SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [ X ] File No. 0-14703
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NBT BANCORP INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
KATHIE J. DEIERLEIN
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box)
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and indentify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
NBT BANCORP INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
March 17, 1997
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that pursuant to call of its Directors,
the regular annual meeting of stockholders of NBT BANCORP INC. will
be held at the Norwich Senior High School auditorium located at
Midland Drive, Norwich, New York, on Saturday, April 19, 1997 at
11:00 a.m., for the purpose of considering and voting upon the
following matters:
1. Election of Directors. To fix the number of directors at six
and elect the candidates listed in the Proxy Statement dated
March 17, 1997.
2. Ratification of the Board of Directors' action of the
selection of independent public accountants for the year 1997.
3. Transaction of such other business as may properly come before
the Meeting or any adjournment thereof.
By order of the Board of Directors
/s/DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
/s/JOE C. MINOR
Joe C. Minor
Vice President, Chief Financial
Officer and Treasurer
WE URGE YOU TO MARK, SIGN, AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE--WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN WITHDRAW
YOUR PROXY. ALSO, YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
THE MEETING OR IN OPEN MEETING UPON WRITTEN NOTIFICATION TO THE
CHIEF EXECUTIVE OFFICER.
[THIS PAGE INTENTIONALLY LEFT BLANK]
PROXY STATEMENT
NBT BANCORP INC.
52 SOUTH BROAD STREET
NORWICH, NEW YORK 13815
This Proxy Statement is being furnished by NBT Bancorp Inc. (the
"Company"), a Delaware corporation, to its stockholders, in connection with
the solicitation by the Board of Directors of proxies to be voted at the
Annual Meeting of Stockholders to be held at 11:00 a.m., on April 19, 1997
(the "Meeting"), at the Norwich Senior High School auditorium located at
Midland Drive, Norwich, New York 13815, and at any adjournments thereof.
In the course of discussions in this Proxy Statement of recommendations
and solicitations of votes, the term "Management" refers to the Board of
Directors of NBT Bancorp Inc., unless otherwise required by the context.
The approximate date on which this Proxy Statement is first being sent
or given to stockholders is March 17, 1997.
A copy of Form 10-K (Annual Report) for December 31, 1996, is being
furnished to the stockholders together with a copy of this Proxy Statement.
Copies of exhibits listed in the Form 10-K can be acquired BY WRITTEN REQUEST
TO JOE C. MINOR, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER,
NBT BANCORP INC., 52 SOUTH BROAD STREET, NORWICH, NEW YORK 13815.
VOTING, PROXY SOLICITATION AND REVOCATION
Your proxy is solicited by the Board of Directors for use at the Meeting.
If the enclosed form of proxy is properly executed and returned prior to
or at the Meeting, and if not revoked prior to or at the Meeting, all shares
represented thereby will be voted at the Meeting as specified in the proxy by
the persons designated therein. Shares represented by such returned,
unrevoked proxies which are not marked "AGAINST," "ABSTAIN" or "WITHHELD"
will be voted to fix the number of directors at six and "FOR" the election
of the nominees and "FOR" ratification of the auditor. Abstentions and broker
non-votes are counted only for purposes of determining whether a quorum is
present at the Meeting, but will not be counted as voting with respect to any
matter as to which the abstention or non-vote is indicated. The solicitation
of proxies will be by mail, but proxies may also be solicited by telephone,
telegraph or in person by officers and other employees of the Company. The
entire cost of this solicitation will be borne by the Company. Should the
Company, in order to solicit proxies, request the assistance of other banks,
brokerage houses and other custodians, nominees or fiduciaries, the Company
will reimburse such persons for their reasonable expenses in forwarding the
proxies and proxy material to the beneficial owners of such shares. A
stockholder may revoke his or her proxy by a later proxy or by delivery of
notice of revocation to the Chief Executive Officer, in writing, at any time
prior to the date and time of meeting or in open meeting. Attendance at the
Meeting will not in and of itself revoke a proxy.
I-1
SHARES ENTITLED TO VOTE
The Board of Directors has fixed the close of business on February 28,
1997, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Meeting. At the close of business on such
date, there were outstanding and entitled to vote at the Meeting 8,393,801
shares of Common Stock, no par value, stated value $1.00 per share. Each
of the outstanding shares is entitled to one vote at the Meeting for all
items set forth in the Notice. Shares held by the Trust Division of NBT
Bank, National Association ("the Bank" or "NBT Bank, N.A.") as Sole Trustee
may not be voted in the election of directors, but may be voted on other
matters.
PRINCIPAL BENEFICIAL OWNERS OF COMMON STOCK
No individual or group of individuals owns of record, or is known to the
Company to own beneficially, more than 5% of the Common Stock. However, Cede
& Co., a nominee of the Depository Trust Company, held record ownership on
behalf of various of its customers on December 31, 1996, of 3,456,480 shares,
or 41.2%, of the outstanding shares. The names of the beneficial owners of
the shares held by those stockholders are unknown to management.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that the number of Directors
authorized to serve until the next annual meeting of stockholders shall be
the number designated at the Annual Meeting and prior to the election of
directors by the stockholders entitled to vote for the election of directors
at that meeting. The Board has proposed and is requesting the stockholders to
approve its proposal that the number of directors of the Company be set at
six. Two persons have been designated by the Board as nominees for election
at this Meeting and are being presented to the stockholders for election. The
directors to be elected at the Meeting shall be determined by a plurality
vote of the shares represented in person or by proxy, entitled to vote at the
Meeting.
Nominations of candidates for election as directors of the Company must
be made in writing and delivered to or received by the President of the
Company within ten days after notice of any Stockholders' meeting called for
the election of directors. Such notification shall contain the name and
address of the proposed nominee, the principal occupation of the proposed
nominee, the number of shares of Common Stock that will be voted for the
proposed nominee by the notifying stockholder, including shares to be voted
by proxy, the name and residence of the notifying stockholder and the number
of shares of Common Stock beneficially owned by the notifying stockholder.
No person shall be eligible for election or elected as a director who
shall have attained the age of 72 years, except for Mr. Everett Gilmour who
was granted an exception to age 75 by resolution of the Board of Directors
amending the By-laws.
Nominations not made in accordance herewith may be disregarded by the
Chairman of the meeting.
The By-Laws of the Company permit the Board of Directors by a majority
vote, between annual meetings of the stockholders, to increase the number of
directors by not more than two members and to appoint qualified persons to
fill the vacancies created thereby.
The By-Laws of the Company provide for a classified Board of Directors.
