SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to ss. 240.14a-12
IBT Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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 identify 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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IBT BANCORP, INC. [LOGO]
March 16, 2007
Dear Stockholder:
On behalf of the Board of Directors and management of IBT Bancorp,
Inc., I cordially invite you to attend our 2007 Annual Meeting of Stockholders
which will be held at the Irwin Masonic Hall, 417 Main Street, Irwin,
Pennsylvania, on Tuesday, April 17, 2007 at 2:00 p.m., local time. The attached
Notice of Annual Meeting and Proxy Statement describe the formal business we
expect to act upon at the Annual Meeting. During the Annual Meeting, I will
report on our operations. Our directors and officers, as well as a
representative of Edwards Sauer & Owens, P.C., our independent auditors, will be
present to respond to any questions you may have.
You will be asked to elect three directors and to ratify the
appointment of Edwards Sauer & Owens, P.C. as our independent auditors for the
fiscal year ending December 31, 2007. The Board of Directors has unanimously
approved each of these proposals and recommends that you vote FOR them.
Your vote is important, regardless of the number of shares you own and
regardless of whether you plan to attend the Annual Meeting. I encourage you to
read the enclosed proxy statement carefully and sign and return your enclosed
proxy card as promptly as possible. The failure to return your proxy could cause
a delay in the Annual Meeting and additional expense to the Company. A
postage-paid return envelope is provided for your convenience. Returning your
proxy will not prevent you from voting in person, but will assure that your vote
will be counted if you are unable to attend the Annual Meeting. If you do decide
to attend the Annual Meeting and feel for any reason that you want to change
your vote at that time, you will be able to do so. If you are planning to attend
the Annual Meeting, please let us know by marking the appropriate box on the
proxy card.
Sincerely yours,
/s/ Charles G. Urtin
Charles G. Urtin
President and Chief Executive Officer
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IBT BANCORP, INC.
309 MAIN STREET
IRWIN, PENNSYLVANIA 15642
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 17, 2007
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NOTICE IS HEREBY GIVEN that the 2007 Annual Meeting of Stockholders of IBT
Bancorp, Inc., will be held at the Irwin Masonic Hall, 417 Main Street, Irwin,
Pennsylvania, on Tuesday, April 17, 2007 at 2:00 p.m., local time, for the
following purposes:
1. To elect three directors;
2. To ratify the appointment of Edwards Sauer & Owens, P.C. as
our independent auditors for the fiscal year ending December
31, 2007; and
3. To transact any other business that properly comes before the
Annual Meeting.
The Board of Directors is not aware of any other business to come before the
Annual Meeting. Stockholders of record at the close of business on March 2, 2007
are the stockholders entitled to notice of and to vote at the Annual Meeting and
any adjournments thereof.
A copy of our Annual Report to Stockholders for the year ended December
31, 2006 is enclosed.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU
OWN. WE ENCOURAGE YOU TO VOTE BY PROXY SO THAT YOUR SHARES WILL BE REPRESENTED
AND VOTED AT THE ANNUAL MEETING EVEN IF YOU CANNOT ATTEND. ALL STOCKHOLDERS OF
RECORD CAN VOTE BY WRITTEN PROXY CARD. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE
NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM
YOUR RECORD HOLDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert A. Bowell
ROBERT A. BOWELL
SECRETARY
Irwin, Pennsylvania
March 16, 2007
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IMPORTANT: YOUR PROMPT RETURN OF PROXIES WILL SAVE US THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM AT THE ANNUAL MEETING. A
SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES.
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PROXY STATEMENT
OF
IBT BANCORP, INC.
309 MAIN STREET
IRWIN, PENNSYLVANIA 15642
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 17, 2007
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This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of IBT Bancorp, Inc. to be used at the 2007
Annual Meeting of Stockholders which will be held at the Irwin Masonic Hall, 417
Main Street, Irwin, Pennsylvania, on Tuesday, April 17, 2007, 2:00 p.m., local
time. The accompanying Notice of Annual Meeting of Stockholders and this Proxy
Statement are being mailed to stockholders on or about March 16, 2007.
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VOTING AND PROXY PROCEDURES
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WHO CAN VOTE AT THE ANNUAL MEETING
You are only entitled to vote at the Annual Meeting if our records show
that you held shares of our common stock, $1.25 par value (the "Common Stock"),
as of the close of business on March 2, 2007 (the "Record Date"). If your shares
are held by a broker or other intermediary, you can only vote your shares at the
Annual Meeting if you have a properly executed proxy from the record holder of
your shares (or their designee). As of the Record Date, a total of 5,882,040
shares of Common Stock were outstanding. Each share of Common Stock has one
vote.
VOTING BY PROXY
The Board of Directors is sending you this Proxy Statement for the purpose
of requesting that you allow your shares of Common Stock to be represented at
the Annual Meeting by the persons named in the enclosed Proxy Card. All shares
of Common Stock represented at the Annual Meeting by properly executed and dated
proxies will be voted according to the instructions indicated on the Proxy Card.
If you sign, date and return the Proxy Card without giving voting instructions,
your shares will be voted as recommended by the Company's Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF ITS NOMINEES FOR DIRECTOR
AND A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF EDWARDS SAUER & OWENS,
P.C. AS OUR INDEPENDENT AUDITORS.
If any matters not described in this Proxy Statement are properly presented
at the Annual Meeting, the persons named in the Proxy Card will vote your shares
as determined by a majority of the Board of Directors. If the Annual Meeting is
postponed or adjourned, your Common Stock may be voted by the persons named in
the Proxy Card on the new Annual Meeting dates as well, unless you have revoked
your proxy. The Company does not know of any other matters to be presented at
the Annual Meeting.
You may revoke your proxy at any time before the vote is taken at the
Annual Meeting. To revoke your proxy you must either advise the Company's
Secretary in writing before your Common Stock has been voted at the Annual
Meeting, deliver a later-dated proxy, or attend the Annual Meeting and vote your
shares in person. Attendance at the Annual Meeting will not in itself constitute
revocation of your proxy.
If you hold your Common Stock in "street name," you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker, bank or other nominee may allow
you to deliver your voting instructions via the telephone or the Internet.
Please see the instruction form provided by your broker, bank or other nominee
that accompanies this Proxy Statement.
VOTE REQUIRED
The Annual Meeting can only transact business if a majority of the
outstanding shares of Common Stock entitled to vote is represented at the Annual
Meeting. If you return valid proxy instructions or attend the Annual Meeting in
person, your shares will be counted for purposes of determining whether there is
a quorum even if you withhold your vote or do not vote your shares at the Annual
Meeting. Broker non-votes will be counted for purposes of determining the
existence of a quorum. A broker non-vote occurs when a broker, bank or other
nominee holding shares for a beneficial owner does not have discretionary voting
power with respect to the agenda item and has not received voting instructions
from the beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees, or vote in favor of all nominees
except nominees you specify as to which you withhold your vote. There is no
cumulative voting in the election of directors. Directors must be elected by a
plurality of the votes cast at the Annual Meeting. This means that the nominees
receiving the greatest number of votes will be elected. Votes that are withheld
and broker non-votes will have no effect on the outcome of the election.
In voting to ratify the appointment of Edwards Sauer & Owens, P.C. as our
independent auditors, you may vote in favor of the proposal, against the
proposal or abstain from voting. To be approved, this proposal requires the
affirmative vote of a majority of the votes cast at the Annual Meeting. Broker
non-votes and abstentions will not be counted as votes cast and will have no
effect on the voting on this proposal.
