NBT BANCORP INC.
52 SOUTH BROAD STREET
NORWICH, NEW YORK 13815
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NBT Bancorp Inc. (NBT), will hold an annual meeting of stockholders at the
Binghamton Regency at One Sarbro Square, Binghamton, NY 13901 on May 1, 2003 at
10:00 a.m. local time for the following purposes:
1. To fix the size of the Board of Directors at sixteen;
2. To elect five directors, each for a three year term;
3. To approve the NBT Non-employee Directors' Restricted and Deferred Stock
Plan;
4. To approve the NBT Performance Share Plan; and
5. To transact such other business as may properly come before the NBT annual
meeting.
We have fixed the close of business on March 15, 2003 as the record date for
determining those stockholders of NBT entitled to vote at the NBT annual meeting
and any adjournments or postponements of the meeting. Only holders of record of
NBT common stock at the close of business on that date are entitled to notice of
and to vote at the NBT annual meeting.
By Order of the Board of Directors of
NBT Bancorp Inc.
/s/ Daryl R. Forsythe
- -----------------------------------------------
Daryl R. Forsythe
Chairman, President and Chief Executive Officer
Norwich, New York
March 28, 2003
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU
OWN. EVEN IF YOU PLAN TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENVELOPE
PROVIDED OR VOTE VIA THE TOLL-FREE TELEPHONE NUMBER OR VIA THE INTERNET ADDRESS
LISTED ON THE PROXY CARD.YOU MAY REVOKE ANY PROXY GIVEN IN WRITING OR IN PERSON
AT ANY TIME PRIOR TO THE VOTE AT THE ANNUAL MEETING.
NBT BANCORP INC.
52 SOUTH BROAD STREET
NORWICH, NEW YORK 13815
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 1, 2003
This proxy statement and accompanying proxy card are being sent to the
stockholders of NBT Bancorp Inc. (the "Company" or "NBT") in connection with the
solicitation of proxies on behalf of the Board of Directors to be used at the
annual meeting of stockholders. This proxy statement, together with the enclosed
proxy card, is being mailed to stockholders on or about March 28, 2003.
WHEN AND WHERE THE NBT ANNUAL MEETING WILL BE HELD
We will hold our annual meeting of stockholders at the Binghamton Regency at One
Sarbro Square, Binghamton, NY 13901 on May 1, 2003 at 10:00 a.m. local time.
WHAT WILL BE VOTED ON AT THE NBT ANNUAL MEETING
At our annual meeting, our stockholders will be asked to consider and vote upon
the following proposals:
- - To fix the size of the Board of Directors at sixteen;
- - To elect five directors, each for a three year term;
- - To approve the NBT Non-employee Directors' Restricted and Deferred Stock
Plan (the "Directors' Plan");
- - To approve the NBT Performance Share Plan (the "Performance Share Plan");
and
- - To transact such other business as may properly come before the NBT annual
meeting.
We may take action on the above matters at our annual meeting on May 1,
2003, or on any later date to which the annual meeting is postponed or
adjourned.
We are unaware of other matters to be voted on at our annual meeting. If
other matters do properly come before our annual meeting, including
consideration of a motion to adjourn the annual meeting to another time and/or
place for such purpose of soliciting additional proxies, we intend that the
persons named in this proxy will vote the shares represented by the proxies on
such matters as determined by a majority of the Company's Board.
STOCKHOLDERS ENTITLED TO VOTE
We have set March 15, 2003 as the record date to determine which of our
stockholders will be entitled to vote at our annual meeting. Only those
stockholders who held their shares of record as of the close of business on that
date will be entitled to receive notice of and to vote at our annual meeting. As
of March 15, 2003, there were 32,414,560 outstanding shares of our common stock.
Each of our stockholders on the record date is entitled to one vote per share.
VOTE REQUIRED TO APPROVE THE PROPOSAL
A plurality of the shares of our common stock represented at our annual meeting,
either in person or by proxy, and entitled to vote at our annual meeting will
elect directors. This means that the five nominees who receive the most votes
will be elected.
The affirmative vote of a majority of the shares of our common stock
represented at our annual meeting, either in person or by proxy, and entitled to
vote at our annual meeting is required to approve (i) the proposal to fix the
number of directors at sixteen (ii) the proposal to adopt the Directors' Plan
and (iii) the proposal to adopt the Performance Share Plan.
Our Board urges our stockholders to complete, date and sign the
accompanying proxy and return it promptly in the enclosed postage-paid envelope
or to vote by telephone or via the Internet. Broker non-votes will not be
counted as a vote cast or entitled to vote on any matter presented at the annual
meeting. Abstentions will be counted in determining the number of shares
represented and entitled to vote.
2 PROXY STATEMENT: NBT BANCORP INC.
NUMBER OF SHARES THAT MUST BE REPRESENTED FOR A VOTE TO BE TAKEN
In order to have a quorum, a majority of the total voting power of our
outstanding shares of common stock entitled to vote at our annual meeting must
be represented at the annual meeting either in person or by proxy. Abstentions
and broker non-votes are counted as present for the purpose of determining the
presence of a quorum for the transaction of business.
VOTING YOUR SHARES
Our Board is soliciting proxies from our stockholders. This will give you an
opportunity to vote at our annual meeting. When you deliver a valid proxy, the
shares represented by that proxy will be voted by a named agent in accordance
with your instructions.
If you are a record holder and vote by proxy but make no specification on
your proxy card that you have otherwise properly executed, the named agent may
vote the shares represented by your proxy:
- - FOR fixing the number of directors at sixteen,
- - FOR electing the five persons nominated by our Board as directors,
- - FOR the approval of the Directors' Plan,
- - FOR the approval of the Performance Share Plan.
If your common stock is held by a broker, bank or other nominee (i.e., in
"street name"), you should receive instructions from that person or entity in
order to have your shares of common stock voted. If you hold your common stock
in your own name and not through a broker or other nominee, you may grant a
proxy by dating, signing and mailing your proxy card or voting by telephone or
via the Internet. You may also cast your vote in person at the meeting.
MAIL. To grant your proxy by mail, please complete your proxy card and sign,
date and return it in the enclosed envelope. To be valid, a returned proxy card
must be signed and dated.
TELEPHONE. If you hold NBT common stock in your own name and not through a
broker or other nominee, you can vote your shares of NBT common stock by
telephone by dialing the tollfree telephone number 1-800-690-6903. Telephone
voting is available 24 hours a day until 11:59 p.m. local time on April 30,
2003. Telephone voting procedures are designed to authenticate stockholders by
using the individual control numbers on your proxy card. If you vote by
telephone, you do not need to return your proxy card.
VIA THE INTERNET. If you hold NBT common stock in your own name and not through
a broker or other nominee, you can vote your shares of NBT common stock
electronically via the Internet at www.proxyvote.com. Internet voting is
available 24 hours a day until 11:59 p.m. local time on April 30, 2003. Internet
voting procedures are designed to authenticate stockholders by using the
individual control numbers on your proxy card. If you vote via the Internet, you
do not need to return your proxy card.
IN PERSON. If you attend the annual meeting in person, you may vote your shares
by completing a ballot at the meeting. Attendance at the annual meeting will not
by itself be sufficient to vote your shares; you still must complete and submit
a ballot at the annual meeting.
CHANGING YOUR VOTE
Any NBT stockholder of record giving a proxy may revoke the proxy at any time
before the vote at the annual meeting in one or more of the following ways:
- - delivering a written notice of revocation to the Chief Executive Officer of
NBT bearing a later date than the proxy;
- - submitting a later-dated proxy by mail, telephone or via the Internet; or
- - appearing in person and submitting a later dated proxy or voting at the
annual meeting. Attendance at the annual meeting will not by itself
constitute a revocation of a proxy; to revoke your proxy, you must complete
and submit a ballot at the annual meeting or submit a later dated proxy.
You should send any written notice of revocation or subsequent proxy to NBT
Bancorp Inc., 52 South Broad Street, Norwich, New York 13815, Attention: Chief
Executive Officer, or hand deliver the notice of revocation or subsequent proxy
to the Chief Executive Officer at or before the taking of the vote at the annual
meeting. You may also revoke your proxy by telephone or via the Internet by
giving a new proxy over the telephone or the Internet prior to 11:59 p.m. on
April 30, 2003.
SOLICITATION OF PROXIES AND COSTS
We will bear our own costs of soliciting of proxies. We will reimburse brokerage
houses, fiduciaries, nominees and others for their out-of-pocket expenses in
forwarding proxy materials to owners of shares of our common stock held in their
names. In addition to the solicitation of proxies by use of the mail, we may
solicit proxies from our stockholders by directors, officers and employees
acting on our behalf in person or by telephone, telegraph, facsimile or other
appropriate means of communications. We will not pay any additional
compensation, except for reimbursement of reasonable out-of-pocket expenses, to
our directors, officers and employees in connection with the solici-
PROXY STATEMENT: NBT BANCORP INC. 3
tation. You may direct any questions or requests for assistance regarding this
proxy statement to Michael J. Chewens, Senior Executive Vice President of NBT,
by telephone at (607) 337- 6520 or by e-mail at mchewens@nbtbci.com.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO US. PLEASE
COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR VOTE BY TELEPHONE OR VIA THE INTERNET USING
THE TELEPHONE NUMBER OR THE INTERNET ADDRESS ON YOUR PROXY CARD.
PROPOSAL 1
SIZE OF THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
Our bylaws provide for a Board consisting of a number of directors, not less
than five nor more than twenty-five, as shall be designated by our stockholders
as of each annual meeting. Our Board is presently comprised of sixteen members.
The Board has proposed that the stockholders vote to keep the number of
directors constituting the full Board at sixteen members.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR FIXING
THE SIZE OF THE BOARD OF DIRECTORS AT SIXTEEN MEMBERS.
PROPOSAL 2
ELECTION OF DIRECTORS
At the annual meeting, five directors will be elected to serve a three-year term
and until the director's successor is elected and qualified or until the
director's earlier death, resignation or removal. The Board currently consists
of sixteen members and is divided into three classes. The term of only one class
of directors expires in each year, and their successors are elected for terms of
up to three years and until their successors are elected and qualified. Messrs.
Hutcherson, Kowalczyk, Mitchell, Murphy and Nasser, whose terms expire at the
2003 annual meeting, have been nominated to stand for re-election at the 2003
annual meeting for terms expiring in 2006.
The persons named in the enclosed proxy intend to vote the shares of our
common stock represented by each proxy properly executed and returned to us FOR
election of the following nominees as directors, but if the nominees should be
unable to serve, they will vote such proxies for those substitute nominees as
our Board shall designate to replace those nominees who are unable to serve. Our
Board currently believes that each nominee will stand for election and will
serve if elected as a director. Assuming the presence of a quorum at the annual
meeting, directors will be elected by a plurality of the votes cast by the
shares of common stock entitled to vote at the annual meeting and present in
person or represented by proxy. There are no cumulative voting rights in the
election of directors. This means that the five nominees who receive the most
votes will be elected. The names of the nominees for election for the term as
shown, our continuing directors and certain information as to each of them, are
as follows:
NUMBER OF
COMMON SHARES
BENEFICIALLY PERCENT
PRINCIPAL OCCUPATION DIRECTOR OWNED OF SHARES
NAME AGE DURING PAST FIVE YEARS AND OTHER DIRECTORSHIPS SINCE ON 12/31/02 OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------------------
NOMINEES WITH TERMS EXPIRING IN 2006
Andrew S. Kowalczyk, Jr. 67 Partner, Kowalczyk, Tolles, Deery & Johnston, attorneys 1994 6,035(1) *
Directorships: Trenton Technology Inc. 1,750(3) *
NBT Bank since 1994
John C. Mitchell 52 President & CEO of I.L. Richer Co.| (agri. business) 1994 18,073(1) *
Directorships: Preferred Mutual Ins. Co. 5,197(2) *
New York Agricultural Development Corp. 1,709(3) *
NBT Bank since 1993 164,041(c) *
Joseph G. Nasser 45 Accountant, Nasser & Co. 2000 35,186(1) *
Directorships: Pennstar Bank since 1999 11,449(2) *
1,500(3) *
Michael H. Hutcherson 40 Area President, Arthur J. Gallagher & Co. of NY 2002 541(1) *
|(insurance services) 2,532(1)(a) *
Directorships: Central National Bank since 2002 801(2) *
Michael M. Murphy 41 President & Owner, Red Line Towing Inc. 2002 2,406(1) *
Directorships: Pennstar Bank since 1999 1,095(1)(a) *
38,599(2) *
500(3) *
4 PROXY STATEMENT: NBT BANCORP INC.
NUMBER OF
COMMON SHARES
BENEFICIALLY PERCENT
PRINCIPAL OCCUPATION DIRECTOR OWNED OF SHARES
NAME AGE DURING PAST FIVE YEARS AND OTHER DIRECTORSHIPS SINCE ON 12/31/02 OUTSTANDING
- --------------------------------------------------------------------------------------------------------------------------------
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2005
Richard Chojnowski 60 Electrical contractor |(sole proprietorship) 2000 1,297(1) *
Directorships: Pennstar Bank since 1994 264,353(2) *
1,500(3) *
Dr. Peter B. Gregory 67 Partner, Gatehouse Antiques 1987 118,054(1) *
Directorships: NBT Bank since 1978 37,858(1)(a) *
1,500(3) *
Paul O. Stillman 69 Chairman of Preferred Mutual Ins. Co. |(c) 1986 26,522(1) *
Directorships: Preferred Mutual Ins. Co. 11,263(1)(a) *
Leatherstocking Cooperative Ins. Co. 1,543(2) *
NBT Bank since 1977 1,500(3) *
164,041(c) *
Joseph A. Santangelo 50 Administrator, Arkell Hall Foundation Inc. 2001 9,549(1) *
Directorships: Central National Bank since 1991 700(3) *
Janet H. Ingraham 65 Professional Volunteer 2002 7,592(1) *
Directorships: Chase Memorial Nursing 520(1)(a) *
Home Corp. 484(3) *
NBT Bank since 1996
Paul D. Horger 65 Partner, Oliver, Price & Rhodes, attorneys 2002 11,073(1) *
Directorships: Pennstar Bank since 1997 500(3) *
CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2004
Daryl R. Forsythe 59 Chairman, President & CEO of NBT since 1992 37,317(1) *
April 2001; Chairman and CEO of NBT Bank 1,511(1)(a) *
since September 1999; President and CEO 9,623(1)(b) *
of NBT and NBT Bank from January 1995 8,427(2) *
to April 2001/September 1999 301,271(4) *
Directorships: Security Mutual Life Ins. Co. of NY
NBT Bank since 1988
William C. Gumble 65 Retired attorney-at-law; County Solicitor and 2000 124,605(1) *
District Attorney of Pike County, PA 1,500(3) *
Directorships: Pennstar Bank since 1985
William L. Owens 53 Partner, Harris Beach LLP, attorneys 1999 4,104(1) *
Directorships: Champlain Enterprises, Inc. 1,484(3) *
Prim Hall Enterprises
Mediquest, Inc.
Community Providers, Inc.
Adirondack Digital Imaging Systems Inc.
NBT Bank since 1995
Gene E. Goldenziel 54 Managing Partner, Needle, Goldenziel 2000 72,572(1) *
& Pascale, attorneys 39,233(2) *
Directorships: Pennstar Bank since 1985 1,400(3) *
Van Ness D. Robinson 67 Chairman/Secretary, New York Central Mutual 2001 1,729(1) *
Fire Insurance Co. (NYCM) 888,471(d) 2.72%
Directorships: NYCM 600(3) *
Basset Healthcare
Bruce Hall Corporation
Central National Bank since 1997
PROXY STATEMENT: NBT BANCORP INC. 5
EXECUTIVE OFFICERS OF NBT BANCORP INC. OTHER THAN DIRECTORS WHO ARE OFFICERS
NUMBER OF
COMMON SHARES
BENEFICIALLY PERCENT
PRESENT POSITION AND OWNED OF SHARES
NAME AGE PRINCIPAL POSITION DURING PAST FIVE YEARS ON 12/31/02 OUTSTANDING
- --------------------------------------------------------------------------------------------------------------
Michael J. Chewens 41 Senior Executive Vice President, Chief Financial Officer 412(1) *
of NBT and NBT Bank since January 2002; EVP of 5,088(1)(b) *
same 1999-2001 78,012(4) *
Secretary of NBT and NBT Bank since December 2000
Senior Vice President of Risk Management 1995-1999
Martin A. Dietrich 47 President and Chief Operating Officer of NBT Bank, N.A. 6,922(1) *
since September 1999 1,071(1)(a) *
Executive Vice President of Retail Banking 1998-1999 16,582(1)(b) *
Senior Vice President of Retail Banking 1996-1998 8,645(2) *
108,765(4) *
7,000(e) *
David E. Raven 40 President and Chief Operating Officer of Pennstar 6,949(1) *
Bank Division since August 2000 3,680(1)(b) *
Senior Vice President of Sales and Administration 44,292(4) *
September 1999-August 2000
Retail Sales Manager 1996-1999
- --------------------------------------------------------------------------------------------------------------
As of December 31, 2002 all Directors and Executive Officers as a group
beneficially owned 2,564,487 or 7.86% of the total shares outstanding, including
shares owned by spouses, certain relatives and trusts, as to which beneficial
ownership may be disclaimed, and options exercisable within sixty days of
December 31, 2002. Based on currently available Schedules 13D and 13G filed with
the SEC, we do not know of any person who is the beneficial owner of more than
5% of our common stock.