The Board is divided into three equal classes. Each class holds office for a
term of three years, but only one class comes up for election each year
(except in those cases where vacancies occur in other classes). The persons
named below are being proposed as nominees for election as directors for the
three-year term expiring at the annual meeting to be held in 2000, and until
their successors are elected and qualify. The persons named in the enclosed
proxy intend to vote for such nominees for election as directors, but if the
nominees should be unable to serve, proxies will be voted for such substitute
I-2
nominees as shall be designated by the Board of Directors to replace such
nominees. It is believed that each nominee is available for election. The
names of the nominees for election for the term as shown and certain
information as to each of them are as follows:
Number of
Principal Occupation During Common Shares Percent
Date Past Five Years and Other Director Beneficially Owned of Shares
Name of Birth Directorships (a) Since on 12/31/96(b) Outstanding
Nominees for Directors with terms expiring in 2000:
Andrew S. Kowalczyk, Jr. 09/27/35 Partner - Kowalczyk, Tolles, 1994 1,586 (1) *
Deery & Johnston, attorneys
Director of NBT Bank, N.A.
since 1994
John C. Mitchell 05/07/50 President & CEO of 1994 5,634 (1) *
I.L. Richer Co. 2,398 (2)(b) *
(agri. business)
Directorships:
Preferred Mutual Ins. Co.(c);
NBT Bank, N.A. since 1993
Directors for with terms expiring in 1999:
Peter B. Gregory 05/07/35 Partner, Gatehouse Antiques 1987 48,943 (1) 0.58%
Director of NBT Bank, N.A. 6,876 (1)(b) *
since 1978 16,710 (2)(b) 0.20%
58,389 (d) 0.70%
Paul O. Stillman 01/15/33 Chairman, President & CEO of 1986 16,095 (1) 0.19%
Preferred Mutual Ins. Co. (c) 427 (2)(b) *
Directorships:
Excess Reinsurance Co.;
Preferred Mutual Ins. Co. (c);
Leatherstocking Cooperative
Ins. Co;
National Association of Mutual
Ins. Companies;
NBT Bank, N.A. since 1977
Directors with terms expiring in 1998:
Daryl R. Forsythe 08/02/43 President & CEO of NBT 1992 5,697 (1) *
Bancorp Inc. & the Bank 17 (1)(b) *
since January 1995 9,457 (2) 0.11%
Vice President & General 980 (2)(b) *
Manager of Simmonds Precision 31,645 (3) 0.38%
Engine Systems, a subsidiary
of BF Goodrich Aerospace for more
than 7 years previous thereto
Directorships:
Security Mutual Life Ins. Co. of NY;
NBT Bank, N.A. since 1988
Everett A. Gilmour 05/22/21 Chairman of NBT Bancorp Inc., 1986 62,473 (1) 0.74%
and the Bank since January 1995 2,964 (2) *
Retired Chairman of NBT 1,807 (2)(b) *
Bancorp Inc. for more than
5 years previous thereto
Directorships:
Preferred Mutual Ins. Co.(c);
NYS Electric & Gas Co.;
Delaware Otsego Corp.;
Norwich Aero Products, Inc.;
NBT Bank, N.A. since 1962
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Executive Officers of NBT Bancorp Inc.
other than Directors who are Officers
Number of
Present Position Common Shares
and Principal Beneficially Percent
Date of Date of Position Last Owned Shares
Name Birth Employment Five Years on 12/31/96(b) Outstanding
John R. Bradley 9/28/43 4/19/93 Senior Vice President - 268 (1) *
Commercial Banking since May 1993 458 (1)(b) *
Senior Vice President and 10,806 (3) 0.13%
Senior Regional Lender -
Fleet Bank 1965 to 1993
Martin A. Dietrich 4/3/55 3/1/81 Senior Vice President-Retail Banking 2,684 (1)(b) *
since April 1996 1,449 (2) *
Senior Vice President - 7,960 (3) *
Chief Credit Officer 1995 - 1996 3,037 (e) *
Regional Manager 1993 - 1995
Director of Marketing 1991 - 1993
Joe C. Minor 10/7/42 3/1/93 Vice President, Chief Financial 124 (1) *
Officer & Treasurer of NBT 627 (1)(b) *
Bancorp Inc. since September 1995 13,200 (3) 0.16%
Senior Vice President, Chief Financial
Officer, Treasurer and Cashier of
the Bank since September 1995
Senior Vice President and Controller
of the Bank, 1993-1995
Owner, Public Accounting/Bank
Consulting Firm Charlotte,
NC 1983-1993
John D. Roberts 2/16/40 2/15/65 Vice President & Secretary 11,377 (1) 0.16%
NBT Bancorp Inc. since September 1995 411 (1)(b) *
Senior Vice President and 180 (2)(b) *
Chief Trust Officer of the Bank 5,551 (3) *
since February 1995
Executive Vice President
Chenango Mutual Insurance Co.
1989 to 1995
All directors and executive officers as a group beneficially owned
332,445 shares as of December 31, 1996, which represented 3.96% of total shares
outstanding, including shares owned by spouses and minor children, as to which
beneficial ownership is disclaimed, and options exercisable within sixty days.
NOTES:
(a) The business experience of each director during the past five years
was that typical to a person engaged in the principal occupation
listed for each.
(b) The information under this caption regarding ownership of
securities is based upon statements by the individual nominees,
directors, and officers and includes shares held in the names of
spouses and minor children as to which beneficial ownership is
disclaimed. These indirectly held shares total in number 34,126
for the spouses and for minor children. In the case of officers
and officer directors, shares of the Company's stock held in NBT
Bank, National Association Employee Stock Ownership Plan as of
December 31, 1996, are included.
(c) Preferred Mutual Insurance Company, of which Paul O. Stillman is
President and Chief Executive Officer and Director, and Everett A.
Gilmour and John C. Mitchell, are Directors, owns 95,648 shares;
Messrs. Stillman, Gilmour, and Mitchell disclaim any beneficial
ownership of any such shares.
(d) Dr. Gregory has power of attorney for Virginia Gregory but
disclaims any beneficial ownership of any such shares.
(e) Mr. Dietrich has power of attorney for Veronica Ulrichs but
disclaims any beneficial ownership of any such shares.
(1) Sole voting and investment authority
(2) Shared voting and investment authority
(3) Shares under option from NBT Bancorp Inc. Stock Option Plan which
are exercisable within sixty days of December 31, 1996.
* Less than .1%
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BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1996, there were six meetings of the Board of Directors. Each
member attended at least 75% of the meetings of the Board and those
committees on which he served. The full Board performed the duties of the
Executive Committee. The following committees perform a dual role for the
Company and the Bank.
Nominating and Organization Committee:
Chairman: Andrew S. Kowalczyk, Jr.
Members: Daryl R. Forsythe
Dr. Peter B. Gregory
Everett A. Gilmour
J. Peter Chaplin
Paul O. Stillman
This committee, which met one time during 1996, nominates directors for
election for the Company and the Bank. The committee also functions to insure
a successful evolution of management at the senior level.
COMPENSATION AND BENEFITS COMMITTEE:
Chairman: Paul O. Stillman
Members: Everett A. Gilmour
Dr. Peter B. Gregory
Andrew S. Kowalczyk, Jr.
John C. Mitchell
Richard F. Monroe
This committee has the responsibility of reviewing the salaries and
other forms of compensation of the key executive personnel of the Company and
the Bank. The committee met four times in 1996. The committee administers the
Company's stock option plan.