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PRINCIPAL HOLDERS OF THE COMMON STOCK
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Persons and groups beneficially owning in excess of 5% of the Common Stock
are required to file certain reports regarding their ownership with the
Securities and Exchange Commission. A person is deemed to be the beneficial
owner of shares of Common Stock if he or she has or shares voting or investment
power with respect to such shares or has the right to acquire beneficial
ownership of the shares at any time within 60 days from the Record Date. The
following table sets forth information regarding all persons or groups known to
us to beneficially own more than 5% of the Common Stock.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP COMMON STOCK
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S&T Bancorp, Inc. 475,174 (1) 8.1%
800 Philadelphia Street
Indiana, PA 15237
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(1) According to the amendment to the Schedule 13G filed by S&T Bancorp,
Inc. on February 12, 2007, all shares are held by its subsidiaries, 9th
Street Holdings, Inc., S&T Bank, and S&T Bancholdings, Inc.
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PROPOSAL I - ELECTION OF DIRECTORS
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Our Articles of Incorporation require the Board of Directors to be divided
into three classes, as nearly equal in number as possible, with each class to
serve for a three-year period, so that approximately one-third of the directors
are elected each year. The Board of Directors currently consists of nine
members, each of whom also serves as a director of our principal subsidiary,
Irwin Bank.
The Board of Directors has nominated Robert Rebich, Jr., Grant J. Shevchik
and Charles G. Urtin (collectively, the "Nominees") for terms of three years
each. The Nominees currently serve as directors of the Company. The Nominees
will serve for their respective terms or until their successors have been
elected and qualified.
The persons named as proxies in the enclosed proxy card intend to vote
"FOR" the election of the Nominees, unless the proxy card is marked to indicate
that such authorization is expressly withheld. Should one or more of the
Nominees withdraw or be unable to serve (which the Board of Directors does not
expect) or should any other vacancy occur in the Board of Directors, it is the
intention of the persons named in the enclosed proxy card to vote "FOR" the
election of such persons as may be recommended by the Board of Directors. If
there are no substitute nominees, the size of the Board of Directors may be
reduced.
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The following table sets forth information with respect to the nominees,
the other continuing directors and each executive officer, including for each
their name, positions with the Company, age, the year they first became a
director of IBT Bancorp, Inc. or Irwin Bank, the expiration of their current
term as a director, and the number and percentage of shares of the Common Stock
beneficially owned. Beneficial ownership of directors and executive officers of
the Company, as a group, is also set forth below.
SHARES OF
COMMON STOCK
AGE AT CURRENT BENEFICIALLY
DECEMBER 31, YEAR FIRST ELECTED TERM OWNED AS OF PERCENT
NAME AND POSITIONS 2006 OR APPOINTED(1) TO EXPIRE THE RECORD DATE(2) OF CLASS (%)
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BOARD NOMINEES FOR TERM TO EXPIRE IN 2010
Robert Rebich, Jr. 65 1991 2007 207,990 (3) 3.53%
Director, Chairman of the Board
Grant J. Shevchik 55 1992 2007 22,894 *
Director
Charles G. Urtin 60 1998 2007 66,629 (3) 1.22%
Director, President and
Chief Executive Officer
DIRECTORS CONTINUING IN OFFICE
Charles W. Hergenroeder 59 2004 2008 9,720 (3) *
Director
Richard L. Ryan 76 1968 2008 25,714 *
Director
Robert C. Whisner 78 1969 2008 166,276 2.83%
Director
Thomas E. Deger 56 2004 2009 8,500 *
Director
Richard J. Hoffman 61 2002 2009 16,024 (3) *
Director
John N. Brenzia 64 2004 2009 8,900 *
Director
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
Robert A. Bowell 51 -- -- 32,758 *
Executive Vice President,
Chief Lending Officer,
Secretary and Treasurer
David A. Finui 52 -- -- 17,838 *
Senior Vice President and
Chief Operating Officer of the
Bank
Raymond G. Suchta 58 -- -- 17,356 *
Senior Vice President and
Chief Financial Officer
All directors, nominees and 607,932 10.12%
executive officers of the
Company, including certain
executive officers of the Bank
as a group (12 persons)
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* Less than 1% of the common stock outstanding.
(footnotes continued on following page)
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(1) Refers to the year the individual first became a director of IBT
Bancorp, Inc. or Irwin Bank. All directors of the Bank as of August
1986 became directors of the Company when it was incorporated in August
1986.
(2) Unless otherwise noted, all persons and group named in the table above
have sole or shared voting or investment power with respect to the
shares listed in the table. Includes 120,684 shares of the Common Stock
that directors, nominees and executive officers have the right to
acquire pursuant to the exercise of options with 60 days of the Record
Date as follows: Mr. Urtin - 37,067 shares; Messrs. Rebich and Shevchik
- 12,000 shares each; Mr. Ryan - 9,750 shares; Messrs. Hoffman and
Whisner - 3,000 shares each; Messrs. Brenzia, Deger and Hergenroeder -
2,000 shares each; Mr. Bowell - 20,067 shares; Mr. Finui - 12,400
shares; and Mr. Suchta - 5,400 shares.
(3) Excludes 252,588 shares of Common Stock held by ITrust & Co. ITrust &
Co. was formed by the Bank to act as the record holder for the clients
of the Bank's trust department. Currently, Directors Hergenroeder,
Hoffman, Rebich and Urtin serve as the trust committee of ITrust & Co.
This committee acts as a fiduciary in directing the voting and
disposition of securities held in the accounts of trusts and estates.
This committee had the authority to exercise shared voting and
dispositive power with respect to 213,220 shares and sole voting and
dispositive power over 39,368 shares on the record date. Beneficial
ownership is disclaimed over all shares held by ITrust & Co.
BIOGRAPHICAL INFORMATION
The principal business experience of each director and executive officer is
set forth below. The executive officers and all directors have held their
present positions for five years unless otherwise stated.
NOMINEES FOR DIRECTORS:
ROBERT REBICH, JR., currently President of Amax Corporation, a property
management firm, retired in 1995 as the general manager of Parker Hannifin Corp.
GRANT J. SHEVCHIK is a physician with Partners in Health - UPMC.
CHARLES G. URTIN is President and Chief Executive Officer of the Company
and the Bank. The Board of Directors appointed Mr. Urtin President of the
Company in April 2000 and Chief Executive Officer of the Company in January
1999. Mr. Urtin became President and Chief Executive Officer of the Bank on
December 31, 1998. Prior to becoming President and Chief Executive Officer, Mr.
Urtin held several executive positions with the Company and the Bank.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
ABOVE NOMINEES.
CONTINUING DIRECTORS:
CHARLES W. HERGENROEDER is a partner in the law firm of Hergenroeder, Rega
and Sommer, LLC, Pittsburgh, Pennsylvania.
RICHARD L. RYAN is Chief Executive Officer and majority stockholder of Ryan
Moving and Storage, Inc. of Pittsburgh.
ROBERT C. WHISNER is the President, Chief Executive Officer and a director
of Airtek Incorporated, North Huntingdon, Pennsylvania, a manufacturer of
electric generators.
THOMAS E. DEGER is the President and majority stockholder in Highland
Carbide Tool Co., Inc., North Huntingdon, Pennsylvania.
