be held at 11:00 a.m., on
April 20, 1996 (the "Meeting"), at the Norwich Senior High School
auditorium located at Midland Drive, Norwich, New York 13815, and at
any adjournments thereof.
In the course of discussions in this Proxy Statement of
recommendations and solicitations of votes, the term "Management"
refers to the Board of Directors of NBT Bancorp Inc., unless otherwise
required by the context.
The approximate date on which this Proxy Statement is first being
sent or given to stockholders is March 18, 1996.
A COPY OF FORM 10-K (ANNUAL REPORT) FOR 1995, FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BY THE COMPANY MAY BE OBTAINED BY
STOCKHOLDERS WITHOUT CHARGE BY WRITTEN REQUEST TO JOE C. MINOR, VICE
PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER, NBT BANCORP INC., 52
SOUTH BROAD STREET, NORWICH, NEW YORK 13815.
PROXY STATEMENT
VOTING, PROXY SOLICITATION AND REVOCATION
Your proxy is solicited by the Board of Directors for use at the
Meeting.
If the enclosed form of proxy is properly executed and returned
prior to or at the Meeting, and if not revoked prior to or at the
Meeting, all shares represented thereby will be voted at the Meeting
as specified in the proxy by the persons designated therein. Shares
represented by such returned, unrevoked proxies which are not marked
"AGAINST," "ABSTAIN" or "WITHHELD" will be voted to fix the number of
directors at six and "FOR" the election of the nominees and "FOR"
ratification of the auditor. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is present
at the Meeting, but will not be counted as voting with respect to any
matter as to which the abstention or non-vote is indicated. The
solicitation of proxies will be by mail, but proxies may also be
solicited by telephone, telegraph or in person by officers and other
employees of the Company. The entire cost of this solicitation will be
borne by the Company. Should the Company, in order to solicit proxies,
request the assistance of other banks, brokerage houses and other
custodians, nominees or fiduciaries, the Company will reimburse such
persons for their reasonable expenses in forwarding the proxies and
proxy material to the beneficial owners of such shares. A stockholder
may revoke his proxy by a later proxy or by delivery of notice of
revocation to the Chief Executive Officer, in writing, at any time
prior to the date and time of meeting or in open meeting. Attendance
at the Meeting will not in and of itself revoke a proxy.
SHARES ENTITLED TO VOTE
The Board of Directors has fixed the close of business on March
4, 1996, as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Meeting. At the close of
business on such date, there were outstanding and entitled to vote at
the Meeting 8,263,867 shares of Common Stock, no par value, stated
value $1.00 per share. Each of the outstanding shares is entitled to
one vote at the Meeting for all items set forth in the Notice. Shares
held by the Trust Division of NBT Bank, National Association ("the
Bank" or "NBT Bank, N.A.") as Sole Trustee may not be voted in the
election of directors, but may be voted on other matters.
1
PRINCIPAL BENEFICIAL OWNERS OF COMMON STOCK
No individual or group of individuals owns of record, or is known
to the Company to own beneficially, more than 5% of the Common Stock.
However, Cede & Co., a nominee of the Depository Trust Company, held
record ownership on behalf of various of its customers on December 31,
1995, of 3,173,270 shares, or 38.4%, of the outstanding shares. The
names of the beneficial owners of the shares held by those stockholders
are unknown to management. Furthermore, Drof & Company, a nominee for
NBT Bancorp Inc. Employee Stock Ownership Plan, held 493,613 shares or
5.97%, of the outstanding shares on December 31, 1995. These shares are
voted by individual plan participants.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that the number of Directors
authorized to serve until the next annual meeting of stockholders
shall be the number designated at the Annual Meeting and prior to the
election of directors by the stockholders entitled to vote for the
election of directors at that meeting. The Board has proposed and is
requesting the stockholders to approve its proposal that the number of
directors of the Company be set at six. Two persons have been
designated by the Board as nominees for election at this Meeting and
are being presented to the stockholders for election.
Nominations of candidates for election as directors of the Company
must be made in writing and delivered to or received by the President
of the Company within ten days after notice of any Stockholders'
meeting called for the election of directors. Such notification shall
contain the name and address of the proposed nominee, the principal
occupation of the proposed nominee, the number of shares of Common
Stock that will be voted for the proposed nominee by the notifying
stockholder, including shares to be voted by proxy, the name and
residence of the notifying stockholder and the number of shares of
Common Stock beneficially owned by the notifying stockholder. The
directors to be elected at the Meeting shall be determined by a
plurality vote of the shares represented in person or by proxy,
entitled to vote at the Meeting.
No person shall be eligible for election or elected as a director
who shall have attained the age of 72 years, except for Mr. Everett
Gilmour who was granted an exception to age 75 by resolution of the
Board of Directors amending the By-laws.
Nominations not made in accordance herewith may be disregarded
by the Chairman of the meeting.
The By-Laws of the Company permit the Board of Directors by a
majority vote, between annual meetings of the stockholders, to increase
the number of directors by not more than two members and to appoint
qualified persons to fill the vacancies created thereby.
The By-Laws of the Company provide for a classified Board of
Directors. The Board is divided into three equal classes. Each class
holds office for a term of three years, but only one class comes up
for election each year (except in those cases where vacancies occur
in other classes). The persons named below are being proposed as
nominees for election as directors for the three-year term expiring at
the annual meeting to be held in 1999, and until their successors are
elected and qualify. The persons named in the enclosed proxy intend to
vote for such nominees for election as directors, but if the nominees
should be unable to serve, proxies will be voted for such substitute
nominees as shall be designated by the Board of Directors to replace
such nominees. It is believed that each nominee is available for
election. The names of the nominees for election for the term as
shown and certain information as to each of them are as follows:
2
NUMBER OF
PRINCIPAL OCCUPATION DURING COMMON SHARES PERCENT
DATE PAST FIVE YEARS AND OTHER DIRECTOR BENEFICIALLY OWNED OF SHARES
NAME OF BIRTH DIRECTORSHIPS (a) SINCE ON 12/31/95(B) OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------
NOMINEES FOR DIRECTORS FOR TERMS EXPIRING IN 1999:
- --------------------------------------------------
Peter B. Gregory 05/07/35 Partner, Gatehouse Antiques 1987 46,613 (1) .56%
Director of the Bank 6,549 (1)(b) *
since 1978 15,915 (2)(b) .19%
59,311 (d) .72%
Paul O. Stillman 01/15/33 Chairman & CEO of 1986 14,996 (1) .18%
Preferred Mutual Ins. Co. (c) 394 (2)(b) *
Directorships:
Excess Reinsurance Co.;
Preferred Mutual Ins. Co. (c);
Leatherstocking Cooperative
Ins. Co;
National Association of
Mutual Ins. Companies
NBT Bank, N.A. since 1977
DIRECTORS WITH TERMS EXPIRING IN 1997:
- --------------------------------------
Andrew S. Kowalczyk, Jr. 09/27/35 Partner--Kowalczyk, Tolles, 1994 1,493 (1) *
Deery & Johnson, attorneys
Director of the Bank
since 1994
John C. Mitchell 05/07/50 President & CEO of 1994 5,199 (1) *
I.L. Richer Co. 2,213 (2)(b) *
(agri. business)
Directorships:
Preferred Mutual Ins. Co.(c);
NBT Bank, N.A. since 1993
DIRECTORS WITH TERMS EXPIRING IN 1998:
- --------------------------------------
Daryl R. Forsythe 08/02/43 President & CEO of NBT 1992 4,630 (1) *
Bancorp Inc. & the Bank since 8,727 (2) .10%
January 1995 934 (2)(b) *
Vice President & Manager of 12,306 (3) .15%
Simmonds Precision Engine
Systems, a subsidiary of BF
Goodrich Aerospace for 7
years previous thereto
Directorships:
Security Mutual Life Ins.