NOTES:
(a) The information under this caption regarding ownership of securities is
based upon statements by the individual nominees, directors, and officers
and includes 55,850 shares held in the names of spouses, certain relatives
and trusts as to which beneficial ownership may be disclaimed.
(b) In the case of officers and officers who are directors, shares of our stock
held in NBT Bancorp Inc. 401(k) and Employee Stock Ownership Plan as of
December 31, 2002 totaling 34,973 are included.
(c) Preferred Mutual Insurance Company, of which Paul O. Stillman is Chairman
and Director, and John C. Mitchell is a Director, owns 164,041 shares; Mr.
Mitchell disclaims any beneficial ownership of these shares. Mr. Stillman
disclaims any beneficial ownership of these shares, except to the extent of
his pecuniary interest therein.
(d) New York Central Mutual Fire Insurance Company, of which Mr. Robinson
serves as Chairman/Secretary, owns 888,471 shares. Mr. Robinson disclaims
any beneficial ownership of these shares, except to the extent of his
pecuniary interest therein.
(e) Mr. Dietrich has power of attorney for his mother, who owns 7,000 shares.
Mr. Dietrich disclaims any beneficial ownership of these shares.
(1) Sole voting and investment authority.
(2) Shared voting and investment authority.
(3) Shares under option from the NBT 2001 Non-Employee Director, Divisional
Director and Subsidiary Director Stock Option Plan, which are exercisable
within sixty days of December 31, 2002.
(4) Shares under option from the NBT 1993 Stock Option Plan, which are
exercisable within sixty days of December 31, 2002.
(*) Less than 1%
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF ALL OF ITS DIRECTOR NOMINEES.
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During fiscal 2002, NBT held five meetings of its Board. Each incumbent Director
attended at least 75% of the aggregate of (i) the total number of meetings of
the Board held during the period that the individual served and (ii) the total
number of meetings held by all committees of the Board on which the director
served during the period that the individual served. NBT has a number of
standing committees, including a Nominating Committee, Compensation Committee
and Risk Management Committee. A description of each of these committees
follows:
NOMINATING, ORGANIZATION AND BOARD AFFAIRS COMMITTEE
Chairman: Daryl R. Forsythe
Members: Andrew S. Kowalczyk, Jr.
Michael H. Hutcherson
Paul D. Horger
Gene E. Goldenziel
John C. Mitchell
Van Ness D. Robinson
This Committee nominates directors for election for our Company and our
subsidiaries. For the 2003 annual meeting, the Nominating Committee, excluding
Mr. Forsythe, met once to select the 2003 director nominees. Although Mr.
Forsythe was a member of the Nominating Committee appointed in fiscal 2002, as
part of the commitment of the Company and the Board of Directors to good
governance practices, Mr. Forsythe resigned from the Nominating Committee prior
to the selection of the 2003 nominees. In addition, the Board of Directors is in
the process of reviewing the composition and charters of all of its Board
committees in light of the requirements of the Sarbanes- Oxley Act of 2002, the
rules and regulations promulgated by the Securities and Exchange Commission
implementing the Sarbanes-Oxley Act as well as the rules proposed by the Nasdaq
Stock Market relating to corporate governance matters. The Committee also
functions to insure a successful evolution of management at the senior level.
This Committee met two times in 2002.
Our bylaws provide that nominations of candidates for election as our
directors must be made in writing and delivered to or received by our President
within ten days following the day on which public disclosure of the date of any
stockholders' meeting called for the election of directors is first given. Such
notification must contain the name and address of the proposed nominee, the
principal occupation of the proposed nominee, the number of shares of our common
stock that the notifying stockholder will vote for the proposed nominee,
including shares to be voted by proxy, the name and residence of the notifying
stockholder and the number of shares of our common stock beneficially owned by
the notifying stockholder. The chairman of our annual meeting may disregard any
nomination not made in accordance with the procedures established by our bylaws.
COMPENSATION AND BENEFITS COMMITTEE
Chairman: Andrew S. Kowalczyk, Jr.
Members: Dr. Peter B. Gregory
Joseph G. Nasser
Paul O. Stillman
William L. Owens
William C. Gumble
Paul D. Horger
Michael M. Murphy
Joseph A. Santangelo
This Committee has the responsibility of reviewing the salaries and other
forms of compensation of the key executive personnel of NBT and our
subsidiaries. The Committee administers our pension plan, 401(k) and employee
stock ownership plan, the directors' and officers' stock option plans, the
restricted stock and the employee stock purchase plans. This Committee met three
times in 2002.
RISK MANAGEMENT COMMITTEE
Chairman: Joseph G. Nasser
Members: Richard Chojnowski
William C. Gumble
Janet H. Ingraham
John C. Mitchell
Van Ness D. Robinson
Joseph A. Santangelo
Paul O. Stillman
Kenneth Axtell (*)
Susan Kwiatek (*)
Harry Schoenagel (*)
(*)-denotes Committee members belonging to a bank or
bank division Board and not the NBT Bancorp Inc. Board
The Risk Management Committee, our audit Committee, represents our Board in
fulfilling its statutory and fiduciary responsibilities for independent audits
of NBT including monitoring accounting and financial reporting practices and
financial information distributed to stockholders and the general public.
Further, the Committee is responsible for determining that we operate within
prescribed procedures in accordance with adequate administrative, operating and
internal accounting controls. It also appoints our independent auditors for the
following year. Our Board has determined that each of the members of the Risk
Management Committee satisfies the requirements of the Nasdaq stock market and
FDIC as to independence, financial literacy and experience. As independent
directors of our Board of Directors, none of the members of the Risk Management
Committee is an officer or employee of our Company or any of our subsidiaries
nor do any members have a relationship which, in the opinion of our Board, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director. This Committee met four times in 2002. The
Committee oversees activities on behalf of the Company as a whole, as well as
activities related directly to our banking subsidiary and
PROXY STATEMENT: NBT BANCORP INC. 7
banking divisions. All Company Board members sit on the bank or a bank division
Board. For our Risk Management Committee, we have three additional bank or bank
division Board members who are not Company Board members. These individuals are
denoted with a (*) above.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our Directors and Executive Officers must, under Section 16(a) of the Securities
Exchange Act of 1934, file certain reports of their initial ownership of our
common stock and of changes in beneficial ownership of our securities. To our
knowledge, all filing requirements under the Securities Exchange Act were
satisfied, except that certain Section 16(a) filings submitted timely in prior
periods for each of Messrs. Goldenziel, Nasser and Stillman were amended in 2002
to include shares held in brokerage and trust accounts not previously reported.
COMPENSATION OF DIRECTORS AND OFFICERS
BOARD OF DIRECTORS' FEES. Members of our Board receive an annual retainer in the
amount of $9,000 which shall be pay able in the form of restricted stock
pursuant to the Directors' Plan (subject to the stockholders approving the
Directors' Plan at the annual meeting) which will vest over a three-year period.
Directors receive $900 in cash for each Board meeting attended. Our Board
members also receive $600 in cash for each committee meeting attended. Chairmen
of the committees receive $900 in cash for each committee meeting attended. Our
officers who are also directors do not receive any Board fees. Under the NBT
Non- Employee Director, Divisional Director and Subsidiary Director Stock Option
Plan, annually, we grant at the fair market value per share on the date of the
grant to each of our non-employee directors an option to purchase 1,000 shares
of our common stock multiplied by the number of NBT Bancorp Board meetings
attended in the prior year and divided by the number of NBT Bancorp Board
meetings held in the prior year. We also provide health insurance for one
director of NBT under an agreement honored from the Pioneer American Holding
Company acquisition; the premium for insurance coverage totaled $8,406 for Mr.
Gene E. Goldenziel, in 2002.
SUMMARY COMPENSATION TABLE
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LONG TERM COMPENSATION
ANNUAL COMPENSATION ---------------------------
------------------------------------- AWARDS SECURITIES
OTHER ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (1) COMPENSATION (2) OPTIONS PAYOUTS COMPENSATION (3)
- --------------------------------------------------------------------------------------------------------------------------------
Daryl R. Forsythe, 2002 $375,000 $ 225,000 52,300 $ 0 $ 113,990
Chairman, President and 2001 350,000 140,625 54,500 0 87,810
Chief Executive Officer of NBT 2000 303,854 200,000 50,400 0 100,799
Michael J. Chewens, 2002 $214,500 $ 120,120 29,900 $ 0 $ 52,705
Senior Executive Vice President, 2001 206,000 49,871 25,600 0 40,870
Chief Financial Officer and 2000 168,315 81,500 18,800 0 44,200
Secretary of NBT and NBT Bank
Martin A. Dietrich, 2002 $260,000 $ 145,600 36,200 $ 0 $ 57,033
President and Chief 2001 253,365 91,650 43,246 0 42,500
Operating Officer of NBT Bank 2000 231,604 147,500 38,600 0 49,300
David E. Raven, 2002 $200,000 $ 112,000 27,900 $ 0 $ 20,930
President and Chief Operating 2001 189,154 46,500 $ 54,586 22,400 0 13,600
Officer of Pennstar Bank Division 2000 146,034 77,000 8,400 0 20,400
- --------------------------------------------------------------------------------------------------------------------------------
NOTES:
(1) Represents bonuses under our Executive Incentive Compensation Plan earned
in the specified year and paid in January of the following year for 2000
and 2002. In 2001 a discretionary amount was paid in lieu of a bonus.
(2) Moving costs for Mr. Raven in 2001 totaled $54,586.
(3) NBT maintains a non-contributory, defined benefit pension plan, with a cash
balance design for all eligible employees. According to IRS rules,
qualified plan maximum compensation was $200,000 for 2002. NBT
contributions made to the cash balance plan for Mr. Forsythe were $87,000
in 2002, $73,950 in 2001, and $73,950 in 2000. For Mr. Chewens,
contributions were $38,000 in 2002, $32,300 in 2001, and $32,300 in 2000.
For Mr. Dietrich, contributions were $44,000 in 2002, $37,400 in 2001, and
$37,400 in 2000. For Mr. Raven, contributions were $10,000 in 2002, $8,500
in 2001, and $8,500 in 2000.
This column also reflects NBT contributions to NBT Bancorp Inc. 401(k) and
Employee Stock Ownership Plan ("401(k)/ESOP"), employer matching
contributions for each of Messrs. Forsythe, Chewens, Dietrich and Raven
were $6,000 in 2002, $5,100 in 2001, and $8,500 in 2000. Effective January
1, 2001, the 401(k)/ESOP plan was restated to tie year-end discretionary
contributions with corporate profitability. In 2002 a discretionary
contribution was made for Messrs. Forsythe, Chewens, Dietrich and Raven in
the amounts of $10,312, $5,287, $7,033, and $4,930 respectively. A
discretionary contribution was not made in 2001. In 2000 a discretionary
contribution of $3,400 was made for Messrs. Forsythe, Chewens, Dietrich and
Raven.
Also included in this column are costs to the corporation for disability
plan agreements and split dollar life insurance plans. For Mr. Forsythe,
these costs were $10,678 in 2002, $8,760 in 2001, and $8,682 in 2000. For
Mr. Chewens these costs were $3,418 in 2002, and $3,470 in 2001.
In addition, included in this column is a restricted stock distribution to
Mr. Forsythe in 2000, of $6,267.
8 PROXY STATEMENT: NBT BANCORP INC.
OPTION GRANTS INFORMATION
The following table presents information concerning grants of stock options made
during 2002 to each of the named Executive Officers. The potentially realizable
values are based solely on arbitrarily assumed rates of appreciation required by
appli cable SEC regulations. Actual gains, if any, on option exercises
and common stockholdings are dependent on the future performance of our common
stock. There can be no assurance that the potential realizable values shown in
this table will be achieved.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE
------------------------------------------------ AT ASSUMED ANNUAL RATES
# OF SECURITIES % OF TOTAL OF STOCK PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM (2)
OPTIONS TO EMPLOYEES PRICE -------------------------------------
NAME GRANTED (1) IN FISCAL YEAR ($/SH) EXPIRATION DATE 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------
Daryl R. Forsythe 52,300 10.5% $ 14.3492 January 2012 $ 471,962 $ 1,196,045
Michael J. Chewens 29,900 6.0% 14.3492 January 2012 269,822 683,781
Martin A. Dietrich 36,200 7.3% 14.3492 January 2012 326,674 827,855
David E. Raven 27,900 5.6% 14.3492 January 2012 251,773 638,043
- ----------------------------------------------------------------------------------------------------------------------------
NOTES:
(1) Nonqualified options have been granted at fair market value at the date of
grant. Options vest 40% after one year from grant date; an additional 20%
vest each following year.
(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 our stock are not necessarily
indicative of actual performance that may be expected. The amounts exclude
any execution costs 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 2002 by each of the named Executive Officers and the value at
December 31, 2002, of unexercised options that are exercisable within sixty days
of December 31, 2002. These values, unlike the amounts set forth in the column
headed "Value Realized," have not been, and may never be, realized. All
information has been adjusted for stock dividends and splits. The underlying
options have not been, and may never be, exercised; and actual gains, if any, on
exercise will depend on the value of our common stock on the date of exercise.
There can be no assurance that these values will be realized. During 2002, there
were no option exercises.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
- -----------------------------------------------------------------------------------------------------
VALUE OF
UNEXERCISED
NUMBER OF SECURITIES IN THE MONEY
UNDERLYING UNEXERCISED OPTIONS
OPTIONS AT FY END AT FY END (2)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE VALUE REALIZED (1) UNEXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------
Daryl R. Forsythe 0 $ 0 $ 301,271/63,262 $ 942,368/129,424
Michael J. Chewens 0 0 78,012/31,941 183,323/67,366
Martin A. Dietrich 0 0 108,765/49,348 195,041/95,348
David E. Raven 0 0 44,292/27,381 66,997/58,255
- -----------------------------------------------------------------------------------------------------
NOTES:
(1) Represents difference between the fair market value on the date of exercise
of the securities underlying the options and the exercise price of the
options.
(2) Represents difference between the fair market value of the securities
underlying the options and the exercise price of the options at December
31, 2002.
PROXY STATEMENT: NBT BANCORP INC. 9
PENSION PLAN
Our executives participate in the NBT Bancorp Inc. Defined Benefit Pension Plan.
This plan is a noncontributory, taxqualified pension plan. Eligible employees
are those who work at least 1,000 hours per year, have completed one year of
eligibility service and have attained age 21. The plan provides for 100% vesting
after five years of qualified service. Prior to the amendment and restatement of
the plan effective January 1, 2000, the plan had received a determination from
the Internal Revenue Service that the plan was qualified under Section 401(a) of
the Internal Revenue Code. The plan, as amended and restated effective January
1, 2000, was submitted in 2001 to the Internal Revenue Service for
determination. The plan was converted to a defined benefit plan with a cash
balance feature, effective January 1, 2000. Prior to that date the plan was a
traditional defined benefit pension plan. In 2002 there were two amendments to
the plan which included Amendment No. 2 that defined participation in the plan
for CNB participants, as well as Amendment No. 3 that stated good faith
compliance with the requirements of the Economic Growth and Tax Relief
Reconciliation Act of 2001.
Under a cash balance plan such as our plan, hypothetical account balances
are established for each participant and pension benefits are generally stated
as the lump-sum amount in that hypothetical account. Notwithstanding the
preceding sentence, since a cash balance plan is a defined benefit plan, the
annual retirement benefit payable at normal retirement (age 65) is an annuity,
which is the actuarial equivalent of the participant's account balance under the
cash balance plan. However, participants may elect, with the consent of their
spouses if they are married, to have the benefits distributed as a lump sum
rather than an annuity. Benefits under the plan for 2002 are computed using a
cash balance methodology for people who converted (as described hereafter) that
provides for pay-based credits to the participants' hypothetical accounts equal
to 5 to 43.5 percent (depending on age and other factors) on the first $200,000
of annual eligible compensation. Eligible compensation under the plan is defined
as fixed basic annual salary or wages, commissions, overtime, cash bonuses, and
any amount contributed by us at the direction of the participant pursuant to a
salary reduction agreement and excludible from the participant's gross income
under Section 125 or Section 402(e)(3) of the Internal Revenue Code, but
excluding any other form of remuneration, regardless of the manner calculated or
paid such as amounts realized from the exercise of stock options, severance pay
or our cost for any public or private benefit plan, including this pension plan.