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RICHARD J. HOFFMAN is the owner of Hoffman Enterprises, a real estate
development company, in Westmoreland and Allegheny Counties, Pennsylvania.
JOHN N. BRENZIA is the vice president and chief financial officer of Irwin
Car and Equipment. Prior to his position with Irwin Car and Equipment, Mr.
Brenzia served in the financial department of Elliott Turbomachinery Company, a
multi-national manufacturer of heavy machinery.
EXECUTIVE OFFICERS OF THE COMPANY OR THE BANK WHO ARE NOT DIRECTORS
ROBERT A. BOWELL was appointed in April 2000 by the Company's Board of
Directors to serve as Executive Vice President, Secretary and Treasurer of the
Company. In January 2002 he was also appointed Chief Lending Officer. Since
December 1998, Mr. Bowell has been an Executive Vice President, Secretary and
Treasurer of the Bank. Prior to such date, Mr. Bowell served as Executive Vice
President of the Bank.
DAVID A. FINUI was appointed on January 15, 2002, Senior Vice President and
Chief Operating Officer of the Bank. Previous to his new appointment, Mr. Finui
served as Vice President and Trust Officer of the Bank. Prior to his employment
at the Bank, Mr. Finui was Senior Vice President of Community Banking for First
Philson Bank, Somerset, Pennsylvania.
RAYMOND G. SUCHTA was appointed Vice President and Chief Financial
Officer of the Bank on January 15, 2002 and as Chief Financial Officer of the
Company in October 2002 and Senior Vice President in April 2003. Previous to his
employment at the Bank, Mr. Suchta was Chief Financial Officer and Treasurer of
GA Financial Inc., Pittsburgh, Pennsylvania. Mr. Suchta is a Certified Public
Accountant.
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CORPORATE GOVERNANCE
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DIRECTOR INDEPENDENCE
The Board of Directors has determined that Directors Rebich, Shevchik,
Hergenroeder, Ryan, Whisner, Deger, Hoffman and Brenzia are independent under
the independence standards of the American Stock Exchange on which the Common
Stock is currently listed. In determining independence, the Board of Directors
considered each director's deposit and lending relationships with Irwin Bank,
all of which were on market terms. In addition, the Board of Directors
considered legal work done for customers of the Bank by the law firm of which
Mr. Hergenroeder is a partner but determined that this relationship did not
affect his independence in view of the small amount of work done. There are no
members of the Audit Committee who do not meet the independence standards of the
American Stock Exchange for Audit Committee members and no members of the Audit
Committee are serving under any exceptions to these standards.
MEETINGS AND ATTENDANCE
The Board of Directors conducts its business through meetings of the Board
of Directors and through its committees. During the fiscal year ended December
31, 2006, the Board of Directors of the Company held 12 regular meetings and no
special meetings. No directors of the Company attended fewer than 75% of the
total meetings of the Board of Directors and committee meetings on which such
Board member served during this period. The Board of Directors encourages, but
does not require, directors to
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attend the annual meeting of stockholders. All directors of the Company attended
the 2006 annual meeting of stockholders.
BOARD COMMITTEES
In addition to other committees, the Company has a standing Audit
Committee. The Compensation Committee of the Bank also acts as the Compensation
Committee for the Company. The full Board of Directors acts as a Nominating
Committee.
AUDIT COMMITTEE. The Audit Committee, a standing committee, is currently
comprised of Directors Brenzia, Ryan, and Shevchik, three non-employee members
of the Board of Directors. All members of the Audit Committee are independent in
accordance with the listing standards of the American Stock Exchange. The Audit
Committee meets with the independent auditors, Edwards Sauer & Owens, P.C., to
discuss the annual audit and any related matters. The Audit Committee is further
responsible for internal controls for financial reporting. The Audit Committee
has adopted a written charter which is available to stockholders on our website
at www.ibtbancorp.biz. The Audit Committee met seven times in fiscal year 2006.
AUDIT COMMITTEE FINANCIAL EXPERT. The Board of Directors has determined
that Mr. Brenzia, a member of the Company's Audit Committee, is an "Audit
Committee Financial Expert" as that term is defined in the Securities Exchange
Act of 1934. The Board of Directors has also determined that Mr. Brenzia is
independent as independence is defined for audit committee members under the
rules of the American Stock Exchange.
COMPENSATION COMMITTEE. The Compensation Committee of the Bank is currently
comprised of Directors Hoffman, Rebich, Ryan and Shevchik. The members of the
Compensation Committee are independent in accordance with the listing standards
of the American Stock Exchange. This standing committee recommends to its Board
of Directors a salary for the president and chief executive officer and approves
officer salary adjustments. The committee's processes and procedures for
determining director and executive officer compensation are discussed in the
Compensation Discussion and Analysis and Director Compensation. The Compensation
Committee has not adopted a written charter. The Compensation Committee met five
times during fiscal year 2006.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The
Compensation Committee currently consists of Directors Hoffman, Rebich, Ryan and
Shevchik. No member of the Committee is, or was, an executive officer of another
company whose board of directors has a comparable committee on which one of the
Company's executive officers serves. None of the executive officers of the
Company is, or was during 2006, a member of a comparable compensation committee
of a company of which any of the directors of the Company is an executive
officer.
DIRECTOR NOMINATION PROCESS
The entire Board of Directors acts as a nominating committee for the
selection of nominees for Director. The Board of Directors met as a nominating
committee one time during the year ended December 31, 2006. We have not adopted
a written nominating committee charter.
By resolution of the Board of Directors, all nominees must be approved by a
majority of the independent directors. The Board of Directors believes that its
procedures comply with the requirements of the American Stock Exchange and
provide adequate assurance that nominations are approved by
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independent directors. The Board of Directors will consider director candidates
recommended by shareholders. Any such recommendations must be submitted to the
Secretary at least 120 days prior to the date of the Annual Meeting and should
include the nominee's name and qualifications for board membership. The Board
believes that all nominees for director, including shareholder nominees, should
have the highest personal and professional ethics and integrity; substantial
business or other professional experience in the market area served by IBT
Bancorp, Inc. and its subsidiary, Irwin Bank; commitment to enhancing the
business and prospects of the Company and the Bank; ability to work with
existing board members and management; ability to make appropriate level of
commitment of time and resources to their duties as director; an understanding
of banking and financial matters and the role of directors in the management of
the Company; and personal investment in the Common Stock.
STOCKHOLDER COMMUNICATIONS
The Board of Directors does not have a formal process for stockholders to
send communications to the Board. In view of the infrequency of stockholder
communications to the Board of Directors, the Board does not believe that a
formal process is necessary. Written communications received by the Company from
stockholders are shared with the full Board no later than the next regularly
scheduled Board meeting.
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COMPENSATION DISCUSSION AND ANALYSIS
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OVERVIEW
IBT Bancorp's Compensation Committee generally reviews, approves and
reports to the Board of Directors on compensation and related programs and
plans. The Compensation Committee is currently comprised of four directors, all
of whom are independent, as described under "Director Independence." The duties
of the Compensation Committee include:
o Recommending to the Board of Directors the compensation for IBT
Bancorp's President and Chief Executive Officer.
o Approving the compensation for and approving promotions of other
executive officers;
o Evaluating the annual performance of the President and Chief Executive
Officer;
o Establishing compensation policies for directors, officers and
employees generally; and
o Other post employment benefit plans
The Compensation Committee meets as necessary, with meetings called by the
Committee Chairman. The Committee may seek the advice of consultants and legal
counsel as it may deem necessary. No such advice, however, was sought during
2006.