Co. of NY
NBT Bank, N.A. since 1988
Everett A. Gilmour 05/22/21 Chairman of NBT Bancorp Inc., 1986 57,651 (1) .70%
& the Bank since January 1995 2,736 (2) *
Retired Chairman of NBT 1,670 (2)(b) *
Bancorp Inc. for more than
5 years previous thereto
Directorships:
Preferred Mutual Ins. Co.(c);
Deposit Telephone Co.;
NYS Electric & Gas Co.;
Delaware Otsego Corp.;
Norwich Aero Products, Inc.
NBT Bank, N.A. since 1962
3
EXECUTIVE OFFICERS OF NBT BANCORP INC.
OTHER THAN DIRECTORS WHO ARE OFFICERS
NUMBER OF
PRESENT POSITION COMMON SHARES PERCENT
DATE DATE OF AND PRINCIPAL BENEFICIALLY OWNED OF SHARES
NAME OF BIRTH EMPLOYMENT POSITION LAST FIVE YEARS ON 12/31/95(B) OUTSTANDING
- -----------------------------------------------------------------------------------------------------------------
Joe C. Minor 10/7/42 3/1/93 Vice President, Chief Financial 38 (1) *
Officer & Treasurer of NBT 269 (1)(b) *
Bancorp Inc. since September 7,235 (3) *
1995
Senior Vice President,
Chief Financial Officer and Treasurer
of the Bank since September 1995
Senior Vice President and Controller
of the Bank 1993-1995
Owner
Public Accounting/Bank Consulting
Firm Charlotte, NC 1983-1993
<FN>
All directors and executive officers as a group beneficially
owned 208,841 shares as of December 31, 1995, which represented 2.52%
of total shares outstanding, including shares owned by spouses and
minor children, as to which beneficial ownership is disclaimed, and
options exercisable within sixty days.
NOTES:
(a) The business experience of each director during the past five
years was that typical to a person engaged in the principal
occupation listed for each.
(b) The information under this caption regarding ownership of
securities is based upon statements by the individual
nominees, directors, and officers and includes shares held in
the names of spouses and minor children as to which
beneficial ownership is disclaimed. These indirectly held
shares total in number 28,146 for the spouses and for minor
children. In the case of officers and officer directors,
shares of the Company's stock held in NBT Bancorp Inc. Employee
Stock Ownership Plan as of December 31, 1995, are included.
(c) Preferred Mutual Insurance Company, of which Paul O. Stillman
is Chairman and Chief Executive Officer and Director, and Everett
A. Gilmour and John C. Mitchell, are Directors, owns 93,094
shares; Messrs. Stillman, Gilmour, and Mitchell disclaim any
beneficial ownership of any such shares.
(d) Dr. Gregory has Power of Attorney for Virginia Gregory, his
mother, but disclaims any beneficial ownership of any such
shares.
(1) Sole voting and investment authority
(2) Shared voting and investment authority
(3) Shares under option from NBT Bancorp Inc. Stock Option Plan
which are exercisable within sixty days of December 31, 1995
* Less than .1%
</FN>
4
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1995, there were six meetings of the Board of Directors. Except
as noted each member attended at least 75% of the meetings of the Board and
those committees on which he served. Paul Stillman attended 67% of Executive
Committee Meetings and Compensation Committee Meetings and he attended 50%
of Bancorp Meetings. The full Board performed the duties of the Executive
Committee. The following committees perform a dual role for the Company and
the Bank.
NOMINATING AND ORGANIZATION COMMITTEE:
Chairman: Andrew S. Kowalczyk, Jr.
Members: Daryl R. Forsythe
Dr. Peter B. Gregory
Everett A. Gilmour
Dan B. Marshman
Paul O. Stillman
This committee, which met one time during 1995, nominates directors
for election for the Company and the Bank. The committee also functions to
insure a successful evolution of management at the senior level.
COMPENSATION AND BENEFITS COMMITTEE:
Chairman: Paul O. Stillman
Members: Everett A. Gilmour
Dr. Peter B. Gregory
Andrew S. Kowalczyk, Jr.
John C. Mitchell
Richard F. Monroe
This committee has the responsibility of reviewing the salaries and
other forms of compensation of the key executive personnel of the Company
and the Bank. The committee met eight times in 1995. The committee
administers the Company's stock option plans.
AUDIT, COMPLIANCE AND LOAN REVIEW COMMITTEE:
Chairman: John C. Mitchell
Members: J. Peter Chaplin
Leah Drexler
Everett A. Gilmour
Dan B. Marshman
Richard F. Monroe
The Audit, Compliance and Loan Review Committee represents the
Board of Directors in fulfilling its statutory and fiduciary
responsibilities for independent examinations of the Company including
monitoring accounting and financial reporting practices and financial
information distributed to stockholders and the general public. Further,
the committee determines that the Company operates within prescribed
procedures in accordance with adequate administrative, operating and
internal accounting controls. It also makes recommendations to the Board
with respect to the appointment of independent auditors for the following
year. This committee met four times in 1995.
5
Directors and Executive Officers must, under Section 16(a) of the
Securities Exchange Act of 1934, file certain periodic reports of changes
in beneficial ownership of Company securities. The Bank endeavors to assist
Directors and Executive Officers in filing the required reports. To the
Company's knowledge all filing requirements under the Securities Exchange
Act were satisfied.
COMPENSATION OF DIRECTORS AND OFFICERS
BOARD OF DIRECTORS FEES
For 1995, members of the Board of Directors received a $2,000
annual retainer and $600 per Board meeting attended. Board members also
received $600 for each committee meeting attended. Chairmen of the
committees received $900 for each committee meeting attended. Officers
of the Company, who are also Directors, do not receive any fees.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the chief
executive officer of the Company and the most highly compensated
executive officers, other than the chief executive officer, of the
Company or the Bank who were serving as executive officers at the end
of 1995 and whose total annual salary and bonus exceeded $100,000 for
1995. The table also sets forth information regarding two additional
individuals who were executive officers during 1995 and whose annual
salary and bonus exceeded $100,000 in 1995.
6
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- ----------------------
SECURITIES ALL OTHER
NAME AND OTHER ANNUAL UNDERLYING LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY BONUS(4) COMPENSATION(5) OPTIONS(6) PAYOUTS (7)
- ---------------------------------------------------------------------------------------------------------------
Daryl R. Forsythe, 1995(1) $240,000 $120,000 30,765 $-0- $ 13,756
President and Chief
Executive Officer of
the Company and the Bank
Joe C. Minor, 1995(2) $ 94,154 $ 23,007 5,355 $-0- $ 7,956
Senior Vice President,
Chief Financial Officer
and Treasurer of the
Bank and Vice President,
Chief Financial Officer,
and Treasurer of the
Company
James J. McAssey, 1995 $ 90,500 $ 22,210 5,250 $-0- $ 5,778
Senior Vice President,
Operations Division
Deborah H. Allen, 1995 $ 82,000 $ 20,021 4,725 $-0- $ 6,944
Senior Vice President,
Marketing, Sales Admin.,
and North Country Admin.