AUDIT, COMPLIANCE AND LOAN REVIEW COMMITTEE:
Chairman: John C. Mitchell
Members: J. Peter Chaplin
Everett A. Gilmour
Janet H. Ingraham
Dan B. Marshman
Richard F. Monroe
Plus 2 rotating members each quarter
The Audit, Compliance and Loan Review Committee represents the Board of
Directors in fulfilling its statutory and fiduciary responsibilities for
independent examinations of the Company including monitoring accounting and
financial reporting practices and financial information distributed to
stockholders and the general public. Further, the committee determines that
the Company operates within prescribed procedures in accordance with adequate
administrative, operating and internal accounting controls. It also makes
recommendations to the Board with respect to the appointment of independent
auditors for the following year. This committee met four times in 1996.
I-5
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and Executive Officers must, under Section 16(a) of the
Securities Exchange Act of 1934, file certain periodic reports of changes in
beneficial ownership of Company securities. The Bank endeavors to assist
Directors and Executive Officers in filing the required reports. To the
Company's knowledge all filing requirements under the Securities Exchange Act
were satisfied.
COMPENSATION OF DIRECTORS AND OFFICERS
BOARD OF DIRECTORS FEES
For 1996, members of the Board of Directors received a $2,000 annual
retainer and $600 per Board meeting attended. Board members also received
$600 for each committee meeting attended. Chairmen of the committees received
$900 for each committee meeting attended. Officers of the Company, who are
also Directors, do not receive any fees. For 1997, members of the Board of
Directors will receive an annual retainer in the amount of $3,000 which will
be payable in the form of restricted stock which will vest over a three year
period.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the chief
executive officer of the Company and the four most highly compensated
executive officers, other than the chief executive officer, of the Company or
the Bank who were serving as executive officers at the end of 1996 and whose
total annual salary and bonus exceeded $100,000 in 1996.
I-6
SUMMARY COMPENSATION TABLE
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------
Securities
Name and Other Annual Underlying LTIP All Other
Principal Position Year Salary Bonus(4) Compensation(5) Options(6) Payouts Compensation(7)
Daryl R. Forsythe, 1996 $240,000 $120,000 30,660 $-0- $24,788
President and Chief 1995 (1) $240,000 $120,000 30,765 $-0- $13,756
Executive Officer of
the Company and the Bank
Joe C. Minor (3), 1996 $115,000 $ 38,352 7,350 $-0- $11,446
Vice President, Chief 1995 (2) $ 94,154 $ 23,007 5,355 $-0- $ 7,956
Financial Officer, and
Treasurer of the
Company
John D. Roberts (3) 1996 $ 95,670 $ 32,015 5,775 $ 8,779
Senior Vice President
Chief Trust Officer of
the Bank and Vice
President and Secretary
of the Company
Martin A. Dietrich (3) 1996 $100,000 $ 33,349 6,405 $10,028
Senior Vice President -
Retail Banking Division
of the Bank
John R. Bradley (3) 1996 $ 91,315 $ 29,981 5,670 $ 9,320
Senior Vice President
and Senior Commercial
Lender of the Bank
NOTES:
(1) Mr. Forsythe's employment with the Company and the Bank
commenced effective January 1, 1995.
(2) Mr. Minor assumed these positions in September 1995. Prior
thereto he was assistant treasurer and chief financial
officer of the Company.
(3) Did not meet reporting requirements for previous years.
(4) Represents bonuses under the Company's Executive Incentive
Compensation Plan earned in the specified year and paid in
January of the following year.
(5) Individual amounts, and in the aggregate, are immaterial.
(6) Grant amount adjusted for the 5% stock dividends in December
1995 and 1996.
(7) In 1996, 1995, and 1994 the Bank contributed $607,557,
$483,240, and $420,000, respectively, to the Bank's
Employees' Stock Ownership Plan ("ESOP"). With the 1996
contribution, the Bank as trustee of the ESOP will purchase
shares of Common Stock of the Company at the fair market
value on the dates of purchase and will allocate these
shares to the accounts of the participants. The amount
shown includes the amount allocated to the named executive.
An individual's maximum compensation eligible for the ESOP
contribution is $150,000. Includes payments by the Company
with respect to the death benefits agreement ($726 for Mr.
Forsythe), disability agreement ($7,734 for Mr. Forsythe),
and matching contributions by the Company or the Bank
pursuant to the Company's and Bank's Section 401(k)
retirement plan in the amount of $4,500, ESOP contribution
of $8,664, and the value of personal share of the auto of
$3,164 for Mr. Forsythe. ESOP contributions of $7,972,
$7,013, $6,562 and $6,763 and 401(k) matching contributions
of $3,474, $3,015, $2,758 and $2,016 were made for Mr.
Minor, Mr. Dietrich, Mr. Bradley and Mr. Roberts
respectively.
OPTION GRANTS INFORMATION
The following table presents information concerning grants of stock
options made during 1996 to each of the executive officers named in the
Summary Compensation Table above. All information has been adjusted for the
December 1996 stock dividend. No gain to the optionees is possible without an
increase in stock price which will benefit all shareholders proportionately.
These potential realizable values are based solely on arbitrarily assumed
rates of appreciation required by applicable SEC regulations. Actual gains,
if any, on option exercises and common stockholdings are dependent on the
I-7
future performance of NBT Bancorp Inc. Common Stock. There can be no
assurance that the potential realizable values shown in this table will be
achieved.
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
# of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees Price
Name Granted(1) in Fiscal Year ($/Sh) Expiration Date 5% 10%
- ---- ---------- --------------- -------- --------------- -- ---
Daryl R. Forsythe 30,660 30.9% $16.46 January 2006 $317,380 $804,304
Joe C. Minor 7,350 7.4% $16.46 January 2006 $ 76,084 $192,813
John R. Bradley 5,670 5.7% $16.46 January 2006 $ 58,694 $148,741
John D. Roberts 5,775 5.8% $16.46 January 2006 $ 59,781 $151,496
Martin A. Dietrich 6,405 6.4% $16.46 January 2006 $ 66,302 $168,022
NOTES:
(1) Non-qualified options have been granted at fair market value at the date
of grant. At the time of grant, options are 40% vested after one year
from grant date; an additional 20% vests each year thereafter.
(2) The potential realizable value of each grant of options, assuming that the
market price of the underlying security appreciates in value from the date
of grant to the end of the option term, at the specified annualized rates.
