SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
BNH BANCSHARES, 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)
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pursuant to Exchange Act Rule 0-11:*
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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BNH BANCSHARES, INC.
209 CHURCH STREET
NEW HAVEN, CONNECTICUT 06510
(203) 498-3500
March 19, 1997
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders of
BNH BANCSHARES, INC., which will be held at The New Haven Lawn Club, 193 Whitney
Avenue, New Haven, Connecticut 06511 on Tuesday, April 29, 1997, at 10:00 a.m.
It is extremely important that your shares be represented at this meeting.
Therefore, even if you expect to attend the meeting, we hope that you will sign
the enclosed Form of Proxy and return it promptly in the enclosed postage paid
envelope. You may revoke the Proxy later and vote personally if you are able to
attend the meeting.
Sincerely,
/s/ GEORGE M. DERMER
--------------------------------------------
GEORGE M. DERMER
Chairman of the Board of Directors
/s/ F. PATRICK MCFADDEN, JR.
--------------------------------------------
F. PATRICK MCFADDEN, JR.
President and Chief Executive Officer
BNH BANCSHARES, INC.
209 CHURCH STREET
NEW HAVEN, CONNECTICUT 06510
(203) 498-3500
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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To the Holders of
Shares of Common Stock:
NOTICE IS HEREBY GIVEN that pursuant to the call of its directors, the
Annual Meeting of Shareholders of BNH BANCSHARES, INC. (the "Company") will be
held at The New Haven Lawn Club, 193 Whitney Avenue, New Haven, Connecticut
06511 on Tuesday, April 29, 1997, at 10:00 a.m., for the purpose of considering
and voting upon the following matters:
1. To elect the fourteen nominees for directors listed in the Proxy Statement
dated March 19, 1997 accompanying the notice of the meeting; and
2. To approve an amendment increasing the aggregate number of shares of the
Company's Common Stock authorized for issuance under the BNH Bancshares,
Inc. 1992 Stock Incentive Plan; and
3. To ratify the selection of Coopers & Lybrand L.L.P. as independent
accountants for the current fiscal year; and
4. To transact such other business as may properly come before the meeting or
an adjournment thereof.
Only those shareholders of record at the close of business on March 3, 1997
shall be entitled to notice of and to vote at the meeting.
By Order of the Board of Directors
/s/ EVELYN R. MILLER
-------------------------------------------
EVELYN R. MILLER,
Secretary
WE URGE YOU TO 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.
BNH BANCSHARES, INC.
209 CHURCH STREET
NEW HAVEN, CONNECTICUT 06510
(203) 498-3500
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PROXY STATEMENT
APPROXIMATE DATE OF MAILING TO SHAREHOLDERS: MARCH 19, 1997
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INTRODUCTION
The following is a proxy statement by the Board of Directors of BNH
BANCSHARES, INC. (the "Company") in connection with the solicitation of proxies
for use at its Annual Meeting of Shareholders scheduled for April 29, 1997.
At such meeting, the Company's shareholders will be asked to: (1) elect
directors; (2) approve an amendment increasing the aggregate number of shares of
the Company's Common Stock authorized for issuance under the BNH Bancshares,
Inc. 1992 Stock Incentive Plan; (3) ratify the selection of Coopers & Lybrand
L.L.P. as independent accountants for the Company for the current fiscal year;
and (4) transact such other business as may properly come before the Annual
Meeting.
The Company has 3,690,491 shares of Common Stock outstanding and entitled
to vote at its Annual Meeting. Each share of Common Stock is entitled to one
vote on each question to be presented at the Annual Meeting. A plurality of the
vote cast by the shares of Common Stock entitled to vote, in person or by proxy,
at the Annual Meeting will elect directors as long as a quorum is present. A
quorum consists of a majority of the votes entitled to be cast on a question. If
a quorum exists, action on the amendment to the 1992 Stock Incentive Plan and
the ratification of the employment of independent accountants will be approved
if votes, in person or by proxy, cast by common shareholders favoring the action
exceed the votes cast by common shareholders opposing the action. In certain
circumstances, a shareholder will be considered to be present at the Annual
Meeting for quorum purposes, but will not be deemed to have voted in the
election of directors or in connection with other matters presented for approval
at the Annual Meeting. Such circumstances will exist where a shareholder is
present but specifically abstains from voting, or where shares are represented
at a meeting by a proxy conferring authority to vote on certain matters but not
for the election of directors or on other matters. Under Connecticut law, such
abstentions and non-votes have a neutral effect on the election of management's
nominees for directors and on the approval or disapproval of the other matters
presented for shareholder action.
The Board of Directors of the Company has fixed March 3, 1997 as the record
date for the determination of the shareholders entitled to vote at that Meeting.
The proxies of shareholders are being solicited by the Board of Directors. A
shareholder giving a proxy pursuant to this solicitation may revoke it at any
time prior to its exercise by giving written notice to the Company, by appearing
at the Annual Meeting on April 29, 1997 and requesting withdrawal of the proxy,
or by giving a proxy bearing a later date. If a proxy is properly signed and is
not revoked by the shareholder, it will be voted at the Annual Meeting and such
vote will be cast in accordance with such shareholder's direction.
1
The cost of soliciting proxies will be borne by the Company. In addition to
solicitations by mail, some directors, officers and regular employees of the
Company's subsidiary, The Bank of New Haven (the "Bank"), without extra
remuneration, may conduct solicitations by telephone and personal interview. The
Company may also request brokers, custodians, nominees and fiduciaries to
forward proxy solicitation material to the beneficial owners of shares held of
record by such persons, and will reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.
The Company has engaged ChaseMellon Shareholder Services, L.L.C. to assist
it in the distribution of proxies. Pursuant to this engagement, ChaseMellon
Shareholder Services, L.L.C. will request brokers, custodians, nominees and
fiduciaries to forward proxy solicitation material to beneficial owners of
shares held of record by such persons. ChaseMellon Shareholder Services, L.L.C.
will receive a fee of approximately $500, plus expenses, for such services.
ELECTION OF DIRECTORS
(PROPOSAL 1)
NOMINEES
Pursuant to the terms of the Company's Bylaws, the Board of Directors has
set the size of the Board at fourteen (14) effective as of the 1997 Annual
Meeting of Shareholders. Accordingly, there are fourteen (14) nominees for
election as directors of the Company at the 1997 Annual Meeting of Shareholders
to serve until the next Annual Meeting of Shareholders of the Company and until
their successors shall have been elected and shall have qualified. Each of the
nominees is currently serving as a director of the Company. Victor B. Hallberg,
who served as a Director of the Company and the Bank since their formation,
submitted his resignation from those positions, effective January 1, 1997. The
Company wishes to thank Mr. Hallberg for his many years of service. The Board of
Directors and management also note with deep regret the passing of Karl J.
Jalbert in November, 1996. Mr. Jalbert had served as a Director of the Company
and the Bank since 1989.
The persons named in the form of proxy to represent shareholders at the
Annual Meeting are Theodore F. Hogan, Jr., Carl M. Porto and Cheever Tyler. In
the event that any nominee for director should become unavailable for election
for any reason, the persons named in the form of proxy will consult with
management of the Company and use their discretion in voting the shares
represented by such proxies. If a quorum is present, a plurality of the vote
cast by the holders of shares of Common Stock entitled to vote, in person or by
proxy, will elect directors. The name of each nominee for director, his or her
principal occupation for the previous five years, his or her other positions
with the Bank and the Company, and his or her age and period of service as a
director of the Company are set forth below.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR LISTED BELOW.