OBJECTIVES
Our overall compensation objective is to design a competitive, total
compensation program to effectively attract, motivate, and retain executives.
The program recognizes team and individual accomplishments related to the
Company's annual performance and long-term strategic goals, consistent with
shareholder expectations. The Committee strives to meet these objectives while
maintaining market
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competitive pay levels within the industry and with companies approximating the
size and operating within the same general geographic area as IBT Bancorp, Inc.
Based upon the Committee's annual review of our compensation programs and market
information for other financial institutions of similar size in the surrounding
geographic areas, we believe that the total compensation opportunity offered to
our executives and employees provides them with a competitive economic
opportunity and income security and provides our shareholders with long-term
value.
ELEMENTS OF COMPENSATION
The Company's compensation program has five major components:
o Base Salary
o Bonuses
o Long-Term Equity-Based Incentive Compensation
o Retirement and Income Security Plans
o Other Benefits and Perquisites
FACTORS RELEVANT IN THE DETERMINATION OF COMPENSATION
GENERAL. Our base salary and benefits plans are designed to attract and
retain executives with a focus on long-term strategic goals and performance.
Bonuses are performance-driven rewards geared towards shorter-term performance.
The Compensation Committee has not established specific allocations of the
various elements of the compensation package. In general, the Committee has
determined that at least 70% of the total compensation package (including
bonuses and retirement benefits) should be base salary. Non-cash compensation is
primarily in the form of benefit plans. Other non-cash compensation, such as
stock options are designed to reward long-term performance and may not actually
be realized in the future as a significant part of the overall compensation
package due to the uncertainties inherent in the future value of the Company's
stock.
The Board considers qualitative and quantitative factors for determining
executive compensation packages. The Committee and the Board exercise discretion
in determining executive compensation packages especially when negative
financial performance cannot be attributed to the decisions or conduct of any
particular executive, such as when a properly underwritten loan becomes
nonperforming.
BASE SALARY. The committee reviews the job performance and the salary of
the President and Chief Executive Officer annually. The President and Chief
Executive Officer assists the committee in its review of the job performance and
salary of other executive officers but does not participate in discussions
regarding his own compensation. Elements considered during these reviews
include:
o Job scope and responsibilities;
o Company, unit and individual performance, and
o Salary rates for similar positions at similar companies.
The Committee reviews the scope of responsibilities of the position held by
the officer, the officer's experience and performance on the job; which is based
on the officer's management skills, judgment, application of knowledge and
information and support of corporate values and priorities.
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BONUSES. Executive officers may receive a percentage of their annual salary
as an annual cash bonus. The amount of the bonus is determined by the
performance of the Company during the previous year or at the Board's
discretion. Performance results are measured by earnings per share, growth in
non-interest income, control of non-interest expenses, achievement of budgeted
targets, and results of compliance exams by the Company's regulators. Particular
emphasis is placed on the Federal Financial Institutions Examination Council
report on Irwin Bank's performance and balance sheet composition relative to its
peer group of banks with assets between $300 million and $1 billion. Because the
Compensation Committee believes that community involvement is important to the
success of a community bank, each individual officer's involvement in the
community is also considered. While the Compensation Committee considers each of
the quantitative and non-quantitative factors described above, such factors are
not assigned a specific weight in evaluating the performance of the Company's
executives. Rather, all factors are considered in the aggregate in determining
the amount of annual incentive compensation to pay. The Compensation Committee
has significant discretion in awarding annual cash bonuses even if the
quantifiable factors considered for such awards fall short of performance goals.
LONG-TERM EQUITY-BASED INCENTIVE COMPENSATION. Ownership of the Company's
stock by executives who play a significant role in the success of the Company is
considered key to building long-term shareholder value. While executives are not
required to own Company stock, all of our executives are encouraged to invest in
the Company's stock and our executives have invested significant amounts of
their personal wealth in the Company's stock. The Compensation Committee
believes that equity-based compensation plans are an effective tool in aligning
executive interests with those of other stockholders. The Board of Directors are
the administrators of a stock option plan approved by stockholders in 2000. The
Board of Directors awards options, at their discretion, from time to time based
upon the factors listed in determining base salary and bonuses and the
performance of the Company's common stock. The Board, executive officers and
other officers of the Bank are eligible to receive incentive stock options under
the stock option plan, which is designed to comply with Section 422 of the
Internal Revenue Code. Exercise prices on options are based upon the closing
price of the Company Stock as reported on the American Stock Exchange, on the
day that the options are granted. Options vest immediately for Directors and
equally, over three years, for all other participants. Vesting is accelerated in
the event of a change in control. Once Options are earned and exercisable, they
remain exercisable for up to ten years from the original date of grant, subject
to continuation of service or employment with the Company. In determining the
timing and amounts of awards, the Committee seeks to recognize the relative
contribution of each executive officer to the success of the Company.
RETIREMENT AND INCOME SECURITY PLANS. Benefit plans, including health
insurance, retirement plans, and change of control plans, are traditional
compensation tools used by companies to attract and maintain employees of
outstanding abilities. Executive officers, other officers and full-time
employees of the Company are eligible to participate in the plans. The Company
pays the costs of the plans, which include; health care, life insurance, and a
defined benefit pension plan (Plan 1). The Company also sponsors a 401(k) plan,
in which the Company will match 25% of an employee's contribution to the plan,
up to a maximum of six percent of salary. The President and Chief Executive
Officer is the sole remaining participant in a supplemental defined benefit
retirement plan (Plan 2) instituted in 1994 after various plan assumptions were
changed which resulted in a reduction in benefits for older and long-standing
employees.
The four NEO's (Named Executive Officers) are all covered by change in
control severance agreements. Details of the payments that would be made under
those severance agreements in various circumstances are discussed elsewhere in
this proxy statement. Payments under the Severance Agreements are triggered upon
the termination of employment of the executive, absent just cause, in connection
with or within two years following a change in control of the Company or the
Bank. The Board of Directors
10
believes that severance protection is desirable in order to ensure that the NEOs
remain focused on the business of the Company in the event of a
change-in-control. The Company considers the level of severance protection
offered to our NEOs to be appropriate and consistent with the usual and
customary practices regarding these types of agreements within the financial
services industry. Such severance payments are not intended to exceed the
amounts that are deductible by the Company in accordance with Section 280G of
the Internal Revenue Code ("Code").
OTHER BENEFITS AND PERQUISITES. As a community-oriented bank, we believe
that it is important that our senior officers are visible in the community and
to our customers and employees. The President and Chief Executive Officer and
the Executive Vice President are paid a gasoline allowance. Both executives
receive a payment designed to compensate them for the taxes related to that
allowance. The Company maintains a corporate membership at a local country club.
The President and Chief Executive Officer, the Executive Vice President and the
Chief Operating Officer are named as members. The aggregate value of perquisites
and personal benefits per individual do not exceed $10,000.