The assumed growth rates in price in the Company's stock are not
necessarily indicative of actual performance that may be expected. The
amounts exclude the cost by the executive to exercise such options.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table presents information concerning the exercise of
stock options during 1996 by each of the executive officers named in the
Summary Compensation Table above, and the value at December 31, 1996, of
unexercised options that are exercisable within sixty days of December 31,
1996. These values, unlike the amounts set forth in the column headed "Value
Realized," have not been, and may never be realized. The underlying options
have not been, and may never be, exercised; and actual gains, if any, on
exercise will depend on the value of NBT Bancorp Inc. Common Stock on the
date of exercise. There can be no assurance that these values will be
realized.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End(2) at FY-End(2)
---------------------- --------------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized(1) Unexercisable Unexercisable
- ---- --------------- ----------------- ------------- -------------
Daryl R. Forsythe -0- $-0- 31,645/31,318 $97,184/91,094
Joe C. Minor -0- $-0- 13,200/ 7,469 $52,686/21,327
John R. Bradley -0- $-0- 10,806/ 6,722 $35,765/20,250
John D. Roberts -0- $-0- 5,551/ 5,626 $16,919/16,234
Martin A. Dietrich -0- $-0- 7,960/ 5,741 $28,324/16,087
NOTES:
(1) Represents difference between the fair market value of the securities
underlying the options and the exercise price of the options on the
date of exercise.
(2) Represents difference between the fair market value of the securities
underlying the options and the exercise price of the options at
December 31, 1996.
I-8
RETIREMENT PLAN
The following table presents information with respect to the pension
plan of the Company and the Bank. The table shows estimated annual benefits
payable upon retirement in specified compensation and years of service
classifications for participants retiring on December 31, 1996.
Years of Participation
--------------------------------------------------------
Final Average
Earnings 10 Years 20 Years 30 Years 40 Years
- ------------- ---------- ---------- ---------- -----------
$15,000 N $ 1,979.00 $ 3,994.00 $ 6,213.00 $ 8,432.00
Q 1,841.00 3,716.00 5,780.00 7,845.00
$25,000 N 3,353.00 6,657.00 10,355.00 14,053.00
Q 3,119.00 6,193.00 9,634.00 13,074.00
$40,000 N 5,996.00 11,751.00 18,280.00 24,625.00
Q 5,578.00 10,933.00 17,007.00 22,910.00
$70,000 N 11,632.00 22,985.00 35,754.00 47,799.00
Q 10,822.00 21,384.00 33,263.00 44,469.00
$100,000 N 17,305.00 34,218.00 53,228.00 70,973.00
Q 16,099.00 31,835.00 49,520.00 66,029.00
$200,000 N 28,587.00 57,524.00 89,481.00 116,732.00
Q 26,595.00 53,517.00 83,248.00 108,600.00
$300,000 N 30,897.00 64,432.00 97,966.00 116,732.00
Q 28,745.00 59,944.00 91,142.00 108,600.00
$400,000 N 30,897.00 64,432.00 97,966.00 116,732.00
Q 28,745.00 59,944.00 91,142.00 108,600.00
$500,000 N 30,897.00 64,432.00 97,966.00 116,732.00
Q 28,745.00 59,944.00 91,142.00 108,600.00
N=Normal Form of Benefit for a Single Participant-5 Years Certain and Continuous.
Q=Normal Form of Benefit for a Married Participant-Qualified Joint and Survivor
(50% of benefit payable to spouse at death of Participant).
Spouse's age assumed to be equal to Participant's age for above calculations.
Salaries are assumed to increase at a rate of 4% per year from date of hire through
date of retirement for above calculations.
The Company has in effect a non-contributory pension plan for all
eligible employees which is self-administered. Eligible employees are those
who work in excess of 1,000 hours per year, have completed one year of
service and have attained age 21. The plan is qualified under Section 401(a)
of the Internal Revenue Code. Employer contributions to the plan are computed
on an actuarial basis using the projected unit credit cost method including
amortization of any past service costs over a thirty-year period. Pension
costs are funded as accrued. The minimum required and maximum deductible
contributions for the plan year ending December 31, 1996, were $604,974 and
$715,184, respectively. The plan provides for 100% vesting after five years
of qualified service. Earnable compensation for the plan is defined as fixed
basic annual compensation, including bonuses, overtime and other taxable
compensation, but excluding the Company's cost for any public or private
employee benefit plan, including this retirement plan. Benefit computations
are based on an average final compensation amount which is the average annual
earnable compensation during the five consecutive year period in an
employee's last ten years of qualified service which produces the highest
such average.
As of December 31, 1996, the end of the plan year, the executive
officers named in the Summary Compensation Table above were credited with the
following years of service for purposes of the above table: Daryl R. Forsythe
I-9
(2), Joe C. Minor (4), Martin A. Dietrich (6), John R. Bradley (4) and John
D. Roberts (1).
The annual normal retirement benefit of a participant who becomes
eligible for benefits shall equal the greater of the amounts described in A
and B below, with that sum then reduced by the amount described in C below.
A. The sum of (i), (ii), and (iii) below:
i. The participant's accrued benefit under the predecessor
plan as of September 30, 1989.
ii. For years of benefit service earned after September 30,
1989 and before January 1, 1995, the sum of 1.60% of
the participant's final average earnings for each year
of benefit service plus .60 percent of the
participant's final average earnings that is in excess
of covered compensation for such year of benefit
service.
iii. For years of benefit service earned after December 31,
1994, the sum of 1.25% of the participant's final
average earnings for each such year of benefit service,
plus .60% of the participant's final average earnings
that is in excess of covered compensation for each such
year of benefit service.
B. The sum of 1.60% of the participant's final average earnings
for each year of benefit service through December 31, 1994,
plus .65% of the participant's final average earnings that is
in excess of covered compensation for each year of benefit
service through December 31, 1994.
C. The annual normal retirement benefit payable to the
participant from the Retirement Plan of Irving Bank
Corporation and Affiliated Companies.
The number of years of benefit service taken into
account under the plan shall be limited to the greater of
30, or the number of years of benefit service completed
by the participant as of December 31, 1994 (up to a
maximum of 40 for the basic benefit and a maximum of 35
for the excess portion of the benefit).
I-10
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
There are no employment contracts between the Company or the Bank and
the named executive officers.
CHANGE IN CONTROL CONTRACTS
The Company has entered into a change in control contract with each of
Messrs. Forsythe, Minor, Dietrich, Bradley and Roberts. The contract provides
in general that, in the event that the Company or the Bank is acquired by
another company or any of certain other changes in control of the Company or
the Bank should occur and further if within 24 months from the date of such
acquisition or change in control Messrs. Forsythe, Minor, Dietrich, Bradley
or Roberts respective employment with the Company or the Bank is terminated
without cause or their salary is reduced or their duties or responsibilities
are changed (except in a promotion) Mr. Forsythe will be entitled to receive
severance pay equal to 2.99 times a base amount and Messrs. Minor, Dietrich,
Bradley and Roberts will be entitled to receive 2.0 times a base amount. An
executive's base amount for these purposes is his average annual compensation
includible in his gross taxable income for the five years preceding the year
in which the change in control occurs (or, if he has been employed by the
Company for less than those five years, for the number of those years during
which he has been employed by the Company, with any partial year annualized),
including base salary, non-deferred amounts under annual incentive, long-term
performance, and profit-sharing plans, distributions of previously deferred
amounts under such plans, and ordinary income recognized with respect to
stock options. The agreement is effective until December 31, 1997, and is
automatically renewed for one additional year commencing at December 31, 1997
and each December 31 thereafter.