NAME, PRINCIPAL SERVED AS A
OCCUPATION AND DIRECTOR OF
POSITION WITH THE THE COMPANY
COMPANY AND THE BANK AGE SINCE
-------------------- --- ------------
Stephen P. Ahern......................................... 66 1989
Director of the Company and the Bank; Vice
President of UNICCO Security Services, Inc.
(formerly known as Ogden Allied Security
Services), a private security service company. Mr.
Ahern also is a director of Birmingham Utilities,
Inc.
Martin R. Anastasio...................................... 55 1985
Director of the Company and the Bank; Principal
and Vice President, Weinstein & Anastasio, P.C.,
Certified Public Accountants
2
NAME, PRINCIPAL SERVED AS A
OCCUPATION AND DIRECTOR OF
POSITION WITH THE THE COMPANY
COMPANY AND THE BANK AGE SINCE
-------------------- --- ------------
Edward M. Crowley...................................... 40 1996
Director of the Company and the Bank; President,
Dichello Distributors, Inc., 1994 to present;
General Sales Manager, Central Distributors of
Beer, Inc., 1978 to 1993
James J. Cullen........................................ 49 1996
Director of the Company and the Bank; President &
Chief Executive Officer, Hospital of Saint
Raphael, August, 1991 to present; Executive Vice
President of the Hospital, January, 1989 to
August, 1991
George M. Dermer....................................... 79 1985
Chairman of the Board of Directors of the Company
and the Bank; Retired President, Kramer Fur Co.,
Inc., Kramer Apparel, Inc. and Peerless Fur
Mfg.Co., Inc.
Thomas M. Donegan, P.E................................. 55 1985
Director of the Company and the Bank; President,
Donegan and Company, Inc. (management consulting);
President and Chief Executive Officer, Advanced
Executive Aircraft, Inc.; Executive Vice President
and Chief Operating Officer, Capital Delta
Partners, Inc. (distributor of aircraft parts),
from May 1, 1994 to present
Theodore F. Hogan, Jr.................................. 64 1985
Director of the Company and the Bank; Retired;
Executive Assistant to the Mayor, City of New
Haven, 1992 to January, 1994; Retired Director,
Office of Urban Affairs, Southern New England
Telephone Co.
Jean G. Lamont......................................... 52 1996
Director of the Company and the Bank; Head of
School, The Foote School, New Haven, July 1, 1992
to present; Head of the Upper School, The
Allen-Stevenson School, New York, NY, September 1,
1981 to June 30, 1992
Lawrence M. Liebman.................................... 66 1985
Director of the Company and the Bank; Former
Attorney-at-Law (retired August, 1995); Private
Investor; Chairman, U.S. Reduction Company
(secondary aluminum smelting company); former
trustee of various Blanchard mutual funds
F. Patrick McFadden, Jr................................ 59 1989
President, Chief Executive Officer and Director of
the Company and the Bank. Mr. McFadden also is a
director of The United Illuminating Company.
Carl M. Porto.......................................... 54 1988
Director of the Company and the Bank;
Attorney-at-Law, Principal, Parrett, Porto, Parese
& Colwell, P.C.
Vincent A. Romei....................................... 63 1985
Director of the Company and the Bank; General
Partner, Colony Inn Hotel; Partner, Bernhard
Associates (real estate); formerly Executive Vice
President of the Bernhard Group
(construction-related companies), 1965 to 1991
3
NAME, PRINCIPAL SERVED AS A
OCCUPATION AND DIRECTOR OF
POSITION WITH THE THE COMPANY
COMPANY AND THE BANK AGE SINCE
-------------------- --- -----------
Stanley Scholsohn...................................... 66 1985
Director of the Company and the Bank; former
Secretary-Treasurer, Star Services, Inc. (health
and beauty aid distributors)
Cheever Tyler.......................................... 59 1989
Director of the Company and the Bank; President,
Partnership for Connecticut Cities and The
Nonprofit Strategies Group, 1994 to present;
Attorney-at-law, Former Partner, Wiggin & Dana
SECURITY OWNERSHIP
The following table sets forth information as of March 3, 1997 with respect
to those persons known to the Company to be the beneficial owners of more than
5% of the Company's Common Stock:
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (a) CLASS (b)
- ------------------- ------------------------ ----------
Cumberland Associates............... 292,500 (c) 7.93%
1114 Avenue of the Americas
New York, NY 10036
Franklin Mutual Advisers, Inc....... 319,750 (d) 8.70%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Kennedy Capital Management, Inc..... 205,000 (e) 5.56%
10829 Olive Boulevard
St. Louis, MO 63141-7739
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(a) Unless otherwise indicated, each person has sole voting and sole
dispositive power with respect to the shares shown.
(b) The percentages shown are calculated on the basis of the number of
outstanding shares of the Company's Common Stock on March 3, 1997.
(c) Cumberland Associates is a limited partnership engaged in the business of
managing, on a discretionary basis, ten securities accounts. According to
information provided to the Company, Cumberland Associates exercises sole
dispositive and voting power with respect to 251,750 shares and shared
dispositive and voting power with respect to 40,750 shares.
(d) Franklin Mutual Advisers, Inc. ("FMA") is an investment advisor registered
under the Investment Advisors Act of 1940. One or more of FMA's advisory
clients is the legal owner of the shares shown. FMA has sole dispositive
and voting power with respect to shares pursuant to investment advisory
agreements with its clients.
(e) Kennedy Capital Management, Inc. is an investment advisor with
discretionary accounts for investment purposes. According to information
provided to the Company, Kennedy Capital Management, Inc. exercises sole
dispositive power with respect to the shares shown, sole voting power with
respect to 110,000 shares and no voting power with respect to 95,000
shares.
4
The following table sets forth for each director, nominee for director and
for each Named Executive Officer (see page 8) information pertaining to his or
her beneficial ownership of the Company's Common Stock as of March 3, 1997. Each
such person has sole investment power and voting power over shares beneficially
owned except where shared ownership is indicated below.
Amount and Nature
of Beneficial Ownership Percent of
NAME of Common Stock Common Stock
- ---- ----------------------- ------------
Stephen P. Ahern....................... 7,781(a)* **
Martin R. Anastasio.................... 20,610(b)* **
Edward M. Crowley...................... 500(c) **
James J. Cullen........................ 725(d) **
George M. Dermer....................... 16,284(e)* **
Thomas M. Donegan, P.E................. 2,460(f)* **
Theodore F. Hogan, Jr.................. 7,273(g)* **
Jean G. Lamont......................... 250(h) **
Lawrence M. Liebman.................... 16,872(i)* **
F. Patrick McFadden, Jr................ 27,550(j) **
Carl M. Porto.......................... 19,953(k)* **
Vincent A. Romei....................... 41,949(l)* 1.11%
Stanley Scholsohn...................... 22,960(m)* **
Cheever Tyler.......................... 2,950* **
John F. Trentacosta.................... 10,440(n) **
Lorraine K. Young...................... 8,329(o) **
- --------------
* Includes 1,250 shares under stock options that are exercisable within sixty
days.
** Beneficially owns less than one percent (1%) of the Company's Common Stock
then outstanding.
(a) Includes 281 shares owned by Ahern Family Limited Partnership, of which Mr.
Ahern is a general partner.
(b) Includes 3,819 shares owned by Weinstein & Anastasio, P.C. Pension Plan and
6,375 shares owned by Weinstein & Anastasio, P.C. Profit Sharing Plan, for
both of which Mr. Anastasio is a Trustee for which he shares voting and
investment power, 920 shares owned in the aggregate by members of Mr.
Anastasio's family and 8,246 shares owned by Mr. Anastasio's wife in which
Mr. Anastasio does not have voting and investment power.
(c) Includes 250 shares under stock options that are exercisable within sixty
days.
