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. DEIERLIEN
----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box)
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $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:
[ X ] 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: $125
(2) Form, schedule or registration statement no.: Preliminary Proxy
Statement
(3) Filing party: Lawrence S. Lese
(4) Date filed: 03/02/98
NBT BANCORP INC.
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
March 17, 1998
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 18, 1998 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, 1998.
2. Ratification of the Board of Directors' action of the selection
of independent public accountants for the year 1998.
3. A resolution to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock to 15,000,000
shares.
4. Approval of a proposal by the Board of Directors to amend the 1993
Stock Option Plan.
5. 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
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 Saturday, April 18, 1998
(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, 1998.
A copy of Form 10-K (Annual Report) for December 31, 1997, 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, 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, "FOR"
ratification of the auditor, "FOR" approval to amend the Company's Certificate
to increase the Company's authorized Common Stock, and "FOR" approval of the
amendments to the 1993 Stock Option Plan. 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 27,
1998, 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 9,049,820 shares of
Common Stock, no par value, stated value $1.00 per share. There were 3,784
shareholders of record on that date. 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, 1997, of 4,222,308 shares, or 46.8%,
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 78 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 2001, and until their successors are elected
and qualify. The persons named in the enclosed proxy intend to vote for such
nominees for election as directors, but if the nominees should be unable to
serve, proxies will be voted for such substitute nominees as shall be
I-2
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 12/31/97 (b) Outstanding
- -----------------------------------------------------------------------------------------------------------------------------------
Nominees for Directors with terms expiring in 2001:
Daryl R. Forsythe 08/02/43 President & CEO of NBT 1992 13,068(1) 0.14%
Bancorp Inc. & the Bank 540(1)(b) *
since January 1995 10,218(2) 0.11%
Vice President & General 1,029(2)(b) *
Manager of Simmonds Precision 59,554(3) 0.66%
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 60,853(1) 0.68%
and the Bank since January 1995 3,203(2) *
Retired Chairman of NBT 1,951(2)(b) *
Bancorp Inc. for more than
5 years previous thereto
Directorships:
Preferred Mutual Ins. Co.(c);
NYS Electric & Gas Co.;
Norwich Aero Products, Inc.;
NBT Bank, N.A. since 1962
Directors with terms expiring in 2000:
Andrew S. Kowalczyk, Jr. 09/27/35 Partner - Kowalczyk, Tolles, 1994 2,041(1) *
Deery & Johnston, attorneys
Director of NBT Bank, N.A.
since 1994
John C. Mitchell 05/07/50 President & CEO of 1994 6,443(1) *
I.L. Richer Co. 2,592(2)(b) *
(agri. business)
Directorships:
Preferred Mutual Ins. Co.(c);
NBT Bank, N.A. since 1993
Directors with terms expiring in 1999:
Peter B. Gregory 05/07/35 Partner, Gatehouse Antiques 1987 51,745(1) 0.57%
Director of NBT Bank, N.A. 7,219(1)(b) *
since 1978 17,544(2)(b) 0.19%
56,772(d) 0.63%
Paul O. Stillman 01/15/33 Chairman of Preferred 1986 17,599(1) 0.20%
Mutual Ins. Co. (c) 462(2)(b) *
Directorships:
Excess Reinsurance Co.;
Preferred Mutual Ins. Co. (c);
Leatherstocking Cooperative
Ins. Co;
NBT Bank, N.A. since 1977
I-3
Executive Officers of NBT Bancorp Inc.
other than Directors who are Officers
Number of
Present Position Common Shares Percent
Date of and Principal Beneficially Owned of Shares
Name Date of Birth Employment Position Last Five Years on 12/31/97(b) Outstanding
John R. Bradley 9/28/43 4/19/93 Senior Vice President - 1,644(1) *
Commercial Banking since May 1993 908(1)(b) *
Senior Vice President and 17,799(3) 0.20%
Senior Regional Lender -
Fleet Bank 1965 to 1993
Martin A. Dietrich 4/3/55 3/1/81 Senior Vice President - Retail Banking 3,551(1) *
since April 1996 3,360(1)(b) *
Senior Vice President - 1,926(2) *
Chief Credit Officer 1995 - 1996 578(2)(b) *
Regional Manager 1993 - 1995 14,187(3) 0.16%
Director of Marketing 1991 - 1993 4,763(e) *
Joe C. Minor 10/7/42 3/1/93 Chief Financial Officer 2,279(1) *
& Treasurer of NBT 1,180(1)(b) *
Bancorp Inc. since September 1995 21,088(3) 0.23%
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 of 12,522(1) 0.14%
NBT Bancorp Inc. since September 1995 750(1)(b) *
Senior Vice President and 195(2)(b) *
Chief Trust Officer of the Bank 11,199(3) 0.12%
since February 1995
Executive Vice President
Chenango Mutual Insurance Co.
1989 to 1995
All directors and executive officers as a group beneficially owned
421,591 shares as of December 31, 1997, which represented 4.68% 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 38,307 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, 1997, are included.
(c) Preferred Mutual Insurance Company, of which Paul O.
Stillman is Chairman and Director, and Everett A. Gilmour
and John C. Mitchell, are Directors, owns 87,104 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.
(f) The Everett & Pearl Gilmour Foundation, of which Everett
Gilmour is a Director, owns 7,000 shares, Mr. Gilmour
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, 1997.
* Less than .1%
I-4
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1997, there were four 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 1997, 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 1997. 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 1997.
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 reports of changes in beneficial
ownership of Company securities. The Bank endeavors to assist Directors and
I-5
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 1997, members of the Board of Directors received a $3,000 annual
retainer in the form of restricted stock 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 1998, members
of the Board of Directors will continue to 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 1997 and whose total annual salary
and bonus exceeded $100,000 in 1997.
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(3) Compensation(4) Options(5) Payouts Compensation(6)
Daryl R. Forsythe, 1997 $280,000 $168,000 32,760 $-0- $31,798
President and Chief 1996 $240,000 $120,000 32,193 $-0- $24,788
Executive Officer of 1995 $240,000 $120,000 33,918 $-0- $13,756
the Company and the Bank
Joe C. Minor (2), 1997 $125,000 $ 55,400 9,135 $-0- $14,400
Chief Financial 1996 $115,000 $ 38,352 7,717 $-0- $11,446
Officer and 1995(1) $ 94,154 $ 23,007 5,903 $-0- $ 7,956
Treasurer of the
Company and the Bank
John D. Roberts (2) 1997 $103,000 $ 45,000 7,560 $12,164
Senior Vice President 1996 $ 95,670 $ 32,015 6,063 $ 8,779
Chief Trust Officer of
the Bank and Vice
President and Secretary
of the Company
Martin A. Dietrich (2) 1997 $110,000 $ 49,000 8,085 $12,992
Senior Vice President - 1996 $100,000 $ 33,349 6,725 $10,028
Retail Banking Division
of the Bank
John R. Bradley (2) 1997 $ 95,000 $ 42,000 6,930 $11,832
Senior Vice President 1996 $ 91,315 $ 29,981 5,953 $ 9,320
and Senior Commercial
Lender of the Bank
NOTES:
(1) Mr. Minor assumed these positions in September 1995. Prior thereto he
was assistant treasurer and chief accounting officer of the Company.