SUPPLEMENTAL RETIREMENTS BENEFITS
The Company agreed in January 1995 to provide Mr. Forsythe with
supplemental retirement benefits ("SERP"). The SERP will provide that annual
supplemental benefits at normal retirement will be equal to 50% of
Mr. Forsythe's average base salary and bonuses for the five salary years
immediately preceding the date of retirement, less the sum of annual amounts
payable to the individual under (a) the Company's pension plan, (b) the
Company's ESOP, (c) social security, and (d) the pension plan of former
employers, as the case may be. Reduced amounts will be payable under the SERP
in the event Mr. Forsythe takes early retirement. Except in the case of early
retirement, payment of benefits will commence upon Mr. Forsythe's attainment
of age 65. The SERP provides that it shall at all times be unfunded.
A Supplemental Retirement Plan has also been provided to Mr. Roberts who
was employed by the Bank between February 15, 1965, through November 1, 1989
and from February 6, 1995, to date. The purpose of the plan is to provide the
benefits Mr. Roberts would have earned under the Bank's Qualified Retirement
Plan had he been employed continuously by the Bank from February 15, 1965,
through his actual termination of employment at anytime after February 6,
1995. The plan will provide supplemental retirement income in excess of the
retirement benefits otherwise provided to the Executive under the Bank's
Qaulified Retirement Plan.
DARYL R. FORSYTHE EMPLOYMENT
Mr. Forsythe was hired effective January 1, 1995 as president and chief
executive officer of the Company and the Bank. Mr. Forsythe is employed at
will without an employment contract at an annual salary of $240,000 for the
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past year and at $280,000 for 1997. As an executive officer, Mr. Forsythe is
eligible to participate in the Company's and the Bank's various employee
benefit plans, including the Executive Incentive Compensation Plan, the Stock
Option Plan, the retirement plan, the ESOP, and the various health,
disability, and life insurance plans. The Company and Mr. Forsythe have
entered into a wage continuation plan which provides that during the first
three months of disability Mr. Forsythe will receive 100% of his regular
wages reduced by any benefits received under social security, workers'
compensation, state disability plan or any other government plan or other
program, such as group coverage, paid for by the Bank. Additionally, if the
disability extends beyond three months, Mr. Forsythe will receive payments of
$7,000 per month under an insurance policy with New England Mutual Life
Insurance Company. The annual cost of the policy is $7,734, which is
reflected in the Summary Compensation Table above. Mr. Forsythe and the
Company have entered into a death benefits agreement. The policy is a
split-dollar life insurance policy on Mr. Forsythe's behalf in the face
amount of $800,000. The Company is the owner of the policy. Upon
Mr. Forsythe's death, his named beneficiary will receive $600,000 from the
policy's proceeds, while the Company will receive the remainder of the
policy's proceeds. Upon termination of the death benefits agreement (e.g.,
upon termination of Mr. Forsythe's employment), Mr. Forsythe is required to
transfer all of his right, title, and interest in the policy to the Company.
The Company pays the premium on the policy, 75% of the cost being
attributable to Mr. Forsythe and is reflected in the Summary Compensation
Table above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ending December 31, 1996, Everett A. Gilmour,
Chairman of the Company and a member of the Compensation and Benefits
Committee served on the Board of Directors of Preferred Mutual Insurance
Company whose Chairman and CEO is Paul O. Stillman who is Chairman the
Company's and of NBT Bank's Compensation and Benefits Committee. Mr. Gilmour
was Chairman of the Company and the Bank from 1972 to 1988 and January 1995 to
present.
The law firm of Kowalczyk, Tolles, Deery and Johnston, of which Director
Andrew S. Kowalczyk, Jr. is a partner and a member of the Compensation and
Benefits Committee, provides legal services to the Company and the Bank from
time to time. Payments for services for 1996 totaled $114,000. These services
occur in the ordinary course of business and at the same terms ad those
prevailing for comparable transactions with other law firms.
John D. Roberts, an Executive Officer of the Company is a director of
the I.L. Richer Co. whose President and CEO, John C. Mitchell, serves on the
Compensation and Benefits Committee.
Richard Monroe, a member of the Compensation and Benefits Committee, is
a retiree of the Company and served as Senior Vice President - Manager of
Newark Valley Office from 1973 to 1985.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The primary responsibility of the Compensation and Benefits Committee
("Committee") is to design, implement, and administer all facets of the
compensation and benefits programs of the Company for all employees. The
Committee is composed entirely of outside, non-employee directors. The
Committee approves participants who are eligible for the Executive Incentive
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Compensation Plan, sets the Plan targets for each year and approves payouts
thereon, awards stock option grants, approves the annual contribution to the
Employee Stock Ownership Plan for all employees, approves executive
compensation, annually reviews the performance of the CEO and recommends the
CEO compensation package to the Board. Actions of the Committee are presented
to the Board of Directors for approval. The objective of the Company's
executive compensation program is to develop and maintain executive reward
programs which contribute to the enhancement of shareholder value, while
attracting and retaining key executives who are critical to the long-term
success of the Company. It is expected that total compensation will vary
annually, based on Company and individual performance.
The Compensation Committee retains the services of an executive salary
and benefits consultant, who is independent and unassociated with the Company,
the CEO, or any member of the Board or management to assist in setting the
total compensation package of senior management. To assist the Committee in
fulfilling its responsibilities, the independent consultant provides advice
and guidance directed toward ensuring that the Board's practices are
consistent within the industry, consistent with and in support of the goals
and objectives of the Company and fairly applied throughout the Company.
The Committee believes it is critical to the ongoing success of the
Company that its executives continue to be among the most highly qualified
and talented available to lead the organization in the creation of
shareholder value. In support of this objective, the philosophy of the
Committee in approving and recommending executive compensation is based upon
the following criteria:
* Design a total compensation package that includes a base salary,
an annual incentive plan that is linked to shareholder interests,
and a stock option plan that encourages share ownership and is
also linked with shareholder interests.
* Set base salaries that are commensurate with each individual's
responsibility, experience, and contribution to the Company.
* Ensure that salaries are competitive within the industry so as to
be able to attract and retain highly qualified executives.
* Promote a pay for performance culture.
The Company's executive compensation program, discussed in detail
below, is made up of both fixed (base salary) and variable (incentive)
compensation elements. Variable compensation consists of annual cash
incentives and stock option grants. The Committee and the management of the
Company believe that variable compensation should be based both on short-term
and long-term measurements and be directly and visibly tied to Company
performance, so that, while introducing appropriate risk in the payout levels,
such compensation will promote a pay for performance culture within the
executive team.
In reviewing executive compensation, the Committee considers a variety
of factors including past performance and the Board's expectations for
improvement in the future. The CEO and senior executive management review
executive compensation throughout the year. The CEO presents recommendations
for compensation for the Senior Management Team to the Committee each year
prior to year-end for their approval. The Committee annually reviews the
CEO's performance against pre-established goals and with respect to the
performance of the Company. Improvements in historical measures such as ROA,
ROE, profit improvement, non-performing assets to total assets and net
non-interest expense to total expense are considered in the Committee's
assessment of performance. During 1996, all of these measures showed
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improvement from 1995. ROA and ROE rose from .9% and 9.18% to 1.11% and
11.80%, respectively, improvements of 21% for ROA and 28% for ROE. The
Committee maintained safety and soundness and once again received a "blue
ribbon" and "five star" ratings by outside agencies. The Company maintained
its satisfactory ratings from regulatory examinations as well.