(d) Includes 475 shares in an individual retirement account ("IRA") for the
benefit of Mr. Cullen and 250 shares under stock options that are
exercisable within sixty days.
(e) Includes 8,328 shares owned by Mr. Dermer's wife in which Mr. Dermer shares
voting and investment power.
(f) Includes 84 shares owned jointly by Mr. Donegan with his wife, 1,042 shares
held in a retirement fund, 42 shares in an IRA for Mr. Donegan's benefit
and 42 shares in an IRA for Mrs. Donegan's benefit.
(g) Includes 4,368 shares owned jointly by Mr. Hogan and his wife and 783
shares owned by his wife in which Mr. Hogan shares voting and investment
power.
5
(h) Represents 250 shares under stock options that are exercisable within sixty
days.
(i) Includes an aggregate of 8 shares owned by Mr. Liebman as custodian for his
son and 352 shares in an IRA for Mr. Liebman's benefit.
(j) Includes 26,527 shares under stock options that are exercisable within
sixty days, 887 shares held in various retirement funds for Mr. McFadden's
benefit and 136 shares allocated to Mr. McFadden through his contributions
and the Company's matching contributions to the Company's 401(k) Profit
Sharing Plan.
(k) Includes 1,643 shares owned by the Porto Tire and Auto Pension Plan of
which Mr. Porto is Trustee and 6,410 shares owned by the Parrett, Porto,
Parese & Colwell Pension Profit Sharing Plan, over which shares Mr. Porto
exercises no voting power, 8,317 shares owned by the Carl Porto, Grantor,
Retained Income Trust, of which Mr. Porto is Trustee, and 65 shares in an
IRA for the benefit of Mr. Porto and his wife.
(l) Includes 14,250 shares owned jointly by Mr. Romei and his wife and 21,106
shares in an IRA for the benefit of Mr. Romei.
(m) Includes 21,710 shares in the aggregate owned by Mr. Scholsohn's family.
(n) Includes 5,647 shares under stock options that are exercisable within sixty
days and 1,093 shares allocated to Mr. Trentacosta through his
contributions and the Company's matching contributions to the Company's
401(k) Profit Sharing Plan.
(o) Includes 2,675 shares under stock options that are exercisable within sixty
days, 715 shares in an IRA for the benefit of Ms. Young, 164 shares
allocated to Ms. Young through her contributions to the Company's 401(k)
Profit Sharing Plan, and 28 shares owned by Ms. Young's son, over which she
has no voting or investment power.
Including the shares beneficially owned by the nominees as shown in the
preceding table, all of the executive officers and directors of the Company as a
group (19 persons) owned beneficially as of March 3, 1997, 226,981 shares of the
Company's Common Stock, including 65,164 shares under options that are
exercisable within sixty days of March 3, 1997, representing 6.04% of the
Company's Common Stock then outstanding.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company met 8 times during 1996 and, together
with three additional individuals, served as members of the Board of Directors
of the Bank. The Bank Board met 13 times during the year. Each incumbent
director of the Company or the Bank, with the exception of Mr. Liebman, attended
75% or more of the total of meetings of the Boards of Directors and meetings of
all Committees of the Boards on which he or she served during 1996. Members of
all Committees are elected annually. During 1996, the Company's and the Bank's
Boards of Directors maintained the Committees referred to below in addition to
the Loan Committee of the Bank's Board of Directors.
The Company's Executive Committee presently consists of Messrs. Dermer,
Liebman, McFadden, Porto, Romei and Scholsohn. In addition to the foregoing
individuals, the Bank's Executive Committee includes Thomas J. Cahill and John
F. Trentacosta. The Executive Committee generally acts on behalf of the Board of
Directors. Members of the Executive Committee are ex officio members of all
committees of the Board of Directors, except the Salary and Benefits Committee.
The Executive Committee met 12 times during 1996.
The Company's Audit Committee presently consists of Messrs. Porto, Cullen,
Hogan, Romei and Tyler and Ms. Lamont. The Bank's Audit Committee is comprised
of the same individuals. The Audit Committee is responsible for reviewing the
operations and financial position of the Company and the Bank. The Audit
Committee met four times during 1996.
6
The Company's Salary and Benefits Committee presently consists of Messrs.
Liebman, Cullen, Dermer, Hogan, Porto and Romei. The same individuals serve as
the members of the Bank's Salary and Benefits Committee. The Salary and Benefits
Committee is responsible for approving compensation for the Bank's executive
officers and administering the employee and director stock compensation plans.
The Salary and Benefits Committee met five times in 1996.
The Nominating Committees of the Company and the Bank presently consist of
Messrs. Dermer and Porto. The Nominating Committees consider candidates for
nominees as directors of the Company and the Bank. The Nominating Committee met
three times during 1996. The Nominating Committee will consider nominees
recommended by shareholders but has no formal procedure for considering nominees
recommended by shareholders.
COMPENSATION OF DIRECTORS
During the period January 1 through April 22, 1996, for each Bank Board
meeting attended, non-employee directors received $350. The Chairman of the
Board and the Chairman of the Audit and Loan Committees each received a $150 per
month retainer. Each non-employee director received $150 for each committee
meeting of the Board attended, with the exception of Executive Committee
meetings. All six non-employee members of the Executive Committee received a
monthly retainer of $450. In addition, Chairmen of the various committees other
than Loan and Audit Committees received $150 for each meeting chaired in
addition to a $150 attendance fee.
Effective April 23, 1996, directors' fees were increased to provide an
annual retainer of $5,000 for the Chairman of the Board and a $2,000 annual
retainer for all other directors. An additional $750 annual retainer is now paid
to Board members who serve on the Executive Committee and as the chair of a
committee. Non-employee Executive Committee members now receive $350 for each
Executive Committee meeting attended, and the chairs of other committees receive
a fee of $250 for each committee meeting chaired.
STOCK OPTION PLAN FOR NON-Employee Directors
At the 1992 Annual Meeting of Shareholders, the shareholders of the Company
approved the adoption of the BNH Bancshares, Inc. Stock Option Plan for
Non-Employee Directors (the "Director Option Plan"). The Director Option Plan is
administered by the Salary and Benefits Committee of the Board of Directors.
Commencing on June 30, 1992 and on each June 30th thereafter during the
10-year term of the Director Option Plan, each non-employee director of the
Company is granted a non-qualified stock option to purchase 250 shares of the
Company's Common Stock (the "Annual Options"). The number of shares has been
adjusted from the former annual grant of 1,000 shares, reflecting the effects of
the Company's one-for-four reverse stock split which had an effective date of
May 2, 1996. The exercise price for each Annual Option is the greater of the
fair market value of the Company's Common Stock on the date of grant or the par
value of the Common Stock on the date of exercise. Annual Options are
exercisable in full following six months from their grant date and expire ten
years from the grant date. However, Annual Options become immediately
exercisable in full upon the director's withdrawal from the Board of Directors
due to death, disability or retirement as defined in the Director Option Plan.
Payment of the exercise price may be made in cash, previously acquired shares of
Common Stock equal in value to the exercise price or a combination of cash and
Common Stock.
The Director Option Plan also provides that each non-employee director of
the Company may elect to receive non-qualified stock options (the "Deferred
Compensation Options") in lieu of all or part of the retainers and fees payable
to the director for service on the Board of Directors and the Board of Directors
of any subsidiary of the Company and their respective committees
("Compensation").