ANNUAL EVALUATIONS
The Board conducts the evaluation of the President and Chief Executive
Officer. All other executive officers' evaluations are conducted by the
President and Chief Executive Officer. For the 2006 fiscal year, the President
and Chief Executive Officers salary was established based on the 2005
performance of the Company, the management of strategic objectives, and public
relations. Additionally, proxy statements were reviewed from publicly traded
financial institutions with assets ranging between $300 million and $1.0 billion
from the areas of Western Pennsylvania, West Virginia and Ohio, including 23
Pennsylvania banks, one West Virginia bank and nine Ohio banks. The President
and Chief Executive Officer received a 5% bonus for fiscal 2006. The Executive
Vice President, Chief Operating Officer and Chief Financial Officer each
received 7.5% bonuses.
Executive officers are primarily evaluated on weighted performance
objectives specific to their individual jobs and rated on a scale from 1 to 5.
The performance factor and percentage weighting for each of the named executive
officers are listed below;
Executive Vice President / Chief Lending Officer
Loan Program Development/Maintenance 20%
Strategic Objectives Management 20%
Management Performance 10%
Policy/Procedure Compliance 10%
Reporting/Communication 10%
Customer/Public Relations 10%
Internal Cooperation 10%
Loan Judgment 10%
Chief Financial Officer
Financial Systems Performance/Management 20%
Strategic Objectives Management 20%
Policy/Procedure Compliance 15%
Reporting/Communication 15%
Management Performance 10%
Customer/Public Relations 10%
Internal Cooperation 10%
11
Chief Operating Officer
Operating Plan Development/Implementation 20%
Strategic Objectives Management 20%
Management Performance 15%
Policy/Procedure Compliance 15%
Reporting/Communication 10%
Customer/Public Relations 10%
Internal Cooperation 10%
The Compensation Committee does not use any specific "benchmarking" with
other selected group of companies when determining compensation levels for its
executive officers. The Committee does review proxy statements from publicly
traded financial institutions that are also used for the President and Chief
Executive Officer. Based on the above scoring and peer group analysis, in 2006,
base salaries for the President and Chief Officer, Executive Vice President and
Chief Lending Officers, Chief Financial Officer, and Chief Operating Officer
were increased 4.88%, 4.44%, 15.79%, and 4.35% from the prior year. In addition,
the President and Chief Executive Officer, the Executive Vice President and
Chief Lending Officer, Chief Financial Officer, and Chief Operating Officer were
each granted stock option awards of 8,000, 5,000, 3,000, and 3,000 shares,
respectively, on April 17, 2006.
OTHER
The Company has never been required to restate performance measures upon
which performance-based compensation is based. Accordingly the Company has never
had to recover performance related compensation from an executive because of
restatements, or recalculations of goals.
Material increases in executive compensation would be based upon material
changes to the duties and responsibilities of the Named Executive Officer,
performance materially in excess of expectations or material changes in the
structure or size of the Company such as that following an acquisition. Material
decreases could be expected to occur in connection with material adverse events.
Bonuses and other performance based compensation are sensitive to the Company's
performance and could fluctuate materially as a result. No such material changes
or occurrences have occurred thus far.
Executive compensation paid or earned previously is not considered when
calculating or setting retirement benefits. All executives participate in
retirement plans available to all full time employees. Benefits are calculated
based upon base salary according to the provisions of those plans.
None of the types of compensation paid by the Company nor the amounts of
compensation paid result in any detrimental accounting treatments or detrimental
income tax treatments to the Company.
CONCLUSIONS
The Compensation Committee and the Board of Directors feel that a complete
and competitive total compensation plan is needed to attract and retain
qualified personnel, including our executives who are able to meet the short and
long-term strategic objectives of the Company and shareholder expectations.
While IBT Bancorp's and by extension Irwin Bank's executive compensation plan
may not be as elaborate as others, pay top of the range salaries, or include a
myriad of perquisites as other programs, the Committee believes that it has been
effective for achieving the Company's objectives and is in the long-term best
interests of our shareholders and has attracted executives that blend well with
the Board of Directors, the employees, and the customers of the Bank.
12
- --------------------------------------------------------------------------------
COMPENSATION COMMITTEE REPORT
- --------------------------------------------------------------------------------
The Compensation Committee has reviewed and discussed the foregoing
Compensation Discussion and Analysis with Management. Based on foregoing review
and discussions, the Compensation Committee recommended to the Board of
Directors that the foregoing Compensation Discussion and Analysis be included in
this proxy statement.
COMPENSATION COMMITTEE
Richard J. Hoffman
Robert Rebich, Jr.
Richard L. Ryan
Grant J. Shevchik
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EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE. The following table sets forth the cash and
non-cash compensation awarded to or earned during the last fiscal year by our
principal executive officer, principal financial officer and each other
executive officer whose total compensation (excluding compensation attributable
to changes in pension value and non-qualified deferred compensation earnings)
during the fiscal year ended December 31, 2006 exceeded $100,000 for services
rendered in all capacities to IBT Bancorp, Inc. and Irwin Bank. The Company does
not have any plans that provide for stock awards or non-equity incentive
compensation to the named executive officers.
CHANGE IN PENSION
VALUE AND
NONQUALIFIED
DEFERRED
OPTION COMPENSATION ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARDS (1) EARNINGS (2) COMPENSATION(3) TOTAL
- --------------------------- ---- ------ ----- ---------- ------------ --------------- -----
Charles G. Urtin 2006 $215,330 $ 10,750 $ 0 $ 47,581 $ 3,500 $266,411
President and Chief
Executive Officer
Raymond G. Suchta 2006 $108,354 $ 8,250 $ 0 $ 6,721 $ 0 $115,075
Chief Financial Officer
Robert A. Bowell 2006 $140,130 $ 10,575 $ 0 $ 11,672 $ 5,100 $156,902
Executive Vice President,
Secretary, Treasurer and
Chief Lending Officer
David A. Finui 2006 $119,570 $ 9,000 $ 0 $ 6,443 $ 0 $126,013
Senior Vice President
and Chief Operating
Officer of the Bank
(footnotes on following page)
13
- -------------------
(1) The Company did not recognize any expense for options granted in 2006.
(2) Consists of the change in actuarial present value of the Named Executive
Officer's accumulated benefit under the Company's defined benefit plans.
(3) Consists of tax reimbursement payments. The aggregate value of perquisites
and personal benefits did not exceed $10,000 for any named executive
officer.
GRANTS OF PLAN-BASED AWARDS. The following tables set forth certain
information with respect to plan-based awards granted to the Named Executive
Officers.
ALL OTHER
OPTION AWARDS: EXERCISE OR GRANT DATE FAIR
NUMBER OF BASE PRICE OF VALUE OF STOCK
GRANT SECURITIES UNDERLYING OPTION AND OPTION
UNAME DATE OPTIONS (#) AWARDS ($/SH) AWARDS(1)
- ----- ---- ----------- ------------- ---------
Charles G. Urtin 4/17/06 8,000 $19.985 $19,608
Raymond G. Suchta 4/17/06 3,000 19.985 7,353
Robert A. Bowell 4/17/06 5,000 19.985 12,255
David A. Finui 4/17/06 3,000 19.985 7,353
- -------
(1) Equals fair value of options calculated using the Black-Scholes Option
Pricing Model and the assumptions described in Note 19 of Notes to
Consolidated Financial Statements in the 2006 Annual Report to
Stockholders.