(2) Did not meet reporting requirements for previous years.
(3) Represents bonuses under the Company's Executive Incentive Compensation
Plan earned in the specified year and paid in January of the following
year.
(4) Individual amounts, and in the aggregate, are immaterial.
(5) Grant amount adjusted for the 5% stock dividends in December 1995,
1996, and 1997.
(6) In 1997, 1996, and 1995 the Bank contributed $424,302, $607,557, and
$483,240, respectively, to the Bank's Employees' Stock Ownership Plan
("ESOP"). With the 1997 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 ($774 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
$8,000, ESOP contribution of $6,400, and the value of personal share
of the auto of $5,684 for Mr. Forsythe. ESOP contributions of $6,400,
$5,774, $5,259 and $5,407 and 401(k) matching contributions of $8,000,
$7,218, $6,573 and $6,757 were made for Mr. Minor, Mr. Dietrich, Mr.
Bradley and Mr. Roberts respectively.
OPTION GRANTS INFORMATION
The following table presents information concerning grants of stock options
made during 1997 to each of the executive officers named in the Summary
Compensation Table above. All information has been adjusted for the December
1997 stock dividend. No gain to the optionees is possible without an increase in
stock price which will benefit all shareholders proportionately. These potential
realizable values are based solely on arbitrarily assumed rates of appreciation
required by applicable SEC regulations. Actual gains, if any, on option
exercises and common stockholdings are dependent on the future performance of
NBT Bancorp Inc. Common Stock. There can be no assurance that the potential
realizable values shown in this table will be achieved.
I-7
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants For Option Term (2)
------------------------------------------------------------------ ----------------------------
# of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees Price
NAME Granted(1) In Fiscal Year ($/SH) Expiration Date 5% 10%
- ---- ---------- --------------- --------- --------------- -- ---
Daryl R. Forsythe 32,760 27.8% 17.11 January 2007 $352,510 $893,330
Joe C. Minor 9,135 7.8% 17.11 January 2007 $ 98,296 $249,102
John R. Bradley 6,930 5.9% 17.11 January 2007 $ 74,569 $188,974
John D. Roberts 7,560 6.4% 17.11 January 2007 $ 81,349 $206,153
Martin A. Dietrich 8,085 6.9% 17.11 January 2007 $ 86,998 $220,469
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 1997 by each of the executive officers named in the Summary
Compensation Table above, and the value at December 31, 1997, of unexercised
options that are exercisable within sixty days of December 31, 1997. 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- 59,554/39,316 711,188/436,869
Joe C. Minor -0- $-0- 21,008/ 9,748 266,464/106,605
John R. Bradley -0- $-0- 17,799/ 7,534 218,920/ 82,631
John D. Roberts -0- $-0- 11,199/ 8,095 132,082/ 88,684
Martin A. Dietrich -0- $-0- 14,187/ 8,281 172,750/ 89,939
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, 1997.
I-8
RETIREMENT PLAN
The following table presents information with respect to the pension plan
of the Company and the Bank. The table shows the estimated annual benefits
payable upon retirement in specified compensation and years of service
classifications for participants retiring on December 31, 1997.
Years of Participation
--------------------------------------------------------
Final Average
Earnings 10 Years 20 Years 30 Years 40 Years
- ------------- ---------- ---------- ---------- -----------
$ 15,000 N $ 2,030.32 $ 3,627.11 $ 5,760.70 $ 7,894.29
Q 1,888.89 3,374.44 5,359.41 7,344.37
$ 25,000 N 3,418.43 6,045.18 9,601.16 13,157.15
Q 3,180.30 5,624.07 8,932.34 12,240.62
$ 40,000 N 6,051.97 10,387.42 16,497.67 22,523.78
Q 5,630.39 9,663.83 15,348.44 20,954.77
$ 70,000 N 11,827.04 20,588.65 32,699.63 44,379.76
Q 11,003.17 19,154.45 30,421.77 41,288.26
$100,000 N 17,628.36 30,789.89 48,901.58 66,235.73
Q 16,400.37 28,645.06 45,495.10 61,621.75
$200,000 N 28,758.10 54,160.78 86,020.06 116,307.48
Q 26,754.81 50,387.94 80,027.90 108,205.50
$300,000 N 30,407.63 63,928.63 97,449.63 121,595.33
Q 28,289.43 59,475.36 90,661.29 113,125.00
$400,000 N 30,407.63 63,928.63 97,449.63 121,595.33
Q 28,289.43 59,475.36 90,661.29 113,125.00
$500,000 N 30,407.63 63,928.63 97,449.63 121,595.33
Q 28,289.43 59,475.36 90,661.29 113,125.00
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, 1997, were $715,728.00 and $972,205.00, 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.
I-9
The annual normal retirement benefit of a participant who becomes eligible
for benefits shall equal the greater of the amounts described in A and B below,
with that sum then reduced by the amount described in C below.
A. The sum of (i), (ii), and (iii) below:
i. The participant's accrued benefit under the predecessor plan
as of September 30, 1989.
ii. For years of benefit service earned after September 30, 1989
and before January 1, 1995, the sum of 1.60 percent of the
participant's final average earnings 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 percent of the participant's final average
earnings for each such year of benefit service, plus .60
percent of the participant's final average earnings that is
in excess of covered compensation for each such year of
benefit service.
B. The sum of 1.60 percent of the participant's final average
earnings for each year of benefit service through December 31,
1994, plus .65% of the participant's final average earnings
that is in excess of covered compensation for each year of
benefit service through December 31, 1994.
C. The annual normal retirement benefit payable to the participant
from the Retirement Plan of Irving Bank Corporation and
Affiliated Companies.
The number of years of benefit service taken into account under
the plan shall be limited to the greater of 30, or the number
of years of benefit service completed by the participant as of
December 31, 1994 (up to a maximum of 40 for the basic benefit
and a maximum of 35 for the excess portion of the benefit).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
There 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, 1998, and is automatically renewed for
one additional year commencing at December 31, 1998 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
I-10
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 Qualified
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 $280,000 for the past year
and at $300,000 for 1998. 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 The New England. 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, 1997, 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 is Paul O. Stillman who is Chairman of 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 1997 totaled $87,000. These services
occur in the ordinary course of business and at the same terms and 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.
I-11
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 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 1997, all of these measures showed improvement from 1996. ROA and ROE
rose from 1.10% and 11.80% to 1.20% and 12.97%, respectively, improvements of
9% for ROA and 10% 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.
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Forsythe receives an annual salary of $300,000 for 1998. 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 and 30% for Level II. 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 1997 was $168,000 (60%). The bonus was paid in 1998.