In addition to the pay-based service credits, monthly interest credits are made
to the participant's account balance based on the average annual yield on
30-year U.S. Treasury securities for the November of the prior year. Each active
participant in the pension plan as of January 1, 2000 was given a one-time
irrevocable election to continue participating in the traditional defined
benefit plan design or to begin participating in the new cash balance plan
design. All employees who became participants after January 1, 2000
automatically participated in the cash balance plan design. Each of our
executives chose to participate in the cash balance plan design.
The following table shows the estimated annual benefits payable as a life
annuity with five years certain upon retirement at normal retirement age (NRA)
for each of the named Executive Officers.
EXECUTIVE ANNUITY BENEFIT AT NRA
- ----------------------------------------------------
Mr. Forsythe $35,369
Mr. Chewens $36,798
Mr. Dietrich $49,325
Mr. Raven $12,213
- ----------------------------------------------------
Pension benefits under the plan are not subject to reduction for Social
Security benefits or other offset amounts. Section 415 of the Internal Revenue
Code places certain limitations on pension benefits that may be paid from the
trusts of taxqualified plans, such as the plan. Because of these limitations and
in order to provide certain of our executives with adequate retirement income,
we have entered into supplemental retirement agreements which provide retirement
benefits to the named executives in the manner discussed below. It should be
noted that where applicable the amounts payable under the supplemental
retirement agreements, as discussed in the following section, are offset by
payments made under our pension plan, the annuitized employer portion of our
401(k)/ ESOP and social security.
SUPPLEMENTAL RETIREMENT AGREEMENTS AND PLAN
We have entered into an agreement with Mr. Forsythe to provide him with
supplemental retirement benefits, revised most recently on January 28, 2002,
which we refer to as the "SERP." The SERP for the benefit of Mr. Forsythe
provides that his combined annual benefit at normal retirement, taking into
consideration (a) the annual benefit payable to Mr. Forsythe under our pension
plan (b) the annual benefit that could be provided by contributions by us and
NBT Bank (other than Mr. Forsythe's elective deferrals) to our 401(k)/ESOP and
the earnings on those amounts if these contributions and earnings were converted
to a benefit payable under the agreement using the actuarial assumptions
provided under the agreement, the amount to be determined by an actuary selected
by us or NBT Bank (c) his social security benefit and (d) the SERP, will be
equal to 75% of Mr. Forsythe's final average compensation (i.e., average annual
base salary, commissions, bonuses and elective deferrals not includible in Mr.
Forsythe's gross income under our 401(k)/ESOP and cafeteria plan for the five
years of benefit service under our pension plan out of the last ten years of
benefit service that produces the highest average,
10 PROXY STATEMENT: NBT BANCORP INC.
the ten years to be those immediately preceding the date of retirement but
without regard to any Internal Revenue Code limitations on compensation
applicable to tax-qualified plans). Reduced amounts will be payable under the
SERP in the event Mr. Forsythe takes early retirement. If Mr. Forsythe becomes
disabled before he attains age 62, he will be treated for purposes of the SERP
as if he had continued to be employed by NBT Bank until he reached age 62, and
then retired. If Mr. Forsythe dies, his spouse will be entitled to an annual
benefit for life equal to 50% of the benefit payable to Mr. Forsythe and, if
such death occurs before he retires, as if he had retired and begun receiving
his benefit before he died. Except in the case of early retirement, disability
or death, payment of benefits will commence upon the first day of the month
after Mr. Forsythe attains age 65. Assuming a retirement age of 65, satisfaction
of applicable SERP conditions, that he is currently 65, and that his 2002
compensation were his final average compensation as defined by the SERP, the
estimated aggregate annual retirement benefit under the SERP, our cash balance
pension plan, the annuitized employer portion of our 401(k)/ESOP and social
security to be paid to Mr. Forsythe would be $386,719. The SERP provides that it
will at all times be unfunded except that, in the event of a change in control,
NBT Bank will be required to transfer to a grantor trust an amount sufficient to
cover all potential liabilities under the SERP.
We have also entered into agreements with Messrs. Chewens and Dietrich and
we have adopted a Supplemental Executive Retirement Plan, in which they
participate, to provide them with SERP's. The SERP's for the benefit of Messrs.
Chewens and Dietrich provide that the combined annual supplemental benefit at
normal retirement, taking into consideration (a) the annual benefit payable to
the executive under our pension plan (b) the annual benefit that could be
provided by contributions by us and NBT Bank (other than the executive's
elective deferrals) to our 401(k)/ESOP and the earnings on those amounts if
these contributions and earnings were converted to a benefit payable under the
agreement using the actuarial assumptions provided under the agreement, the
amount to be determined by an actuary selected by us or NBT Bank (c) his social
security benefit and (d) the SERP, will be equal to the greater of (1) 50% of
the executive's final average compensation (i.e., average annual base salary,
commissions, bonuses and elective deferrals not includible in the executive's
gross income under our 401(k)/ESOP and cafeteria plan for the five years of
benefit service under our pension plan out of the last ten years of benefit
service that produces the highest average, the ten years to be those immediately
preceding the date of retirement but without regard to any Internal Revenue Code
limitations on compensation applicable to tax qualified plans) or (2) the sum of
the annual amount of the executive's benefit under our pension plan, calculated
without giving effect to limitations and restrictions imposed by the Internal
Revenue Code plus the annual benefit that could be provided by contributions by
us and NBT Bank (other than the executive's elective deferrals) to our
401(k)/ESOP and the earnings on those amounts, calculated by disregarding the
limitations and restrictions imposed by the Internal Revenue Code and using the
actuarial assumptions set out in our pension plan. Reduced amounts will be
payable under the SERP in the event Mr. Chewens or Mr. Dietrich takes early
retirement. If Mr. Chewens or Mr. Dietrich dies leaving a surviving spouse, his
spouse will be entitled to an annual benefit for life equal to the annual
survivor annuity benefit under our pension plan, calculated without giving
effect to limitations and restrictions imposed by the Internal Revenue Code,
reduced by the surviving spouse benefit actually payable under such plan, plus a
lump sum amount equal to contributions by us and NBT Bank (other than the
executive's elective deferrals) to our 401(k)/ESOP, calculated by disregarding
the limitations and restrictions imposed by the Internal Revenue Code, reduced
by the amounts actually contributed to our 401(k)/ESOP, plus the earnings on
such net amount. If the executive dies after attaining age 60 and after he has
retired, but before payment of benefits has commenced, the surviving spouse will
also receive an annual benefit equal to 50% of the excess, if any, of 50% of the
executive's final average compensation (as defined above) over the sum of (1)
the annual amount of the executive's benefit under our pension plan, calculated
without giving effect to limitations and restrictions imposed by the Internal
Revenue Code and (2) the annual benefit that could be provided by contributions
by us and NBT Bank (other than the executive's elective deferrals) to our
401(k)/ESOP and the earnings on those amounts, calculated by disregarding the
limitations and restrictions imposed by the Internal Revenue Code and using the
actuarial assumptions set out in our pension plan, and (3) the executive's
social security benefits. Except in the case of early retirement or death,
payment of benefits will commence upon the first day of the month after Mr.
Chewens or Mr. Dietrich attains age 62. Assuming a retirement age of 62,
satisfaction of applicable SERP conditions, that he is currently 62, and that
his 2002 compensation were his final average compensation as defined by the
SERP, the estimated aggregate annual retirement benefit under the SERP, our cash
balance pension plan, the annuitized employer portion of our 401(k)/ESOP and
social security to be paid to Mr. Chewens would be $132,186. Assuming a
retirement age of 62, satisfaction of applicable SERP conditions, that he is
currently 62, and that his 2002 compensation were his final average compensation
as defined by the SERP, the estimated aggregate annual retirement benefit under
the SERP, our cash balance pension plan, the annuitized employer portion of our
401(k)/ESOP and social security to be paid to Mr. Dietrich would be $175,826.
The SERP's for both Mr. Chewens and Mr. Dietrich provide that they will at all
times be unfunded except that, in the event of a change in control, NBT Bank
will be required to transfer to a grantor trust an amount sufficient to cover
all potential liabilities under the SERP.
PROXY STATEMENT: NBT BANCORP INC. 11
EMPLOYMENT AGREEMENTS
Effective January 1, 2000, we entered into an employment agreement with Mr.
Forsythe, which was revised on January 22, 2001 and again on January 1, 2002.
The agreement provides that Mr. Forsythe will serve as our Chairman, President
and Chief Executive Officer until August 2, 2003, except that the term of
employment may be extended for one or two additional years by mutual agreement
of the parties. Mr. Forsythe's annual salary was $375,000 during 2002 and will
be $425,000 during 2003 and, if applicable, thereafter. Mr. Forsythe's salary
for 2002 reflected his election to only take one half of the contractual
increase to which he was entitled. Mr. Forsythe will be eligible to be
considered for performance bonuses commensurate with his title and salary grade
in accordance with our compensation policies. The agreement also grants Mr.
Forsythe a right to stock options to be granted to him annually under our 1993
Stock Option Plan, computed using a formula approved by us that is commensurate
with his title and salary grade. The option exercise price will be the fair
market value of the stock at time of grant. The agreement also provides to Mr.
Forsythe paid vacation time commensurate with his title and salary grade, in
accordance with the Company's Policy. In addition, Mr. Forsythe may be excused
from physical presence at our headquarters for the months of January, February
and March, except on an as-required basis as mutually agreed by our Board of
Directors. Under the agreement Mr. Forsythe will also receive other benefits
including use of an automobile, country club privileges, and participation in
our various employee benefits plans such as the pension plan, the 401(k)/ESOP,
and various health, disability, and life insurance plans. In the event Mr.
Forsythe's employment is terminated by us other than for "cause" (as defined) or
by Mr. Forsythe for "good reason" (as defined), Mr. Forsythe will be entitled to
receive his accrued and unpaid salary, his accrued rights under our employee
plans and arrangements, unpaid expense reimbursements, the cash equivalent of
his accrued annual vacation and sick leave and his salary for the period
commencing on the date immediately following the termination date and ending
upon and including the later of the third anniversary of the commencement date
or the second anniversary of the termination date. However, if such termination
is covered by his change in control agreement (discussed later), his severance
payments will be determined under that agreement.
Effective January 1, 2000, we also entered into an employment agreement
with Mr. Dietrich, which was revised on January 1, 2002. The agreement with Mr.
Dietrich provides that he will serve as the President, Chief Operating Officer
and a director of NBT Bank through January 1, 2005, with automatic one-year
extensions occurring annually beginning January 1, 2003. Mr. Dietrich's salary
in 2003 is $281,000 and the agreement provides for minimum increases of 8% per
annum. For 2002, Mr. Dietrich relinquished his right to an 8% increase and
accepted a 4% increase. Mr. Dietrich will be eligible to be considered for
performance bonuses commensurate with his title and salary grade in accordance
with our compensation policies. The agreement also grants Mr. Dietrich a right
to stock options to be granted to him annually under our 1993 Stock Option Plan,
computed using a formula approved by us that is commensurate with his title and
salary grade. The option exercise price will be the fair market value of the
stock at time of grant. Under the agreement Mr. Dietrich will also receive other
benefits including use of an automobile, country club privileges, and
participation in our various employee benefits plans such as the pension plan,
the 401(k)/ESOP, and various health, disability, and life insurance plans. In
the event Mr. Dietrich's employment is terminated by us other than for "cause"
(as defined) or by Mr. Dietrich for "good reason" (as defined), Mr. Dietrich
will be entitled to receive his accrued and unpaid salary, his accrued rights
under our employee plans and arrangements, unpaid expense reimbursements, the
cash equivalent of his accrued annual vacation and sick leave, and severance
payments equal to his salary until the later of January 1, 2005, the date to
which the term of employment has been automatically extended or 24 months after
the termination date. However, if such termination is covered by his change in
control agreement (discussed later), his severance payments will be determined
under that agreement.
Effective June 1, 2000, we entered into an employment agreement with Mr.
Chewens, which was revised on January 1, 2002. The agreement with Mr. Chewens
provides that he will serve as a Senior Executive Vice President of our Company,
our Chief Financial Officer and a Senior Executive Vice President and Chief
Financial Officer of NBT Bank through January 1, 2005, with automatic one-year
extensions occurring annually beginning January 1, 2003. Mr. Chewens' salary in
2003 is $232,000 and the agreement provides for minimum increases of 8% per
annum. For 2002, Mr. Chewens relinquished his right to an 8% increase and
accepted a 4% increase. Mr. Chewens will be eligible to be considered for
performance bonuses commensurate with his title and salary grade in accordance
with our compensation policies. The agreement also grants Mr. Chewens a right to
stock options to be granted to him annually under our 1993 Stock Option Plan,
computed using a formula approved by us that is commensurate with his title and
salary grade. The option exercise price will be the fair market value of the
stock at time of grant. Under the agreement Mr. Chewens will also receive other
benefits including use of an automobile, country club privileges, and
participation in our various employee benefits plans such as the pension plan,
the 401(k)/ESOP, and various health, disability, and life insurance plans. In
the event Mr. Chewens' employment is terminated by us other than for "cause" (as
defined) or by Mr. Chewens for "good reason" (as defined), Mr. Chewens will be
entitled to receive his accrued and unpaid salary, his accrued rights under our
employee plans and
12 PROXY STATEMENT: NBT BANCORP INC.
arrangements, unpaid expense reimbursements, the cash equivalent of his accrued
annual vacation and sick leave, a relocation payment if he relocates outside the
Binghamton area within 18 months and severance payments equal to his salary
until the later of January 1, 2005, the date to which the term of employment has
been automatically extended or 24 months after the termination date. However, if
such termination is covered by his change in control agreement (discussed
later), his severance payments will be determined under that agreement.
Effective August 1, 2001, we entered into an employment agreement with Mr.
Raven, which was revised on January 1, 2002. The agreement with Mr. Raven
provides that he will serve as the President and Chief Operating Officer of our
Pennstar Bank division through January 1, 2005, with automatic one-year
extensions occurring annually beginning January 1, 2003. Mr. Raven's annual
salary in 2003 is $216,000 and the agreement provides for minimum increases of
8% per annum. Mr. Raven will be eligible to be considered for performance
bonuses commensurate with his title and salary grade in accordance with our
compensation policies. The agreement also grants Mr. Raven a right to stock
options to be granted to him annually under our 1993 Stock Option Plan, computed
using a formula approved by us that is commensurate with his title and salary
grade. The option exercise price will be the fair market value of the stock at
time of grant. Under the agreement Mr. Raven will also receive other benefits
including use of an automobile, country club privileges, and participation in
our various employee benefits plans such as the pension plan, the 401(k)/ESOP,
and various health, disability, and life insurance plans. In the event Mr.
Raven's employment is terminated by us other than for "cause" (as defined) or by
Mr. Raven for "good reason" (as defined), Mr. Raven will be entitled to receive
his accrued and unpaid salary, his accrued rights under our employee plans and
arrangements, unpaid expense reimbursements, the cash equivalent of his accrued
annual vacation and sick leave, a relocation payment if he relocates outside the
Scranton area within 18 months and severance payments equal to his salary until
the later of January 1, 2005, the date to which the term of employment has been
automatically extended or 24 months after the termination date. However, if such
termination is covered by his change in control agreement (discussed later), his
severance payments will be determined under that agreement.
CHANGE IN CONTROL AGREEMENTS
We have entered into a change in control agreement with each of Messrs.