Richard I. Linhart, 1995(3) $124,692 $ 12,000 -0- $-0- $114,632(8)
Former Executive 1994 150,000 12,173 10,290 -0- 7,500
Vice President,
Chief 1993 130,000 34,444 9,812 -0- 11,868
Administrative and
Financial Officer and
Treasurer of the Bank
and Vice President,
Chief Financial Officer
and Treasurer of the
Company
Frederick H. Weismann, 1995(3) $116,635 $ 11,500 -0- $-0- $139,703(9)
Former Executive Vice 1994 145,000 11,411 9,870 -0- 8,253
President, Chief 1993 125,000 31,761 9,481 -0- 5,172
Banking and Credit
Officer of the Bank
<FN>
NOTES:
(1) Mr. Forsythe's employment with the Company and the Bank
commenced effective December 31, 1994.
(2) Mr. Minor assumed these positions in September 1995. Prior
thereto he was Senior Vice President and Controller of the
Bank and Assistant treasurer and Chief Accounting Officer of
the Company.
(3) Messrs. Linhart's and Weismann's employment with the Company
and the Bank ended in September 1995.
(4) Represents bonuses under the Company's Executive Incentive
Compensation Plan earned in the specified year and paid in
January of the following year, except that Messrs. Linhart
and Weismann received payment upon their leaving the employ
of the Company.
(5) Individual amounts, and in the aggregate, are immaterial.
(6) Grant amount adjusted for the 5% stock dividends in December
1993, 1994 and 1995.
(7) In 1995, 1994, and 1993 the Bank contributed $483,240,
$420,000, and $765,000, respectively, to the Bank's
Employees' Stock Ownership Plan ("ESOP"). With the 1995
contribution, the Bank as trustee of the ESOP will purchase
shares of Common Stock of the Company at the fair market
value on the dates of purchase and will allocate these shares
to the accounts of the participants. The amounts shown include
the amounts allocated to the named executives. An individual's
maximum compensation eligible for the ESOP contribution is
$150,000. Includes payments by the Company with respect to the
death benefits agreement ($8,348 for Mr. Forsythe), disability
agreement ($5,408 for Mr. Forsythe), and matching contributions
by the Company or the Bank pursuant to the Company's and Bank's
Section 401(k) retirement plan.
(8) Represents payments made to Mr. Linhart pursuant to his
September 22, 1995 severance agreement with the Company and
the Bank. The amount includes $80,000 in severance and the
remainder representing vested benefits under the ESOP Plan and
housing costs. In addition, Mr. Linhart is entitled to receive
his vested portion of the Company's pension plan in the amount of
$660 per month commencing in October 2008.
(9) Represents payments made to Mr. Weismann pursuant to his
September 15, 1995 severance agreement with the Company and
the Bank. The amount includes $100,000 in severance and the
remainder representing accrued vacation and vested benefits
under the ESOP and Section 401(k) retirement plan. In
addition, Mr. Weismann is entitled to receive his vested
portion of the Company's pension plan in the amount of $532
per month commencing in February 2013.
</FN>
7
OPTION GRANTS INFORMATION
The following table presents information concerning grants
of stock options made during 1995 to each of the executive
officers named in the Summary Compensation Table above. All
information has been adjusted for the December 1995 Stock
Dividend.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (2)
------------------------------------------------------ ---------------------------
# OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE
NAME GRANTED(1) FISCAL YEAR ($/Sh) EXPIRATION DATE 5% 10%
- ---- ---------- ------------ -------- --------------- -------- --------
Daryl R. Forsythe 30,765 29.7% $15.61 February 2005 $302,021 $765,382
Joe C. Minor 5,355 5.2% $15.61 February 2005 $ 52,570 $133,273
James J. McAssey 5,250 5.1% $15.61 February 2005 $ 51,539 $130,611
Deborah H. Allen 4,725 4.6% $15.61 February 2005 $ 46,386 $117,550
Richard I. Linhart(3) 15,435 16.6% $15.61 February 2005 $151,526 $383,997
Frederick H. Weismann(3) 14,910 16.1% $15.61 February 2005 $146,372 $370,936
<FN>
NOTES:
(1) Non-qualified options have been granted at fair market value at
the date of grant. Options are 40% vested after one year from
grant date; an additional 20% vests each year thereafter. For
options granted prior to 1993, 50% vesting occurred at the time
of grant and an additional 25% would vest after 30 months and 48
months.
(2) The potential realizable value of each grant of options, assuming
that the market price of the underlying security appreciates in
value from the date of grant to the end of the option term, at
the specified annualized rates. The assumed growth rates in price
in the Company's stock are not necessarily indicative of actual
performance that may be expected. The amounts exclude the cost
by the executive to exercise such options.
(3) Messrs. Linhart and Weismann left the Company in September 1995.
As a result, the unvested portion of their option grant lapsed
(options to purchase 30,360 shares and 33,358 shares,
respectively).
</FN>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table presents information concerning the exercise
of stock options during 1995 by each of the executive officers named
in the Summary Compensation Table above, and the value at December 31,
1995, of unexercised options that are exercisable within sixty days of
December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END(2) AT FY-END(2)
--------------------- ---------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ------------- ---------------
Daryl R. Forsythe -0- $ -0- 12,306/18,459 $ 20,213/30,319
Joe C. Minor -0- $ -0- 7,236/ 5,452 $ 20,266/10,577
James J. McAssey -0- $ -0- 4,415/ 4,694 $ 6,112/ 6,949
Deborah H. Allen -0- $ -0- 19,264/ 5,596 $104,261/11,743
Richard I. Linhart(3) 16,436 $91,787 -0-/-0- $ -0-/-0-
Frederick H. Weismann(3) 7,596 $31,645 -0-/-0- $ -0-/-0-
<FN>
NOTES:
(1) Represents difference between the fair market value of the
securities underlying the options and the exercise price of the
options on the date of exercise.
(2) Represents difference between the fair market value of the
securities underlying the options and the exercise price of the
options at December 31, 1995.
(3) Messrs. Linhart and Weismann exercised their options during 1995
either to conform to the requirements of the Executive Stock
Ownership Plan or upon their ceasing to be employees of the
Company.
</FN>
8
RETIREMENT PLAN
The following table presents information with respect to the
pension plan of the Company. The table shows estimated annual benefits
payable upon retirement in specified compensation and years of service
classifications for participants retiring on December 31, 1995.