Other executives receiving bonuses were evaluated based on comparisons to
predetermined corporate and personal goals. Each officer achieved a majority of
their goals and were comparably rewarded.
STOCK OPTION PLAN. In order to provide long-term incentives to key employees,
including executive officers, to encourage share ownership by key officers, and
to retain and motivate key officers to further shareholder returns, the Company
has a Stock Option Plan. The Committee believes that stock options, which
provide value to participants only when the Company's shareholders benefit from
stock price appreciation, are an important component of the Company's executive
compensation program. The number of options currently held by an officer is not
a factor in determining individual grants. The value of stock options granted in
1997 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 1997 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
I-13
401(K) AND EMPLOYEE STOCK OWNERSHIP PLAN
NBT Bancorp Inc. amended the Employee Stock Ownership Plan and 401(k) Plan,
merging the two Plans together effective January 1, 1997. This merged and
amended 401(k) and Employee Stock Ownership Plan is for the exclusive benefit of
eligible employees and their beneficiaries. The Plan is administered by the
Bank. Discretionary and matching contributions 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, 1997,
the Plan owned 551,848 shares of the Company's common stock, 6.12% of total
shares outstanding.
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 for partial vesting of
an employee's interest in the Plan and approximately 20% per year with 100%
vesting being achieved after five years of qualified service.
However, participants are eligible to make salary reduction contributions
after the date of hire if they are scheduled to work 1,000 hours in a
twelve-month period. The plan provides that eligible employees 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 100% of the first 5% of the employee's deferred amount. In 1997,
the company or the bank provided matching contribution to Mr. Forsythe of
$8,000, Mr. Minor of $8,000, Mr. Dietrich of $7,218, Mr. Bradley of $6,573 and
Mr. Roberts of $6,757. These payments are reflected in the Summary Compensation
Table.
Discretionary contributions, as determined annually by the Board of
Directors, are made by the company to a separate trust for the benefit of the
eligible employees and their beneficiaries. Annual contributions may not exceed
amounts deductible for Federal income tax purposes. Employer contributions are
allocated among all participants in proportion that each participant's
compensation for the plan year bears to the total compensation of all
participants for the plan year (compensation for the plan is defined as total
compensation during a Plan Year that is subject to income tax and reflected on
the W-2 Form, but including a salary reduction contribution to any plan or
arrangement maintained by the company, and excluding distributions from
non-qualified plans, income from the exercise of stock options, and severance
payments). The Board of Directors may amend the plan at any time.
The value of a participant's account is the total of allocated employer
contribution, employee salary deferrals, plus the earnings on those
contributions and deferrals, plus or minus any gain or loss on the investment of
the contributions and deferrals.
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 or her beneficiary.
A participant's retirement benefit under the plan is the value of his or
her 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)
distributions of the account value in employer securities, both subject to
obtaining spousal waivers.
As a qualified plan (under current law) employer contributions and employee
salary deferrals are not currently taxed to employees; and retirement benefits
will be taxable to employees when received from the plan.
In 1997, the Company made a discretionary contribution of $424,302 to the
plan. The Summary Compensation Table reflects payments made to the Company's
named executive officers under the plan.
I-14
STOCK OPTION PLAN
The Board of Directors adopted Stock Option Plans in 1986 and in 1993,
which were subsequently approved by the Company's stockholders at the 1987 and
1993 Annual Meetings, respectively. The purposes of the plans are to encourage
ownership of capital stock of the Company by officers and other key employees of
the Company and its subsidiaries in order to help the Company attract and retain
in its service persons of exceptional competence, to furnish added incentives
for them to increase their efforts on behalf of the Company, and to gain for the
Company the advantages inherent in key employees having an ownership interest in
the Company. Pursuant to the approval of the 1993 Stock Option Plan, the 1986
plan was "frozen" and no new options or stock appreciation rights may be granted
under that plan.
Options may be issued to full-time key employees (officers, whether or not
they are Directors, and Directors who are also employees, including, but not
limited to, President, Chief Executive Officer, Branch Manager, Department Head
or Division Manager) of the Company or any subsidiary. Any employee of the
Company or any subsidiary may be determined to be a key employee and may be
granted an option at the discretion of the Board of Directors.
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, 1997, 600,643 shares of the Company's Common Stock have
been reserved for issuance under the Plans. In 1997, non-qualified options,
which expire in 2007, for 117,810 shares were granted to 31 key employees, at an
option price of $17.11. Options for 351,807 shares were outstanding at December
31, 1997 with option prices ranging from $8.58 to $17.11 per share for all
officers as a group. All options were at 100% of fair market value as of date of
the grant. Options and option prices have been adjusted for all stock dividends
to date.
Under current law, a participant who received non-qualified stock options
or incentive stock options, will not realize any income, nor will the Company
receive a deduction, for Federal income tax purposes, in the year of the grant.
Ordinary income will be realized by the recipient of an option at the time
shares are transferred, or cash paid to him, pursuant to his exercise of a
non-qualified stock option. In the case of a non-qualified stock option, the
I-15
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 1998 award will range
from 0% to 30% of the participant's regular salary at the lowest level to 0% to
75% 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 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 1997 pursuant to the Plan were made January 1998.
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 $3,932,537,
$4,238,002 and $3,563,357 at December 31, 1995, 1996, and 1997, respectively,
representing 3.6%, 4.0% and 2.9% of equity capital at those dates. The highest
aggregate amounts outstanding on such loans during 1995, 1996, and 1997 were
$4,650,773, $4,238,002 and $5,008,597, respectively, which represented 4.3%,
4.0% and 4.1% 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
I-16
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.
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, 1992. 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 Composite Index
Year Covered) INC. Stocks Index (US Companies)
- -------------- ------- ------------ ---------------
4Q92 $100.00 $100.00 $100.00
1Q93 $116.28 $107.36 $101.95
2Q93 $117.04 $102.64 $103.99
3Q93 $123.08 $108.34 $112.68
4Q93 $135.59 $104.88 $114.75
1Q94 $130.87 $102.02 $109.82
2Q94 $124.25 $107.71 $104.28
3Q94 $121.35 $108.36 $112.92
4Q94 $132.36 $100.19 $111.08
1Q95 $129.31 $110.91 $120.72
2Q95 $132.30 $119.63 $137.89
3Q95 $135.31 $134.91 $154.15
4Q95 $151.75 $145.44 $155.42
1Q96 $148.54 $149.98 $162.70
2Q96 $144.22 $151.90 $175.05
3Q96 $149.77 $166.04 $181.24
4Q96 $169.07 $185.99 $190.71
1Q97 $184.57 $193.32 $180.47
2Q97 $255.79 $225.48 $213.02
3Q97 $252.65 $263.07 $249.01
4Q97 $273.20 $291.44 $231.97
I-17
PROPOSAL NUMBER 2
PROPOSAL TO RATIFY THE BOARD OF DIRECTORS ACTION IN SELECTION OF
KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS 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
auditors of the Company to examine the financial statements for the fiscal year
ending December 31, 1998. KPMG Peat Marwick LLP has served as the Company's
independent auditors 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.