Forsythe, Chewens, Dietrich and Raven most recently on July 23, 2001. The
agreements for Messrs. Forsythe, Chewens, Dietrich and Raven provide in general
that, in the event there is a change in control of us or NBT Bank and further,
if within 24 months from the date of such change in control, Mr. Forsythe's,
Chewens', Dietrich's or Raven's respective employment with us or NBT Bank is
terminated without cause or by the executive with good reason (as defined in the
agreement), or if within 12 months of such change in control, the executive
resigns, irrespective of the existence of good reason, Messrs. Forsythe,
Chewens, Dietrich or Raven will be entitled to receive 2.99 times the greater of
(1) the sum of his annualized salary for the calendar year in which the change
in control occurs, the maximum target bonus that could have been paid to him for
such year if all applicable targets and objectives had been achieved, or if no
formal bonus program is in effect, the largest bonus amount paid to him during
any of the three preceding calendar years, his income from the exercise of
nonqualified stock options during such year and other annualized amounts that
constitute taxable income to him from us for such year, without consideration
for salary reduction amounts that are excludible from taxable income or (2) his
average annual compensation includible in his gross income for federal income
tax purposes for the three years immediately preceding the year in which the
change in control occurs, including base salary, bonus and ordinary income
recognized with respect to stock options, without reduction for salary reduction
amounts that are excludible from taxable income, plus any gross-up amount
required to compensate for the imposition of any excise taxes under section 4999
of the Internal Revenue Code. Moreover, if the executive's employment with us or
NBT Bank is terminated without cause or by the executive with good reason (as
defined in the agreements) within 24 months of such change in control, or if the
executive resigns within 12 months of such change in control irrespective of the
existence of good reason, we or NBT Bank will maintain in effect, for the
continued benefit of the executive and his spouse and family, if applicable, for
three years after the executive's date of termination, or such longer period as
is provided in the appropriate plan, all noncash employee benefit plans,
programs, or arrangements (including pension and retirement plans and
arrangements, stock option plans, life insurance and health and accident plans
and arrangements, medical insurance plans, disability plans, and vacation plans)
in which the executive was entitled to participate immediately prior to the
executive's date of termination, as in effect at the date of termination, or, if
more favorable to the executive and his spouse and family, as applicable, at any
time thereafter with respect to executive employees of our Company or any
successor; provided that the executive's continued participation is possible
after his termination under the general terms and provisions of the plans,
programs, and arrangements. However, if the executive becomes eligible to
participate in a benefit plan, program, or arrangement of another employer which
confers substantially similar benefits upon the executive, the executive will
cease to receive the benefits in respect to our plan, program, or arrangement.
In the event that the executive's participation in any such plan, program, or
arrangement is barred, we or NBT Bank will arrange to provide the executive with
benefits substantially similar to those which the executive is entitled to
receive under such plans, programs
PROXY STATEMENT: NBT BANCORP INC. 13
and arrangements or alternatively, pay an amount equal to the reasonable value
of substantially similar benefits. In addition, each executive's benefit under
any SERP shall be fully vested and his benefit thereunder will be determined as
if his employment had continued for three additional years (or such lesser
period after which the maximum benefit is attained), at an annual compensation
equal to the amount determined for purposes of calculating his severance amount.
Moreover, under certain circumstances we or NBT Bank or the acquiring entity
will provide the executive with health coverage for the maximum period after
termination of employment for which COBRA continuation coverage is available.
The agreements are effective until December 31, 2004, and are automatically
renewed for one additional year commencing at December 31, 2001 and each
December 31 of following years, and will be automatically extended for 24 months
from the date of such a change in control.
OTHER EMPLOYMENT BENEFITS
In addition to the employment agreement and supplemental retirement agreements
between Messrs. Forsythe, Chewens and NBT, the Corporation and Mr. Forsythe have
entered into a wage continuation plan effective August 1, 1995, which provides
that during the first three months of disability Mr. Forsythe will receive 100%
of his regular wages subject to any deduction for social security or other
offset amounts. Additionally, if the disability extends beyond three months, Mr.
Forsythe will receive payments of $10,000 per month, until age 65, under an
individual supplemental insurance policy. The annual cost of the policy for Mr.
Forsythe is $7,734. Furthermore, Mr. Chewens will receive 100% of his regular
wages for the first seven weeks, and $1,000 per week for the balance of the
short-term disability (26 weeks maximum), subject to any deduction for social
security or other offset amounts. Also, if the disability extends beyond three
months Mr. Chewens will receive payments of $3,750 per month, until age 65,
under an individual supplemental insurance policy. The annual cost of the policy
for Chewens is $3,418.
We and Mr. Forsythe have entered into a death benefits agreement, which was
amended most recently on January 28, 2002. The policy is a split dollar life
insurance policy on Mr. Forsythe's life in the face amount of $800,000. We are
the owner of the policy and have the right to designate another officer or
employee as the insured under the policy upon termination of the agreement. Upon
Mr. Forsythe's death, his named beneficiary will receive $600,000 from the
policy's proceeds, while we will receive the remainder of the policy's proceeds.
Upon termination of the death benefits agreement (i.e., upon termination of Mr.
Forsythe's employment), Mr. Forsythe is required to transfer all of his rights,
title, and interest in the policy to us. We pay the premium on the policy, of
which an actuarially determined amount is attributable to Mr. Forsythe and is
reflected in the Summary Compensation Table above. In addition, we entered into
a split dollar agreement with Mr. Forsythe on January 25, 2002, with respect to
a life insurance policy on Mr. Forsythe's life in the amount of $1,500,000. We
are the owner of the policy and have the right to designate another officer or
employee as the insured under the policy upon termination of the agreement. Upon
Mr. Forsythe's death, his named beneficiary will receive $1,000,000 from the
policy's proceeds, while we will receive the remainder of the policy's proceeds.
We pay the premium on the policy, of which an actuarially determined amount is
attributable to Mr. Forsythe and is reflected in the Summary Compensation Table
above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In fiscal 2002, the following directors served as members of our Compensation
and Benefits Committee: Andrew S. Kowalczyk, Jr., Dr. Peter B. Gregory, Joseph
G. Nasser, Paul O. Stillman, William L. Owens, William C. Gumble, Paul D.
Horger, Michael M. Murphy and Joseph A. Santangelo. The law firm of Kowalczyk,
Tolles, Deery and Johnston, of which Director Andrew S. Kowalczyk, Jr., is a
partner, provided legal services to us and NBT Bank in 2002. We paid $116,330 in
fees for services received from this firm. The law firms of Harris Beach LLP, of
which Director William L. Owens is a partner and Oliver, Price & Rhodes, of
which Director Paul D. Horger is a partner, also provided legal services to us
in 2002. The amounts paid to each of these entities was less than the
established reporting thresholds. From time to time NBT Bank makes loans to its
Directors and Executive Officers and related persons or entities. It is the
belief of Management that these loans are made in the ordinary course of
business, are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and neither involve more than normal risk of collectability nor
present other unfavorable features.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors is comprised
of non-employee directors. The primary responsibility of the Compensation and
Benefits Committee is to design, implement, and administer all facets of our
compensation and benefits programs for all employees (including Executive
Officer salaries, bonuses and certain other forms of compensation). The
Committee also administers our pension plan, 401(k) and employee stock ownership
plan (ESOP), the directors' and officers' stock option plans, the restricted
stock plan and the employee stock purchase plan. The Committee presents its
actions to our Board for approval.
The Committee annually retains an independent compensation consultant, to
help ensure that the total compensation is
14 PROXY STATEMENT: NBT BANCORP INC.
reasonable in comparison to the total compensation provided by similarly
situated publicly traded financial institutions. The Compensation Committee has
also sought the advice of that consultant in connection with the grant of stock
options. Set forth below is a report addressing NBT's compensation policies for
2002 as they affected NBT's Executive Officers.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS
NBT's executive compensation policies are designed to provide competitive levels
of compensation, to assist NBT in attracting and retaining qualified executives
and to encourage superior performance. In determining levels of Executive
Officers' overall compensation, the Compensation Committee considers the
qualifications and experience of the executives, the asset size of the Company
and the complexity of its operations, the financial condition, including
recurring income of the Company, the compensation paid to other persons employed
by the Company and the compensation paid to persons having similar duties and
responsibilities in comparable financial institutions. Compensation paid or
awarded to NBT's Executive Officers in 2002 consisted of the following
components: base salary, variable compensation and other.
BASE SALARY. The Compensation Committee reviews executive base salaries
annually. Base salary is intended to signal the internal value of the position
and to track with the external marketplace. All current named Executive Officers
presently serve pursuant to employment agreements that provide for a minimum
base salary that may not be reduced without the consent of the Executive
Officer. In establishing the fiscal 2002 salary for each Executive Officer, the
Compensation Committee considered the officer's responsibilities, qualifications
and experience, the asset size of the Company and the complexity of its
operations, the financial condition of the Company (based on levels of recurring
income, asset quality and capital), and compensation paid to persons having
similar duties and responsibilities in comparable financial institutions.
VARIABLE COMPENSATION. Variable compensation consists of annual cash incentives
in the form of our Executive Incentive Compensation Plan (EICP) and stock option
grants.
The Committee designed the current EICP that links payout with stockholder
interests. The Committee reviews the EICP annually. The Compensation Committee
establishes corporate performance objectives at the beginning of each year. For
2002, the primary corporate financial performance objective was based on the
Company attaining a certain target Earnings Per Share "EPS" level. EPS levels
below the target level result in no EICP payment being made. EPS levels
exceeding the target by specified percentages may result in increasing EICP
payments based on a four-tiered structure. The Compensation Committee, where
appropriate, also considers individual non-financial performance measures and
divisional performance measures, in determining bonuses. In 2002, the named
executives, including Mr. Forsythe were eligible to receive an EICP payment
based on NBT's reported EPS. The Committee may, at their discretion, modify or
interpret the plan from time to time, to negate the effects of certain
nonrecurring increases or decreases in the EPS level. For example in 2002, the
favorable effect on EPS attributed to the adoption of a new FASB pronouncement
was not considered in determining the payments.
The purpose of NBT's non-qualified stock option plan is to provide an
additional incentive to certain NBT officers to work to maximize stockholder
value. Stock options vest 40% after one year and in equal increments over the
next three years. This approach is designed to act as a retention device for key
employees and to encourage employees to take into account the long-term
interests of NBT. The guidelines used in 2002 by the Compensation Committee in
making the stock option grants to Mr. Forsythe and other named Executive
Officers of NBT took into account the duties and responsibilities of the
individuals and the advice of our independent compensation consultant. In 2002,
the named executives received options to purchase an aggregate of 146,300 shares
of common stock at exercise prices equal to the fair market value on the
respective date of grant. In January 2003 the CEO and named executives received
options to purchase an aggregate of 98,700 shares of common stock at exercise
prices equal to the fair market value on the respective date of grant. The
reduction in option shares is primarily a function of proposed accounting rules
affecting the treatment of stock options.
OTHER. In addition to the compensation paid to Executive Officers as described
above, Executive Officers received, along with and on the same terms as other
employees, certain benefits pursuant to our 401(k)/ESOP and Employee Stock
Purchase Plan (ESPP). All of our named executives were eligible to participate
in the 401(k)/ESOP and were 100% vested during 2002. The 401(k)/ESOP plan
provides that an eligible employee may elect to defer up to the Internal Revenue
Code Section 402(g) limit, of his or her salary for retirement (subject to a
maximum limitation for 2002 and 2003 of $11,000 and $12,000, respectively), and
that we will provide a matching contribution of 100% of the first 3% of the
employee's deferred amount. In addition, we may make an additional discretionary
matching contribution on behalf of participants who are employed on the last day
of the plan year and who completed a year of service during the plan year based
on the financial performance of the Company. For 2002, discretionary
contributions of $545,214 (including the named executives) were made for
eligible participants, in January 2003. These contributions were made in the
form of Company stock. Compensation taken into account under the plan cannot
exceed $200,000 for 2002 and 2003. All of our named executives were also
eligible to participate in the ESPP. Our Board may amend or terminate these
plans at any time.
PROXY STATEMENT: NBT BANCORP INC. 15
CEO COMPENSATION. The Compensation Committee, in determining the compensation
for the Chief Executive Officer, considers NBT's asset size and complexity,
financial condition and results, including progress in meeting strategic
objectives. The Chief Executive Officer's fiscal 2002 salary was $375,000, an
increase of 7.1%, compared to $350,000 in 2001. NBT annually retains an
independent compensation consultant, and in that regard received an opinion that
the total compensation was reasonable in comparison to the total compensation
provided by similarly situated publicly traded financial institutions. The
Compensation Committee also sought the advice of that consultant in connection
with the grant of options in fiscal 2002. For the fiscal year 2002, the
Compensation Committee concluded that total compensation for the Chief Executive
Officer was reasonable in comparison to similarly situated publicly traded
financial institutions.
INTERNAL REVENUE CODE (IRC) SECTION 162(M). In 1993, the IRC was amended to
disallow publicly traded companies from receiving a tax deduction on
compensation paid to executive officers in excess of $1 million (section 162(m)
of the IRC), unless, among other things, the compensation meets the requirements
for performance-based compensation. In structuring NBT's compensation programs
and in determining executive compensation, the Committee takes into
consideration the deductibility limit for compensation.
MEMBERS OF THE COMPENSATION AND BENEFITS COMMITTEE
Chairman: Andrew S. Kowalczyk, Jr.
Members: Dr. Peter B. Gregory
Joseph G. Nasser
Paul O. Stillman
William L. Owens
William C. Gumble
Paul D. Horger
Michael M. Murphy
Joseph A. Santangelo
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
From time to time NBT Bank makes loans to its Directors and Executive Officers
and related persons or entities. It is the belief of Management that these loans
are made in the ordinary course of business, are made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and neither involve more than
normal risk of collectability nor present other unfavorable features.
The law firm of Kowalczyk, Tolles, Deery and Johnston, of which Director
Andrew S. Kowalczyk, Jr., is a partner, provided legal services to us and NBT
Bank in 2002. We paid $116,330 in fees for services received from this firm. The
law firms of Harris Beach LLP, of which Director William L. Owens is a partner;
Oliver, Price & Rhodes, of which Director Paul D. Horger is a partner; and
Needle, Goldenziel and Pascale, of which Director Gene E. Goldenziel is a
partner, also provided legal services to us in 2002. The amounts paid to each of
these entities was less than the established reporting thresholds.
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return (i.e.,
price change, reinvestment of cash dividends and stock dividends received) on
our common stock against the cumulative total return of the NASDAQ Stock Market
(U.S. Companies) Index and the Index for NASDAQ Financial Stocks. The stock
performance graph assumes that $100 was invested on December 31, 1997. 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. We calculate each of the
referenced indices 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.
16 PROXY STATEMENT: NBT BANCORP INC.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG NBT BANCORP INC.,
THE INDEX FOR NASDAQ FINANCIAL STOCKS, AND THE NASDAQ STOCK MARKET (U.S.
COMPANIES) INDEX
[GRAPH OMITTED]
RISK MANAGEMENT COMMITTEE REPORT
Our Risk Management Committee, which functions as our audit Committee, comprises
eight Company and three bank or bank division directors who are not officers or
employees of NBT. Each of the members of the Risk Management Committee is an
independent director under Rule 4200(a)(14) of the National Association of
Securities Dealers listing standards. The Risk Management Committee held four
meetings during 2002. The meetings were designed to facilitate and encourage
private communication between the Risk Management Committee, the internal
auditors and our independent public accountants, KPMG LLP.
The Risk Management Committee has prepared a report regarding the
preparation of our consolidated financial statements as of and for the three
years ended December 31, 2002.
The Risk Management Committee has:
- - Reviewed and discussed the audited consolidated financial statements with
NBT Management;
- - Discussed with KPMG, our independent auditors, the matters required to be
discussed by Statements on Auditing Standards (SAS) 61 (Codification of
Statements on Auditing Standards, AU 380);
- - Received the written disclosures and the letter from KPMG required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees) and has discussed with KPMG its independence.
On the basis of its review and discussions referred to in this section of
the proxy statement, the Risk Management Committee has recommended to our Board
that the audited consolidated financial statements be included in our Annual
Report Form 10-K for the year ended December 31, 2002 for filing with the SEC.
MEMBERS OF THE RISK MANAGEMENT COMMITTEE
Chairman: Joseph G. Nasser
Members: Richard Chojnowski
William C. Gumble
Janet H. Ingraham
John C. Mitchell
Van Ness D. Robinson
Joseph A. Santangelo
Paul O. Stillman
Kenneth Axtell (*)
Susan Kwiatek (*)
Harry Schoenagel (*)
(*) denotes Committee members belonging to a bank or bank division Board and
not the NBT Bancorp Inc. Board
Our Risk Management Committee acts under a written charter adopted and
approved by our Board. The Committee and Board of Directors is in the process of
reviewing the Risk Management Committee Charter in light of the requirements of
the Sarbanes-Oxley Act of 2002, the rules and regulations
PROXY STATEMENT: NBT BANCORP INC. 17
promulgated by the Securities and Exchange Commission implementing the
Sarbanes-Oxley Act as well as the rules proposed by The Nasdaq Stock Market
relating to corporate governance matters. The Board of Directors intends to
adopt a revised Risk Management Committee Charter that complies with the
Securities and Exchange Commission's rules and regulations implementing the
Sarbanes-Oxley Act and the proposed Nasdaq rules once those rules have been
finalized. Our Board established the Committee to assist our Board in fulfilling
its fiduciary responsibilities to our Company. In furtherance of its duties, the
Committee has met and held discussions with Management and the independent
auditors. Under the charter, the Committee's primary duties and responsibilities
are to:
- - Monitor the integrity of our Company's consolidated financial reporting
process and systems of internal control regarding finance, accounting and
legal compliance;
- - Monitor the independence and performance of our Company's independent
auditors and Risk Management personnel;
- - Provide an avenue of communications among the independent auditors, our
Management, the Risk Management Division, and our Board.