YEARS OF PARTICIPATION
------------------------------------------------------
FINAL AVERAGE
EARNINGS 10 YEARS 20 YEARS 30 YEARS 40 YEARS
- ------------- -------- -------- -------- --------
$15,000 N $ 1,979.00 $ 3,994.00 $ 6,213.00 $ 8,432.00
Q 1,841.00 3,716.00 5,780.00 7,845.00
$25,000 N 3,353.00 6,657.00 10,355.00 14,053.00
Q 3,119.00 6,193.00 9,634.00 13,074.00
$40,000 N 5,996.00 11,751.00 18,280.00 24,625.00
Q 5,578.00 10,933.00 17,007.00 22,910.00
$70,000 N 11,632.00 22,985.00 35,754.00 47,799.00
Q 10,822.00 21,384.00 33,263.00 44,469.00
$100,000 N 17,305.00 34,218.00 53,228.00 70,973.00
Q 16,099.00 31,835.00 49,520.00 66,029.00
$200,000 N 28,587.00 57,524.00 89,481.00 116,732.00
Q 26,595.00 53,517.00 83,248.00 108,600.00
$300,000 N 30,897.00 64,432.00 97,966.00 116,732.00
Q 28,745.00 59,944.00 91,142.00 108,600.00
$400,000 N 30,897.00 64,432.00 97,966.00 116,732.00
Q 28,745.00 59,944.00 91,142.00 108,600.00
$500,000 N 30,897.00 64,432.00 97,966.00 116,732.00
Q 28,745.00 59,944.00 91,142.00 108,600.00
<FN>
N=Normal Form of Benefit for a Single Participant-5 Years Certain and
Continuous.
Q=Normal Form of Benefit for a Married Participant-Qualified Joint and
Survivor (50% of benefit payable to spouse at death of Participant).
Spouse's age assumed to be equal to Participant's age for above
calculations.
Salaries are assumed to increase at a rate of 4% per year from date of
hire through date of retirement for above calculations.
</FN>
The Company has in effect a non-contributory pension plan for all
eligible employees which is self-administered. Eligible employees are
those who work in excess of 1,000 hours per year, have completed one
year of service and have attained age 21. The plan is qualified under
Section 401(a) of the Internal Revenue Code. Employer contributions to
the plan are computed on an actuarial basis using the projected unit
credit cost method including amortization of any past service costs
over a thirty-year period. Pension costs are funded as accrued. The
minimum required and maximum deductible contributions for the plan
year ending December 31, 1995, were $326,116 and $426,078,
respectively. The plan provides for 100% vesting after five years of
qualified service. Earnable compensation for the plan is defined as
fixed basic annual compensation, including bonuses, and overtime, but
excluding the Company's cost for any public or private employee benefit
plan, including this retirement plan, the income from exercise of stock
options, and severance. Benefit computations are based on an average
final compensation amount which is the average annual earnable
compensation during the five consecutive year period in an employee's
last ten years of qualified service which produces the highest such
average.
For each year of qualified service an employee will be entitled
to a basic plan and an excess annual retirement allowance. The basic
annual allowance is equal to 1.75% for service through September 30,
1989, and 1.6% for service from October 1, 1989, through December 31,
1994, and 1.25% thereafter of the Highest Consecutive five year Average
Compensation, times the years of creditable service to a maximum of 40
years (30 years maximum service after December 31, 1994) plus an excess
annual allowance of .6% of the Excess Compensation which is defined as
the excess of the participant's Highest Consecutive five year Average
Compensation above the participant's Covered Compensation determined
by a table provided by the IRS. The excess benefit is limited to 35
9
years. The benefits listed above in the pension plan table are subject
to any deduction for Social Security or other offset amounts. As of
December 31, 1995, the end of the plan year, the executive officers
named in the Summary Compensation Table above were credited with the
following years of service for purposes of the above table: Daryl R.
Forsythe (1), Joe C. Minor (3), Deborah H. Allen (9), and James J.
McAssey (2).
The annual normal retirement benefit of a participant who becomes
eligible for benefits shall equal the greater of the amounts described
in A and B below, with that sum then reduced by the amount described
in C below.
A. The sum of (i), (ii), and (iii) below:
i. The participant's accrued benefit under the
predecessor plan as of September 30, 1989.
ii. For years of benefit service earned after September
30, 1989 and before January 1, 1995, the sum of 1.60
percent of the participant's final average earnings
that is in excess of covered compensation for such
year of benefit service.
iii. For years of benefit service earned after December
31, 1994, the sum of 1.25 percent of the
participant's final average earnings for each such
year of benefit service, plus .60 percent of the
participant's final average earnings that is in
excess of covered compensation for each such year
of benefit service.
B. The sum of 1.60 percent of the participant's final average
earnings for each year of benefit service through December
31, 1994, plus .65% of the participant's final average
earnings that is in excess of covered compensation for each
year of benefit service through December 31, 1994.
C. The annual normal retirement benefit payable to the
participant from the Retirement Plan of Irving Bank
Corporation and Affiliated Companies.
The number of years of benefit service taken into account
under the plan shall be limited to the greater of 30, or the number
of years of benefit service completed by the participant as of December
31, 1994 (up to a maximum of 40 for the basic benefit and a maximum of
35 for the excess portion of the benefit).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
There were no employment contracts between the Company or the Bank
and the named executive officers.
CHANGE IN CONTROL CONTRACT
The Company has entered into a change-in-control contract with
Mr. Forsythe. The contract provides in general that, in the event that
the Company or the Bank is acquired by another company or any of
certain other changes in control of the Company or the Bank should
occur and further if within 24 months from the date of such acquisition
or change in control Mr. Forsythe's employment with the Company or the
Bank is terminated without cause or his salary is reduced or his duties
or responsibilities are changed (except in a promotion), he will be
entitled to receive severance pay equal to 2.99 times a base amount.
An executive's base amount for these purposes is his average annual
compensation includible in his gross taxable income for the five years
preceding the year in which the change in control occurs (or, if he has
been employed by the Company for less than those five years, for the
number of those years during which he has been employed by the Company,
with any partial year annualized), including base salary, non-deferred
amounts under annual incentive, long-term performance, and
profit-sharing plans, distributions of previously deferred amounts
under such plans, and ordinary income recognized with respect to stock
options. The agreement is effective until December 31, 1997, and is
automatically renewed for one additional year commencing at December
31, 1995 and each December 31 thereafter.
SUPPLEMENTAL RETIREMENT BENEFITS
The Company agreed in January 1995 to provide Mr. Forsythe with
supplemental retirement benefits ("SERP"). The SERP will provide that
annual supplemental benefits at normal retirement will be equal to 50%
of Mr. Forsythe's average base salary and bonuses for the five salary
years immediately preceding the date of retirement, less the sum of
annual amounts payable to the individual under (a) the Company's
pension plan, (b) the Company's ESOP, (c) social security, and (d) the
pension plan of former employers, as the case may be. Reduced amounts
10
will be payable under the SERP in the event Mr. Forsythe takes early
retirement. Except in the case of early retirement, payment of benefits
will commence upon Mr. Forsythe's attainment of age 65. The SERP
provides that it shall at all times be unfunded.
DARYL R. FORSYTHE EMPLOYMENT
Mr. Forsythe was hired effective December 31, 1994 as President
and Chief Executive Officer of the Company and the Bank. Mr. Forsythe
is employed at will without an employment contract at an annual salary
of $240,000. As an executive officer, Mr. Forsythe is eligible to
participate in the Company's and the Bank's various employee benefit
plans, including the Executive Incentive Compensation Plan, the Stock
Option Plan, the retirement plan, the ESOP, and the various health,
disability, and life insurance plans. The Company and Mr. Forsythe have
entered into a wage continuation plan which provides that during the
first three months of disability Mr. Forsythe will receive 100% of his
regular wages reduced by any benefits received under social security,
workers' compensation, state disability plan or any other government
plan or other program, such as group coverage, paid for by the Bank.