PROPOSAL 3
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
By resolution dated January 27, 1998, the Board of Directors declared it
advisable and in the best interests of the Company to amend the Company's
Certificate of Incorporation (the "Certificate") to increase the number of
shares of stock that the Company has the authority to issue to an aggregate of
17,500,000 shares, of which 15,000,000 shares would be common stock and
2,500,000 shares would be preferred stock, and directed that the amendment to
the Certificate be submitted to a vote of the stockholders at the Meeting. If
the proposal is adopted, Article Fourth of the Certificate, as amended, will be
further amended to read as follows:
"FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have the authority to issue is Seventeen
Million Five Hundred Thousand (17,500,000) shares, consisting of Fifteen
Million (15,000,000) shares of Common Stock having no par value, stated
value $1.00 per share and Two Million Five Hundred Thousand (2,500,000)
shares of Preferred Stock having no par value, stated value $1.00 per
share."
The Certificate currently authorizes the issuance of up to 15,000,000
shares, consisting of 12,500,000 shares of common stock and 2,500,000 shares of
preferred stock. As of March 1, 1998, the Company had 9,049,820 shares of common
stock and no shares of preferred stock outstanding. In addition, as of the same
date 1,118,507 shares of common stock were reserved for issuance as follows:
592,745 shares for issuance under the Company's stock option plans and 525,762
shares for issuance under the employee stock purchase and dividend reinvestment
plan. Moreover, the Company has reserved 100,000 shares of preferred stock for
possible issuance pursuant to the Company's stockholder rights plan, adopted in
November 1994. The Company has also historically declared a 5% common stock
dividend each December.
The Board of Directors believes it is in the best interests of the
Company and its stockholders to increase the number of authorized shares of
common stock in order to have additional shares available for issuance to meet a
variety of business needs as they may arise and to enhance the Company's
flexibility in connection with possible future actions. These business needs and
actions may include stock dividends, stock splits, employee benefit programs,
corporate business combinations, funding of business acquisitions, and other
corporate purposes. Although the Board periodically considers transactions such
as those listed above, it currently does not have plans to issue any significant
amount of such common stock or preferred stock, except as described in the
preceding paragraph and in this proxy statement. The terms of the preferred
stock to be authorized, including dividend rates, conversion prices, voting
rights, redemption prices, maturity dates, and similar matters, will be
determined by the Board of Directors without any further authorization by the
stockholders.
The authorized shares of common stock in excess of those presently issued
will be available for issuance at such times and for such purposes as the Board
of Directors may deem advisable without further action by the Company's
stockholders, except as may be required by applicable laws or regulations. In
this regard, the rules of the National Association of Securities Dealers, Inc.
with respect to securities of companies approved for trading on the NASDAQ
National Market, upon which the Company's common stock trades, currently
requires stockholder approval of (a) acquisition transactions where the present
or potential issuance of shares could result in an increase of 20% or more in
I-18
the number of shares of common stock outstanding, (b) a stock option or purchase
plan to be established pursuant to which stock may be acquired by officers or
directors, and (c) a transaction pursuant to which the issuance would result in
a change of control. The Board does not intend to issue any stock except on
terms or for reasons which the Board deems to be in the best interests of the
Company and except as stated elsewhere in this proxy statement. Because the
holders of the Company's common stock do not have preemptive rights, the
issuance of common stock otherwise than on a pro-rata basis to all current
stockholders would reduce the current stockholders' proportionate interests.
However, in any such event, stockholders wishing to maintain their interests may
be able to do so through normal market purchases. Any future issuance of common
stock or preferred stock will be subject to the rights of holders of outstanding
shares of any preferred stock which the Company may issue in the future. While
the issuance of shares in certain instances may have the effect of forestalling
a hostile takeover, the Board does not intend or view the increase in authorized
common stock or preferred stock as an anti-takeover measure, nor is the Company
aware of any proposed or contemplated transaction of this type, and this
amendment to the Certificate is not being recommended in response to any
specific effort of which the Company is aware to obtain control of the Company.
Adoption of the amendment to the Certificate requires the affirmative vote
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote thereon. Abstention from voting on this amendment (including broker
non-vote) has the same legal effect as a vote "against" this amendment. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
CERTIFICATE TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT THE COMPANY IS
AUTHORIZED TO ISSUE. Proxies will be voted FOR unless stockholders specify
otherwise in their proxies. If this proposal is approved by the stockholders, it
will become effective upon the filing of the Certificate of Amendment of the
Company's Certificate of Incorporation with the Secretary of State of the State
of Delaware, which will occur as soon as reasonably practicable after approval.
PROPOSAL 4
PROPOSAL TO AMEND THE 1993 STOCK OPTION PLAN
The Board of Directors of the Company has adopted, and recommends that the
stockholders approve, amendments to the Company's 1993 Stock Option Plan (the
"1993 Plan") as follows. The 1993 Plan as amended is attached to this proxy
statement as Annex A.
INCREASE IN PLAN SHARES. Currently, the 1993 Plan provides for options to
be granted permitting the purchase of a maximum of 607,753 shares of Common
Stock, having been adjusted for the Company's annual stock dividend. As of the
date of this proxy statement, options to purchase a total of 479,617 shares of
Common Stock had been granted, and options to purchase a total of 128,136 shares
of Common Stock remained ungranted. Of the total options granted, 443,863 remain
available for exercise. In order for the 1993 Plan to be able to accomplish the
purposes and goals established by the Board for the 1993 Plan, the Board has
determined to increase the number of shares available for option under the 1993
Plan by 600,000. If the stockholders approve the amendments to the 1993 Plan,
options will be available for future grant to purchase a total of 728,136 shares
of Common Stock, net of currently granted and heretofore exercised options.
EXTENSION OF TERM OF PLAN. The 1993 Plan currently provides that it will
expire on April 24, 2003, ten years from the original adoption date. The Board
has proposed that the life of the 1993 Plan be extended until April 18, 2008,
ten years after the date of this year's annual meeting of stockholders.
ELIMINATION OF INCENTIVE STOCK OPTIONS. Currently, the 1993 Plan permits
the Committee to grant incentive stock options ("ISOs"). To date, no ISOs have
been granted under the 1993 Plan. The Board has determined that the 1993 Plan
would better serve the interests of the Company if the provisions to grant ISOs
were eliminated. Upon stockholder approval of the amendments, the Committee will
be authorized to grant only non-qualified options under the 1993 Plan.