BASE SALARY. Although not specifically weighted, the performance of each
executive, the level of responsibility, and current inflationary indices were
considered in establishing base salaries for executive officers. Salary
ranges have been established with the assistance of the salary and benefits
consultant and are based upon responsibility, experience, and individual
performance. Mr. Forsythe receives an annual salary of $280,000 for 1997. No
written employment agreement has been entered into between the Company or the
Bank and Mr. Forsythe. In determining Mr. Forsythe's salary, the Committee
took into consideration the salaries of CEOs of similar-sized banks, the
performance of the Bank, and the recommendations of the salary consultant.
EXECUTIVE INCENTIVE COMPENSATION PLAN. The Committee, working with an
outside salary and benefits consultant designed the current incentive plan
that would link the payout with shareholder interests. The Plan is reviewed
annually by the Committee. The Plan, as it now exists has three components
which determine the potential award within the Plan: Return on Assets,
Return on Equity, and the dollar increase in net income over the prior year.
The Plan has a minimum net income requirement before any payout is possible.
There are participative levels within the Plan which range from the maximum
payout being 40% of salary for Level I to 10% at the lowest level. Each level
has a corporate performance component and an individual performance component.
At Level I the corporate component is 80% and the personal component is 20%.
The Committee sets "stretch" targets in order to achieve the maximum payout.
As part of the executive incentive compensation plan a separate level
was established for the CEO. The Plan provided for a maximum payout of 60% of
salary with the range of the bonus awarded being based on corporate
performance. Mr. Forsythe's bonus earned in 1996 was $120,000 (50%). The
bonus was paid in 1997.
Other executives receiving bonuses were evaluated based on comparisons
to predetermined corporate and personal goals. Each officer achieved a
majority of their goals and were comparably rewarded.
I-14
STOCK OPTION PLAN. In order to provide long-term incentives to key
employees, including executive officers, to encourage share ownership by key
officers, and to retain and motivate key officers to further shareholder
returns, the Company has a Stock Option Plan. The Committee believes that
stock options, which provide value to participants only when the Company's
shareholders benefit from stock price appreciation, are an important
component of the Company's executive compensation program. The number of
options currently held by an officer is not a factor in determining
individual grants. The value of stock options granted in 1996 ranged from
200% of base compensation at the CEO level down to 50% of base compensation.
"Value" is determined by multiplying the number of options granted by the
fair market value of the Company's Common Stock which underlies such options
on the date of the grant. With respect to the options granted in 1996 to the
CEO and to all other executive officers, the Committee in making the awards
considered the various factors referred to above, especially the positive
growth of the Company, its financial condition, and profitability. The
Committee did not apply any specific weighting to the factors considered. The
number of options which the Committee granted to the officers was based upon
individual performance and level of responsibility, subject to
Committee-imposed restrictions. The Committee determined that the award level
must be sufficient in size to provide a strong incentive for participants to
work for long-term business interests of the Company, thereby creating
additional shareholder value resulting from the appreciation of the Company's
stock, and to become significant owners of the Company. Options are granted
at the fair market value of the Company's stock at the time of grant. Under
the 1993 Plan, options vest at the rate of 40% after one year of date of
grant and an additional 20% each year thereafter. Since an option gives the
officer only the right to buy these shares at a fixed price over a future
period, the compensation value is derived by the incentive to increase
shareholder value in the future; hence, the motivation to improve the
Company's performance.
MEMBERS OF THE COMPENSATION AND BENEFITS COMMITTEE
Paul O. Stillman - Chairman
Everett A. Gilmour
Dr. Peter B. Gregory
Andrew S. Kowalczyk, Jr.
John C. Mitchell
Richard F. Monroe
EMPLOYEES' STOCK OWNERSHIP PLAN
The Company sponsors a non-contributory, IRS qualified Employees' Stock
Ownership Plan. The plan is administered by the Bank and plan investments are
primarily in the Company's Common Stock. The stock is voted by the plan's
Trustees only as participants direct the Trustees to vote by properly
executing a proxy. At December 31, 1996, the plan owned 493,613 shares of the
Company's Common Stock, 5.97% of total shares outstanding.
Employees eligible to participate in the plan are those who work in
excess of 1,000 hours per year, have completed one year of service and have
attained age 21. The plan provides for partial vesting of an employee's
interest in the plan at approximately 20% per year, with 100% vesting being
achieved after seven years of qualified service.
Discretionary contributions, as determined annually by the Board of
Directors, are made by the Company to a separate trust for the benefit of the
participating employees. Annual contributions may not exceed amounts
deductible for Federal income tax purposes. Employer contributions are
allocated among all participants in proportion that each participant's
I-15
compensation for the plan year bears to the total compensation of all
participants for the plan year. (Compensation for the plan is defined as
fixed basic annual compensation, including bonuses, overtime and other
taxable compensation, but excluding the Company's cost for any public or
private employee benefit plan, including the retirement, executive incentive
compensation and ESOP plans.) The Board of Directors may amend the plan at
any time.
The value of a participant's account is the total of allocated employer
contributions, plus the earnings on those contributions, plus or minus any
gain or loss on the investment of the contributions.
Normal retirement age under the plan is 65. The plan also provides for
early retirement at age 55 and disability retirement at any age. In the event
a participant dies before retiring under the plan, the value of his account
in the plan will be paid to his beneficiary.
A participant's retirement benefit under the plan is the value of his
account at the date of retirement. Effective January 1, 1985, the normal form
of retirement benefit for a married employee is a joint and survivor annuity;
for an employee who is not married, a lump sum distribution of cash. Other
available retirement options are: 1) installment payments of cash and 2)
distribution of the account value in employer securities, both subject to
obtaining spousal waivers.
As a qualified plan (under current law) employer contributions and plan
earnings are not currently taxed to employees; retirement benefits will be
taxable to employees when received from the plan.
In 1996 the Company made a contribution of 607,557 to the plan. The
Summary Compensation Table above reflects payments made to the Company's
named executive officers under the plan.
401(K) PLAN
The Company and the Bank have adopted a Section 401(k) retirement plan.
All employees of the Company and the Bank are eligible to participate in the
plan after one year's service, are at least 21 years of age, and complete
1,000 hours of service during the year. The plan provides that any employee
may elect to defer up to 15% of his or her salary for retirement (subject to
a maximum limitation of $9,500) and that the Company or the Bank will provide
a matching contribution of 75% of the first 4% of the employee's deferred
amount. In 1996, the Company or the Bank provided matching contributions to
Mr. Forsythe of $4,500, Mr. Minor of $3,474, Mr. Dietrich of $3,015,
Mr. Bradley of $2,758, and Mr. Roberts of $2,016. These payments are
reflected in the Summary Compensation Table.