Additionally, if the disability extends beyond three months, Mr.
Forsythe will receive payments of $7,000 per month under an insurance
policy with New England Mutual Life Insurance Company. The annual cost
of the policy is $5,408. Mr. Forsythe and the Company have entered into a
death benefits agreement. The policy is a split-dollar life insurance
policy on Mr. Forsythe's behalf in the face amount of $800,000. The Company
is the owner of the policy. Upon Mr. Forsythe's death, his named
beneficiary will receive $600,000 from the policy's proceeds, while the
Company will receive the remainder. Upon termination of the death benefits
agreement (e.g., upon termination of Mr. Forsythe's employment), Mr.
Forsythe is required to transfer all of his right, title, and interest in
the policy to the Company. The Company pays the premium on the policy,
75% of the cost being attributable to Mr. Forsythe and is reflected in
the Summary Compensation Table above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Company's Compensation and Benefits
Committee has ever been an officer or employee of the Company or the
Bank or had any relationship during 1995 with the Company or the Bank
other than as discussed under "Related Party Transactions," below.
During the fiscal year ending December 31, 1995, no executive
officer of the Company or the Bank (a) served as a member of the
compensation committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers served
on the Compensation and Benefits Committee of the Company, or (b) served
as a director of another entity, one of whose executive officers served
on the Compensation and Benefits Committee of the Company, or (c)
served as a member of the compensation committee (or other board
committee performing equivalent functions) of another entity, one of
whose executive officers served as a director of the Company.
No interlocks exist between Company compensation committee and
directorship of other companies.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The primary responsibility of the Compensation Committee
(``Committee'') is to design, implement, and administer all facets of
the compensation and benefits programs of the Company for all
employees. The Committee is composed entirely of outside directors. The
Committee approves participants who are eligible for the Executive
Incentive Compensation Plan, sets the Plan targets for each year and
approves payouts thereon, awards stock option grants, approves the
annual contribution to the Employee Stock Ownership Plan for all
employees, approves executive compensation, annually reviews the
performance of the CEO and recommends the CEO compensation package to
the Board. Actions of the Committee are presented to the Board of
Directors for approval. The Committee has been particularly active in
the past several years in ensuring that executive compensation, among
other things, is aligned to shareholder interests. The objective of the
Company's executive compensation program is to develop and maintain
executive reward programs which contribute to the enhancement of
shareholder value, while attracting and retaining key executives who
are critical to the long-term success of the Company. It is expected
that total compensation will vary annually, based on Company and
individual performance.
11
The Compensation Committee retains the services of an executive
salary and benefits consultant, who is independent and unassociated
with the Company, the CEO, or any member of the Board or management
to assist in setting the total compensation package of senior management.
To assist the Committee in fulfilling its responsibilities, the independent
consultant provides advice and guidance directed toward ensuring that the
Board's practices are consistent within the industry, consistent with and
in support of the goals and objectives of the Company and fairly applied
throughout the Company.
The Committee believes it is critical to the ongoing success of
the Company that its executives continue to be among the most highly
qualified and talented available to lead the organization in the
creation of shareholder value. In support of this objective, the
philosophy of the Committee in approving and recommending executive
compensation is based on the following criteria:
* Design a total compensation package that includes a base salary,
an annual incentive plan that is linked to shareholder interests,
and a stock option plan that encourages share ownership and is
also linked with shareholder interests.
* Set base salaries that are commensurate with the individuals'
responsibility, experience, and contribution to the Company.
* Ensure that salaries are competitive within the industry so as
to be able to attract and retain highly qualified executives.
* Promote a pay for performance culture.
The Company's executive compensation program, discussed in detail
below, is made up of both fixed (base salary) and variable (incentive)
compensation elements. Variable compensation consists of annual cash
incentives, and stock option grants. The Committee and the management
of the Company believe that variable compensation should be based both
on short-term and long-term measurements and be directly and visibly
tied to Company performance, so that, while introducing appropriate
risk in the payout levels, promotes a pay for performance culture
within the executive team.
In reviewing executive compensation, the Committee considers a
variety of factors including past performance and the Board's
expectations for improvement in the future. The CEO and the Senior
Management Team review executive compensation throughout the year. The
CEO presents recommendations for compensation for the Senior
Management Team to the Committee each year prior to year-end for their
approval. The Committee annually reviews the CEO's performance against
pre-established goals and with respect to the performance of the
Company. Improvements in historical measures such as ROA, ROE, profit
improvement, non-performing assets to total assets and net non-interest
expense to total expense are considered in the Committee's assessment
of performance. During 1995, all of these measures improved. For
instance ROA and ROE rose from .64% and 6.53% to .9% and 9.18%,
respectively, improvements of over 40%. Maintenance of sound asset
quality resulted in the Company's being able to take full advantage of
the 1995 reduction in FDIC insurance, thus reducing the rate from
$.23/$100 to $.04/$100 by year-end. The Committee also considers growth
and in 1995 the Company grew its assets from $1.04 billion to $1.1
billion primarily due to the acquisition in the 4th quarter of three
Community Banking System branches. The Company maintained safety and
soundness and once again received a "blue ribbon" and "five star"
ratings by outside agencies. The Company maintained its satisfactory
ratings from regulatory examinations as well.
BASE SALARY. Although not specifically weighted, the performance of
each executive, the level of responsibility, and current inflationary
indices were considered in establishing base salaries for executive
officers. Salary ranges have been established with the assistance of
the salary and benefits consultant and are based upon responsibility,
experience, and individual performance. Mr. Forsythe receives an
annual salary of $240,000. No written employment agreement has been
entered into between the Company or the Bank and Mr. Forsythe. In
determining Mr. Forsythe's salary, the Committee took into consideration
the salaries of CEO's of similar-sized banks, the salaries of the previous
two CEO's and the recommendations of the salary consultant. Further, the
Committee believing Mr. Forsythe would provide the vision and leadership
necessary for the Bank to be successful, determined that some inducement
would be necessary to attract Mr. Forsythe to the Bank.
12
The Committee realizes that a strong and experienced management
team is vital in assisting Mr. Forsythe in achieving the corporate
goals of the Company.
EXECUTIVE INCENTIVE COMPENSATION PLAN. The Committee, working with
an outside salary and benefit consultant designed the current incentive
plan that would link the payout with shareholder interests. The Plan
is reviewed annually by the Committee. Upon implementation of the Plan
for 1992, the Board of Directors terminated the One-Year and Three-Year
Incentive Plans and installed an annual Executive Incentive
Compensation Plan ("EICP") that is more closely linked to shareholder
value. There are three components to the potential award within the
Plan: Return on Assets, Return on Equity, and the dollar increase in
net income over the prior year. The Plan has a minimum Return on Assets
achievement before any payout is possible. There are participating
levels within the plan which range from the maximum payout being 35%
of salary for Level I to 15% of salary at the lowest level. Each level
has a corporate performance component and an individual performance
component. At the highest level the corporate component is 75% and the
personal component is 25% to 25% corporate component and 75% personal
component at the lowest participating level. The Committee sets
"stretch" targets in order to achieve the maximum payout.