I-19
RELOAD OPTIONS. As amended, the 1993 Plan provides that for each share of
Common Stock purchased by an optionee upon the exercise of a stock option
pursuant to the 1993 Plan the optionee will receive a Reload Option to purchase
another share of Common Stock. Granting of a Reload Option is subject to the
express approval of the Board of Directors or the Committee. The exercise price
of Reload Options will be the fair market price of the Common Stock on the date
of exercise of the original option. A Reload Option will become exercisable two
years after the date of its grant, provided the optionee is then an employee or
retired employee of the Company, will be exercisable for the same number of
years that was originally assigned to the option which such Reload Option
replaced, and will be subject to such other terms and conditions as the
Committee may determine. No Reload Options are permitted to be granted upon
exercise of Reload Options. If an optionee sells shares of Common Stock without
Board or Committee approval (which approval will not be withheld in the case of
an optionee's financial hardship) within two years after the grant of a Reload
Option, then the number of shares of Common Stock available for purchase by an
optionee upon the exercise of a Reload Option will be reduced by that number of
shares of Common Stock that the optionee will have sold within such two-year
period after the grant date of the Reload Option. These provisions regarding
Reload Options apply to stock options currently granted and outstanding under
the 1993 Plan, as well as to options yet to be granted under the 1993 Plan.
CHANGE IN CONTROL. The 1993 Plan as amended provides that immediately upon
the occurrence of a Change in Control of the Company, all outstanding options
will immediately vest and become exercisable in full, including that portion of
any option that had not theretofore become vested and exercisable. A "Change in
Control" of the Company is defined as:
(i) A change in control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A as in effect on the date
hereof pursuant to the Securities Exchange Act of 1934 (the "Exchange Act");
provided that, without limitation, such a change in control shall be deemed to
have occurred at such time as any Person hereafter becomes the "Beneficial
Owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 30 percent or more of the combined voting power of the Company's
Voting Securities; or
(ii) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to constitute
at least a majority thereof unless the election, or the nomination for election
by the Company's shareholders, of each new director was approved by a vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of the period; or
(iii) There shall be consummated (x) any consolidation or merger of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which Voting Securities would be converted into cash, securities, or other
property, other than a merger of the Company in which the holders of Voting
Securities immediately prior to the merger have the same proportionate ownership
of common stock of the surviving corporation immediately after the merger, or
(y) any sale, lease, exchange, or other transfer (in one transaction or a series
of related transactions), of all, or substantially all of the assets of the
Company, provided that any such consolidation, merger, sale, lease, exchange or
other transfer consummated at the insistence of an appropriate banking
regulatory agency shall not constitute a change in control, or
(iv) Approval by the shareholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company.
In this regard, the term "Person" is defined as any individual,
corporation, partnership, group, association, or other "person," as such term is
used in Section 14(d) of the Exchange Act, other than the Company or any
employee benefit plan(s) sponsored by the Company and the term "Voting
Securities" is defined as the Company's outstanding securities ordinarily having
the right to vote at elections of directors.
The Company currently is aware of no situation wherein the Company is
subject to or threatened by a Change in Control.
I-20
REVISION OF RETIREMENT AND DISABILITY PROVISIONS. The Board believes that
retired and disabled optionees will be better served by amending the 1993 Plan
regarding vesting and exercise provisions. The 1993 Plan at present provides
that an optionee who retires from the Company or its subsidiaries will be able
to exercise his or her options in accordance with their terms. The amendment
provides that an optionee's options will vest immediately upon retirement and
will be exercisable in full upon retirement and in accordance with the other
terms of the options. The 1993 Plan presently provides that an optionee who
becomes permanently and totally disabled will be able to exercise his or her
options for six months after the date of such disability; additionally, all
options become exercisable immediately. The amendment will retain the
accelerated vesting provision of the 1993 Plan and will eliminate the six-month
exercise provision, thereby permitting the disabled optionee to exercise his or
her options immediately and in accordance with the other original terms of the
options.
TERMINATION FOR CAUSE. The Board proposes to amend the 1993 Plan by
providing that, if an optionee's employment with the Company or its subsidiaries
is terminated for cause, such optionee's options will be canceled and rendered
null and void on the date such employment is terminated. Termination of an
optionee's employment for cause has been defined to mean termination because the
optionee committed an act of fraud, embezzlement, or theft constituting a
felony, or an act intentionally against the interests of the Company which
causes the Company material injury.
SUMMARY OF THE 1993 PLAN
The 1993 Plan is intended to promote the interests of the Company and its
stockholders by ensuring continuity of management and increased incentive on the
part of officers and other key management employees of the Company and its
subsidiaries responsible for major contributions to effective management,
through facilitating their acquisition of equity interests in the Company.
The 1993 Plan authorizes the granting of options ("Options") to purchase
shares of the Company's Common Stock to officers and key management employees of
the Company and its subsidiaries. Common Stock issued pursuant to the 1993 Plan
may be authorized but unissued Common Stock or reacquired Common Stock, or both.
The 1993 Plan is administered by the Board of Directors, the Compensation and
Benefits Committee, or a subcommittee thereof (the "Committee"), consisting of
at least three Directors of the Company who are disinterested directors as
defined by Rule 16b-3 promulgated under the Securities Exchange Act of 1934.
The Committee (or subcommittee, as the case may be) is authorized to
determine the employees to whom grants of Options may be made under the 1993
Plan, the number and terms of Options to be granted to each employee selected,
the time or times when Options will be granted, the period during which Options
will be exercisable, and the exercise price per share of Common Stock. The
exercise price may not be less than the fair market value of a share of Common
Stock at the date the Option is granted.
Options granted to an employee under the 1993 Plan may not be transferred
by the recipient otherwise than by will or by the law of descent and
distribution, and such Option may be exercisable during such person's life only
by him. No Option may be exercisable after the expiration of ten years from the
date such Option is granted. The terms of an Option must provide that it is
exercisable only in specified installments during the Option period: to the
extent of forty percent of the number of shares originally covered thereby with
respect to each particular grant of options, at any time after the expiration of
one year from the date of grant, and to the extent of an additional twenty
percent of such number of shares upon the expiration of each succeeding year, so
that upon the expiration of four years from the date of grant one hundred
percent of such number of shares will be eligible for exercise by the recipient.
Such installments are cumulative. Upon termination of his employment, any such
Option will be exercisable to the extent that he was entitled to exercise the
Option at the date of such termination; upon the employee's death, the Option
will become exercisable in full on the date of death.
I-21
The 1993 Plan provides that, if there occurs a change in the number of
outstanding shares of Common Stock by reason of a stock split, stock dividend,
recapitalization, reclassification, merger, consolidation, combination or
exchange of shares or other similar event, the Committee may, in its discretion,
make such adjustments as may be equitably required in the number of shares that
may be issued under the 1993 Plan, in the number of shares which are subject to
outstanding Options, and in the purchase price per share relating thereto.