The Company's Stock Based Compensation Plan was approved by the
stockholders on April 18, 2000 and provides for granting of incentive stock
options within the meaning of Section 422 of the Internal Revenue Code. The Plan
is administered by the Board of Directors. The Board, from time to time,
determines the officers, directors, key employees and other persons who shall be
granted awards under the plan. The stock options granted to the Named Executive
Officers in 2006 have a ten year term and fully vest three years after the date
of grant. Options have no express performance criteria other than continued
employment (with limited exceptions for termination of employment, death,
disability, retirement, and change in control). Options have an implicit
performance criterion because the options have no value unless and until the
stock price exceeds the exercise price.
No options may be granted under the plan after ten years from the effective
date. The price at which an option may be exercised shall not be greater than
the fair market value of the Common Stock on the date the option is granted. All
exercise prices on all options granted to date have been the closing price of
the stock on the date the option was granted. The exercise prices were adjusted
to reflect the 100% stock dividend paid by the Company on November 16, 2006.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END. The following table sets
forth information concerning outstanding equity awards of the Named Executive
Officers at fiscal year end, as well as the value of such awards held by such
persons at the end of the fiscal year.
14
OPTION AWARDS
------------------------------------------------------------------------
NUMBER OF NUMBER OF SECURITIES
SECURITIES UNDERLYING UNDERLYING OPTION OPTION
GRANT UNEXERCISED OPTIONS UNEXERCISED OPTIONS EXERCISE EXPIRATION
NAME DATE EXERCISABLE UNEXERCISABLE PRICE DATE
- ---- ---- ----------- ------------- ----- ----
Charles G. Urtin 5/16/2000 16,000 $12.250 5/16/2010
5/16/2001 8,000 11.500 5/16/2011
5/21/2002 8,000 16.438 5/21/2012
9/02/2003 2,400 25.700 9/02/2013
4/17/2006 8,000 (1) 19.985 4/17/2016
Raymond G. Suchta 5/21/2002 2,000 $16.438 5/21/2012
9/02/2003 2,400 25.700 9/02/2013
4/17/2006 3,000 (1) 19.985 4/17/2016
Robert A. Bowell 5/16/2000 8,000 $12.250 5/16/2010
5/16/2001 4,000 11.500 5/16/2011
5/21/2002 4,000 16.438 5/21/2012
9/02/2003 2,400 25.700 9/02/2013
4/17/2006 5,000 (1) 19.985 4/17/2016
David A. Finui 5/16/2000 4,000 $12.250 5/16/2010
5/16/2001 2,000 11.500 5/16/2011
5/21/2002 3,000 16.438 5/21/2012
9/02/2003 2,400 25.700 9/02/2013
4/17/2006 3,000 (1) 19.985 4/17/2016
- --------
(1) Options become 33-1/3% vested on each of April 17, 2007, 2008 and 2009.
PENSION BENEFITS. The following table provides information with respect to
each defined benefit pension plan in which a Named Executive Officer may receive
payments or other benefits at, following, or in connection with retirement.
PRESENT
NUMBER OF VALUE OF PAYMENTS
YEARS CREDITED ACCUMULATED DURING LAST
NAME PLAN NAME SERVICE (1) BENEFIT (2) FISCAL YEAR
- ---- --------- ----------- ----------- -----------
Charles G. Urtin Plan #1 22 $345,414 N/A
Plan #2 12 72,402 N/A
Raymond G. Suchta Plan #1 5 26,740 N/A
Robert A. Bowell Plan #1 18 82,721 N/A
David A. Finui Plan #1 7 65,702 N/A
- --------
(1) Years of credited service equal the lesser of the Named Executive Officer's
actual years of service or the number of years that the plan has been in
existence.
(2) Assumes retirement at normal retirement age as defined in the Plan. Present
value is calculated using assumptions set forth in Note 15 of Notes to
Consolidated Financial Statements in the 2006 Annual Report to
Stockholders.
Irwin Bank maintained one non-contributory defined benefit pension plan for
its employees prior to 1995 (Plan #1). Employees are eligible to enter the plan
on October 15th or April 15th following the attainment of age 21 and the
completion of one year of service. In 1995, various plan assumptions were
changed which resulted in a reduction in benefits for older and long-standing
employees. To compensate for this, a supplemental non-qualified plan was
installed for those employees so affected (Plan #2). The Bank's funding policy
is to contribute annually an amount not to exceed that which can be deducted for
15
federal income tax purposes for Plan #1. Contributions are intended to provide
not only for benefits attributed to service to date, but also for those expected
to be earned in the future. Assets for the plans are primarily invested in U.S.
Government obligations, corporate obligations and equity securities whose
valuations are subject to market fluctuations.
Benefits under Plan #1 and #2 will be calculated at normal retirement at
age 65 as a monthly benefit equal to the sum of 1.1% of average monthly
compensation multiplied by years of service (with a maximum of 44 years), plus
0.65% of average monthly compensation in excess of the social security taxable
wage base for each year multiplied by years of service (not to exceed 35 years).
Effective October 15, 1994, the pension formula was revised to 0.8% rather than
1.1% of average monthly compensation, as noted above, for all employees, except
those who attained age 50 and completed 10 years of service prior to December
31, 1994.
Participants age 55 with 15 years of service are eligible for early
retirement equal to the Normal Retirement Benefit reduced 5/9% for each month
early for the first five years and 5/18% for each of the next sixty months that
payment precedes age 65.
The present value of accumulated plan benefits is calculated using 7.00%
interest and the 1983 Group Annuity Maturity Table.
Benefits are payable in the form of various annuity alternatives, including
a joint and survivor option. For the pension plan year ended December 31, 2006,
the highest permissible annual benefit under the Internal Revenue Code is
$175,000.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL. The Named
Executive Officers are parties to various agreements that provide for payments
in connection with terminations of their employment in certain specified
circumstances. The following table shows the prepayments that would be made to
the Named Executive Officers at, following or in connection with terminations of
their employment in the specified circumstances as of the last business day of
the last fiscal year.
16
INVOLUNTARY CHANGE-IN-
VOLUNTARY EARLY NORMAL NOT FOR CAUSE FOR CAUSE CONTROL
NAME AND PLAN TERMINATION RETIREMENT RETIREMENT TERMINATION TERMINATION TERMINATION DISABILITY DEATH
- ------------- ----------- ---------- ---------- ----------- ----------- ----------- ---------- -----
Charles G. Urtin
Severance Agreement(1) $ -- $ -- $ -- $ -- $ -- $600,815 $120,000 $416,160
Insurance Continuation(2) -- 48,179 -- -- -- -- -- --
Pension Plan(3) -- 464,639 617,270 -- -- -- -- --
Stock Option Plan(4) -- -- -- -- -- 19,608 -- --
Non-Qualified Plan(5) -- 73,981 98,770 -- -- -- -- --
Raymond G. Suchta
Severance Agreement(1) -- -- -- -- -- 83,247 60,062 200,208
Pension Plan(3) -- 36,363 53,829 -- -- -- -- --
Stock Option Plan(4) -- -- -- -- -- 7,353 -- --
Robert Bowell
Severance Agreement(1) -- -- -- -- -- 256,924 80,793 269,310
Pension Plan(3) -- 127,611 271,235 -- -- -- -- --
Stock Option Plan (4) -- -- -- -- -- 12,255 -- --
David A. Finui
Severance Agreement(1) -- -- -- -- -- 105,916 66,342 221,140
Pension Plan(3) -- 43,394 87,660 -- -- -- -- --
Stock Option Plan(4) -- -- -- -- -- 7,353 -- --
- ------
(1) Equals lump sum payment to which Named Executive Officer would be entitled
upon termination.