As part of executive incentive compensation, a Senior Executive
Incentive Compensation Plan (SEICP) was approved by the Committee for
the President and two Executive Vice Presidents. At December 31, 1995,
President Forsythe was the only participant in the SEICP. The Plan
provided for a maximum payout of 70% of salary with the range of the
bonus awarded being based on corporate performance. Mr. Forsythe's bonus
earned in 1995 of $120,000 or 71% of the maximum potential payout was in
accordance with the Company's 1995 performance. The bonus was paid in 1996.
Other executives receiving bonuses were evaluated based on comparisons
to predetermined corporate and personal goals. Each officer achieved a
majority of their goals and were comparably rewarded.
STOCK OPTION PLAN. In order to provide long-term incentives to key
employees, including executive officers, to encourage share ownership
by key officers, and to retain and motivate key officers to further
shareholder returns, the Company has a Stock Option Plan. The Committee
believes that stock options, which provide value to participants only
when the Company's shareholders benefit from stock price appreciation,
are an important component of the Company's executive compensation
program. The number of options currently held by an officer is not a
factor in determining individual grants. The value of stock options
granted in 1995 ranged from 200% of base compensation at the CEO level
down to 50% of base compensation. "Value" is determined by multiplying
the number of options granted by the fair market value of the Company's
Common Stock which underlies such options on the date of the grant.
With respect to the options granted in 1995 to the CEO and to all other
executive officers, the Committee in making the awards considered the
various factors referred to above, especially the positive growth of
the Company, its financial condition, and profitability. The Committee
did not apply any specific weighing to the factors considered. The
number of options which the Committee granted to the officers was based
upon individual performance and level of responsibility, subject to
Committee-imposed restrictions. The Committee determined that the award
level must be sufficient in size to provide a strong incentive for
participants to work for long-term business interests of the Company,
thereby creating additional shareholder value resulting from the
appreciation of the Company's stock, and to become significant owners
of the Company. Options are granted at the fair market value of the
Company's stock at the time of grant. Under the 1993 Plan, options vested
at the rate of 40% after one year of date of grant and an additional
20% each year thereafter. Since an option only gives the officer the
right to buy these option shares at a fixed price over a future
period, the compensation value is derived by the incentive to increase
shareholder value in the future; hence, the motivation to improve the
Company's performance.
MEMBERS OF THE COMPENSATION AND BENEFITS COMMITTEE
Paul O. Stillman - Chairman
Everett A. Gilmour
Dr. Peter B. Gregory
Andrew S. Kowalczyk, Jr.
John C. Mitchell
Richard Monroe
13
PERFORMANCE GRAPHS
The following graph compares the cumulative total shareholder
return (i.e., price change, reinvestment of cash dividends and stock
dividends received) on the Company's Common Stock against the
cumulative total return of the NASDAQ Stock Market (US Companies) Index
and the Index for NASDAQ Financial Stocks. The stock performance graph
assumes that $100 was invested on December 31, 1990. The graph further
assumes the reinvestment of dividends into additional shares of the
same class of equity securities at the frequency with which dividends
are paid on such securities during the relevant fiscal year. The yearly
points marked on the horizontal axis correspond to December 31 of that
year. Each of the referenced indices is calculated in the same manner.
All are market-capitalization-weighted indices, so companies judged
by the market to be more important (i.e., more valuable) count for more
in all indices.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG NBT
BANCORP INC., THE INDEX FOR NASDAQ FINANCIAL STOCKS, AND THE
NASDAQ STOCK MARKET (US COMPANIES) INDEX.
Five Year Cumulative Total Return
[FOLLOWING IS A TABULAR PRESENTATION OF DATA POINTS FOR THE GRAPH WHICH
APPEARS HERE IN THE PAPER COPY]
Measurement NBT NASDAQ NASDAQ
Period (Fiscal BANCORP Financial Market Index
Year Covered) INC. Stocks Index (US Companies)
- -------------- ------- ------------ --------------
4Q90 $100 $100 $100
1Q91 $ 91 $122 $129
2Q91 $ 90 $132 $127
3Q91 $ 84 $145 $141
4Q91 $ 88 $156 $157
1Q92 $ 89 $173 $162
2Q92 $107 $185 $151
3Q92 $113 $191 $156
4Q92 $122 $220 $181
1Q93 $142 $240 $185
2Q93 $143 $232 $188
3Q93 $150 $253 $204
4Q93 $166 $249 $208
1Q94 $160 $243 $199
2Q94 $152 $258 $189
3Q94 $148 $261 $205
4Q94 $161 $240 $201
1Q95 $157 $264 $219
2Q95 $160 $291 $251
3Q95 $164 $333 $281
4Q95 $184 $354 $284
14
On March 17, 1992, the Company listed its Common Stock on the
NASDAQ National Market System. Prior to this listing the Company's
Common Stock was traded on the over-the-counter ("OTC") "pink sheets".
Since the listing, the number of market makers who are active in
trading the Company's stock has increased from three to eleven. The
Company believes that by its being listed on the NASDAQ system its
shareholders have a more readily accessible market to buy or sell the
Company's stock. Many of the Company's peers are also listed on this
exchange. The graph below represents the cumulative total returns of
the Company's stock compared with the NASDAQ Stock Market (US
Companies) and the Index for NASDAQ Financial Stocks since March 17,
1992, the date the Company first began trading on the NASDAQ National
Market System. For purposes of the graph below, the NASDAQ indices were
set to $100 on March 17, 1992.
Cumulative Total Return Since NASDAQ listing 3/17/92
[FOLLOWING IS A TABULAR PRESENTATION OF DATA POINTS FOR THE GRAPH WHICH
APPEARS HERE IN THE PAPER COPY]
Measurement NBT NASDAQ NASDAQ
Period (Fiscal BANCORP Financial Market Index
Year Covered) INC. Stocks Index (US Companies)
- -------------- ------- ------------ --------------
1Q92 $100 $100 $100
2Q92 $119 $107 $ 93
3Q92 $118 $109 $ 96
4Q92 $127 $127 $112
1Q93 $148 $138 $114
2Q93 $149 $134 $117
3Q93 $157 $146 $126
4Q93 $173 $144 $129
1Q94 $167 $140 $123
2Q94 $158 $149 $117
3Q94 $154 $151 $127
4Q94 $169 $139 $125
1Q95 $165 $151 $135
2Q95 $168 $166 $155
3Q95 $172 $188 $173
4Q95 $193 $200 $174
EMPLOYEES' STOCK OWNERSHIP PLAN
The Company sponsors a non-contributory, IRS qualified Employees'
Stock Ownership Plan. The plan is administered by the Bank and plan
investments are primarily in the Company's Common Stock. The stock is
voted by the plan's Trustees only as participants direct the Trustees to
vote by properly executing a proxy. At December 31, 1995, the plan owned
493,613 shares of the Company's Common Stock, 5.97% of total shares
outstanding.
Employees eligible to participate in the plan are those who
work in excess of 1,000 hours per year, have completed one year of service
and have attained age 21. The plan provides for partial vesting of an
employee's interest in the plan at approximately 20% per year, with 100%
vesting being achieved after five years of qualified service.
15
Discretionary contributions, as determined annually by the Board
of Directors, are made by the Company to a separate trust for the
benefit of the participating employees. Annual contributions may not
exceed amounts deductible for Federal income tax purposes. Employer
contributions are allocated among all participants in proportion that
each participant's compensation for the plan year bears to the total
compensation of all participants for the plan year. (Compensation for
the plan is defined as fixed basic annual compensation, including
bonuses, overtime and other taxable compensation, but excluding stock
options and the Company's cost for any public or private employee
benefit plan, including the retirement, executive incentive compensation
and ESOP plans.) The Board of Directors may amend the plan at any time.