The Board may amend the 1993 Plan at any time without the approval of the
stockholders of the Company, but no amendment which (a) increases the aggregate
number of shares as to which Options may be granted under the 1993 Plan (other
than equitable adjustments referred to in the immediately preceding paragraph
which will not constitute amendments), (b) changes the class of persons eligible
to receive options, (c) changes the provisions of the 1993 Plan regarding the
option price, (d) extends the period during which options may be granted, (e)
extends the maximum period after the date of grant during which options may be
exercised, or (f) changes the provision in the 1993 Plan as to qualification for
membership on the Committee will be effective unless and until the amendment is
approved by the stockholders of the Company. In the event of a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not to be the surviving corporation or a sale of substantially all the assets of
the Company to another corporation, every option outstanding under the 1993 Plan
will terminate, except that the optionee will have the right to exercise, prior
to or simultaneously with such event, his Option to purchase any or all shares
then subject to the Option, including those, if any, which have not theretofore
become available for purchase under other provisions of the 1993 Plan.
FEDERAL INCOME TAX CONSEQUENCES
Under the present provisions of the Internal Revenue Code of 1986, as
amended, the Federal income tax consequences of the 1993 Plan are as follows:
The granting of a non-qualified option to an employee will not result in taxable
income to the recipient or a deduction in computing the income tax of the
Company or any subsidiary. Upon exercise of a non-qualified option, the excess
of the fair market value of the shares acquired over the Option price is (a)
taxable to the optionee as ordinary income and (b) deductible in computing the
Company's income tax, subject to satisfying applicable withholding requirements
and general rules relating to reasonableness of compensation.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of Common
Stock represented at the Meeting in person or by proxy and entitled to vote is
required to approve the adoption of the amendments to the 1993 Plan. THE
COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THIS
PROPOSAL.
STOCKHOLDER PROPOSALS
Management anticipates mailing the proxy materials for the 1999 Annual
Meeting on or about March 17, 1999. If any security holder wishes a proposal to
be considered for inclusion in the 1999 Proxy Statement, this material must be
received by the Chief Executive Officer no later than November 13, 1998.
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.
I-22
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
Chief Financial Officer and Treasurer
Dated: March 17, 1998
I-23
ANNEX A
NBT BANCORP INC.
1993 STOCK OPTION PLAN
1. Purposes. (a) The purposes of the 1993 Stock Option Plan (the
"Plan") are (a) to attract and retain outstanding key management employees, (b)
to further the growth, development, and financial success of NBT Bancorp Inc.
(the "Company") by recognizing and rewarding those key employees responsible
therefore, (c) to provide an incentive to, and encourage stock ownership in the
Company, by those employees responsible for the policies and operations of the
Company or its subsidiaries, and (d) to revise and amend the Company's stock
option plan dated November 25, 1986, as amended January 12, 1988 (referred to
herein as the "1986 Plan"), in the manner set forth in Section 22, below.
(b) In furtherance of these purposes, all stock options to be granted
pursuant to the Plan shall be non-statutory ("non-qualified") stock options.
2. Administration. (a) This Plan shall be administered by the Board of
Directors of the Company, the Compensation and Benefits Committee of the Board
of Directors of the Company (or successor committee) or a subcommittee thereof
(the "Committee"). The Committee shall consist of not fewer than three members
of the Board of Directors. It is intended that the Committee at all times comply
with the disinterested administration provisions of Rule 16b-3 promulgated under
Section 16(b) of the Securities Exchange Act of 1934, as amended.
(b) The Committee shall have full authority and discretion to
determine, consistent with the provisions of this Plan, the employees to be
granted options; the times at which options will be granted; the option price of
the shares subject to each option (subject to Section 6); the number of options
to be granted to each employee; the period during which each option becomes
exercisable (subject to Section 8); and the terms to be set forth in each option
agreement. The Committee shall also have full authority and discretion to adopt
and revise such rules and procedures as it shall deem necessary for the
administration of this Plan. The Committee shall act by majority vote of all
members taken at a meeting of the Committee or by the written affirmation of a
majority of its members without a meeting.
(c) The Committee's interpretation and construction of any provisions
of this Plan or any option granted hereunder shall be final, conclusive, and
binding.
3. Eligibility. The Committee shall from time to time determine the key
management employees of the Company and its subsidiaries who shall be granted
options under this Plan. For purposes of this Plan, key management employees
shall be deemed to be those employees who are responsible for the policies and
operation of the Company and its subsidiaries, including its president, chief
executive officer, other executive officers, department heads, branch managers,
and division managers of the Company or its subsidiaries. A person who has been
granted an option may be granted additional options under this Plan if the
Committee shall so determine. The granting of an option under this Plan shall
not affect any outstanding stock option previously granted to an optionee under
this Plan or any other plan of the Company.
4. Shares of stock subject to this Plan. The number of shares which may
be issued pursuant to options granted under this Plan shall not exceed 1,207,753
shares of the no par value, stated value $1.00 per share, common stock of the
Company (the "Common Stock"). Such shares may be authorized and unissued shares
or shares previously acquired or to be acquired by the Company and held in
treasury. The Company shall reserve a sufficient number of shares for options
granted under the Plan. Any shares subject to an option which expires for any
reason or is terminated unexercised as to such shares may again be subject to an
option under this Plan.
5. Issuance and terms of option certificates. Each optionee shall be
entitled to receive an appropriate certificate evidencing his option and
referring to the terms and conditions of this Plan.
6. Granting price of options. (a) The grant of each option shall state
the number of shares to which it pertains and shall state the exercise price,
which shall not be less than 100% of the fair market value of the Common Stock.
"Fair Market Value," as used in this Plan, shall mean 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 and the five preceding trading days
prior to the date of grant. If there is no sale reported on the National Market
I-24
System of NASDAQ on the appropriate date, the Fair Market Value shall be
determined by taking the average between the highest and lowest sales for the
five most recent preceding trading days.
(b) The option price shall be payable in United States dollars and be
paid in full upon the exercise of the option and may be paid in cash or by
check, provided, however, that subject to the discretion of the Committee and
provided that all required regulatory approvals, if any, have been obtained, the
optionee may deliver certificates of the Common Stock of the Company in part or
in full payment of the purchase price (including the payment of all applicable
federal and state taxes due upon exercise) in which event such certificates
shall be valued at their Fair Market Value upon exercise of the option.
7. Use of proceeds. The proceeds from the sale of the Common Stock upon
exercise of options shall be added to the general funds of the Company and used
for its corporate purposes.
8. Term and exercise of options. (a) Each option granted under this
Plan shall be exercisable on the dates, for the number of shares and on such
other terms as shall be provided in the agreement evidencing the option granted
by the Committee. An option granted under the Plan shall become exercisable in
installments as follows: to the extent of forty percent (40%) of the number of
shares originally covered thereby with respect to each particular grant of
options, at any time after the expiration of one year from the date of grant,
and to the extent of an additional twenty percent (20%) of such number of shares
upon the expiration of each succeeding year, so that upon the expiration of four
years from the date of grant one hundred percent (100%) of such number of shares
will be eligible for exercise by the optionee; and such installments shall be
cumulative.