Among other things, the Committee is responsible to our
Board for the following:
- - Review our Management's annual assertion with respect to the system of
internal controls at certain banking subsidiaries and review the
independent auditors' reports and attestations regarding the controls;
- - Advise our Board with respect to our Company's policies and procedures
regarding compliance with applicable laws and regulations and with our Code
of Ethics;
- - Provide governance, guidance and oversight of our internal control
structure;
- - Review all regulatory examination reports and required Management
responses;
- - Review the internal audit function including coordination of plans with the
independent auditors; approve the annual internal audit plan; and review
audit reports issued and Management responses received or updated since the
previous meeting;
- - Ensure that the independent auditors are ultimately accountable to our
Board and the Committee;
- - Approve the retention and when necessary the termination or replacement of
the independent auditors;
- - Prior to and during their annual review, meet with and evaluate the
independent auditors; review and approve significant non-audit services
performed or planned and the fees for these services;
- - On an annual basis, review and discuss with the independent auditors all
significant relationships they have with our Company, which could impair
the auditors' independence;
- - Review our Company's annual audited consolidated financial statements prior
to their filing with the SEC and discuss with our Management and the
independent auditors significant issues regarding accounting principles and
judgments; Based on this review, the Committee shall advise the Board
whether it recommends that the audited consolidated financial statements be
included in our Annual Report Form 10-K to be filed with the SEC;
- - Meet at least annually with our Management, our Risk Management Division
personnel and the independent auditors to review our Company's major
financial risk exposures and the steps Management has taken to monitor and
control those exposures.
Our Management is responsible for our Company's financial reporting
process, including our system of internal control, and for the preparation of
consolidated financial statements in conformity with accounting principles
generally accepted in the United States. Our Company's independent auditors are
responsible for auditing those financial statements. The Committee's
responsibility is to monitor and review these processes. It is not the
Committee's duty or responsibility to conduct auditing or accounting reviews or
procedures. Therefore, the Committee has relied, without independent
verification, on Management's representation that the consolidated financial
statements have been prepared with integrity and objectivity and in conformity
with accounting principles generally accepted in the United States, and on the
representations of our Company's independent auditors included in their report
on our Company's consolidated financial statements. The Committee's oversight
does not provide it with an independent basis to determine that Management has
maintained appropriate accounting and financial reporting principles or
policies, or appropriate internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations.
Furthermore, the Committee's deliberations and discussions with Management and
our Company's independent auditors do not assure that our Company's consolidated
financial statements are presented in conformity with accounting principles
generally accepted in the United States, that the audit of our Company's
consolidated financial statements has been carried out in accordance with
auditing standards generally accepted in the United States, or that our
Company's independent auditors are, in fact, independent of our Company and
Management.
18 PROXY STATEMENT: NBT BANCORP INC.
NBT'S INDEPENDENT AUDITORS
Our Risk Management Committee has appointed KPMG LLP as our independent auditors
to audit our consolidated financial statements for the fiscal year ending
December 31, 2003. KPMG LLP has served as our independent auditors since 1987.
We expect representatives of KPMG LLP to be present at our annual meeting. Those
representatives will have an opportunity to make a statement if they desire to
do so and will also be available to respond to appropriate questions.
AUDIT FEES AND NON-AUDIT FEES. The following table presents fees for
professional audit services rendered by KPMG LLP for the audit of NBT's annual
consolidated financial statements for the fiscal year ended December 31, 2002,
and fees billed for other services provided by KPMG LLP during 2002.
Audit fees $ 262,000
Audit related fees (1) $ 97,000
----------
Audit and audit related fees $ 359,000
Tax fees (2) $ 554,270
All other fees (3) $ 94,739
----------
Total fees $1,008,009
==========
(1) Audit related fees consisted principally of fees for audits of certain
employee benefit plans' financial statements and loan review procedures.
(2) Tax fees consisted primarily of fees for tax return preparation, tax
compliance and tax planning services.
(3) All other fees consisted of fees for mortgage process review analysis.
AUDIT COMMITTEE REVIEW. Our Risk Management Committee has considered whether
KPMG's provision of the non-audit services summarized in the preceding section
is compatible with maintaining KPMG's independence.
PROPOSAL 3
APPROVAL OF THE NBT BANCORP INC.
NON-EMPLOYEE DIRECTORS' RESTRICTED
AND DEFERRED STOCK PLAN
- --------------------------------------------------------------------------------
At its January 27, 2003 meeting, the Board adopted the NBT Bancorp Inc.
Non-employee Directors' Restricted and Deferred Stock Plan (the "Directors'
Plan"), subject to the approval thereof by the stockholders of the Company at
the Annual Meeting. The principal provisions of the Directors' Plan are
summarized below. Such summary is not complete and is qualified in its entirety
by the terms of the Directors' Plan. A copy of the Directors' Plan is attached
as Appendix A and incorporated herein by reference.
PURPOSE. The purpose of the Directors' Plan is to attract, motivate and retain
qualified non-employee directors and to encourage their ownership of common
stock of the Company, par value $0.01 per share and align the interest of the
Board and stockholders.
PARTICIPATION. Participation in the Directors' Plan is limited to directors who
are not employees of the Company or any of its subsidiaries.
SHARES AVAILABLE UNDER THE DIRECTORS' PLAN. 200,000 shares of common stock will
be authorized for issuance under the Directors' Plan in 2003 and future years.
Shares issued pursuant to the Directors' Plan may be authorized but unissued
shares of common stock or treasury shares.
AWARD DOCUMENT. Each grant of restricted stock will be evidenced by an award
document issued by the Company. In addition to the terms and conditions defined
in the Directors' Plan, such documents may contain such other terms and
conditions, not inconsistent with the Directors' Plan, as the Board will
prescribe. Such additional terms may vary among award participants.
RESTRICTED SHARES. Directors shall receive their annual retainer for Board
service in the form of restricted shares of the Company's common stock rather
than cash. Restricted shares are registered in the name of the director and
shall be delivered to the director within 30 days after the vesting of any
shares to which the director shall be entitled. Directors may not sell,
transfer, assign, pledge or otherwise encumber or dispose of the shares covered
by any restricted stock award until applicable restriction period has lapsed.
Restricted shares have all the attributes of outstanding shares including the
right to vote and to receive dividends thereon. If a director terminates Board
membership due to death, disability, retirement after the age of 70, or failure
to be re-elected or re-appointed, any restricted shares granted, to the extent
not already vested, shall vest in full as of the date of such termination.
Voluntary resignation or removal for cause will result in forfeiture of the
non-vested grants.
DEFERRED SHARES. The Board may from time to time, grant deferred stock under the
Directors' Plan. A certificate representing the shares covered by the award
shall be registered in the name of the director and shall be delivered to the
director within 30 days after the director ceases to be a director. Deferred
shares have all the attributes of outstanding shares including the right to vote
and to receive dividends thereon.
AMENDMENT AND TERMINATION OF THE DIRECTORS' PLAN. The Board may amend, suspend
or terminate the Directors' Plan as to any shares for which restricted or
deferred stock awards have not been granted. No amendment, suspension or
termination of the Directors' Plan shall, without the consent of the
PROXY STATEMENT: NBT BANCORP INC. 19
holder, alter or impair rights or obligations under any restricted or deferred
stock theretofore granted under the Directors' Plan.
ADJUSTMENTS. In the event of any change in the outstanding common stock by
reason of a stock dividend, recapitalization, reclassification, stock split or
other increase or decrease in such shares effected without receipt of
consideration by the Company, the number and kind of shares subject to any
outstanding awards of restricted or deferred stock shall be adjusted
proportionately by the Company.
TAX MATTERS. The grant of restricted or deferred stock will not be a taxable
event if the shares are subject to a substantial risk of forfeiture, unless the
recipient makes a special tax election under Section 83(b) of the Internal
Revenue Code within 30 days after the grant. Upon the vesting of restricted or
deferred stock (assuming no Section 83(b) election), the grantee will realize
ordinary income equal to the value of the restricted or deferred stock, as
applicable, that become vested and we will generally be entitled to a deduction
for tax purposes in the same amount. If the grantee makes a Section 83(b)
election, he will realize ordinary income as of the grant date in an amount
equal to the value of the restricted or deferred stock, as applicable, at that
time and we generally will be entitled to a deduction in a like amount. A
grantee who makes a Section 83(b) election will not be entitled to any tax
deduction if he subsequently forfeits the shares.
NEW PLAN BENEFITS. The following table sets forth the benefits or amounts that
will be received by or allocated to each of the following persons under the
Directors' Plan as of the date of this proxy statement.
NAME AND POSITION DOLLAR VALUE($) NUMBER OF UNITS
- --------------------------------------------------------------------
Daryl R. Forsythe Not Applicable Not Applicable
Michael J. Chewens Not Applicable Not Applicable
Martin A. Dietrich Not Applicable Not Applicable
David E. Raven Not Applicable Not Applicable
Executive Group Not Applicable Not Applicable
Non-Executive Director Group* $ 135,235 7,890
Non-Executive Officer Not Applicable Not Applicable
Employee Group Not Applicable Not Applicable
- --------------------------------------------------------------------
* Dollar value determined as of January 1, 2003, the grant date (subject to
the stockholders approving the Directors' Plan).
There has been no determination by the Board with respect to any additional
awards authorized by the Directors' Plan, which are discretionary in nature.
Accordingly, any additional benefits or amounts are not determinable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE DIRECTORS' PLAN.
PROPOSAL 4
APPROVAL OF NBT BANCORP INC.
PERFORMANCE SHARE PLAN
- --------------------------------------------------------------------------------
At its January 27, 2003 meeting, the Board adopted the NBT Bancorp Inc.
Performance Share Plan (the "Performance Share Plan"), subject to the approval
thereof by the stockholders of the Company at the Annual Meeting. The principal
provisions of the Performance Share Plan are summarized below. Such summary is
not complete and is qualified in its entirety by the terms of the Performance
Share Plan. A copy of the Performance Share Plan is attached as Appendix B and
incorporated herein by reference.
PURPOSE. The purpose of the Performance Share Plan is to retain officers and key
employees of the Company and its subsidiaries and to encourage their ownership
of common stock of the Company, par value $0.01 per share.
PARTICIPATION. Participation in the Performance Share Plan is limited to
officers and other key employees of the Company or any of its subsidiaries or
other affiliates who are designated to be eligible by the Board of Directors.
SHARES AVAILABLE UNDER THE PERFORMANCE SHARE PLAN. 300,000 shares of common
stock will be authorized for issuance under the Performance Share Plan in the
future. Shares issued pursuant to the Performance Share Plan may be authorized
but unissued shares of common stock or treasury shares. The maximum number of
shares that may be issued to any participant with respect to any performance
period pursuant to any performance share award is 50,000 shares.
ADMINISTRATION. The Performance Share Plan will be administered by the Board.
Among other things, the Board will have the authority, subject to the terms of
the plan, to (i) select officers and key employees to be awarded performance
shares (ii) determine the number of performance shares to be granted to a
participant (iii) determine the vesting schedule and financial performance
requirements which must be satisfied for the performance shares to vest (iv)
determine the period of time during which the financial performance requirements
must be met and (v) determine the other terms and conditions of awards. All
determinations and interpretations made by the Board with respect to the
Performance Share Plan will be final and binding on the Company and
participants.
VESTING AND PAYMENT OF PERFORMANCE SHARES. Awards under the Performance Share
Plan are made in the form of performance shares. Each performance share has the
same value as one common share of the Company. The performance shares vest over
a period determined by the Board. The vesting of the performance shares is
contingent upon the achievement of
20 PROXY STATEMENT: NBT BANCORP INC.
performance goals set by the Board, which shall be based on objective business
criteria, including but not limited to one or more of the following: earnings
per share, total stockholder return, operating earnings, growth in assets,
return on equity, return on capital, market share, stock price, net income, cash
flow and retained earnings. The performance goals set by the Board are intended
to be an objective goal which satisfies the requirements for "performance-based
compensation" under Section 162(m) of the Internal Revenue Code. Distribution of
the shares of common stock underlying the performance shares will be made two
years (or such other period as may be specified by the Board) following the end
of the applicable performance period, provided that the participant is then in
the employ of the Company (except in the event of death, disability or
retirement). After performance shares have become vested, but before delivery of
the underlying common stock, the participants shall generally have the rights
and privileges of a stockholder of the Company with respect to the shares,
including the right to vote and receive dividends.
TERMINATION OF EMPLOYMENT. If a participant terminates employment due to death,
disability, good reason, without cause or retirement after attaining the age of
65, the participant will generally be eligible for a pro-rated portion of the
performance shares that would have otherwise been payable to the participant
after the end of the applicable performance period. If the participant's
employment terminates for any other reason, all unvested and undistributed
performance shares will be forfeited.
ADJUSTMENTS. In the event of any change in the outstanding common stock by
reason of a stock dividend, recapitalization, reclassification, stock split or
other change in corporate structure affecting the common stock, the Board may,
in its discretion, make such substitution or adjustments in the aggregate number
and kind of shares reserved for issuance under the Performance Share Plan or in
the number and kind of shares subject to outstanding performance share awards.
AMENDMENT AND TERMINATION. The Performance Share Plan may be amended in whole or
in part and terminated by the Board at any time.
TAX MATTERS. The grant of performance shares will not be a taxable event if the
shares are subject to a substantial risk of forfeiture; the recipient may make a
special tax election under Section 83(b) of the Internal Revenue Code within 30
days after the vesting of the performance shares. Upon the distribution of the
performance shares (assuming no Section 83(b) election), the grantee will
realize ordinary income equal to the value of the performance shares that were
distributed and we will generally be entitled to a deduction for tax purposes in
the same amount, except as limited by Section 162(m) of the Internal Revenue
Code, if the recipient's annual compensation exceeds $1 million. If the grantee
makes a Section 83(b) election, he will realize ordinary income as of the
vesting date in an amount equal to the value of the performance shares at that
time and we generally will be entitled to a deduction in a like amount. A
grantee who makes a Section 83(b) election will not be entitled to any tax
deduction if he subsequently forfeits the shares.
NEW PLAN BENEFITS. As of the date of this proxy statement, there has been no
determination by the Board with respect to any awards of performance shares,
which are dependent upon the attainment of certain performance goals and are
discretionary in nature. Accordingly, the benefits or amounts that will be
received by or allocated to eligible participants, and that would have been
received by or allocated to the eligible participants if the Performance Share
Plan had been in effect during fiscal 2002, are not determinable.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF THE PERFORMANCE SHARE PLAN.
PROXY STATEMENT: NBT BANCORP INC. 21
EQUITY COMPENSATION PLAN INFORMATION
As of December 31, 2002, the following table summarizes the Company's equity compensation plans:
- ---------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES REMAINING
AVAILABLE FOR
NUMBER OF SECURITIES WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
TO BE ISSUED UPON EXERCISE EXERCISE PRICE OF OUT- EQUITY COMPENSATION PLANS
PLAN CATEGORY OF OUTSTANDING OPTIONS (a) STANDING OPTIONS (b) (EXCLUDING SECURITIES
REFLECTED IN COLUMN (a)) (c)
- ---------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by stockholders 2,192,223 $ 14.96 2,908,784
Equity compensation plans
not approved by stockholders None None None
OTHER MATTERS
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS FOR ANNUAL MEETINGS
Stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange Act for
inclusion in our proxy statement for the 2004 Annual Meeting of Stockholders
must be received by NBT by November 27, 2003. Each proposal must comply with the
requirements as to form and substance established by the SEC for such a proposal
to be included in the proxy statement and form of proxy. SEC rules set forth
standards as to what stockholder proposals corporations must include in a proxy
statement for an annual meeting.
In addition, the proxy solicited by the Board of Directors for the 2004 Annual
Meeting of Stockholders will confer discretionary authority on the agents named
on the proxy card to vote on any stockholder proposal presented at the meeting
(rather than included in our proxy statement), unless we are provided with
notice of the proposal no later than February 9, 2004. The persons named as
proxies intend to vote or not vote in accordance with the majority vote of our
Board.
OTHER MATTERS
As of the date of this proxy statement, our Board knows of no matters that will
be presented for consideration at our meeting other than as described in this
proxy statement. If any other matters should properly come before our meeting
and be voted upon, the enclosed proxies will be deemed to confer discretionary
authority on the individuals named as proxies to vote the shares represented by
those proxies as to those matters. The persons named as proxies intend to vote
in accordance with the determination of the majority vote of our Board.
Upon receipt of a written request, the Company will furnish to any
stockholder, without charge, a copy of the Company's Annual Report on form 10-K
for the year ended December 31, 2002 and exhibits thereto required to be filed
with the Commission under the Securities Exchange Act of 1934. Such written
request should be directed to:
Michael J. Chewens
Senior Executive Vice President,
Chief Financial Officer and
Corporate Secretary
NBT Bancorp Inc.