(2) Equals present value of anticipated payments through age 65 based on past
experience and using 3.50% discount value.
(3) Equals present value of anticipated payments using actuarial assumptions in
the 1994 Group Annuity Reserve Table and 5.00% discount rate.
(4) Equals fair value of unvested option calculated using Black-Scholes Option
Pricing Model and assumptions described in Note 19 of Notes to Consolidated
Financial Statements in the 2006 Annual Report to Stockholders.
(5) Present value of anticipated payments using actuarial assumptions in the
1984 Unisex Pension Table and 7.00% discount rate.
CHANGE IN CONTROL AGREEMENTS. Irwin Bank has entered into change in control
severance agreements with Messrs. Urtin, Suchta, Bowell and Finui, respectively.
The agreements are each for a three year term and may be renewed annually by the
board of directors upon a determination of satisfactory performance within the
board's sole discretion. The agreement may be terminated by the Bank for just
cause, as that term is defined in the agreement, or for no cause. If Messrs.
Urtin's, Bowell's, Finui's or Suchta's employment is terminated without just
cause in connection with, or within two years after, any change in control of
the Bank or the Company, such officer will be paid a lump sum equal to 2.99,
2.0, 1.0 or 1.0 times, respectively, of his average annual taxable compensation
paid during the five years prior to the change in control. In the event of a
change of control at December 31, 2006, Messrs. Urtin, Suchta, Bowell and Finui
would have received payments of approximately $600,815, $83,247, $256,924 and
$105,910, respectively.
MEDICAL INSURANCE CONTINUATION AGREEMENT. IBT Bancorp, Inc. has entered
into a Medical Insurance Continuation Agreement with Charles G. Urtin which
provides that if Mr. Urtin's employment is terminated by the Bank for any reason
or he retires prior to the date that Mr. Urtin shall attain age 65, Mr. Urtin
and his dependent family shall be eligible to continue to participate in medical
and dental insurance plans sponsored by the Bank or the Company and any
successor thereto, with the cost of such
17
premiums paid by the Bank until such time that Mr. Urtin and his spouse shall be
eligible for coverage under the Federal Medicare System or any successor
program.
STOCK OPTION PLAN. Under the Stock Option Plan, all unvested options become
immediately vested and exercisable upon a change-in-control.
- --------------------------------------------------------------------------------
DIRECTOR COMPENSATION
- --------------------------------------------------------------------------------
Set forth below is a table providing information concerning the
compensation of the directors of IBT Bancorp, Inc. who are not Named Executive
Officers for the last completed fiscal year (2006). The Company does not have
any plans providing for stock awards or non-equity incentive compensation to
directors. Directors do not participate in any pension or deferred compensation
plans offered by the Company.
FEES EARNED
OR PAID OPTION ALL OTHER
NAME IN CASH AWARDS (1) COMPENSATION TOTAL
---- ------- ---------- ------------ -----
John N. Brenzia $22,000 $2,451 $ -- $24,451
Thomas E. Deger 20,250 2,451 -- 22,701
Charles W. Hergenroeder 18,500 2,451 -- 20,951
Richard J. Hoffman 17,250 2,451 -- 19,701
Robert J. Rebich, Jr. 18,500 2,451 -- 20,951
Richard L. Ryan 20,750 2,451 -- 23,201
Grant J. Shevchik 19,750 2,451 -- 22,201
Robert C. Whisner 17,000 2,451 11,276 30,727
- -------
(1) Equals grant-date fair value of award calculated using the Black-Scholes
Option Pricing Model and the assumptions described in Note 19 of Notes to
Consolidated Financial Statements in the 2006 Annual Report which was the
amount recognized as expense for financial reporting purposes in 2006. At
December 31, 2006, directors had the following number of option awards
outstanding: Messrs. Rebich and Shevchik - 12,000 shares each; Mr. Ryan -
9,750 shares; Messrs. Hoffman and Whisner - 3,000 shares each; and Messrs.
Brenzia, Deger and Hergenroeder - 2,000 shares each.
The directors of IBT Bancorp, Inc. are not separately compensated. However,
each non-employee director of Irwin Bank & Trust Company received a fee of
$1,250 for each meeting attended for the year ended December 31, 2006. Each
member of a board committee (other than employees who are also directors)
receives a fee of $250 per committee meeting attended, except members of the
executive committee are paid a fee of $500 per meeting attended in person. For
the year ended December 31, 2006, board and committee fees totaled approximately
$154,000.
All directors of the Bank were, prior to 1995, eligible to defer receipt of
board fees earned prior to 1995 until a later date, such as following retirement
or reaching a certain age. Director Whisner participates in this program that
provides a guaranteed net rate of return by the Bank over a specified time
period for the fees deferred. During 2006, this program resulted in payments to
Director Whisner of $11,276.
The Bank pays life insurance premiums for Director Whisner. However, the
premiums on the policies are currently being paid by the dividends on the
policies.
18
Under the 2000 Stock Option Plan, each non-employee director was granted
options to purchase 2,250 shares of Common Stock in May 2000, 1,125 shares of
Common Stock in May 2001, 1,125 shares of Common Stock in May 2002, 500 shares
in September 2003 and 1,000 shares in April 2006. The exercise price of the
options is the fair market value of the Company's Common Stock on the effective
date of grant.
- --------------------------------------------------------------------------------
TRANSACTIONS WITH RELATED PERSONS
- --------------------------------------------------------------------------------
The Bank, like many financial institutions, has followed a policy of
granting various types of loans to officers, directors and employees. All loans
to executive officers, directors and immediate family members of such persons
have been made in the ordinary course of business and on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for the Bank's other customers except that employees of the Bank are entitled to
a one percentage point reduction in the rate of interest charged, and do not
involve more than the normal risk of collectibility, or present other
unfavorable features. The following table sets forth information with respect to
all loans in excess of $120,000 outstanding to executive officers or directors
at the employee rate during the fiscal year ended December 31, 2006
HIGHEST
OUTSTANDING BALANCE AT
NAME AND TITLE TYPE OF LOAN RATE BALANCE 12/31/2006
-------------- ------------ ---- ------- ----------
Charles G. Urtin Home Equity 4.490% $ 70,200 $ 53,297
President and Chief Executive Home Equity 5.75 85,000 85,000
Officer
David A. Finui Home Equity 5.490 165,627 159,301
Senior Vice President
The Board of Directors approves all loans to executive officers and
annually reviews all lines of credit. Mr. Urtin does not participate directly or
indirectly in the voting on his loan. All loans have an imbedded demand feature
obligating immediate repayment of the principal outstanding when the aggregate
amount of indebtedness from all sources exceeds the statutory limit set under
Regulation O.
- --------------------------------------------------------------------------------
PROPOSAL II -- RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
Edwards Sauer & Owens, P.C. was our independent auditors for the 2006
fiscal year. The Board of Directors has appointed Edwards Sauer & Owens, P.C. to
be the independent auditors for the fiscal year ending December 31, 2007,
subject to ratification by stockholders. The engagement of Edwards Sauer &
Owens, P.C. was approved in advance by the Audit Committee. A representative of
Edwards Sauer & Owens, P.C. is expected to be present at the Annual Meeting to
respond to stockholders' questions and will have the opportunity to make a
statement if the representative so desires.