As of March 3, 1997, 13,250 shares of Common Stock were reserved for
issuance upon the exercise of outstanding Annual Options at exercise prices
ranging from $5.00 to $7.375 per share (adjusted to reflect the effects
7
of the Company's one-for-four reverse stock split) and 75,541 shares remain
available for grants of awards under the Director Option Plan in 1997, subject
to adjustment for stock splits or similar capitalization changes. None of the
directors have elected to receive Deferred Compensation Options in lieu of
Compensation. Shares subject to options which lapse without having been
exercised become available for new grants.
The Board of Directors may discontinue or amend the Director Option Plan at
any time. However, without shareholder approval, the Board of Directors may not
amend the Director Option Plan to increase the number of shares of Common Stock
as to which options may be granted annually under the Plan, modify the
requirements for participation in the Plan, extend the term of the Plan or the
option periods provided therein, or decrease the option price or otherwise
materially increase the benefits under the Plan. The Director Option Plan may
not be amended more often than once every six months except to comply with
changes in tax laws.
COMPENSATION OF EXECUTIVE OFFICERS
All of the executive officers of the Company are currently officers of the
Bank. The Company has no existing plan or arrangement to pay any remuneration to
such officers in addition to the compensation that they will receive from the
Bank in their respective capacities as officers of the Bank. The table below
sets forth a summary for the last three (3) fiscal years of the cash and
non-cash compensation paid or awarded by the Bank to the Chief Executive
Officer, the Chief Financial Officer and one other Executive Vice President, who
were the only three executive officers whose total annual salary and bonus for
1996 exceeded $100,000 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS (1)
------------------------------------ -------------------------
(A) (B) (C) (D) (E) (F)
ALL OTHER
NAME AND SALARY BONUS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) OPTIONS (#) ($)
------------------ ---- ------- --------- ---------- ------------
F. Patrick McFadden, Jr............... 1996 188,855 40,000(2) 21,100(3) 6,685(5)
President and Chief 1995 177,028 34,200(2) 15,545(4) 6,365(5)
Executive Officer 1994 160,003 -- -- 5,460(5)
John F. Trentacosta................... 1996 107,826 18,750(2) 7,700(3) 22,080(6)
Executive Vice 1995 102,217 12,750(2) 7,418(4) 2,044(6)
President and Chief 1994 96,500 -- -- --
Financial Officer
Lorraine K. Young..................... 1996 87,672 13,500(2) 5,350(3) 18,372(7)
Executive Vice 1995 83,214 10,375(2) 4,527(4) 2,496(7)
President 1994 76,812 -- -- --
- ---------------
(1) Although the BNH Bancshares, Inc. 1992 Stock Incentive Plan (the "1992
Stock Incentive Plan") permits grants of restricted stock, freestanding
stock appreciation rights and shares of Common Stock, cash or a combination
thereof contingent upon the attainment of certain performance criteria, no
grants of these incentives have been made.
(2) Annual bonuses received under the Company's Annual Incentive Bonus Plan are
reported in the year earned, although paid in the subsequent year.
8
(3) Non-qualified stock options were granted pursuant to the Company's 1992
Stock Incentive Plan on November 15, 1996 with an exercise price of $8.625
per share. The options expire on November 14, 2006 and are exercisable to
the extent of one-half of the number of shares on and after March 19, 1997
with the remaining one-half exercisable on or after March 19, 1998.
(4) Non-qualified stock options were granted pursuant to the Company's 1992
Stock Incentive Plan on August 15, 1995 with an exercise price, adjusted to
reflect the effects of the Company's one-for-four reverse stock split,
equal to $5.50 during the first year of the option, $5.96 during the second
year of the option, $6.48 during the third year of the option, $7.00 during
the fourth year of the option, and $7.60 during the fifth year of the
option. The options expire on August 14, 2000 and are exercisable to the
extent of one-half of the number of shares on and after August 15, 1996
with the remaining one-half exercisable on or after August 15, 1997,
subject to acceleration in the event of a change in control of the Company
as defined in such option agreements.
(5) Premiums paid by the Company for term life insurance, of which Mr.
McFadden's estate is the beneficiary and the Company's matching
contribution to the BNH Bancshares, Inc. 401(k) Profit Sharing Plan
("401(k) Plan") for 1995 and 1996. "All Other Compensation" for 1994
consists of life insurance premium only.
(6) For 1996, includes stock option exercise and the Company's matching
contribution to the 401(k) Plan. For 1995, consists of the Company's
matching contribution to the 401(k) Plan.
(7) For 1996, includes stock option exercise and the Company's matching
contribution to the 401(k) Plan. For 1995, consists of the Company's
matching contribution to the 401(k) Plan.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
Mr. McFadden has entered into an employment agreement with the Bank as of
May 1, 1993 which provides that he will serve as President and Chief Executive
Officer of the Company and the Bank for a base salary of $160,000 per year (a
reduction of $20,000 from his 1992 base salary of $180,000). Unless earlier
terminated by Mr. McFadden or the Bank in accordance with the provisions of that
agreement, the term of the agreement will be for a period of one year and on the
first day of each month such term will automatically be extended for a period of
one year unless either party gives written notice that the agreement will not be
automatically so extended. In the event the Bank terminates the agreement for
cause (which is defined as gross malfeasance or gross neglect of duty), or if
Mr. McFadden terminates the agreement for any reason other than those
specifically described below, Mr. McFadden will be entitled to any unpaid base
salary through the date of termination. If the Bank terminates the agreement for
any reason other than for cause, Mr. McFadden will be entitled to all unpaid
base salary through the remaining term of the agreement and any unpaid bonuses.
If Mr. McFadden terminates the agreement as a result of not being re-elected a
director of the Bank or the Company or for good reason (which is defined to
include an adverse change in his duties, failure by the Bank to provide salary
or other benefit payments on a timely basis, relocation of the principal office
of the Bank outside Connecticut or action by the Bank under certain
circumstances to diminish substantially the value of Mr. McFadden's awards or
benefits under the Bank's benefit plans or policies), Mr. McFadden will be
entitled to all unpaid base salary through the remaining term of the agreement
and any unpaid bonuses.
In addition, Messrs. McFadden and Trentacosta, Ms. Young and three other
executive officers of the Bank have entered into Severance Agreements with the
Bank which provide for the payment of termination benefits in the event of a
change in control (as defined in the Severance Agreements). In the event that
there is an involuntary termination of Mr. McFadden's, Mr. Trentacosta's or Ms.
Young's employment (as defined in the Severance Agreement to include such
Officer's election to terminate his or her employment under certain
circumstances and to exclude termination due to death, disability or retirement
or termination for cause as defined therein) within one year prior to the change
in control or within the two year period following a change in control, such
officer will receive a lump sum payment equal to three times his or her annual
salary during the 12 months preceding the date of termination or the 12 months
preceding the date of the change in control, whichever is greater, in addition
to a continuation of certain employee benefits for a period of one year
following termination of employment.
9
The following table sets forth information on grants of stock options
during the fiscal year ended December 31, 1996 to the Named Executive Officers.
Such grants are reflected in the Summary Compensation Table above. No stock
appreciation rights have been granted under the 1992 Stock Incentive Plan during
1996.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS(1) POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO 10 YEAR OPTION
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION TERMS (2)
NAME GRANTED(#) IN 1996 ($/SH) DATE 5% 10%
---- ---------- ---------- --------------- ----------- -------------------
F. Patrick McFadden, Jr....... 21,100 36% (1) 11/14/2006 $114,451/$290,041
John F. Trentacosta........... 7,700 13% (1) 11/14/2006 $ 41,766/$105,844
Lorraine K. Young............. 5,350 9% (1) 11/14/2006 $ 29,020/$ 73,541
- ------------
(1) Non-qualified stock options were granted pursuant to the Company's 1992
Stock Incentive Plan on November 15, 1996. The options expire on November
14, 2006 and are exercisable to the extent of one-half of the number of
shares on and after March 19, 1997 with the remaining one-half exercisable
on or after March 19, 1998. The options have an exercise price equal to
$8.625 (the fair market value of the Common Stock on the grant date). The
1992 Stock Incentive Plan contains a provision which permits withholding
taxes to be paid in cash, with previously owned shares or by withholding
cash or shares from distributions of cash or stock awards, as the case may
be.