STOCK OPTION PLAN
The Board of Directors adopted Stock Option Plans in 1986 and in 1993,
which were subsequently approved by the Company's stockholders at the 1987
and 1993 Annual Meetings, respectively. The purposes of the plans are to
encourage ownership of capital stock of the Company by officers and other key
employees of the Company and its subsidiaries in order to help the Company
attract and retain in its service persons of exceptional competence, to
furnish added incentives for them to increase their efforts on behalf of the
Company, and to gain for the Company the advantages inherent in key employees
having an ownership interest in the Company. Pursuant to the approval of the
1993 Stock Option Plan, the 1986 plan was "frozen" and no new options or
stock appreciation rights may be granted under that plan.
I-16
Options may be issued to full-time key employees (officers, whether or
not they are Directors, and Directors who are also employees, including, but
not limited to, President, Chief Executive Officer, Branch Manager,
Department Head or Division Manager) of the Company or any subsidiary. Any
employee of the Company or any subsidiary may be determined to be a key
employee and may be granted an option at the discretion of the Board of
Directors.
The Plan permits the grant of either non-qualified stock options or
incentive stock options as determined by the Board of Directors. The grants,
when exercised, may not exceed any limit specified by the Internal Revenue
Code, Section 422A, or $100,000 annually, whichever is smaller, in the event
that the optionee has incentive stock options.
The exercise price and expiration dates with respect to each option are
determined by the Compensation and Benefits Committee, but in no event may
the price be less than 100% of the fair market value of the Company's Common
Stock. "Fair Market Value" is defined as the average between the highest and
lowest quoted selling prices of the Common Stock on the National Market
System of NASDAQ on the date of grant with respect to incentive stock options,
and on the five preceding trading days prior to the grant with respect to
nonqualified options. Payment of the exercise price may be made by check or,
with the consent of the Company, by delivery of shares of Common Stock of the
Company, having fair market value equal to the exercise price or by the
purchaser's fully-secured promissory note, bearing interest at such rate as
may be determined by the Board of Directors. No option may be transferred, and
each option is exercisable only by the optionee during its term in accordance
with the provisions of the grant, provided he is currently employed by, or
retired from, the Company or one of its subsidiaries. In the event that an
optionee dies or becomes permanently disabled, an option will become
exercisable in full on the date of death or determination of disability, and
such option will remain exercisable by the optionee or his legal
representative for six months after the date of death or disability. In the
event that an optionee's employment by the Company is terminated for reasons
other than retirement, disability or death, an option may be exercised within
thirty days of termination of employment to the extent that it was
exercisable at the date of such termination. No option granted under the Plan
may extend for a period exceeding ten years from the date of the grant, and
the Committee will determine the sequence in which grants may be exercised.
The Plan is administered by the Compensation and Benefits Committee. The
Board may, in its discretion, at any time, or from time to time, while the
Plan is operative, make changes therein or amendments thereto without
stockholder approval which, in its opinion, are not inconsistent with the
purpose of the Plan, including, but not limited to, changes in the allocation
of benefits which may increase the cost to the Company. The Plan contains
provisions for adjustments in the event of stock splits, stock dividends and
similar changes.
As of December 31, 1996, 607,452 shares of the Company's Common Stock
have been reserved for issuance under the Plan. In 1996, non-qualified
options, which expire in 2006, for 109,100 shares were granted to 30 key
employees, at option prices of $15.68 to $15.89. Options for 276,984 shares
were outstanding at December 31, 1996 with option prices ranging from $9.01
to $15.89 per share for all officers as a group. All options were at 100% of
fair market value as of date of the grant. Options and option prices have
been adjusted for all stock dividends to date.
Under current law, a participant who received non-qualified stock
options or incentive stock options, will not realize any income, nor will the
Company receive a deduction, for Federal income tax purposes, in the year of
I-17
the grant. Ordinary income will be realized by the recipient of an option at
the time shares are transferred, or cash paid to him, pursuant to his
exercise of a non-qualified stock option. In the case of a non-qualified
stock option, the amount of such income will be equal to the difference
between the option price and the fair market value of the shares of common
stock on the date of exercise.
EXECUTIVE INCENTIVE COMPENSATION PLAN
The Company adopted, effective January 1, 1992, an Executive Incentive
Compensation Plan (hereinafter, the "Plan") to promote individual motivation
for the achievement of the Company's financial and operating objectives and
to aid in attracting and retaining highly qualified personnel. Pursuant to
the Plan, officers of the Bank are eligible to receive cash in the event
certain performance criteria are satisfied. The operation of the Plan is
predicated on the Bank's attaining and exceeding management performance
goals. The goals consist of return on average assets, return on stockholders'
equity, and profit improvement. Unless a participant elects to have all or a
portion of his award deferred, distribution of awards will be made in cash
during the first quarter after year-end. All distributions must be approved
by the Compensation and Benefits Committee. This Committee has broad
discretion in determining who will be eligible to receive incentive
compensation awards and has full power and authority to interpret, manage,
and administer the Plan. The Plan provides that the President and Chief
Executive Officer of the Company will recommend to the Committee the amounts
to be awarded to individual participants. The President and Chief Executive
Officer may also recommend a change beyond the formula to a bonus award to a
participant. The Committee has the authority to amend such recommendation.
Bonus awards are made pursuant to an established formula. An employee
will be placed into a particular level, according to the participant's office
and responsibility. Depending upon the particular level, the award will range
from 0% to 20% of the participant's regular salary at the lowest level to 0%
to 60% of the salary at the CEO level. The formula provides that the
financial criteria necessary for plan operation consist of return on average
assets, return on equity, and profit improvement. Incentive distributions
will be based upon attainment of corporate performance goals to establish the
total awards. The total awards, in turn, will be determined by reference to
both corporate and individual components. The corporate component will be
determined by attainment of corporate goals (as established by the Committee)
and the individual component will be determined by attainment of individual
goals (objectives mutually agreed upon between participants and the division
head and approved by the Chief Executive Officer). The corporate component
will range from 100% for the highest level (the President and Chief Executive
Officer) to 60% for the lowest level, whereas the individual component will
range from 0% for the highest level to 40% for the lowest level.
The Plan also provides that, in order that the Chief Executive Officer
will own such number of shares of Company Common Stock as will equal at the
end of the five years twice his current base salary.
The amount of incentive compensation awards to the individuals named in
the Summary Compensation Table is included in the "Bonus" column of that
table. Payments of bonuses for 1996 pursuant to the Plan were made
January 1997.
I-18
PERSONAL BENEFITS
During the past fiscal year, no director, officer or principal
stockholder or members of their respective families received any banking
services or other benefits, including use of any staff, facilities or
properties of the Company, not directly related to job performance and not
generally available to all employees of the Company. Health insurance and
group life insurance are routinely provided all staff members.