(b)An option may be exercised at any time or from time to time during
the term of the option as to any or all full shares which have become
purchasable under the provisions of the option and this Plan. However, no option
shall be exercisable until after one year from the date of grant, nor after the
expiration of ten years from the date of grant.
(c) An option shall be exercised by written notice of intent to
exercise the option with respect to a specified number of shares delivered to
the Company's secretary or treasurer at its principal office in Norwich, New
York and payment in full to the Company at such office of the amount of the
option price for the number of shares of Common Stock with respect to which the
option is then being exercised. In addition to and at the time of payment of the
option price, the optionee shall pay to the Company in cash or in Common Stock
of the Company the full amount of all federal and state withholding or other
taxes applicable to the taxable income of such optionee resulting from such
exercise.
(d) (i) Except as otherwise provided herein, for each share of Common
Stock purchased by an optionee upon the exercise of a stock option pursuant to
the Plan, the optionee upon the approval of the Board or the Committee shall
receive a replacement option (a "Reload Option") to purchase another share of
Common Stock at the Fair Market Value, determined in accordance with Section
6(a), on the date of exercise of such original option.
(ii) A Reload Option shall become exercisable two years after the date
of its grant, provided the optionee is then an employee or retired employee of
the Company, shall be exercisable for the same number of years that was
originally assigned to the option which such Reload Option replaced, and shall
be subject to such other terms and conditions as the Committee may determine.
(iii) No Reload Option shall be granted upon exercise of a Reload
Option.
(iv) If an optionee shall sell shares of Common Stock without Board or
Committee approval (which approval shall not be withheld in the case of an
optionee's financial hardship) within two years after the grant of a Reload
Option, then the number of shares of Common Stock available for purchase by an
optionee upon the exercise of a Reload Option shall be reduced by that number of
shares of Common Stock that the optionee shall have sold without such approval
within such two-year period after the grant date of the Reload Option.
9. Nontransferability. All options granted under this Plan shall be
nontransferable by the optionee, otherwise than by will or the laws of descent
and distribution, and shall be exercisable during his lifetime, only by him, nor
may any option be assigned, pledged, hypothecated, or otherwise disposed of in
any other way. Upon any attempt to sell, transfer, assign, pledge, hypothecate
or otherwise dispose of an option or any other right or privilege conferred
I-25
under this Plan, such option and any other rights or privileges conferred
hereunder shall be deemed forfeited, immediately terminated, and rendered null
and void.
10. Requirements of law. The granting of options and the issuance of
shares of Common Stock upon the exercise of an option shall be subject to all
applicable laws, rules, and regulations and shares shall not be issued except
upon approval of proper government agencies or stock exchanges as may be
required.
11. Termination of Employment. (a) Except as otherwise provided herein
and in Section 12, if an optionee's employment with the Company or its
subsidiaries shall terminate for any reason, he may, but only within a period of
30 days beginning the day following the date of such termination of employment,
exercise his option, to the extent that he was entitled to exercise it at the
date of such termination.
(b)(i) If an optionee's employment with the Company or its subsidiaries
shall terminate for "cause," as defined below, all options held by such optionee
at the date of such termination of employment shall be deemed forfeited,
immediately terminated, and rendered null and void.
(ii) Termination of an optionee's employment by the Company for "cause"
shall mean termination because, and only because, the optionee committed an act
of fraud, embezzlement, or theft constituting a felony or an act intentionally
against the interests of the Company which causes the Company material injury.
Notwithstanding the foregoing, the optionee shall not be deemed to have been
terminated for cause unless and until there shall have been delivered to the
optionee a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at a meeting of the
Board called and held for the purpose (after reasonable notice to the optionee
and an opportunity for the optionee, together with optionee's counsel, to be
heard before the Board), finding that in the good faith opinion of the Board the
optionee was guilty of conduct constituting cause as defined above and
specifying the particulars thereof in detail.
12. Retirement, disability, or death of optionee. (a) In the event that
the optionee shall retire, the option shall become exercisable in full on the
date of retirement, shall otherwise continue in full force and effect as if the
optionee were still employed by the Company or its subsidiaries, and shall be
exercisable in accordance with its terms.
(b) In the event that the optionee shall become permanently and totally
disabled, as determined by the Committee in accordance with applicable Company
personnel policies, such option shall become exercisable in full on the date of
such disability and shall otherwise remain exercisable in accordance with its
terms for the remaining term of the option as established upon grant of such
option.
(c) In the event of the death of an optionee while in the employ of the
Company or its subsidiaries, the option theretofore granted to him shall be
exercisable only by the proper personal representative of the optionee's estate
within a period of six months after the date of death and such option shall
become exercisable in full on the date of such death.
13. Acceleration of Vesting. (a) Immediately upon the occurrence of a
Change in Control of the Company, all options shall immediately vest and become
exercisable in full, including that portion of any option that had not
theretofore become vested and exercisable.
(b) A "Change of Control" of the Company shall mean:
(i) A change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A as
in effect on the date hereof pursuant to the Securities Exchange Act of
1934 (the "Exchange Act"); provided that, without limitation, such a
change in control shall be deemed to have occurred at such time as any
Person hereafter becomes the "Beneficial Owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of 30 percent or
more of the combined voting power of the Company's Voting Securities;
or
(ii) During any period of two consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the
nomination for election by the Company's shareholders, of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the
period; or
I-26
(iii) There shall be consummated (x) any consolidation or merger of the
Company in which the Company is not the continuing or surviving
corporation or pursuant to which Voting Securities would be converted
into cash, securities, or other property, other than a merger of the
Company in which the holders of Voting Securities immediately prior to
the merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (y) any sale,
lease, exchange, or other transfer (in one transaction or a series of
related transactions), of all, or substantially all of the assets of
the Company, provided that any such consolidation, merger, sale, lease,
exchange or other transfer consummated at the insistence of an
appropriate banking regulatory agency shall not constitute a change in
control; or
(iv) Approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company.
(c) For purposes of these "Change in Control" provisions, the term
"Person" shall mean and include any individual, corporation, partnership, group,
association, or other "person," as such term is used in Section 14(d) of the
Exchange Act, other than the Company or any employee benefit plan(s) sponsored
by the Company.
(d) The term "Voting Securities" shall mean the Company's outstanding
securities ordinarily having the right to vote at elections of directors.
14. Adjustments. In the event of any change in the outstanding shares
of Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination or exchange of shares, or
other similar corporate change, then if the Committee shall determine, in its
sole discretion, that such change necessarily or equitably requires an
adjustment in the number of shares subject to each outstanding option and the
option prices or in the maximum number of shares subject to this Plan, such
adjustments shall be made by the Committee and shall be conclusive and binding
for all purposes of this Plan. No adjustment shall be made in connection with
the sale by the Company of its Common Stock in the open market in an
SEC-registered offering or in a privately-placed exempt offering or the issuance
by the Company of Common Stock pursuant to the Company's Automatic Dividend
Reinvestment and Stock Purchase Plan or the Employees' Stock Ownership Plan or
of any warrants, rights, or options to acquire additional shares of Common Stock
or of securities convertible into Common Stock.