(2) Potential realizable values are computed based upon the difference between
the assumed annual rates of stock price appreciation and the exercise price
for the option of $8.625.
The following table sets forth information concerning the exercise of
options during the last fiscal year by Named Executive Officers and the fiscal
year-end value of unexercised options to purchase the Company's Common Stock
granted to the Named Executive Officers under the 1986 Option Plan and the 1992
Stock Incentive Plan.
OPTION EXERCISES AND
FISCAL YEAR-END OPTION VALUES
(A) (B) (C) (D) (E)
NUMBER OF VALUE OF
SHARES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1996 DECEMBER 31, 1996
ACQUIRED ON VALUE (#) EXERCISABLE/ ($) EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE (1)
- ---- ----------- ----------- ------------- -----------------
F. Patrick McFadden, Jr............... -- -- 15,978/28,872 $49,432/$89,283
John F. Trentacosta................... 3,700 20,036 1,797/11,409 $ 2,280/$36,981
Lorraine K. Young..................... 3,699 14,588 0/7,614 0/$24,117
- -------------
(1) The option exercise prices for exercisable options were lower than the
average of the high and low prices of the Company's Common Stock as quoted
on the Nasdaq National Market tier of The Nasdaq Stock Market(sm) on
December 31, 1996. For unexercisable options (50% of which were not
exercisable except in the event of a Change in Control) value is based upon
the difference between the exercise price in effect during 1996 and the
last sales price of $11.00 for the Company's Common Stock as quoted on the
Nasdaq National Market tier of the Nasdaq Stock Market(sm) on December 31,
1996. The exercise price of such options increases on each anniversary of
its grant date.
10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Salary and Benefits Committee of the Bank approved base salaries for
executive officers of the Bank for 1996, and administers and grants awards under
the Company's stock compensation plans. The following non-employee directors
served on the Salary and Benefits Committee during the last fiscal year: Messrs.
Cullen, Dermer, Hallberg, Hogan, Jalbert, Liebman, Porto and Romei and Dr.
D'Onofrio.
SALARY AND BENEFITS COMMITTEE
REPORT ON EXECUTIVE COMPENSATION FOR 1996
Notwithstanding anything to the contrary contained in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate by reference future
filings in whole or in part, including this Proxy Statement, the following
report and the Performance Graph immediately following the report shall not be
incorporated by reference into any such filings.
The Salary and Benefits Committee of the Bank (the "Committee") makes this
report on executive compensation for the fiscal year ended December 31, 1996.
The Committee was solely responsible for approving the total compensation of the
Bank's executive officers during 1996 and is composed entirely of outside
directors.
The objective of the Company's executive compensation program is to
attract, motivate and retain key executives and to reward them based on Company
and individual performance. In particular, the compensation program is designed
to reward executive initiatives that enhance the strategic position of the
Company and that result in increases in shareholder value.
Total executive compensation generally consists of three components: base
salary, annual incentives in the form of cash bonuses and equity participation
in the form of stock options. The Committee makes ongoing reviews of each of
these components in light of the specific criteria described below and approves
the amount and specific terms of each component in a manner designed to meet the
overall objectives of the Company.
BASE SALARY. The base salaries of the Bank's executive officers are
determined by two factors: the salaries for similar positions in financial
institutions in Connecticut and the Northeast with comparable asset size and by
the executive's performance and contribution to the Company relative to specific
goals that have been set by the President and CEO and approved by the Committee
at the onset of the fiscal year. In determining competitive salaries in the
marketplace, the Committee examines survey information that compares each
executive's base salary to executives who perform similar duties at other
financial institutions, primarily banks, located in the Northeast and
Connecticut with assets between $250 million and $500 million. The Committee's
philosophy is to pay salaries to high performing executives that are equivalent
to the average base compensation of executives who have similar employment
responsibilities within the peer group. Performance adjustments to base
salaries, if any, for subordinate executives are recommended by the President
and CEO and presented to the Committee for review and approval. Each executive's
performance for the year is evaluated by the President and CEO on the basis of
three strategic initiatives of the Bank, namely (1) growth in loan originations,
especially in the commercial sector, (2) continued development of the retail
deposit business, and (3) sustaining low levels of classified assets and Other
Real Estate Owned. At the end of 1996, the Committee approved increases
averaging 4.45% in executive base salaries (excluding the President and CEO) for
1996, funded through a Bank-wide merit pool. The size of the merit pool was
established on the basis of an estimate of the extent to which base salaries,
including the base salaries of executive officers other than the CEO, are
expected to change, on average, during 1997, based on surveys of national
consulting firms of base salaries paid primarily by Connecticut companies. These
merit increases allow executives to be compensated at their respective average
comparative base salary, as adjusted for their individual accomplishments and
unique contributions to the Bank in the strategic areas described above.
11
ANNUAL INCENTIVES. The Committee acts to promote the short-term and
long-term success of the Company by providing for the payment of annual cash
bonuses to selected key employees (6 in 1996) upon the achievement of
performance goals established by the Committee at the beginning of the Bonus
Plan year. The Committee first established target awards, expressed as
percentages of base salaries, payable if target performance levels are reached.
These were determined by an outside compensation consulting organization and
reflect the amount of annual bonuses paid to executives with similar
responsibilities in the peer group.
Subject to adjustment by the Committee, actual awards may range from zero
to 143 percent of the target award based upon performance levels. The Committee
determined that for 1996 the Company's Return on Average Equity (before taxes
and extraordinary items such as tax credits) ("ROAE") and Shareholder Value
Increases were the performance criteria to fund the executive officer bonus
pool. The 1996 bonus pool for all officers was 105% of target and 110% of the
1995 pool amount. For the Named Executive Officers, the annual bonuses paid
under the Bonus Plan are set forth in the Summary Compensation Table on page 8
and reflect a payment of 127% of the target award amounts. It is the Committee's
belief that target awards should be paid only when (1) strong individual
performance has been achieved and (2) the awards can be funded through
achievement of the corporate performance goals. The Named Executive Officers
were all judged by the Committee to have exceeded their individual performance
goals.
EQUITY PARTICIPATION. Equity participation is designed to align the
interests of management and investors, to encourage the proper balance in the
pursuit of short- and long-term objectives, and to reward management only when
shareholders benefit. An analysis conducted during 1996 by an independent
consultant indicated that the amount of stock options granted to the Bank's
executives in prior years were substantially below the levels granted to
comparable executives in comparably sized banks in the Northeast and in
Connecticut. The Committee approved stock option grants to executives in 1996
and 1997 which were consistent with the median option grant levels of these
comparably sized banks. However, these 1996 and 1997 grants exhausted the amount
of option shares authorized by the shareholders under the 1992 Stock Incentive
Plan. The Committee has requested that the shareholders approve an amendment to
the 1992 Stock Incentive Plan at this meeting. The amendment would increase the
number of shares available for stock option grants by 90,000 shares and impose a
further restriction that no more than 30,000 authorized option shares shall be
granted in any one calendar year. The restriction does not include the 28,379
option shares granted on January 21, 1997. (See Proposal 2 on page 14). The
stock option awards made to the Named Executive Officers are shown in the Table
on page 8. The options have a ten-year life, with one-half of the options
exercisable on or after March 19, 1997 and the remainder exercisable on or after
March 19, 1998. All options were granted for purchase at a price equal to the
fair market value of a share of Common Stock on the day of grant.