AUDIT FEES. The aggregate fees billed by Edwards Sauer & Owens, P.C. for
professional services rendered for the audit of the Company's annual
consolidated financial statements and for the review of the consolidated
financial statements included in the Company's Quarterly Reports on Form 10-Q
for the fiscal years ended December 31, 2006 and 2005 were $89,900 and $88,555,
respectively.
19
AUDIT RELATED FEES. The aggregate fees billed by Edwards Sauer & Owens,
P.C. for assurance and related services related to the audit of the annual
financial statements and to the review of the quarterly financial statements for
the years ended December 31, 2006 and 2005 were $26,875 and $22,915,
respectively.
TAX FEES. The aggregate fees billed by Edwards Sauer & Owens, P.C. for
professional services rendered for tax compliance, tax advice or tax planning
for the years ended December 31, 2006 and 2005 were $10,968 and $10,832,
respectively.
ALL OTHER FEES. The aggregate fees billed by Edwards Sauer & Owens, P.C.
for professional services rendered for services or products other than those
listed under the captions "Audit Fees," "Audit-Related Fees," and "Tax Fees" for
the years ended December 31, 2006 and 2005 were $22,677 and $20,076,
respectively, and consisted of assistance in accounting matters, trust
examinations and assistance with benefit plans.
It is the Audit Committee's policy to pre-approve all audit and non-audit
services prior to the engagement of the Company's independent auditor to perform
any service. All of the services listed above for 2006 and 2005 were approved by
the Audit Committee prior to the service being rendered. No services were
approved pursuant to the de minimus exception of the Sarbanes-Oxley Act of 2002.
RATIFICATION OF THE APPOINTMENT OF THE ACCOUNTANTS REQUIRES THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE VOTES CAST BY THE STOCKHOLDERS OF THE COMPANY AT THE
ANNUAL MEETING. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF EDWARDS SAUER & OWENS, P.C. AS THE
COMPANY'S ACCOUNTANTS FOR THE 2007 FISCAL YEAR.
- --------------------------------------------------------------------------------
REPORT OF THE AUDIT COMMITTEE
- --------------------------------------------------------------------------------
For the fiscal year ended December 31, 2006, the Audit Committee: (i)
reviewed and discussed the Company's audited financial statements with
management, (ii) discussed with the Company's independent auditor, Edwards Sauer
& Owens, P.C., all matters required to be discussed under Statement on Auditing
Standards No. 61, and (iii) received Edwards Sauer & Owens, P.C. disclosures
regarding Edwards Sauer & Owens, P.C.'s independence as required by Independence
Standards Board Standard No. 1 and discussed with Edwards Sauer & Owens, P.C.
its independence. Based on the foregoing review and discussions, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2006.
AUDIT COMMITTEE:
Grant J. Shevchik- Chairman
John N. Brenzia
Richard L. Ryan
- --------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires our directors
and executive officers and the beneficial owners of more than 10% of the Common
Stock to file reports of ownership and changes
20
in ownership of their equity securities of the Company with the Securities and
Exchange Commission and to furnish us with copies of those reports. To the best
of our knowledge, all filings by our directors and executive officers were made
on a timely basis during the 2006 fiscal year except that all directors and
executive officers were late in filing Form 4s to report the receipt of the
stock options in April 2006. We are not aware of any beneficial owners of more
than 10% of the Common Stock.
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STOCKHOLDER PROPOSALS
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In order to be considered for inclusion in the Company's proxy statement
for the annual meeting of stockholders to be held in 2008, all stockholder
proposals must be submitted to the Secretary at the Company's executive office,
309 Main Street, Irwin, Pennsylvania 15642, on or before November 18, 2007. In
order to be considered for possible action by stockholders at the 2008 annual
meeting of stockholders, stockholder proposals not included in the Company's
proxy statement must be submitted to the Secretary of the Company, at the
address set forth above, no later than sixty days prior to the date of the 2008
annual meeting of stockholders.
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OTHER MATTERS
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The Board of Directors is not aware of any business to come before the
Annual Meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Annual Meeting, it
is intended that proxies in the accompanying form will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
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MISCELLANEOUS
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The cost of soliciting proxies will be borne by the Company. The Company
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers, and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
The Company's 2006 Annual Report to Stockholders accompanies this proxy
statement. Such Annual Report is not to be treated as a part of the proxy
solicitation material or as having been incorporated herein by reference except
to the extent specifically provided otherwise in this Proxy Statement. A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
2006 WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF THE RECORD DATE UPON
WRITTEN REQUEST TO THE SECRETARY, IBT BANCORP, INC., 309 MAIN STREET, IRWIN,
PENNSYLVANIA 15642.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert A. Bowell
ROBERT A. BOWELL
SECRETARY
Irwin, Pennsylvania
March 16, 2007
21
/X/ PLEASE MARK VOTES IBT BANCORP, INC.
AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS WITH- FOR ALL
APRIL 17, 2007 FOR HOLD EXCEPT
1. The election as director |_| |_| |_|
The undersigned hereby appoints the Board of of the nominees listed
Directors of IBT Bancorp, Inc. (the "Company"), or its below with terms to expire
designee, with full powers of substitution, to act as attorneys during the year listed:
and proxies for the undersigned, to vote all shares of
Common Stock of the Company which the undersigned is Robert Rebich (2010)
entitled to vote at the 2007 Annual Meeting of Stockholders Grant J. Shevchik (2010)
(the "Annual Meeting"), to be held at the Irwin Masonic Charles G. Urtin (2010)
Hall, located at 417 Main Street, Irwin, Pennsylvania on
Tuesday, April 17, 2007, at 2:00 p.m., local time, and at any INSTRUCTION: To withhold to vote authority for any
and all adjournments thereof, in the following manner: individual nominee, mark "For All Except" and write that
nominee's name on the space provided below.
________________________________________________________
FOR AGAINST ABSTAIN
2. To ratify the appointment |_| |_| |_|
of Edwards Sauer & Owens,
P.C. as independent accountants
for the Company for the fiscal
year ending December 31, 2007.
The Board of Directors recommends a vote "FOR" the above
listed propositions. ---
Please check box if you plan to attend the Annual Meeting.|_|
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S
BOARD OF DIRECTORS.
THIS SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF
NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE
VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER
BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS
PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE
BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO
BE PRESENTED AT THE ANNUAL MEETING.
----------------------------------------------------------
Please be sure to sign and date Date
this Proxy in the box below
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Stockholder sign above. Co-holder (if any) sign above.
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Detach above card, sign, date and mail in postage paid envelope provided.
IBT BANCORP, INC.
309 MAIN STREET
IRWIN, PENNSYLVANIA 15642
Should the above signed be present and elect to vote at the Annual Meeting, or at any adjournments thereof,
and after notification to the Secretary of the Company at the Annual Meeting of the stockholder's decision to
terminate this proxy, the power of said attorneys and proxies shall be deemed terminated and of no further force
and effect. The undersigned may also revoke this proxy by filing a subsequently dated proxy or by written
notification to the Secretary of the Company of his or her decision to terminate this proxy.
The abovesigned acknowledges receipt from the Company prior to the execution of this proxy of an
annual report, a Notice of Annual Meeting of Stockholders and a proxy statement dated March 16, 2007.
Please sign exactly as your name appears on this proxy. When signing as attorney, executor, administrator,
trustee, or guardian, please give your full title. If shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY
PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION
WITH THE PROXY IN THE ENVELOPE PROVIDED.
____________________________________
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