52 South Broad Street
Norwich, NY 13815
22 PROXY STATEMENT: NBT BANCORP INC.
APPENDIX A
NBT BANCORP INC. NON-EMPLOYEE DIRECTORS' RESTRICTED AND DEFERRED STOCK PLAN
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TABLE OF CONTENTS
1. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . A2
3. Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . A3
4. Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A4
5. Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . A4
6. Effective Date and Term of The Plan . . . . . . . . . . . . . . . . A4
7. Grant of Restricted and Deferred Stock . . . . . . . . . . . . . . A4
8. Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . A5
9. Transferability of Restricted Stock; Restrictions on Stock. . . . . A5
10. Parachute Limitations . . . . . . . . . . . . . . . . . . . . . . . A6
11. Amendment and Termination of the Plan. . . . . . . . . . . . . . . A6
12. Exchange Act: Rule 16b-3 . . . . . . . . . . . . . . . . . . . . . A6
13. Effect of Changes in Capitalization. . . . . . . . . . . . . . . . A6
14. Disclaimer of Rights . . . . . . . . . . . . . . . . . . . . . . . A7
15. Nonexclusivity of the Plan . . . . . . . . . . . . . . . . . . . . A7
16. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A7
17. Other Provisions . . . . . . . . . . . . . . . . . . . . . . . . . A7
18. Number and Gender. . . . . . . . . . . . . . . . . . . . . . . . . A7
19. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . A7
20. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . A8
PROXY STATEMENT: NBT BANCORP INC. APPENDIX A1
NBT BANCORP INC. NON-EMPLOYEE DIRECTORS' RESTRICTED AND DEFERRED STOCK PLAN
- --------------------------------------------------------------------------------
NBT Bancorp Inc. sets forth herein the terms of this Non-Employee Directors'
Restricted and Deferred Stock Plan as follows:
1 PURPOSE
The Plan is intended to advance the interests of the Company by providing
an additional incentive to attract, retain and motivate qualified and
competent persons who are not employees of the Company to serve on the
Board of the Company. To this end, the Plan provides for the grant of
restricted and deferred stock all as set out herein.
2 DEFINITIONS
For purposes of interpreting the Plan and related documents (including
Restricted Stock and Deferred Stock Agreements), the following definitions
shall apply:
2.1 "Affiliate" means any company or other trade or business that is
controlled by or under common control with the Company (determined in
accordance with the principles of Section 414(b) and 414(c) of the Code
and the regulations thereunder) or is an affiliate of such entity within
the meaning of Rule 405 of Regulation C under the 1933 Act.
2.2 "Agreement" means a written agreement between the Company and the
recipient individual that sets out the terms and conditions of the grant
of a Restricted or Deferred Stock Award.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change in Control" of the Company means
(A) 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% or more of the combined voting power of the
Company's Voting Securities; or
(B) 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 stockholders, 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
(C) 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 of the
Company; or
(D) Approval by the stockholders of the Company of any plan or proposal
for the liquidation or dissolution of the Company.
2.5 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.
2.6 "Committee" means the committee appointed by the Board pursuant to Section
3.2 of the Plan.
2.7 "Company" means NBT Bancorp Inc., a Delaware corporation.
2.8 "Deferred Stock" shall mean Stock which will not be distributed nor which
a Holder may sell, transfer, assign, pledge or otherwise encumber or
dispose of until the Holder ceases to be a Director. Deferred stock shall
otherwise be granted without any vesting requirements or any Restriction
Period except as provided in this definition.
2.9 "Deferred Stock Agreement" means the written agreement evidencing the
grant of Deferred Stock hereunder.
2.10 "Director" means a member of the Board or a Director of a Subsidiary or
one denominated as a Director of a division of a Subsidiary.
A2 APPENDIX PROXY STATEMENT: NBT BANCORP INC.
2.11 "Effective Date" means the date of adoption of the Plan by the Board,
subject to approval by the stockholders of the Company.
2.12 "Exchange Act" means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.
2.13 "Fair Market Value" means the value of each Share subject to the Plan
determined as follows: if on the Grant Date or other determination date
the shares of Stock are listed on an established national or regional
stock exchange, are admitted to quotation on the National Association of
Securities Dealers Automated Quotation System, or are publicly traded on
an established securities market, the Fair Market Value of the shares
shall be the average price between the high and the low sale price of the
shares on such exchange or in such market on the trading day immediately
preceding the Grant Date or, if no sale of the shares is reported for such
trading day, on the next preceding day on which any sale shall have been
reported. If the shares are not listed on such an exchange, quoted on such
System or traded on such a market, Fair Market Value shall be determined
by the Board in good faith.
2.14 "Grant Date" means the later of (i) the date as of which the Board
approves the grant and (ii) the date as of which the Holder and the
Company or Affiliate enter the relationship resulting in the Holder being
eligible for grants.
2.15 "Holder" means a person who is eligible to receive Restricted or Deferred
Stock under the Plan.
2.16 "Plan" means the NBT Bancorp Inc. Non-Employees Directors' Restricted and
Deferred Stock Plan.
2.17 "Restricted Stock" means Stock which is subject to a risk of forfeiture.
2.18 "Restricted Stock Agreement" means the written agreement evidencing the
grant of Restricted Stock hereunder.
2.19 "Restricted Stock Award" means an award of Restricted Stock granted
pursuant to Section 7 of this Plan.
2.20 "1933 Act" means the Securities Act of 1933, as now in effect or as
hereafter amended.
2.21 "Stock" means the Common Stock, par value $0.01 per share, of the Company.
2.22 "Subsidiary" means any "subsidiary corporation" of the Company within the
meaning of Section 424(f) of the Code.
2.23 "Voting Securities" means securities of the Company having the right to
vote at elections of members of the Board of Directors.
3 ADMINISTRATION
3.1 Board. The Plan shall be administered by the Board, which shall have the
-----
full power and authority to take all actions and to make all
determinations required or provided for under the Plan or any Restricted
or Deferred Stock Agreement entered into hereunder and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Board to be necessary or appropriate
to the administration of the Plan or any Restricted or Deferred Stock
Agreement entered into hereunder. The interpretation and construction by
the Board of any provision of the Plan or of any Restricted or Deferred
Stock Agreement entered into hereunder shall be final and conclusive.
3.2 Committee. The Board may from time to time appoint a Committee, and the
---------
Board, in its sole discretion, may provide that the role of the Committee
shall be limited to making recommendations to the Board concerning any
determinations to be made and actions to be taken by the Board pursuant to
or with respect to the Plan, or the Board may delegate to the Committee
such powers and authorities related to the administration of the Plan, as
set forth in Section 3.1 hereof, as the Board shall determine, consistent
with the Certificate of Incorporation and Bylaws of the Company and
applicable law. In the event that the Plan or any Restricted or Deferred
Stock Agreement entered into hereunder provides for any action to be taken
by or determination to be made by the Board, such action may be taken by
or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as
provided for in this Section 3.2. Unless otherwise expressly determined by
the Board, any such action or determination by the Committee shall be
final and conclusive.
3.3 No Liability. No member of the Board or of the Committee shall be liable
-------------
for any action or determination made, or any failure to take or make an
action or determination, in good faith with respect to the Plan or any
Restricted or Deferred Stock Agreement entered into hereunder.
PROXY STATEMENT: NBT BANCORP INC. APPENDIX A A3
4 STOCK
The Stock that may be issued pursuant to Restricted or Deferred Stock
Awards may be treasury shares or authorized but unissued shares. The
number of shares of Stock that may be issued pursuant to Restricted or
Deferred Stock Awards under the Plan shall not exceed, in the aggregate,
200,000 shares. If any Restricted Stock Award expires, terminates, or is
terminated or canceled for any reason prior to vesting in full, the shares
that were subject to the forfeited or terminated portion of such
Restricted Stock Award shall be available immediately for future grants of
Restricted Stock Awards under the Plan.
5 ELIGIBILITY
5.1 Designated Recipients. Restricted Stock and Deferred Stock Awards may be
----------------------
granted under the Plan to any non-employee director of the Company or any
Subsidiary or any division of a Subsidiary, as the Board shall determine
and designate from time to time.
5.2 Successive Grants. An individual may hold more than one Restricted or
------------------
Deferred Stock Award, subject to such restrictions as are provided herein.
6 EFFECTIVE DATE AND TERM OF THE PLAN
6.1 Effective Date. The Plan shall be effective as of the date of adoption by
---------------
the Board, subject to approval by the stockholders of the Company.
6.2 Term. The Plan shall continue until there are no shares available for
----
grant pursuant to Section 4, or unless earlier terminated in accordance
with Section 11 hereof.
7 GRANT OF RESTRICTED AND DEFERRED STOCK
7.1 Restricted Stock Awards.
-------------------------
(a) The Board may from time to time, and subject to the provisions of
the Plan and such other terms and conditions as the Board may
determine, grant Restricted Stock under the Plan. Each Restricted
Stock Award shall be evidenced by a written instrument which shall
state the number of shares covered by the award and the terms and
conditions which the Board shall have determined with respect to
such award, including the number of shares that the Holder shall be
entitled to receive, and the vesting terms. In accordance with
Section 7.3, a certificate representing the shares covered by the
award shall be registered in the name of the Holder and shall be
delivered to the Holder within 30 days after the vesting of any
shares to which the Holder shall be entitled. The Holder shall
generally have the rights and privileges of a stockholder of the
Company with respect to such shares, including the right to vote and
to receive dividends, subject to the restrictions specified in
paragraphs (b) and (c).
(b) The Board shall determine a period of time ("Restriction Period")
which shall apply to the shares transferred to a Holder with respect
to each Restricted Stock Award. Except as otherwise determined by
the Board, during the Restriction Period applicable with respect to
each Restricted Stock Award, the Holder may not sell, transfer,
assign, pledge or otherwise encumber or dispose of the shares
covered by such Restricted Stock Award. The Board in its discretion
may prescribe conditions for the incremental lapse of the preceding
restrictions during the Restriction Period, and for the lapse or
termination of such restrictions upon the occurrence of certain
events before the expiration of the Restriction Period. The Board in
its discretion also may shorten or terminate the Restriction Period
or waive any conditions for the lapse or termination of the
restrictions with respect to all or any portion of the shares
covered by the Restricted Stock Award.
(c) If the Holder terminates board membership with the Company (or any
Subsidiary or any division, including advisory boards), due to
death, disability, retirement after the age of 70, or failure to be
re-elected or re-appointed, the Restricted Stock granted, to the
extent not already vested, shall vest in full as of the date of such
termination. Voluntary resignation or removal for cause will result
in forfeiture of the non-vested grants. The Holder may designate a
beneficiary to receive the stock certificate representing that
portion of the Restricted Stock award automatically vested upon
death. The Holder has the right to change such beneficiary
designation at will.
A4 APPENDIX A PROXY STATEMENT: NBT BANCORP INC.
7.2 Restricted Stock and Deferred Stock Agreements. All Restricted and
---------------------------------------------------
Deferred Stock Awards granted pursuant to the Plan shall be evidenced by
Restricted and Deferred Stock Agreements, to be executed by the Company
and by the Holder, in such form or forms as the Board shall from time to
time determine. Restricted Stock and Deferred Stock Agreements covering
Restricted Stock granted from time to time or at the same time need not
contain similar provisions; provided, however, that all such Restricted
and Deferred Stock Agreements shall comply with all terms of the Plan.
7.3 Certificates for Restricted Stock and Deferred Stock. The Board may cause
-----------------------------------------------------
a legend to be placed on such certificates that complies with the
applicable securities laws and regulations and makes appropriate reference
to the restrictions to which the shares are subject. Upon attainment of
the specified objectives and requirements (or, to the extent specified in
the grant, upon the partial attainment of the objectives and
requirements), a certificate for the number of shares with respect to
which restrictions have lapsed shall be delivered to the Holder free of
restrictions.
7.4 Deferred Stock Awards. The Board may from time to time, and subject to the
---------------------
provisions of the Plan and such other terms and conditions as the Board
may determine, grant Deferred Stock under the Plan. Each Deferred Stock
Award shall be evidenced by a written instrument which shall state the
number of shares covered by the award and the terms and conditions with
respect to such award. Subject to Section 7.3, a certificate representing
the shares covered by the award shall be registered in the name of the
Holder and shall be delivered to the Holder within 30 days after the
Holder ceases to be a Director. The Holder shall generally have the rights
and privileges of a stockholder of the Company, including the right to
vote and receive dividends, with respect to such shares. The Holder may
designate a beneficiary to receive the stock certificate representing the
Deferred Stock award should the Holder die while still a Director. The
Holder has the right to change such beneficiary designation at will.
8 REQUIREMENTS OF LAW
The Company shall not be required to issue any shares of Stock under the
Plan if the issuance of such shares would constitute a violation by the
Holder or by the Company of any provision of any law or regulation of any
governmental authority, including without limitation any federal or state
securities laws or regulations. If at any time the Company shall
determine, in its discretion, that the listing, registration or
qualification of any shares of Stock subject to the Plan upon any
securities exchange or under any state or federal law, or the consent or
approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the issuance of shares of Stock
hereunder, the Restricted Stock shall remain subject to a risk of
forfeiture in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company. Specifically in
connection with the 1933 Act (as now in effect or as hereafter amended),
unless a registration statement under such Act is in effect with respect
to the shares of Stock covered by the Plan, the Company shall not be
required to issue such shares unless the Company has received evidence
satisfactory to it that the Holder may acquire such shares pursuant to an
exemption from registration under such Act. Any determination in this
connection by the Company shall be final, binding, and conclusive. The
Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the 1933 Act (as now in effect or as
hereafter amended). The Company shall not be obligated to take any
affirmative action in order to cause the issuance of shares of Stock
pursuant thereto to comply with any law or regulation of any governmental
authority. As to any jurisdiction that expressly imposes the requirement
that the Restricted Stock or Deferred Stock shall remain subject to a risk
of forfeiture unless and until the shares of Stock covered by the Plan are
registered or are subject to an available exemption from registration, the
termination of the risk of forfeiture as to the Restricted Stock (under
circumstances in which the laws of such jurisdiction apply) shall be
deemed conditioned upon the effectiveness of such registration or the
availability of such an exemption.
9 TRANSFERABILITY OF RESTRICTED STOCK; RESTRICTIONS ON STOCK
No Restricted Stock shall be assignable or transferable, other than by
will or the laws of descent and distribution, before the later of (i) the
end of the Restriction Period and (ii) satisfaction of any other
applicable performance and service requirements with respect to such
shares, as set forth in the applicable Restricted Stock Agreement.
Deferred Stock is subject to the limitations contained in the definition
thereof and in Section 7.4.
PROXY STATEMENT: NBT BANCORP INC. APPENDIX A A5
10 PARACHUTE LIMITATIONS
Notwithstanding any other provision of this Plan or of any other
agreement, contract, or understanding heretofore or hereafter entered into
by the Holder with the Company, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an "Other Agreement"), and notwithstanding
any formal or informal plan or other arrangement for the direct or
indirect provision of compensation to the Holder (including groups or
classes of participants or beneficiaries of which the Holder is a member),
whether or not such compensation is deferred, is in cash, or is in the
form of a benefit to or for the Holder (a "Benefit Arrangement"), if the
Holder is a "disqualified individual," as defined in Section 280G(c) of
the Code, any Restricted Stock or Deferred Stock held by that Holder and
any right to receive any payment or other benefit under this Plan shall
not become vested (i) to the extent that such right to vesting, payment,
or benefit, taking into account all other rights, payments, or benefits to
or for the Holder under this Plan, all Other Agreements, and all Benefit
Arrangements, would cause any payment or benefit to the Holder under this
Plan to be considered a "Parachute Payment" within the meaning of Section
280G(b)(2) of the Code as then in effect (a "Parachute Payment") and (ii)
if, as a result of receiving a Parachute Payment, the aggregate after-tax
amounts received by the Holder from the Company under this Plan, all Other
Agreements, and all Benefit Arrangements would be less than the maximum
after-tax amount that could be received by him or her without causing any
such payment or bene fit to be considered a Parachute Payment. In the
event that the receipt of any such right to vesting, payment, or benefit
under this Plan, in conjunction with all other rights, payments, or
benefits to or for the Holder under any Other Agreement or any Benefit
Arrangement would cause the Holder to be considered to have received a
Parachute Payment under this Plan that would have the effect of decreasing
the after-tax amount received by the Holder as described in clause (ii) of
the preceding sentence, then the Holder shall have the right, in the
Holder's sole discretion, to designate those rights, payments, or benefits
under this Plan, any Other Agreements, and any Benefit Arrangements that
should be reduced or eliminated so as to avoid having the payment or
benefit to the Holder under this Plan be deemed to be a Parachute Payment.
11 AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any shares as to which Restricted or Deferred
Stock Awards have not been granted. Except as permitted under this Section
11 or Section 13 hereof, no amendment, suspension, or termination of the
Plan shall, without the consent of the Holder of the Restricted or
Deferred Stock, alter or impair rights or obligations under any Restricted
or Deferred Stock theretofore granted under the Plan.