CEO COMPENSATION
Mr. McFadden's base salary, annual bonus and stock option award in 1996 are
set forth in Tables on pages 8 and 10. The criteria governing the amounts of the
compensation components paid to Mr. McFadden for 1996 are the same as those
governing other executive officers of the Bank for 1996 which are described
above. The bonus award was specifically contingent upon the Company's level of
achievement on ROAE, and on the price of the Company's Common Stock. The
potential value of the stock option award depends upon the ability of management
to enhance the value of the Company's Common Stock over time. The size of the
target bonus awards and stock option grants are determined by reference to
compensation surveys prepared by an independent consultant as described above.
The Committee approved a 6.7% increase to Mr. McFadden's base salary for
1996. In making its decision, the Committee considered two factors: (1) Mr.
McFadden's base salary in relation to the base salaries of CEOs within the peer
group, and (2) his 1996 performance in the three strategic areas described
above. Again, it is the Committee's philosophy to keep salaries at average
levels while recognizing special contributions and accomplishments. In
recommending an increase in Mr. McFadden's base salary, the Committee
specifically cited a number of key Bank achievements, including, but not limited
to, the following: increased earnings and stock price; further decreases in
12
classified assets and Other Real Estate Owned; increases in the relative levels
of fee-based income; and the authorization for the Company to recognize tax
credits in its financial statements. Mr. McFadden's base salary for 1997 falls
within the average range of base salaries for CEOs in the peer group.
The Committee does not believe that the provisions of Section 162(m) of the
Internal Revenue Code of 1986, as amended, which limits the deductibility of
compensation in excess of $1 million in any year paid to the executive officers
named in the Company's proxy statement, will have any impact upon the Company.
THE SALARY AND BENEFITS COMMITTEE
Lawrence M. Liebman Theodore F. Hogan, Jr.
James J. Cullen Carl M. Porto
George M. Dermer Vincent A. Romei
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock with the
cumulative total return of the Nasdaq National Market (U.S.) and Nasdaq Bank
Stocks for the period of five fiscal years commencing December 31, 1991 and
ended December 31, 1996. The total return assumes the reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG BNH BANCSHARES, INC.,
NASDAQ STOCK MARKET AND NASDAQ BANK STOCKS
[GRAPHICAL REPRESENTATION OF DATA TABLE BELOW]
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
-------- -------- -------- -------- -------- --------
BNH Bancshares, Inc. .... 100 70.47 100.00 72.73 136.36 200.00
NASDAQ Stock Market ..... 100 116.38 133.60 130.59 184.67 227.16
NASDAQ Bank Stock ....... 100 145.55 165.99 165.38 246.32 325.60
13
RELATED PARTY TRANSACTIONS
The Bank has made loans to and had other transactions in the ordinary
course of business with directors and officers and members of the immediate
family of, and business entities associated with, such persons. The Board of
Directors of the Bank believes that the terms of all such loans and other
transactions, including interest rates, collateral and repayment terms, were
fair and equitable and were substantially the same as terms prevailing at the
time for comparable transactions with others, and that such loans and other
transactions did not involve more than normal risks of collectibility or present
other unfavorable features.
The Bank expects to have in the future banking transactions in the ordinary
course of its business with directors, officers, principal shareholders and
their associates, on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for comparable
transactions with persons not affiliated with the Bank.
The Company and its subsidiaries retained Carl M. Porto, Esquire, or the
law firm with which he was affiliated, during 1996. The Company and its
subsidiaries intend to retain Mr. Porto or the law firm with which he is
affiliated during 1997. Mr. Porto currently is a director of the Company and the
Bank.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent (10%) of the Company's Common Stock, to file with the SEC initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company on Form 3, 4 and 5. Officers, directors
and ten percent (10%) shareholders are required by SEC regulations to furnish
the Company with copies of all Forms 3, 4 and 5 they file.
To the Company's knowledge, based solely on the review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and ten
percent (10%) beneficial owners were complied with, except that Mr. Scholsohn
inadvertently failed to report certain purchases during 1993 of shares issued
pursuant to a rights offering made by the Company. As a result, Mr. Scholsohn
filed an amended Form 4 in 1996 to reflect those transactions.
APPROVAL OF AN AMENDMENT INCREASING THE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE UNDER THE BNH BANCSHARES, INC. 1992 STOCK INCENTIVE PLAN
(PROPOSAL 2)
Summary of Proposed Amendments
At the Company's Annual Meeting of Shareholders in 1992, shareholders
approved the adoption of the BNH Bancshares, Inc. 1992 Stock Incentive Plan (the
"1992 Plan"). The shareholders are asked to consider and vote upon a proposal to
approve an amendment to the 1992 Plan. A summary of the principal features of
the 1992 Plan, as amended, follows.
On March 18, 1997, the Board of Directors adopted an amendment to the Plan,
subject to approval by shareholders, to increase the aggregate number of shares
of the Company's Common Stock authorized for issuance under the 1992 Plan from
137,500 (adjusted to reflect the effects of the Company's one-for-four reverse
stock split) to 227,500, an increase of 90,000 shares (2.4% of the total shares
of Common Stock outstanding on March 3, 1997), with the restriction that no more
than 30,000 authorized option shares shall be granted in any one calendar year.
The 28,379 option shares shown below were granted on January 21, 1997 and are
not included in such restriction.
14
The following table sets forth the number of shares covered by
non-qualified stock options ("NSOs") granted during 1996 and incentive stock
options ("ISOs") granted in January 1997 under the 1992 Plan to the persons
listed below. The last sales price of the Company's Common Stock on March 3,
1997 on the Nasdaq National Market tier of The Nasdaq Stock Marketsm was $11.875
per share.
1997 GRANTS
1996 GRANTS NUMBER OF SHARES
NUMBER OF UNDERLYING UNDERLYING
NAME AND POSITION OPTIONS OPTIONS(1)
- ----------------- -------------------- ----------------
F. Patrick McFadden, Jr................. 21,100 14,563
Executive Officer
John F. Trentacosta..................... 7,700 5,898
Executive Officer
Lorraine K. Young....................... 5,350 2,418
Executive Officer
All Executive Officers as a group ...... 46,910 28,379
All employees as a group................ 1,500
(excluding Executive Officers)
- --------------
(1) The 1997 ISO grants were made on January 21, 1997 at an exercise price of
$11.75 per share. The options expire on January 20, 2007 and are
exercisable to the extent of one-half of the number of shares on and after
January 21, 1998 with the remaining one-half exercisable on or after
January 21, 1999.
Summary of the 1992 Plan, as Amended
The Company adopted the 1992 Plan in 1992 in order to use awards thereunder
to attract and retain key employees in the belief that employee stock ownership
and stock-related compensation encourage a community of interest between
employees and shareholders. The Company has had stock option plans for its key
employees in the past. The 1986 Option Plan expired on March 10, 1996. Options
for an aggregate of 7,687 shares of the Company's Common Stock remain
outstanding and subject to exercise under the 1986 Plan. The 1992 Plan currently
provides for the issuance of an aggregate of 137,500 shares of the Company's
Common Stock, with 130,101 shares of Common Stock currently subject to
outstanding awards of NSOs and ISOs. Options for 7,399 shares were exercised in
1996. Because no shares remain available for the grant of future awards under
the 1992 Plan, the Board of Directors is seeking shareholder approval to
increase the number of shares authorized for issuance under the 1992 Plan by an
additional 90,000 shares of Common Stock so that incentive awards can continue
to be made thereunder. The following is a summary of the 1992 Plan, as amended.