The value of a participant's account is the total of allocated
employer contributions, plus the earnings on those contributions, plus
or minus any gain or loss on the investment of the contributions.
Normal retirement age under the plan is 65. The plan also provides
for early retirement at age 55 and disability retirement at any age. In
the event a participant dies before retiring under the plan, the value of
his account in the plan will be paid to his beneficiary.
A participant's retirement benefit under the plan is the value
of his account at the date of retirement. Effective January 1, 1985,
the normal form of retirement benefit for a married employee is a joint
and survivor annuity; for an employee who is not married, a lump sum
distribution of cash. Other available retirement options are: 1)
installment payments of cash and 2) distribution of the account value
in employer securities, both subject to obtaining spousal waivers.
As a qualified plan (under current law) employer contributions
and plan earnings are not currently taxed to employees; retirement
benefits will be taxable to employees when received from the plan.
In 1995 the Company made a contribution of $483,240 to the plan.
The Summary Compensation Table above reflects payments made to the
Company's named executive officers under the plan.
401(K) PLAN
The Company and the Bank have adopted a Section 401(k) retirement
plan. All employees of the Company and the Bank are eligible to participate
in the plan after one year's service, are at least 21 years of age, and
complete 1,000 hours of service during the year. The plan provides that
any employee may elect to defer up to 15% of salary for retirement (subject
to a maximum limitation of $9,240) and that the Company or the Bank will
provide a matching contribution of 50% of the first 4% of the employee's
deferred amount. In 1995, the Company or the Bank provided matching
contributions to Mr. Forsythe of $-0-, Mr. Minor of $1,883, Mr. McAssey of
$1,810, Ms. Allen of $1,640, Mr. Linhart of $-0-, and Mr. Weismann of
$2,385. These payments are reflected in the Summary Compensation Table.
STOCK OPTION PLAN
The Board of Directors adopted Stock Option Plans in 1986 and in
1993, which were subsequently approved by the Company's stockholders
at the 1987 and 1993 Annual Meetings, respectively. The purposes of the
plans are to encourage ownership of capital stock of the Company by
officers and other key employees of the Company and its subsidiaries
in order to help the Company attract and retain in its service persons
of exceptional competence, to furnish added incentives for them to
increase their efforts on behalf of the Company, and to gain for the
Company the advantages inherent in key employees having an ownership
interest in the Company. Pursuant to the approval of the 1993 Stock
Option Plan, the 1986 plan was "frozen" and no new options or stock
appreciation rights may be granted under that plan.
Options may be issued to full-time key employees (officers,
whether or not they are Directors, and Directors who are also
employees, including, but not limited to, President, Chief Executive
Officer, Branch Manager, Department Head or Division Manager) of the
Company or any subsidiary. Any employee of the Company or any
subsidiary may be determined to be a key employee and may be granted
an option at the discretion of the Board of Directors.
16
The Plan permits the grant of either non-qualified stock options
or incentive stock options as determined by the Board of Directors. The
grants, when exercised, may not exceed any limit specified by the
Internal Revenue Code, Section 422A, or $100,000 annually, whichever
is smaller, in the event that the optionee has incentive stock options.
The exercise price and expiration dates with respect to each
option are determined by the Compensation and Benefits Committee, but
in no event may the price be less than 100% of the fair market value
of the Company's Common Stock. "Fair Market Value" is defined as the
average between the highest and lowest quoted selling prices of the
Common Stock on the National Market System of NASDAQ on the date of
grant with respect to incentive stock options, and on the five
preceding trading days prior to the grant with respect to nonqualified
options. Payment of the exercise price may be made by check or, with
the consent of the Company, by delivery of shares of Common Stock of
the Company, having fair market value equal to the exercise price or
by the purchaser's fully-secured promissory note, bearing interest at
such rate as may be determined by the Board of Directors. No option may
be transferred, and each option is exercisable only by the optionee
during its term in accordance with the provisions of the grant,
provided he is currently employed by, or retired from, the Company or
one of its subsidiaries. In the event that an optionee dies or becomes
permanently disabled, an option will become exercisable in full on the
date of death or determination of disability, and such option will
remain exercisable by the optionee or his legal representative for six
months after the date of death or disability. In the event that an
optionee's employment by the Company is terminated for reasons other
than retirement, disability or death, an option may be exercised within
thirty days of termination of employment to the extent that it was
exercisable at the date of such termination. No option granted under
the Plan may extend for a period exceeding ten years from the date of
the grant, and the Committee will determine the sequence in which
grants may be exercised.
The Plan is administered by the Compensation and Benefits
Committee. The Board may, in its discretion, at any time, or from time
to time, while the Plan is operative, make changes therein or
amendments thereto without stockholder approval which, in its opinion,
are not inconsistent with the purpose of the Plan, including, but not
limited to, changes in the allocation of benefits which may increase
the cost to the Company. The Plan contains provisions for adjustments
in the event of stock splits, stock dividends and similar changes.
As of December 31, 1995, 593,942 shares of the Company's Common
Stock have been reserved for issuance under the Plan. In 1995,
non-qualified options, which expire in 2005, for 103,530 shares were
granted to 17 key employees, at option prices of $15.61 to $15.54.
Options for 181,105 shares were outstanding at December 31, 1995 with
option prices ranging from $9.46 to $16.10 per share for all officers
as a group. All options were at 100% of fair market value as of date
of the grant. Options and option prices have been adjusted for all
stock dividends to date.
Under current law, a participant who received non-qualified
stock options or incentive stock options, will not realize any income,
nor will the Company receive a deduction, for Federal income tax
purposes, in the year of the grant. Ordinary income will be realized
by the recipient of an option at the time shares are transferred, or
cash paid to him, pursuant to his exercise of a non-qualified stock
option. In the case of a non-qualified stock option, the amount of such
income will be equal to the difference between the option price and the
fair market value of the shares of common stock on the date of
exercise.
EXECUTIVE INCENTIVE COMPENSATION PLAN
The Company adopted, effective January 1, 1992, an Executive
Incentive Compensation Plan (hereinafter, the "Plan") to promote
individual motivation for the achievement of the Company's financial
and operating objectives and to aid in attracting and retaining highly
qualified personnel. Pursuant to the Plan, officers of the Bank are
eligible to receive cash in the event certain performance criteria are
satisfied. The operation of the Plan is predicated on the Bank's
attaining and exceeding management performance goals. The goals consist
of return on average assets, return on stockholders' equity, and profit
improvement. Unless a participant elects to have all or a portion of
his award deferred, distribution of awards will be made in cash during
the first quarter after year-end. All distributions must be approved
by the Compensation and Benefits Committee. This Committee has broad
17
discretion in determining who will be eligible to receive incentive
compensation awards and has full power and authority to interpret,
manage, and administer the Plan. The Plan provides that the President
and Chief Executive Officer of the Company will recommend to the
Committee the amounts to be awarded to individual participants. The
President and Chief Executive Officer may also recommend a change
beyond the formula to a bonus award to a participant. The Committee has
the authority to amend such recommendation.