RELATED PARTY TRANSACTIONS
The Bank has had, and expects in the future to have, transactions in the
ordinary course of business with directors and officers of the Company and
the Bank on the same terms as those prevailing at the time for comparable
transactions with others. The Bank has extended credit to its directors and
officers and their business interests. The total of these loans was
$3,330,297, $3,932,537, and $4,238,002 at December 31, 1994, 1995, and 1996
respectively, representing 3.4%, 3.6%, and 4.0% of equity capital at those
dates. The highest aggregate amounts outstanding on such loans during 1994,
1995, and 1996 were $4,189,790 $4,650,773 and $4,238,002 which represented
4.3%, 4.3%, and 4% of equity capital at those interim dates.
All outstanding loans made by the Bank to such persons were made in the
ordinary course of business on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and, in the opinion of management, do not
present more than normal risk of collectability or present other unfavorable
features. Based upon the information available to it, the Bank does not
consider that any of the officers or directors of the Bank or the Company had
a material interest in any transactions during the last year, except as
stated above, or have such an interest in any proposed transactions.
I-19
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
(i.e., price change, reinvestment of cash dividends and stock dividends
received) on the Company's Common Stock against the cumulative total return
of the NASDAQ Stock Market (US Companies) Index and the Index for NASDAQ
Financial Stocks. The stock performance graph assumes that $100 was invested
on December 31, 1991. The graph further assumes the reinvestment of dividends
into additional shares of the same class of equity securities at the
frequency with which dividends are paid on such securities during the
relevant fiscal year. The yearly points marked on the horizontal axis
correspond to December 31 of that year. Each of the referenced indices is
calculated in the same manner. All are market-capitalization-weighted
indices, so companies judged by the market to be more important (i.e., more
valuable) count for more in all indices.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG NBT BANCORP INC.,
THE INDEX FOR NASDAQ FINANCIAL STOCKS, AND THE NASDAQ STOCK MARKET (US
COMPANIES) INDEX.
{FOLLOWING IS A TABULAR PRESENTATION OF DATA POINTS FOR THE GRAPH WHICH
APPEARS HERE IN THE PAPER COPY}
Measurement NBT NASDAQ NASDAQ
Period (Fiscal BANCORP Financial Market Index
Year Covered) INC. Stocks Index (US Companies)
- -------------- ------- ------------ --------------
4Q91 $100.00 $100.00 $100.00
1Q92 $101.34 $110.89 $102.97
2Q92 $121.02 $118.76 $ 96.12
3Q92 $119.82 $122.56 $ 99.48
4Q92 $129.01 $140.67 $115.45
1Q93 $150.12 $153.52 $117.70
2Q93 $151.11 $148.89 $120.06
3Q93 $158.94 $161.74 $130.10
4Q93 $175.07 $159.20 $132.49
1Q94 $168.98 $155.49 $126.81
2Q94 $160.46 $165.53 $120.40
3Q94 $156.74 $167.30 $130.38
4Q94 $169.72 $153.97 $128.26
1Q95 $165.80 $168.75 $139.69
2Q95 $169.61 $186.60 $159.91
3Q95 $173.51 $212.95 $179.09
4Q95 $194.63 $226.90 $180.84
1Q96 $190.60 $237.54 $189.48
2Q96 $184.99 $240.49 $204.00
3Q96 $192.17 $266.70 $211.32
4Q96 $216.88 $300.44 $221.91
I-20
PROPOSAL NUMBER 2
PROPOSAL TO RATIFY THE BOARD OF DIRECTORS ACTION IN SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
COMPANY
The Board of Directors upon the recommendation of the Audit, Compliance
and Loan Review Committee has appointed KPMG Peat Marwick LLP as independent
public accountants of the Company to examine the financial statements for the
fiscal year ending December 31, 1997. KPMG Peat Marwick LLP has served as the
Company's independent public accountants since January 1987. Ratification of
such employment will require the affirmative vote of the holders of a
majority of the shares represented at the Meeting in person or by proxy and
entitled to vote. The Board of Directors recommends a vote FOR Proposal
Number 2. In the event the stockholders fail to ratify this employment, it
will be considered as a directive to the Board of Directors to select other
auditors for the current year.
Representatives of KPMG Peat Marwick LLP are expected to be present at
the Meeting and will have an opportunity to make a statement if they desire
to do so. They will also be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Management anticipates mailing the proxy materials for the 1998 Annual
Meeting on or about March 16, 1998. If any security holder wishes a proposal
to be considered for inclusion in the 1998 Proxy Statement, this material
must be received by the Chief Executive Officer no later than November
14, 1997.
OTHER MATTERS
Management does not know of any other matters which may come before the
Meeting. However, if any matters properly come before the Meeting, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with the recommendations of the Board of Directors. It is
important that proxies be returned promptly. Therefore, the stockholders who
do not expect to attend in person are urged to mark, date, sign and return
the enclosed proxy in the accompanying postage paid envelope.
By Order of the Board of Directors
/s/DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
/s/JOE C. MINOR
Joe C. Minor
Vice President, Chief Financial Officer
and Treasurer
Dated: March 17, 1997
I-21
PROXY FOR 1997 ANNUAL MEETING OF NBT BANCORP INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
KNOWN ALL MEN BY THESE PRESENTS that I (we), the undersigned Stockholder(s)
of NBT Bancorp Inc. (the "Company"), do hereby nominate, constitute and
appoint John R. Huhtala and James A. Hoy or any one of them (with full power
to act alone), my true and lawful attorney(s) with full power of substitution,
for me and in my name, place and stead to vote all the Common Stock of said
Company, standing in my name on its books February 28, 1997, at the Annual
Meeting of its Stockholders to be held at Norwich Senior High School, Midland
Drive, Norwich, New York 13815 on April 19, 1997, at 11:00 a.m., or at any
adjournments thereof, with all the powers the undersigned would possess if
personally present.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BELOW. IN THE
ABSENCE OF ANY DIRECTION, THE SHARES REPRESENTED HEREBY SHALL BE VOTED TO FIX
THE NUMBER OF DIRECTORS AT SIX, FOR THE ELECTION OF THE NOMINEES LISTED, AND
FOR RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
Comments/Address Changes: ___________________________________________
[ X ] Please mark your votes as in this example.
FOR ALL WITHHOLD FROM
NOMINEES ALL NOMINEES
1) Election of Directors. [ ] [ ]
Fix the number of Directors
at six and the election of
nominees listed below:
Andrew S. Kowalczyk, Jr.
John C. Mitchell
The Board of Directors recommends a vote FOR the Nominees.
IF YOU DO NOT WICH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE,
DRAW A LINE THROUGH THAT PERSON'S NAME AT LEFT.
FOR AGAINST ABSTAIN
2) Approval of the appointment [ ] [ ] [ ]
of KPMG Peat Marwick LLP
as Independent Public
Accountants for the
Company for 1997.
The Board of Directors recommends a vote for APPROVAL.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or any adjournment or
postponed thereof.
Mark box at right if comments or
address change have been noted on the [ ]
reverse side of this card.
SIGNATURE(S)__________________________DATE_________
NOTE: Please sign exactly as name appears hereon. Joint
owners should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.