SHARES SUBJECT TO THE 1992 PLAN. As proposed to be amended, the 1992 Plan
provides for the issuance or use for reference purposes of a maximum of 227,500
shares of the Company's Common Stock (subject to adjustment in the event of
stock dividends, stock splits, mergers, recapitalizations or similar
transactions).
Awards under the 1992 Plan may be granted in the form of ISOs, NSOs, stock
appreciation rights ("SARs"), which may, but need not, be granted in conjunction
with related stock options, dividend equivalents, stock granted with or without
restrictions (awards of Common Stock with restrictions are referred to as
"Restricted Stock") and awards entitling the grantee to receive shares of Common
Stock, cash or a combination thereof contingent upon the attainment of certain
performance criteria ("Performance Stock"), as well as other types of awards
that the Committee determines to be consistent with the objectives and
limitations of the 1992 Plan. Shares delivered pursuant to the 1992 Plan upon
the exercise of awards may be either authorized but unissued shares of the
Company's Common
15
Stock or previously issued shares of the Company's Common Stock reacquired by
the Company. Shares reserved for awards which terminate without having been
exercised or vested become available for new grants.
DURATION. The term during which awards may be granted under the 1992 Plan
will expire March 17, 2002.
ADMINISTRATION AND ELIGIBILITY. The 1992 Plan is to be administered by the
Committee, which consists of not less than three directors who are not employees
of the Company, its parent or its subsidiaries, including at least two
non-employee directors who are members of the Executive Committee of the
Company's Board (and who may not be granted awards under the 1992 Plan or any
other discretionary award plan maintained by the Company or any of its
affiliates). The individuals eligible to participate in the 1992 Plan will be
certain employees of the Company or its subsidiaries (whether or not they are
directors of the Company), who serve in executive, administrative or
professional capacities who are selected for awards in the discretion of the
Committee. The Committee also has the discretion, within the guidelines and
limitations expressed in the 1992 Plan, to determine the amount of each award,
whether options granted under the 1992 Plan will be ISOs (qualifying under the
provisions of Section 422 of the Code) or NSOs, the time of the awards, the
date(s) on which awards will be exercisable, and the form and terms of
agreements evidencing awards granted under the 1992 Plan and the acceleration or
waiver of award conditions. The Committee has full power and authority to
administer and interpret the 1992 Plan, and to adopt or amend rules,
regulations, agreements and guidelines for the conduct of its business.
TERM OF AWARDS. Awards granted under the 1992 Plan are exercisable during
the term of the award period as determined by the Committee and specified in the
agreement governing such respective award. The time within which an award must
be exercised, as specified by the Committee, may not extend beyond the tenth
anniversary of the date of the grant of the award. Awards under the 1992 Plan
are generally non-transferable other than by will or by the laws of descent and
distribution and may be exercised only by the grantee or his or her legal
representative during the grantee's lifetime. As amended, the 1992 Plan would
permit the Committee to grant or amend NSOs to permit their transfer, without
consideration, to immediate family members, or a trust or partnership for the
benefit of such persons to the extent such transferability is in accordance with
the transfer restrictions, if any, applicable to a grantee who is subject to
Section 16 under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended. As amended, the 1992 Plan would not permit the transfer of awards
pursuant to the terms of a qualified domestic relations order. All unexercised
options and SARs terminate on the date a grantee's employment terminates,
provided that such awards may be exercised during certain periods, to be
specified by the Committee subject to certain stated limitations, following
termination of employment by reason of death, disability or retirement.
EXERCISE PRICE AND PAYMENT. The exercise price of each option granted under
the 1992 Plan will be established by the Committee and set forth in the
agreement governing the option and shall not be less than the fair market value
of the Company's Common Stock on the date of grant of such option. In general,
grants of Restricted Stock, Performance Stock and dividend equivalents will
require little or no payment upon issuance.
The exercise of an option must be accompanied by payment in full of the
purchase price in cash, by check or by delivery of shares of the Company's
Common Stock previously acquired by the grantee equal in value to the option
price, or by a combination of cash and stock. In addition, the Committee may
authorize, in accordance with rules and regulations adopted by it, payment of
the option price by delivery of a properly executed exercise notice together
with irrevocable instructions to a broker to deliver to the Company that portion
of sales or loan proceeds required to pay the option price in full. Participants
under the 1992 Plan may pay withholding taxes by means of contributing cash or
shares of the Company's Common Stock previously acquired or by deducting shares
of Common Stock from the amount to be received upon the exercise or vesting of
an award in accordance with procedures adopted by the Committee. The aggregate
number and kind of shares which are reserved for issuance under the 1992 Plan
and which are subject to awards under the 1992 Plan and the purchase price per
share of shares subject to awards will be appropriately adjusted by the
Committee in the event of stock dividends, stock splits, mergers,
recapitalizations or similar transactions that affect the Company's Common
Stock.
16
AWARD AND EXERCISE OF SARS. SARs may be granted by the Committee
independently of or in conjunction with stock options granted concurrently or
previously under the 1992 Plan. SARs entitle the grantee to receive in cash or
in shares of Common Stock (or in a combination of cash and stock) from the
Company at exercise the difference between the fair market value of a specified
number of shares of the Company's Common Stock on the date of exercise and the
fair market value per share specified in the agreement granting the SARs. SARs
shall be exercisable at such time and only to the extent provided in an SAR
agreement or related option. Upon exercise of an SAR, the number of shares
subject to exercise under a related option shall be reduced automatically by the
number of shares surrendered.
AMENDMENT AND TERMINATION. The Board of Directors may amend, suspend or
terminate the 1992 Plan at any time prior to its specified date of termination.
Any amendment (1) effecting an increase in the aggregate number of shares which
may be issued under the 1992 Plan (other than an increase merely reflecting a
stock dividend, a recapitalization or other such change), (2) extending the term
of the 1992 Plan or the maximum option periods provided thereunder, (3)
decreasing the minimum option price under the 1992 Plan, or otherwise materially
increasing the benefits accruing to grantees through awards under the 1992 Plan,
(4) abolishing the Committee, changing the qualification of its members or
withdrawing the 1992 Plan from its supervision, or (5) modifying the eligibility
requirements for participation in the 1992 Plan, must be approved by the
shareholders of the Company.
FEDERAL INCOME TAX CONSEQUENCES
NSOS AND SARS. Under current law, there will generally be no Federal income
tax consequences to either the employee or the Company on the grant of NSOs or
SARs. Upon exercise of NSOs or SARs, the difference between the fair market
value of the Company's Common Stock at the date of exercise and the exercise
price is taxed at ordinary income rates, and is subject to withholding tax by
the Company. The exercise of NSOs or SARs will result in a tax deduction to the
Company, measured by such difference. However, grantees who are subject to the
six-month restrictions on resale of Common Stock under Federal securities laws
will, unless they elect otherwise, generally not recognize ordinary income until
such restrictions lapse. The fair market value of the Company's Common Stock at
the date of exercise becomes the tax basis in the hands of the grantee of shares
acquired upon such exercise.
ISOS. Under the Internal Revenue Code, there are generally no Federal
income tax consequences to the employee or the Company upon the grant or
exercise of an ISO, except that the difference between the option price and the
fair market value of the Common Stock at the exercise of the option will be an
item of adjustment for purposes of the alternative minimum tax. If the employee
does not dispose of the stock within two years from the grant date of the ISO,
and holds the stock after exercise for at least one year, the employee will be
taxed at long-term capital gain rates upon the sale of the stock and the Company
will not be entitled to a tax deduction in connection with the exercise of the
ISO. If the employee does not meet these holding period requirements, the
employee's gain upon disposing of the stock will usually be taxed as ordinary
income to the extent of the excess of the fair market value of the shares on the
date of exercise over the option price. The balance of the amount received, if
any, will be short-term or long-term capital gain depending on how long the
shares were held by the employee. The Company will be allowed a tax deduction in
the amount of the grantee's ordinary income as a result of the disposition.