12 EXCHANGE ACT: RULE 16B-3
12.1 General. The Plan is intended to comply with Rule 16b-3 ("Rule 16b-3")
-------
under the Exchange Act. Any provision inconsistent with Rule 16b-3 shall,
to the extent permitted by law and determined to be advisable by the
Board, be inoperative and void.
12.2 Additional Restriction on Transfer of Stock. No director, officer or other
-------------------------------------------
"insider" of the Corporation subject to Section 16 of the Exchange Act
shall be permitted to sell shares (which such "insider" had received as
Restricted Stock) during the six months immediately following the grant of
such Restricted Stock Award.
13 EFFECT OF CHANGES IN CAPITALIZATION
13.1 Changes in Stock. If the number of outstanding shares of Stock is
------------------
increased or decreased or the shares are changed into or exchanged for a
different number or kind of shares or other securities of the Company on
account of any recapitalization, reclassification, stock split, reverse
split, combination of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or decrease in
such shares effected without receipt of consideration by the Company,
occurring after the Effective Date, the number and kinds of shares for the
issuance of which Restricted or Deferred Stock Awards may be granted shall
be adjusted proportionately and accordingly by the Company.
13.2 Change of Control. Upon a Change of Control of the Company, unvested
-------------------
Restricted Stock Awards shall cease being subject to a risk of forfeiture,
any Limitation Period shall expire, and all Restricted Stock Awards will
be fully vested.
A6 APPENDIX A PROXY STATEMENT: NBT BANCORP INC.
13.3 Adjustments. Adjustments under this Section 13 related to shares of Stock
-----------
or securities of the Company shall be made by the Board, whose
determination in that respect shall be final, binding, and conclusive. No
fractional shares or units of other securities shall be issued pursuant to
any such adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the nearest whole
share or unit.
13.4 No Limitations on Company. The grant of Restricted or Deferred Stock
----------------------------
Awards pursuant to the Plan shall not affect or limit in any way the right
or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to
merge, consolidate, dissolve, or liquidate, or to sell or transfer all or
any part of its business or assets.
14 DISCLAIMER OF RIGHTS
No provision in the Plan or in any Restricted or Deferred Stock Award
granted or Agreement entered into pursuant to the Plan shall be construed
to confer upon any individual the right to remain in the employ or service
of the Company, any Subsidiary or any Affiliate, or to interfere in any
way with any contractual or other right or authority of the Company, any
Subsidiary or any Affiliate either to increase or decrease the
compensation or other payments to any individual at any time, or to
terminate any other relationship between any individual and the Company, a
Subsidiary or an Affiliate. The obligation of the Company to pay any
benefits pursuant to this Plan shall be interpreted as a contractual
obligation to pay only those amounts described herein, in the manner and
under the conditions prescribed herein. The Plan shall in no way be
interpreted to require the Company to transfer any amounts to a third
party trustee or otherwise hold any amounts in trust or escrow for payment
to any participant or beneficiary under the terms of the Plan.
15 NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its
discretion determines desirable, including, without limitation, the
granting of Restricted or Deferred Stock otherwise than under the Plan.
16 CAPTIONS
The use of captions in this Plan or any Agreement is for the convenience
of reference only and shall not affect the meaning of any provision of the
Plan or such Agreement.
17 OTHER PROVISIONS
Each Restricted or Deferred Stock Award granted under the Plan may contain
such other terms and conditions not inconsistent with the Plan as may be
determined by the Board, in its sole discretion.
18 NUMBER AND GENDER
With respect to words used in this Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender,
etc., as the context requires.
19 SEVERABILITY
If any provision of the Plan or any Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable
in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
PROXY STATEMENT: NBT BANCORP INC. APPENDIX A A7
20 GOVERNING LAW
The validity and construction of this Plan and the instruments evidencing
the Restricted Stock Awards granted hereunder shall be governed by the
laws of the State of New York, without regard to any applicable conflicts
of laws rules.
The Plan was duly adopted and approved by the Board of Directors of the Company
on the day of , 2003.
-- --
- ------------------------
Secretary of the Company
The Plan was duly adopted and approved by the stockholders of the Company on the
day of , 2003.
-- --
- ------------------------
Secretary of the Company
A8 APPENDIX A PROXY STATEMENT: NBT BANCORP INC.
APPENDIX B
NBT BANCORP INC. PERFORMANCE SHARE PLAN EFFECTIVE MAY 1, 2003
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
I GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . B2
1.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . B2
1.2 Effective Date. . . . . . . . . . . . . . . . . . . . B2
II DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . B2
III ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . B4
3.1 Eligibility . . . . . . . . . . . . . . . . . . . . . B4
3.2 Participation in Performance Share Awards . . . . . . B4
IV PLAN DESIGN. . . . . . . . . . . . . . . . . . . . . . . B4
4.1 Eligibility Period. . . . . . . . . . . . . . . . . . B4
4.2 Performance Period. . . . . . . . . . . . . . . . . . B4
4.3 Performance Share Awards. . . . . . . . . . . . . . . B4
4.4 Performance Goals . . . . . . . . . . . . . . . . . . B4
4.5 Available Common Stock .. . . . . . . . . . . . . . . B5
4.6 Adjustment to Shares. . . . . . . . . . . . . . . . . B5
4.7 Maximum Award . . . . . . . . . . . . . . . . . . . . B5
4.8 Committee Discretion to Adjust Awards . . . . . . . . B5
V PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . B5
5.1 Committee Determination of Common Stock Payable . . . B5
5.2 Timing and Form of Payment. . . . . . . . . . . . . . B5
5.3 Distribution upon Termination of Employment . . . . . B6
5.4 Beneficiary Designation . . . . . . . . . . . . . . . B7
VI ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . B7
6.1 Committee . . . . . . . . . . . . . . . . . . . . . . B7
6.2 General Rights, Powers, and Duties of Committee . . . B7
6.3 Information to be Furnished to Committee. . . . . . . B7
6.4 Responsibility and Indemnification .. . . . . . . . . B7
VII AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . B8
7.1 Amendment . . . . . . . . . . . . . . . . . . . . . . B8
7.2 Company's Right to Terminate. . . . . . . . . . . . . B8
VIII MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . B8
8.1 No Implied Rights; Rights on Termination of Service . B8
8.2 No Right to Company Assets .. . . . . . . . . . . . . B8
8.3 No Employment Rights. . . . . . . . . . . . . . . . . B8
8.4 Other Benefits. . . . . . . . . . . . . . . . . . . . B8
8.5 Offset. . . . . . . . . . . . . . . . . . . . . . . . B8
8.6 Non-assignability . . . . . . . . . . . . . . . . . . B8
8.7 Notice .. . . . . . . . . . . . . . . . . . . . . . . B8
8.8 Governing Laws .. . . . . . . . . . . . . . . . . . . B8
8.9 Gender and Number . . . . . . . . . . . . . . . . . . B9
8.10 Severability . . . . . . . . . . . . . . . . . . . . B9
PROXY STATEMENT: NBT BANCORP INC. APPENDIX B B1
I GENERAL
1.1 Purpose. The purposes of the Plan are to retain officers and other key
-------
employees, to support the achievement of the Company's strategic business
objectives, and to encourage increased ownership of Company stock by
officers and other key employees by providing to such persons competitive
long-term incentive opportunities that are linked to the profitability of
the Company's business and increases in stockholder value. The Plan is to
be maintained primarily for a select group of management and highly
compensated employees.
1.2 Effective Date. The Plan shall become effective as of May 1, 2003, subject
--------------
to its approval by the Company's stockholders.
II DEFINITIONS
2.1 "Beneficiary" means the person or persons so designated by a Participant
pursuant to Section 5.4.
2.2 "Board of Directors" means the Board of Directors of the Company.
2.3 "Cause" shall mean the commission of 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.
2.4 "Change in Control" of the Company means
(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% 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 stockholders, 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 of the
Company; or
(iv) Approval by the stockholders of the Company of any plan or proposal
for the liquidation or dissolution of the Company.
2.5 "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
2.6 "Committee" means the committee referred to in Section 6.1.
2.7 "Common Stock" means common stock, par value $0.01 per share, of the
Company.
2.8 "Company" means NBT Bancorp Inc.
2.9 "Covered Employee" means any Participant who is or may be a "Covered
Employee," within the meaning of Section 162(m)(3) of the Code, in the
year in which the payment of any shares of Common Stock in satisfaction of
a Performance Share award will be taxable to such Participant.
2.10 "Disability" shall have the same meaning as under the Company-sponsored
long-term disability plan under which the applicable Participant is then
eligible to participate or, if the Participant is not then eligible to
participate in such plan, the Participant shall be considered to be
disabled if he or she is eligible for disability benefits from the Social
Security Administration.
2.11 "Eligibility Period" means a period, as determined by the Committee
pursuant to Section 4.1.
2.12 "Fair Market Value" means the value of each Share subject to the Plan
determined as follows: if on the Grant Date or other determination date
the shares of Stock are listed on an established national or regional
stock exchange, are admit-
B2 APPENDIX B PROXY STATEMENT: NBT BANCORP INC.
ted to quotation on the National Association of Securities Dealers Automated
Quotation System, or are publicly traded on an established securities market,
the Fair Market Value of the shares shall be the average price between the high
and the low sale price of the shares on such exchange or in such market on the
trading day immediately preceding the Grant Date or, if no sale of the shares is
reported for such trading day, on the next preceding day on which any sale shall
have been reported. If the shares are not listed on such an exchange, quoted on
such System or traded on such a market, Fair Market Value shall be determined by
the Board in good faith.
2.13 "Good Reason" means the termination by the Participant of employment for
"Good Reason" based on any of the following:
(i) A change in the Participant's position(s) with the Company, other
than for Cause is in effect immediately prior to the Change in
Control, without the consent of the Participant.
(ii) A decrease by the Company in the Participant's salary or benefits as
in effect immediately prior to the Change in Control.
2.14 "Non-Employee Director" means a member of the Board of Directors who
qualifies as (i) a "non-employee director," as defined in Rule 16b-3, as
promulgated by the Securities Exchange Commission under the Securities
Exchange Act of 1934, or any successor definition adopted by the
Securities Exchange Commission, and as (ii) an "outside director," as
defined in Section 1.162-27(e)(3) of the Treasury Regulations issued under
Section 162(m) of the Code, or any successor definition adopted by the
Department of the Treasury.
2.15 "Normal Retirement" means termination of employment after attainment of
age 65 or such earlier age as is provided or has been provided in a
Supplemental Executive Retirement Plan with respect to a person
participating in the Plan which was in effect at any time during the
Performance Period. However, the Committee, within its discretion, may
determine that a Participant who terminates employment prior to age 65 has
terminated by virtue of Normal Retirement.
2.16 "Participant" means a person who is designated, pursuant to Article III,
to be eligible to receive benefits under the Plan.
2.17 "Performance Goals" means the performance standards established by the
Committee pursuant to Section 4.4.
2.18 "Performance Period" means a period of service, as determined pursuant to
Section 4.2, over which the extent of achievement of established
Performance Goals will be measured. For purposes of applying to Covered
Employees the various rules of the performance-based compensation
exemption under Section 162(m)(4)(C) of the Code and the Treasury
Regulations issued thereunder, the Performance Period shall be the "period
of service to which the Performance Goals relate" (as defined in Treasury
Regulation Section 1.162-27(e) (2)).
2.19 "Performance Share" means an award, designated in terms of a share of
Common Stock, granted pursuant to the Plan.
2.20 "Person" means and includes 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.
2.21 "Plan" means this NBT Bancorp Inc. Performance Share Plan, as amended from
time to time.
2.22 "Pro-rated" or "Pro-rata" means, for purposes of determining the amount of
Common Stock payable to a Participant whose eligibility to participate in
the Plan with respect to an Eligibility Period ceases prior to the end of
such Eligibility Period for any of the reasons described in subsection (a)
(b) (c) (d) or (e) of Section 5.3, the percentage to be applied to the
Common Stock that would have been payable at the end of the Performance
Period to such Participant if he had been eligible to participate for the
entire Eligibility Period. Such percentage shall equal the number of
months (rounded to the nearest whole month) of the Eligibility Period
during which the Participant was designated by the Committee as eligible
to participate in the Plan divided by the number of months (rounded to the
nearest whole month) in such Eligibility Period. A Participant who,
pursuant to Section 3.2 but subject to the limitations of Section 4.3, is
designated as eligible to participate in the Plan after the applicable
Eligibility Period has commenced, shall, for purposes of this Section
2.21, be deemed to have been eligible as of the beginning of such
Eligibility Period; provided, however, that the Committee shall, in
accordance with its authority under Section 4.8, have the discretion to
reduce the Pro-rated Common Stock award that is otherwise payable to such
Participant to account for such late commencement of participation.
2.23 "Voting Securities" means securities of the Company having the right to
vote at elections of members of the Board of Directors.
PROXY STATEMENT: NBT BANCORP INC. APPENDIX B B3
III ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Participation in the Plan shall be limited to officers and
-----------
other key employees of the Company or any of its subsidiaries or other
affiliates who are designated to be eligible by the Committee.
3.2 Participation in Performance Share Awards. The Committee will determine
--------------------------------------------
the persons who will participate for each Eligibility Period under the
Plan. Subject to Section 4.3, after an Eligibility Period has commenced,
persons may be designated as eligible to participate in the Plan with
respect to such Eligibility Period. The award of Performance Shares with
respect to a Performance Period contained in any Eligibility Period does
not guarantee participation in subsequent Eligibility Periods.
IV PLAN DESIGN
4.1 Eligibility Period. An Eligibility Period is a certain period of time, as
-------------------
determined by the Committee, over which eligibility to receive benefits
under the Plan shall be measured. Eligibility Periods under the Plans
shall commence and terminate as determined by the Committee in its sole
discretion. The Committee may establish a separate Eligibility Period for
persons determined to be eligible for participation after the commencement
of any Eligibility Period.
4.2 Performance Period. Each Eligibility Period under the Plan shall include a
------------------
Performance Period which shall be a specified period of service over which
the achievement of applicable Performance Goals will be measured.
Performance Periods shall commence and terminate as determined by the
Committee, provided that each such Performance Period shall commence
coincident with or after the commencement of the corresponding Eligibility
Period and shall terminate coincident with or prior to the termination of
the corresponding Eligibility Period. Notwithstanding the foregoing, in
the event of a Change of Control, the Performance Period shall terminate.
The Committee may also establish a separate Performance Period for persons
determined to be eligible for participation after the commencement of any
Performance Period.
4.3 Performance Share Awards. On or about the commencement of each Eligibility
------------------------
Period under the Plan, the Committee shall establish the minimum and
maximum Performance Shares that may be awarded to each Participant in the
Plan for such Eligibility Period and the basis for such awards. The
Committee may also award Performance Shares to persons determined to be
eligible for participation after the commencement of any Eligibility
Period. Performance Shares must be awarded to Covered Employees at a time
when the outcome of the Performance Goals established or to be established
for the applicable Performance Period is substantially uncertain. The
Performance Shares awarded to any Covered Employee and the terms and
conditions applicable to such Performance Shares must be finalized in
writing by the Committee as soon as is practicable. Each award of
Performance Shares under the Plan shall be evidenced by a written "Notice
of Award," which shall be signed by an authorized officer of the Company
and by the Participant and shall contain such terms and conditions as are
approved by the Committee. Such terms and conditions need not be the same
in all cases.
4.4 Performance Goals.
------------------
(a) Performance Goals with respect to each Performance Period shall be
established by the Committee. The Committee may in its discretion
adjust the terms of such Performance Goals; provided that
Performance Goals applied to Covered Employees ("Covered Employees'
Performance Goals") shall not be adjusted. No Covered Employees'
Performance Goals shall be adjusted at a time when the outcome of
such Performance Goals is no longer substantially uncertain. Covered
Employees' Performance Goals must be finalized in writing by the
Committee on or prior to the applicable adjustment deadline
described in the preceding sentences.
(b) The Performance Goals set by the Committee shall be based on
specified criteria as determined by the Committee, which shall
specify the manner in which such Performance Goals shall be
calculated. Covered Employees' Performance Goals shall be based on
objective business criteria, which shall include but not be limited
to one or more of the following: earnings per share, total
shareholder return, operating earnings, growth in assets, return on
equity, return on capital, market share, stock price, net income,
cash flow, and retained earnings. Performance Goals also may be
based upon the attainment of specified levels of performance of the
Company under one or more of the measures described above relative
to the performance of other corporations.
(c) All of the provisions of this Section 4.4 are subject to the
requirement that all Covered Employees' Performance Goals shall be
objective performance goals satisfying the requirement for
"performance-based compensation" within the meaning of Section
162(m)(4) of the Code and the Treasury Regulations issued
thereunder.