Bonus awards are made pursuant to an established formula. An
employee will be placed into a particular level, according to the
participant's office and responsibility. Depending upon the particular
level, the award will range from 0% to 15% of the participant's regular
salary at the lowest level to 0% to 70% of the salary at the CEO level.
The formula provides that the financial criteria necessary for plan
operation consist of return on average assets, return on equity, and
profit improvement. Incentive distributions will be based upon
attainment of corporate performance goals to establish the total
awards. The total awards, in turn, will be determined by reference to
both corporate and individual components. The corporate component will
be determined by attainment of corporate goals (as established by the
committee) and the individual component will be determined by
attainment of individual goals (objectives mutually agreed upon between
participants and the division head and approved by the Chief Executive
Officer). The corporate component will range from 100% for the
highest level (the President and Chief Executive Officer) to 25% for
the lowest level, whereas the individual component will range from 0%
for the highest level to 75% for the lowest level.
The Plan also provides that, in order that the Chief Executive
Officer will own such number of shares of Company Common Stock as will
equal at the end of 5 years twice his current base salary and that the
executive vice presidents will own that number of shares of Company
Common Stock as will equal their respective current base salary at the
end of 5 years, the particular officer may utilize 50% or more of his
bonus awarded under the Plan in a particular year for the purchase of
Company Common Stock.
The amount of incentive compensation awards to the individuals
named in the Summary Compensation Table is included in the "Bonus"
column of that table. Payments of bonuses for 1995 pursuant to the Plan
were made January 1996.
PERSONAL BENEFITS
During the past fiscal year, no director, officer or principal
stockholder or members of their respective families received any banking
services or other benefits, including use of any staff, facilities or
properties of the Company, not directly related to job performance and not
generally available to all employees of the Company. Health insurance and
group life insurance are routinely provided all staff members.
RELATED PARTY TRANSACTIONS
The Bank has had, and expects in the future to have, transactions
in the ordinary course of business with directors and officers of the
Company and the Bank on the same terms as those prevailing at the time
for comparable transactions with others. The Bank has extended credit
to its directors and officers and their business interests. The total
of these loans was $1,631,403, $3,330,297, and $3,932,537 at December
31, 1993, 1994, and 1995, respectively, representing 1.7%, 3.4%, and
3.6% of equity capital at those dates. The highest aggregate amounts
outstanding on such loans during 1993, 1994, and 1995 were $1,794,037,
$4,189,790 and $4,650,773 which represented 1.9%, 4.3% and 4.3% of
equity capital at those interim dates.
All outstanding loans made by the Bank to such persons were made
in the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and, in the
opinion of management, do not present more than normal risk of
collectability or present other unfavorable features. Based upon the
information available to it, the Bank does not consider that any of the
officers or directors of the Bank or the Company had a material interest
in any transactions during the last year, except as stated above, or have
such an interest in any proposed transactions.
18
The law firm of Kowalczyk, Tolles, Deery and Johnston, of which
Director Andrew S. Kowalczyk, Jr. is a partner, performs legal services
for the Bank from time to time. Payments for services for 1995 totalled
$92,573. These services occur in the ordinary course of business and
at the same terms as those prevailing for comparable transactions with
other law firms.
PROPOSAL NUMBER 2
PROPOSAL TO RATIFY THE BOARD OF DIRECTORS ACTION IN SELECTION OF
KPMG PEAT MARWICK AS AUDITOR FOR THE COMPANY
The Board of Directors upon the recommendation of the Audit,
Compliance and Loan Review Committee has appointed KPMG Peat Marwick
as independent public accountants of the Company to examine the financial
statements for the fiscal year ending December 31, 1996. KPMG Peat
Marwick has served as the Company's independent public accountants since
January 1987. Ratification of such employment will require the affirmative
vote of the holders of a majority of the shares represented at the Meeting
in person or by proxy and entitled to vote. The Board of Directors
recommends a vote FOR Proposal Number 2. In the event the stockholders fail
to ratify this employment, it will be considered as a directive to the Board
of Directors to select other auditors for the current year.
Representatives of KPMG Peat Marwick are expected to be present
at the Meeting and will have an opportunity to make a statement if they
desire to do so. They will also be available to respond to appropriate
questions.
STOCKHOLDER PROPOSALS
Management anticipates mailing the proxy materials for the 1997
Annual Meeting on or about March 14, 1997. If any security holder
wishes a proposal to be considered for inclusion in the 1997 Proxy
Statement, this material must be received by the Chief Executive
Officer no later than November 15, 1996.
OTHER MATTERS
Management does not know of any other matters which may come
before the Meeting. However, if any matters properly come before the
Meeting, it is the intention of the persons named in the enclosed proxy
to vote such proxy in accordance with the recommendations of the Board
of Directors. It is important that proxies be returned promptly.
Therefore, the stockholders who do not expect to attend in person are
urged to mark, date, sign and return the enclosed proxy in the
accompanying postage paid envelope.
By Order of the Board of Directors
Daryl R. Forsythe
President and Chief Executive Officer
Joe C. Minor
Vice President, Chief Financial Officer
and Treasurer
Dated: March 18, 1996
19
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20
PROXY FOR 1996 ANNUAL MEETING OF NBT BANCORP INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
KNOWN ALL MEN BY THESE PRESENTS that I (we), the undersigned
Stockholder(s) of NBT Bancorp Inc. (the "Company"), do hereby nominate,
constitute and appoint John R. Huhtala and Josephine F. Johnson or any
one of them (with full power to act alone), my true and lawful attorney(s)
with full power of substitution, for me and in my name, place and stead to
vote all the Common Stock of said Company, standing in my name on its
books March 4, 1996, at the Annual Meeting of its Stockholders to be held
at Norwich Senior High School, Midland Drive, Norwich, New York 13815 on
April 20, 1996, at 11:00 a.m., or at any adjournments thereof, with all
the powers the undersigned would possess if personally present.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BELOW. IN
THE ABSENCE OF ANY DIRECTION, THE SHARES REPRESENTED HEREBY SHALL BE VOTED
TO FIX THE NUMBER OF DIRECTORS AT SIX, FOR THE ELECTION OF THE NOMINEES
LISTED, AND FOR RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
Comments/Address Changes: ___________________________________________
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Please mark your
[ X ] votes as in this
example.
FOR ALL WITHHOLD FROM
NOMINEES ALL NOMINEES
1) Election of Directors. [ ] [ ]
Fix the number of Directors
at six and the election of
nominees listed at right:
IF YOU DO NOT WISH YOUR SHARES
VOTED "FOR" A PARTICULAR NOMINEE,
DRAW A LINE THROUGH THAT PERSON'S
NAME AT RIGHT.
NOMINEES:
Peter B. Gregory
Paul O. Stillman
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE NOMINEES.
FOR AGAINST ABSTAIN
2) Approval of the [ ] [ ] [ ]
appointment of
KPMG Peat Marwick
as Auditor of the
Company for 1996.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR
APPROVAL.
In their discretion, the Proxies are authorized
to vote upon such other business as may properly come
before such meeting or any adjournment or postponement
thereof.
Mark box at right if comments or
address change have been noted on the [ ]
reverse side of this card.
SIGNATURE __________________________DATE_________
SIGNATURE __________________________DATE_________
NOTE: Please sign exactly as name appears hereon. Joint
owners should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.