RESTRICTED STOCK, PERFORMANCE STOCK AND DIVIDEND EQUIVALENTS. If Common
Stock is transferred to an employee under the 1992 Plan, the employee must
include in gross income the excess of the then fair market value of the stock
over the amount, if any, paid for it in the first taxable year in which such
employee's beneficial interest in such Common Stock is either transferable or
not subject to a substantial risk of forfeiture, unless the employee elects to
be taxed upon the grant of such an award. Generally, the employer is entitled to
a deduction at the time of and equal to the amount of the inclusion in the
employee's gross income. Dividends paid on Restricted Stock are treated as
compensation deductible by the employer and includable in the income of the
employee when paid, unless the employee elects to be taxed upon the grant of
such an award. Performance Stock granted under the 1992 Plan, receipt
17
of which is contingent on the attainment of performance goals established by the
Committee, is generally taxed to the employee upon attainment of the goals at
the end of such performance period. The employer is entitled to a deduction for
the payment of Performance Stock awards, whether paid in stock, cash or in
combination thereof, in an amount equal to the amount included in the employee's
gross income. Dividend equivalents are taxed to the employee and are deductible
by the employer when paid.
Approval of the amendment to the 1992 Plan requires the affirmative vote of
the holders of at least a majority of the Common Stock of the Company present,
or represented, and voting at the April 29, 1997 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
THE AMENDMENT TO THE 1992 PLAN.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(PROPOSAL 3)
The Company's Board of Directors is submitting for shareholder approval its
proposal to engage Coopers & Lybrand L.L.P., independent accountants, as
auditors of the Company for the fiscal year ending December 31, 1997. On October
19, 1995, the Audit Committee of the Board of Directors of the Company
recommended and the Board of Directors of the Company approved the dismissal of
Price Waterhouse LLP, effective October 19, 1995, as the independent accountants
engaged to perform the audit examination of the Company's financial statements
for the year ending December 31, 1995. On October 19, 1995, the Company notified
Price Waterhouse LLP of the Board of Directors' decision to replace Price
Waterhouse LLP as independent accountants of the Company. Price Waterhouse LLP
acted as the auditors of the Company from the fiscal year ending December 31,
1987.
The reports of Price Waterhouse LLP on the financial statements of the
Company for the two years ending December 31, 1994 contained no adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle, except that their report on the Company's
financial statements for the year ended December 31, 1993 included an
explanatory paragraph regarding the uncertainty that the Company could continue
as a going concern.
During the Company's two fiscal years ending December 31, 1994 and the
subsequent interim period ending October 19, 1995, there were no disagreements
with Price Waterhouse LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Price Waterhouse LLP, would
have caused Price Waterhouse LLP to make reference thereto in their report on
the financial statements for such years.
On October 19, 1995, the Audit Committee of the Board of Directors
recommended and the Company's Board of Directors approved the engagement of
Coopers & Lybrand L.L.P., effective October 19, 1995, to perform the audit
examination of the Company's financial statements for the year ending December
31, 1995. During the Company's two fiscal years ending December 31, 1994 and
through October 19, 1995, the Company has not consulted with Coopers & Lybrand
L.L.P. on items which (1) were or should have been subject to SAS 50 or (2)
concerned with subject matter of a disagreement or reportable event with the
former auditor.
Representatives from Coopers & Lybrand L.L.P. will be present at the Annual
Meeting. They will be afforded an opportunity to make a statement if they desire
to do so and are expected to be available to respond to appropriate questions
from shareholders.
Audit services performed by Coopers & Lybrand L.L.P. during the past fiscal
year include audits of the financial statements of the Company, services related
to filings with the SEC and federal and state taxation authorities and
consultations on matters related to accounting and financial reporting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS DESCRIBED ABOVE.
18
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the
Company knows of no other matters which may come before the Annual Meeting. If
any matters other than those referred to in this Proxy Statement should properly
come before the Annual Meeting, it is the intention of the persons named in the
enclosed form of proxy to vote each proxy with respect to such matters in
accordance with their best judgment.
SUBMISSION OF SHAREHOLDER PROPOSALS FOR INCLUSION IN 1998
PROXY MATERIAL
Any shareholder who intends to present a proposal at the Company's 1998
Annual Meeting of Shareholders is advised that, in order for such proposal to be
included in the Board of Directors' proxy material for such meeting, the
proposal must be received by the Company at its principal executive office on or
before November 26, 1997, directed to the Secretary of the Company.
Any such shareholder would need to meet the requirements specified in Rule
14a-8 under the Securities Exchange Act of 1934.
The Board of Directors would like you to attend the meeting in person.
However, whether or not you plan to attend the meeting, please complete, date
and sign the enclosed proxy card and return it in the enclosed postage prepaid
envelope as soon as possible. If you attend the meeting, you may vote in person
if you desire.
By Order of the Board of Directors
/S/ EVELYN R. MILLER
-----------------------------
EVELYN R. MILLER, Secretary
New Haven, Connecticut
March 19, 1997
19
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 13 contains a description in tabular form of a graph entitled
"Performance Graph" which represents the comparison of the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return of the NASDAQ Stock Market Index and the NASDAQ Bank Stocks Index for the
period of five years commencing December 31, 1991 and ending December 31, 1996,
which graph is contained in the paper format of this Proxy Statement being sent
to Stockholders.
BNH BANCSHARES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD
APRIL 29, 1997
The undersigned hereby appoints THEODORE F. HOGAN, JR., CARL M. PORTO and
CHEEVER TYLER, and each of them, with power of substitution, proxies and agents
of the undersigned to vote at the Annual Meeting of Shareholders of BNH
Bancshares, Inc. (the "Company"), to be held at The New Haven Lawn Club, 193
Whitney Avenue, New Haven, Connecticut 06511 on Tuesday, April 29, 1997, at
10:00 a.m. and at any adjournment thereof, all shares of common stock of the
Company which the undersigned would be entitled to vote if personally present
for the following matters.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 and 3.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
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FOLD AND DETACH HERE
Please mark your votes as indicated in this example [X]
1. ELECTION OF DIRECTORS
Nominees:
STEPHEN P. AHERN, MARTIN R. ANASTASIO, EDWARD M. CROWLEY, JAMES J. CULLEN,
GEORGE M. DERMER, THOMAS M. DONEGAN, THEODORE F. HOGAN, JR., JEAN G. LAMONT,
LAWRENCE M. LIEBMAN, F. PATRICK MCFADDEN, JR., CARL M. PORTO, VINCENT A. ROMEI,
STANLEY SCHOLSOHN AND CHEEVER TYLER
[ ] FOR [ ] WITHHELD FOR ALL
[ ] WITHHELD FOR (Write that nominee's name in the space provided below):
------------------------------------------------------------------------
2. TO APPROVE AN AMENDMENT INCREASING THE AGGREGATE NUMBER OF SHARES OF THE
COMPANY'S COMMON STOCK AUTHORIZED FOR ISSUANCE UNDER THE BNH BANCSHARES,
INC. 1992 STOCK INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. TO RATIFY THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. as the independent
accountants to audit the consolidated financial statements of the Company
for the calendar year 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the meeting or
an adjournment thereof.
Please mark this box if you plan to attend the Annual Meeting in person [ ]
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by an authorized person.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the related Proxy Statement.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
Signature(s)____________________________________ Date _______________
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FOLD AND DETACH HERE