B4 APPENDIX B PROXY STATEMENT: NBT BANCORP INC.
4.5 Available Common Stock. The maximum number of shares of Common Stock which
----------------------
shall be available for distribution in satisfaction of awards under the
Plan shall not exceed 300,000, subject to adjustment as provided in
Section 4.6. The shares of Common Stock available for issuance under the
Plan may be authorized and unissued shares or treasury shares or may be
purchased in the open market.
4.6 Adjustment to Shares. In the event of any merger, reorganization,
----------------------
consolidation, recapitalization, stock dividend, stock split,
extraordinary distribution with respect to Common Stock or other change in
corporate structure affecting such Common Stock, the Committee may make
such substitution or adjustments in the aggregate number and kind of
shares reserved for issuance under the Plan or in the number and kind of
shares subject to outstanding Performance Share awards under the Plan. The
Committee shall make such substitutions or adjustments as in its
discretion it determines to be appropriate and equitable to prevent
dilution or enlargement of rights hereunder; provided, however, that the
number of shares of Common Stock subject to any Performance Share award
shall always be a whole number.
4.7 Maximum Award. The maximum number of shares of Common Stock that may be
--------------
issued to any Covered Employee with respect to any Eligibility Period
pursuant to any Performance Share award is 50,000, subject to adjustment
as provided in Section 4.6. This limit includes any portion or amount of
Common Stock that is withheld for taxes (as described in Section 5.2).
4.8 Committee Discretion to Adjust Awards. At any time prior to the time the
---------------------------------------
Committee determines, pursuant to Section 5.1, the amount of shares of
Common Stock that are to be paid to any Participant in satisfaction of a
Performance Share award hereunder, the Committee shall have the authority
to modify, amend, or adjust the terms and conditions of such Performance
Share award, the terms and conditions of the corresponding Performance
Goals, and/or the amount of Common Stock payable, provided, however, such
authority to modify, amend or adjust the terms and conditions of such
Performance Share award shall be exercised to reduce an award only in
unusual circumstances not anticipated in the original design of the Plan
including, but not limited to non-recurring events or changes in the tax
law or accounting rules. However, the Committee shall have no authority to
increase directly or indirectly or to otherwise adjust upwards the amount
of Common Stock payable to a Covered Employee with respect to a particular
Performance Share award or to take any other action to the extent that
such action or the Committee's ability to take such action would cause any
payment under the Plan to any Covered Employee to fail to qualify as
"performance-based compensation" within the meaning of Code Section
162(m)(4) and the Treasury Regulations issued thereunder.
V PAYMENT
5.1 Committee Determination of Common Stock Payable. After a Performance
----------------------------------------------------
Period has ended, each Participant who has been awarded Performance Shares
and satisfied the Performance Goals with respect to such Performance
Period shall be entitled to receive a specified number of shares of Common
Stock as determined by the Committee which shall meet within thirty days
after the end of the Performance Period in order to make such
determination. The Committee shall determine the extent to which the
Performance Goals set pursuant to Section 4.4 have been met (as Pro-rated
in accordance with Section 5.3, if applicable). With respect to
Performance Shares awarded to Covered Employees, no payment of Common
Stock shall be made hereunder prior to written certification by the
Committee that the applicable Performance Goal or Goals have been
satisfied to a particular extent for the Performance Period, and no Common
Stock shall be payable unless a preestablished minimum level of
achievement of the Performance Goals has been met. The date on which the
Committee determines the number of shares of Common Stock payable to a
Participant shall be the date on which such Participant will become the
owner of such shares, regardless of when the underlying stock certificate
or certificates are actually delivered to such Participant, and such
Participant will enjoy all rights of ownership of such shares of Common
Stock as of that date including the right to vote and receive dividends
(the "Ownership Date").
5.2 Timing and Form of Payment.
------------------------------
(a) Shares of Common Stock payable to Participants pursuant to Section
5.1 shall be distributed two years (or such other period as has been
specified by the Committee at the time the Performance Goals were
determined with respect to such Shares) following the end of the
Performance Period, provided the Participant is then in the employ
of the Company and on such date the Participant will become the
owner of such shares, regardless of when the underlying stock
certificate or certificates are actually delivered to such
Participant; if the Participant is not then in the employ of the
Company, such shares will be forfeited and be available immediately
for future awards of Performance Shares.
PROXY STATEMENT: NBT BANCORP INC. APPENDIX B B5
(b) The Company shall have the right to deduct first from distributions
hereunder any federal, state, or local taxes required by law to be
withheld with respect to such distributions, and such additional
amounts of withholding as are reasonably requested by the
Participant from sources available to the Company. If such sources
are insufficient to satisfy the withholding obligations, the Company
shall have the right to deduct amounts from the Common Stock
distributable to satisfy such withholding obligations.
5.3 Distribution upon Termination of Employment.
-----------------------------------------------
(a) Death. If a Participant in the Plan dies while in the employ of the
Company before the end of an Eligibility Period for which
Performance Shares have been granted to him, such Participant's
Beneficiary will be eligible for a Prorated portion of the
Performance Shares that would have otherwise been payable to the
Participant after the end of the applicable Performance Period
without regard to subsection 5.2(a), but otherwise this
distribution, if any is payable, will be made to the Beneficiary in
the same form as all other Participants under the Plan receive their
distributions with respect to that Performance Period. Additionally,
shares of Common Stock that were otherwise distributable except that
the two-year period described in subsection 5.2(a) had not been
completed, shall be distributed to the Beneficiary as soon as is
practicable.
(b) Disability. If a Participant in the Plan, upon becoming Disabled,
terminates employment with the Company before the end of an
Eligibility Period for which Performance Shares have been granted to
him, the Participant will be eligible for a Pro-rated portion of the
Performance Shares that would have otherwise been payable to him
after the end of the applicable Performance Period without regard to
subsection 5.2(a), but otherwise this distribution, if any is
payable, will be made to the Participant in the same form as all
other Participants under the Plan receive their distributions with
respect to that Performance Period. Additionally, shares of Common
Stock that were otherwise distributable except that the two-year
period described in subsection 5.2(a) had not been completed, shall
be distributed to the Participant as soon as is practicable.
(c) Normal Retirement. If a Participant in the Plan terminates
employment upon attaining Normal Retirement before the end of an
Eligibility Period for which Performance Shares have been granted to
him, the Participant will be eligible for a Pro-rated portion of the
Performance Shares that would have otherwise been payable to him
after the end of the applicable Performance Period without regard to
subsection 5.2(a), but otherwise this distribution, if any is
payable, will be made to the Participant in the same form as all
other Participants under the Plan receive their distributions with
respect to that Performance Period. Additionally, shares of Common
Stock that were otherwise distributable except that the two-year
period described in subsection 5.2(a) had not been completed, shall
be distributed to the Participant as soon as is practicable.
(d) Termination of Employment Without Cause. If (i) the Company
terminates a Participant's employment other than for Cause, for any
reason after a Change in Control or (ii) the Participant terminates
the Participant's employment at the request of the Company, before
the end of an Eligibility Period for which Performance Shares have
been granted to him, the Participant will be eligible for a
Pro-rated portion of the Performance Shares that would have
otherwise been payable to him after the end of the applicable
Performance Period without regard to subsection 5.2(a); provided,
however, that calculations will be based on performance figures that
are no less than those contained in the budget of the Company as of
the date of such termination of employment, if such calculations
will result in a greater distribution to such Participant. This
distribution, if any is payable, will be made to the Participant in
the same form as all other Participants under the Plan receive their
distributions with respect to that Performance Period. Additionally,
shares of Common Stock that were otherwise distributable except that
the two-year period described in subsection 5.2(a) had not been
completed, shall be distributed to the Participant as soon as is
practicable.
(e) Termination of Employment for Good Reason. If the Participant
terminates the Participant's employment for Good Reason, before the
end of an Eligibility Period for which Performance Shares have been
granted to him, the Participant will be eligible for a Pro-rated
portion of the Performance Shares that would have otherwise been
payable to him after the end of the applicable Performance Period
without regard to subsection 5.2(a); provided, however, that
calculations will be based on performance figures that are no less
than those contained in the budget of the Company as of the date of
such termination of employment, if such calculations will result in
a greater distribution to such Participant. This distribution, if
any is payable, will be made to the Participant in the same form as
all other Participants under the Plan receive their distributions
with respect to that Performance Period. Additionally, shares of
Common Stock that were otherwise distributable except that the
two-year period described in subsection 5.2(a) had not been
completed, shall be distributed to the Participant as soon as is
practicable.
B6 APPENDIX B PROXY STATEMENT: NBT BANCORP INC.
(f) Other Termination of Employment. If, before the end of an
Eligibility Period for which Performance Shares have been granted to
him, a Participant in the Plan incurs a termination of employment
for any reason other than those specified in subsections (a)-(e) of
this Section 5.3, whether voluntary or involuntary and a Change of
Control has not occurred, he shall forfeit all rights to receive any
distribution of Performance Shares with respect to such Eligibility
Period.
5.4 Beneficiary Designation. A Participant may designate a Beneficiary who is
------------------------
to receive, upon his death, the distributions that otherwise would have
been paid to him. All designations shall be in writing and shall be
effective only if and when delivered to the Executive Vice President of
Human Resources of the Company during the lifetime of the Participant. If
a Participant designates a Beneficiary without providing in the
designation that the Beneficiary must be living at the time of each
distribution, the designation shall vest in all of the distribution
whether payable before or after the Beneficiary's death, and any
distributions remaining upon the Beneficiary's death shall be made to the
Beneficiary's estate.
A Participant may from time to time during his lifetime change his
Beneficiary by a written instrument delivered to the Executive Vice
President of Human Resources of the Company. In the event a Participant
shall not designate a Beneficiary as aforesaid, or if for any reasons such
designation shall be ineffective, in whole or in part, the distribution
that otherwise would have been paid to such Participant shall be paid to
his estate, and in such event the term "Beneficiary"shall include his
estate.
VI ADMINISTRATION
6.1 Committee. The Plan shall be administered by the Board of Directors, or
---------
such other Committee of the Board of Directors, composed exclusively of
not less than two Non-Employee Directors, each of whom shall be appointed
by and serve at the pleasure of the Board of Directors. The Committee may
designate person(s) who are Company employees to oversee the day to day
administration of the Plan.
6.2 General Rights, Powers, and Duties of Committee. The Committee shall be
--------------------------------------------------
responsible for the management, operation, and administration of the Plan.
Subject to the limitations contained in Section 4.8 and to the remaining
terms of the Plan, the Committee shall, in addition to those provided
elsewhere in the Plan, have the following powers, rights, and duties:
(a) To maintain records concerning the Plan sufficient to prepare
reports, returns and other information required by thePlan or by
law;
(b) To direct the payment of benefits under the Plan, and to give such
other directions and instructions as may be necessary for the proper
administration of the Plan; and
(c) To be responsible for the preparation, filing and disclosure on
behalf of the Plan of such documents and reports as are required by
any applicable federal or state law.
The Committee shall also have the authority to adopt, alter, and
repeal such administrative rules, guidelines, and practices governing the
Plan as it shall, from time to time, deem advisable, to interpret the
terms and provisions of the Plan and any award issued under the Plan (and
any Notice of Award or other agreement relating thereto), and to otherwise
supervise the administration of the Plan.
Any determination made by the Committee pursuant to the provisions
of the Plan with respect to any grants, payments, or other transactions
under the Plan shall be made in the sole discretion of the Committee at
the time of the grant, payment, or other transaction or, unless in
contravention of any express term of the Plan, at any time thereafter. All
decisions made by the Committee pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Company and Plan
Participants.
6.3 Information to be Furnished to Committee. Participants and their
---------------------------------------------
Beneficiaries shall furnish to the Committee such evidence, data, or
information and execute such documents as the Committee requests.
6.4 Responsibility and Indemnification. No member of the Committee or of the
------------------------------------
Board of Directors or any person who is designated to oversee the day to
day administration of the Plan (as provided in Section 6.1) shall be
liable to any person for any action taken or omitted in connection with
the administration of this Plan unless attributable to his own fraud or
willful misconduct; nor shall the Company be liable to any person for any
such action unless attributable to fraud or willful misconduct on the part
of a director, officer, or employee of the Company within the scope of his
Company duties. Each member of the Committee shall be indemnified and held
harmless by the Company for any liability arising out of the
administration of the Plan, to the maximum extent permitted by law.
PROXY STATEMENT: NBT BANCORP INC. APPENDIX B B7
VII AMENDMENT AND TERMINATION
7.1 Amendment. The Plan may be amended in whole or in part by the Company, by
---------
action of the Board of Directors, at any time. The Committee reserves the
unilateral right to change any rule under the Plan if it deems such a
change necessary to avoid the application of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), to the Plan. No
amendment shall be made without the approval of the Company's stockholders
to the extent such approval is required by law or by agreement.
7.2 Company's Right to Terminate. The Company reserves the sole right to
-------------------------------
terminate the Plan, by action of the Board of Directors, at any time.
VIII MISCELLANEOUS
8.1 No Implied Rights; Rights on Termination of Service. Neither the
----------------------------------------------------------
establishment of the Plan nor any amendment thereof shall be construed as
giving any Participant, Beneficiary, or any other person any legal or
equitable right unless such right shall be specifically provided for in
the Plan or conferred by specific action of the Committee in accordance
with the terms and provisions of the Plan. Except as expressly provided in
this Plan, the Company shall not be required or be liable to make any
payment under the Plan.
8.2 No Right to Company Assets. Neither the Participant nor any other person
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shall acquire, by reason of the Plan, any right in or title to any assets,
funds or property of the Company whatsoever including, without limiting
the generality of the foregoing, any specific funds, assets, or other
property which the Company, in its sole discretion, may set aside in
anticipation of a liability hereunder. Any benefits which become payable
hereunder shall be paid from the general assets of the Company. The
Participant shall have only a contractual right to the amounts, if any,
payable hereunder unsecured by any asset of the Company. Nothing contained
in the Plan constitutes a guarantee by the Company that the assets of the
Company shall be sufficient to pay any benefit to any person.
8.3 No Employment Rights. Nothing herein shall constitute a contract of
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employment or of continuing service or in any manner obligate the Company
to continue the services of the Participant, shall obligate the
Participant to continue in the service of the Company, or shall serve as a
limitation of the right of the Company to discharge any of its employees,
with or without cause. Nothing herein shall be construed as fixing or
regulating the compensation payable to the Participant.
8.4 Other Benefits. No Common Stock paid under the Plan shall be considered
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compensation for purposes of computing benefits under any "employee
benefit plan" (as defined in Section 3(3) of ERISA) of the Company nor
affect any benefits or compensation under any other benefit or
compensation plan of the Company now or subsequently in effect (except as
provided to the contrary in such Company plan).
8.5 Offset. If, at the time payments are to be made hereunder, the Participant
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or the Beneficiary or both are indebted or obligated to the Company, then
the payments under the Plan remaining to be made to the Participant or the
Beneficiary or both may, at the discretion of the Company, be reduced by
the amount of such indebtedness or obligation, provided, however, that an
election by the Company not to reduce any such payment or payments shall
not constitute a waiver of its claim for such indebtedness or obligation.
8.6 Non-assignability. Neither the Participant nor any other person shall have
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any voluntary or involuntary right to commute, sell, assign, pledge,
anticipate, mortgage, or otherwise encumber, transfer, hypothecate, or
convey in advance of actual receipt the amounts, if any payable hereunder
or any part thereof, which are expressly declared to be unassignable and
non-transferable. Except as otherwise provided in Section 8.5, no part of
the amounts payable prior to actual payment shall be subject to seizure or
sequestration for the payment of any debts, judgments, alimony, or
separate maintenance owed by the Participant or any other person, or be
transferable by operation of law in the event of the Participant's or any
other person's bankruptcy or insolvency.
8.7 Notice. Any notice required or permitted to be given under the Plan shall
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be sufficient if in writing and hand delivered, sent by registered or
certified mail, or sent by facsimile to the Company at its principal
office, directed to the attention of the Committee c/o the Chief Financial
Officer of the Company. Such notice shall be deemed given as of the date
of delivery or, if delivery is made by mail or facsimile, as of the date
shown on the postmark, facsimile, or the receipt for registration or
certification.
8.8 Governing Laws. The Plan and all awards made and actions taken under the
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Plan shall be governed and construed according to the laws of the State of
New York, without regard to any applicable conflicts of laws.
B8 APPENDIX B PROXY STATEMENT: NBT BANCORP INC.
8.9 Gender and Number. Where appropriate, references in this Plan to the
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masculine shall include the feminine, and references to the singular shall
include the plural.
8.10 Severability. In the event any provision of the Plan shall be held legally
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invalid for any reasons, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.
PROXY STATEMENT: NBT BANCORP INC. APPENDIX B B9