15. Extraordinary transactions. Upon (i) the dissolution or liquidation
of the Company, (ii) a reorganization, merger or consolidation of the Company
with one or more corporations or other entity as a result of which the Company
is not the surviving corporation, or (iii) a sale of substantially all the
assets of the Company to another corporation or other entity, the Board of
Directors shall cause written notice of the proposed transaction to be given to
the optionee or grantee not less than 40 days prior to the anticipated effective
date of the proposed transaction, and the option shall be accelerated and, prior
to a date specified in such notice, which shall be not more than ten days prior
to the anticipated effective date of the proposed transaction, the optionee
shall have the right to exercise the stock option to purchase any or all shares
then subject to the option, including those, if any, which have not become
available for purchase under other provisions of the Plan. The optionee, by so
notifying the Company in writing, may, in exercising the stock options,
condition such exercise upon, and provide that such exercise shall become
effective at the time of but immediately prior to, the consummation of the
transaction, in which event the optionee need not make payment for the shares of
Common Stock to be purchased upon exercise of the option until five days after
written notice by the Company to the optionee that the transaction is
consummated. Each option, to the extent not previously exercised prior to the
date specified in the foregoing notice, shall terminate on the effective date of
such consummation. If the proposed transaction is abandoned, any shares of
Common Stock not purchased upon exercise of the option shall continue to be
available for exercise in accordance with the other provisions of the Plan, and
the shares of Common Stock, if any, purchased upon exercise of an option
pursuant to this subsection shall be deemed to have been purchased in the order
in which they first become available for purchase under other provisions of the
plan.
16. Claim to stock option, ownership, or employment rights. No employee
or other person shall have any claim or right to be granted options under this
Plan. No optionee, prior to issuance of the stock, shall be entitled to voting
rights, dividends, or other rights of stockholders except as otherwise provided
in this Plan. Neither this Plan nor any other action taken hereunder shall be
construed as giving any employee any right to be retained in the employ of the
Company or a subsidiary.
17. Unsecured obligation. Optionees under this Plan shall not have any
interest in any fund or specific asset of the Company by reason of this Plan. No
trust fund shall be created in connection with this Plan or any award
thereunder, and there shall be no required funding of amounts which may become
payable to any optionee.
I-27
18. Expenses of plan. The expenses of administering the Plan shall be
borne by the Company.
19. Reliance on reports. Each member of the Committee and each member
of the Board of Directors shall be fully justified in relying or acting in good
faith upon any report made by the independent public accountants of the Company
and its subsidiaries and upon any other information furnished in connection with
the Plan by any person or persons other than himself. In no event shall any
person who is or shall have been a member of the Committee or of the Board of
Directors be liable for any determination made or other action taken or any
omission to act in reliance upon any such report or information or for any
action, including the furnishing of information, taken or failure to act, if in
good faith.
20. Indemnification. Each person who is or shall have been a member of
the Committee or of the Board of Directors shall be indemnified and held
harmless by the Company against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may be a party
or in which he may be involved by reason of any action taken or failure to act,
in good faith, under the Plan and against and from any and all amounts paid by
him in settlement thereof, with the Company's approval, or paid by him in
satisfaction of judgment in any such action, suit, or proceeding against him,
provided he shall give the Company an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle and defend it on his own
behalf. The foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such person may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power than the Company may have to indemnify them or hold them harmless.
21. Amendment and termination. Unless this Plan shall theretofore have
been terminated as hereinafter provided, no options may be granted after April
18, 2008. The Board of Directors may terminate this Plan or modify or amend this
Plan in such respect as it shall deem advisable, provided, however, that the
Board of Directors may not without further approval by the Company's
shareholders, (a) increase the aggregate number of shares of Common Stock as to
which options may be granted under the Plan except as provided in Section 14,
(b) change the class of persons eligible to receive options, (c) change the
provisions of the Plan regarding the option price, (d) extend the period during
which options may be granted, (e) extend the maximum period after the date of
grant during which options may be exercised or (f) change the provision in the
Plan as to the qualification for membership on the Committee. No termination or
amendment of the Plan may, without the consent of a person to whom an option
shall theretofore have been granted, adversely affect the rights of such person
under such option.
22. Revision and amendment of 1986 Plan. (a) Upon the adoption of the
Plan, the Board of Directors and the Committee shall have no authority to grant
additional options or SARs pursuant to the 1986 Plan, except as otherwise
provided in this Section.
(b) Article VI of the 1986 Plan is hereby amended to authorize the
Board of Directors or the Committee to (i) dissolve the in tandem feature of
previously-granted options and SARs and (ii) cancel previously granted SARs and
grant replacement options on the basis of seven-tenths (.7) options for each SAR
and such replacement options having terms similar to those of the canceled SARS,
the Board of Directors having determined that this was the amount necessary to
induce holders of SARs to surrender such SARS.
23. Gender. Any masculine terminology used in this Plan shall also
include the feminine gender.
24. Effective date of plan. The Plan was approved by a majority of the
shareholders of the Company at its annual meeting on April 24, 1993 (or
adjournment thereof) and shall become effective as of April 24, 1993.
25. Plan binding on successors. The Plan shall be binding upon the
successors and assigns of the Company.
26. Ratification of actions. By accepting any option or other benefit
under the Plan, each participant in the Plan and each person claiming under or
through such participant shall be conclusively deemed to have indicated such
person's acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board, or the Committee.
27. Invalidity or unenforceability. If any term or provision of the
Plan is held by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remainder of the terms and provisions will remain in full
force and effect and will in no way be affected, impaired, or invalidated.
I-28
NBT BANCORP INC.
/s/DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
/s/JOHN D. ROBERTS
John D. Roberts
Secretary
I-29
PROXY FOR 1998 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
James I. Dunne 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 27, 1998, at the Annual Meeting of its
Stockholders to be held at Norwich Senior High School, Midland Drive, Norwich,
New York 13815 on April 18, 1998, 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, FOR
RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS, FOR APPROVAL TO AMEND THE
COMPANY'S CERTIFICATE TO INCREASE THE COMPANY'S AUTHORIZED COMMON STOCK, AND FOR
APPROVAL OF THE AMENDMENTS TO THE 1993 STOCK OPTION PLAN.
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:
NOMINEES:
Daryl R. Forsythe
Everett A. Gilmour
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR THE NOMIMEES.
IF YOU DO NOT WISH 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 1998.
The Board of Directors
Recommends a vote FOR approval.
FOR AGAINST ABSTAIN
3)Approval of the amendment to [ ] [ ] [ ]
the Company's Certificate of
Incorporation to increase the
number of authorized shares
of Common Stock to 15,000,000
shares.
The Board of Directors
Recommends a vote FOR approval.
FOR AGAINST ABSTAIN
4)Approval of the amendments to [ ] [ ] [ ]
the 1993 Stock Option Plan.
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.
