-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DjfDqfaqqxjmudzYdmIUCthmEXbs7wk6BM4XteaN6PBJHUs6JrefYFIvAmRU8LB8 Pw5S3XnT7UkXcJz/bi0F4Q== 0000790359-97-000006.txt : 19970318 0000790359-97-000006.hdr.sgml : 19970318 ACCESSION NUMBER: 0000790359-97-000006 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970419 FILED AS OF DATE: 19970317 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NBT BANCORP INC CENTRAL INDEX KEY: 0000790359 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 161268674 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14703 FILM NUMBER: 97557328 BUSINESS ADDRESS: STREET 1: 52 S BROAD ST CITY: NORWICH STATE: NY ZIP: 13815 BUSINESS PHONE: 6073376000 MAIL ADDRESS: STREET 1: 52 S. BROAD STREET CITY: NORWICH STATE: NY ZIP: 13815 DEF 14A 1 DEFINITIVE PROXY STATEMENT FOR 4-19-97, NO PRELIMINARY REQUIRED SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the registrant [ X ] File No. 0-14703 Filed by a party other than the registrant [ ] Check the appropriate box: [ ] Preliminary proxy statement [ X ] Definitive proxy statement [ ] Definitive additional materials [ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 NBT BANCORP INC. - ---------------------------------------------------------------- (Name of Registrant as Specified in Its Charter) KATHIE J. DEIERLEIN - ---------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of filing fee (Check the appropriate box) [ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2). [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3) [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transactions applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: (4) Proposed maximum aggregate value of transaction: [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and indentify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: (2) Form, schedule or registration statement no.: (3) Filing party: (4) Date filed: NBT BANCORP INC. NOTICE OF ANNUAL STOCKHOLDERS' MEETING March 17, 1997 TO THE HOLDERS OF SHARES OF COMMON STOCK: NOTICE IS HEREBY GIVEN that pursuant to call of its Directors, the regular annual meeting of stockholders of NBT BANCORP INC. will be held at the Norwich Senior High School auditorium located at Midland Drive, Norwich, New York, on Saturday, April 19, 1997 at 11:00 a.m., for the purpose of considering and voting upon the following matters: 1. Election of Directors. To fix the number of directors at six and elect the candidates listed in the Proxy Statement dated March 17, 1997. 2. Ratification of the Board of Directors' action of the selection of independent public accountants for the year 1997. 3. Transaction of such other business as may properly come before the Meeting or any adjournment thereof. By order of the Board of Directors /s/DARYL R. FORSYTHE Daryl R. Forsythe President and Chief Executive Officer /s/JOE C. MINOR Joe C. Minor Vice President, Chief Financial Officer and Treasurer WE URGE YOU TO MARK, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE--WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO ATTEND THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY. ALSO, YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO THE MEETING OR IN OPEN MEETING UPON WRITTEN NOTIFICATION TO THE CHIEF EXECUTIVE OFFICER. [THIS PAGE INTENTIONALLY LEFT BLANK] PROXY STATEMENT NBT BANCORP INC. 52 SOUTH BROAD STREET NORWICH, NEW YORK 13815 This Proxy Statement is being furnished by NBT Bancorp Inc. (the "Company"), a Delaware corporation, to its stockholders, in connection with the solicitation by the Board of Directors of proxies to be voted at the Annual Meeting of Stockholders to be held at 11:00 a.m., on April 19, 1997 (the "Meeting"), at the Norwich Senior High School auditorium located at Midland Drive, Norwich, New York 13815, and at any adjournments thereof. In the course of discussions in this Proxy Statement of recommendations and solicitations of votes, the term "Management" refers to the Board of Directors of NBT Bancorp Inc., unless otherwise required by the context. The approximate date on which this Proxy Statement is first being sent or given to stockholders is March 17, 1997. A copy of Form 10-K (Annual Report) for December 31, 1996, is being furnished to the stockholders together with a copy of this Proxy Statement. Copies of exhibits listed in the Form 10-K can be acquired BY WRITTEN REQUEST TO JOE C. MINOR, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER, NBT BANCORP INC., 52 SOUTH BROAD STREET, NORWICH, NEW YORK 13815. VOTING, PROXY SOLICITATION AND REVOCATION Your proxy is solicited by the Board of Directors for use at the Meeting. If the enclosed form of proxy is properly executed and returned prior to or at the Meeting, and if not revoked prior to or at the Meeting, all shares represented thereby will be voted at the Meeting as specified in the proxy by the persons designated therein. Shares represented by such returned, unrevoked proxies which are not marked "AGAINST," "ABSTAIN" or "WITHHELD" will be voted to fix the number of directors at six and "FOR" the election of the nominees and "FOR" ratification of the auditor. Abstentions and broker non-votes are counted only for purposes of determining whether a quorum is present at the Meeting, but will not be counted as voting with respect to any matter as to which the abstention or non-vote is indicated. The solicitation of proxies will be by mail, but proxies may also be solicited by telephone, telegraph or in person by officers and other employees of the Company. The entire cost of this solicitation will be borne by the Company. Should the Company, in order to solicit proxies, request the assistance of other banks, brokerage houses and other custodians, nominees or fiduciaries, the Company will reimburse such persons for their reasonable expenses in forwarding the proxies and proxy material to the beneficial owners of such shares. A stockholder may revoke his or her proxy by a later proxy or by delivery of notice of revocation to the Chief Executive Officer, in writing, at any time prior to the date and time of meeting or in open meeting. Attendance at the Meeting will not in and of itself revoke a proxy. I-1 SHARES ENTITLED TO VOTE The Board of Directors has fixed the close of business on February 28, 1997, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Meeting. At the close of business on such date, there were outstanding and entitled to vote at the Meeting 8,393,801 shares of Common Stock, no par value, stated value $1.00 per share. Each of the outstanding shares is entitled to one vote at the Meeting for all items set forth in the Notice. Shares held by the Trust Division of NBT Bank, National Association ("the Bank" or "NBT Bank, N.A.") as Sole Trustee may not be voted in the election of directors, but may be voted on other matters. PRINCIPAL BENEFICIAL OWNERS OF COMMON STOCK No individual or group of individuals owns of record, or is known to the Company to own beneficially, more than 5% of the Common Stock. However, Cede & Co., a nominee of the Depository Trust Company, held record ownership on behalf of various of its customers on December 31, 1996, of 3,456,480 shares, or 41.2%, of the outstanding shares. The names of the beneficial owners of the shares held by those stockholders are unknown to management. PROPOSAL NUMBER 1 ELECTION OF DIRECTORS The By-laws of the Company provide that the number of Directors authorized to serve until the next annual meeting of stockholders shall be the number designated at the Annual Meeting and prior to the election of directors by the stockholders entitled to vote for the election of directors at that meeting. The Board has proposed and is requesting the stockholders to approve its proposal that the number of directors of the Company be set at six. Two persons have been designated by the Board as nominees for election at this Meeting and are being presented to the stockholders for election. The directors to be elected at the Meeting shall be determined by a plurality vote of the shares represented in person or by proxy, entitled to vote at the Meeting. Nominations of candidates for election as directors of the Company must be made in writing and delivered to or received by the President of the Company within ten days after notice of any Stockholders' meeting called for the election of directors. Such notification shall contain the name and address of the proposed nominee, the principal occupation of the proposed nominee, the number of shares of Common Stock that will be voted for the proposed nominee by the notifying stockholder, including shares to be voted by proxy, the name and residence of the notifying stockholder and the number of shares of Common Stock beneficially owned by the notifying stockholder. No person shall be eligible for election or elected as a director who shall have attained the age of 72 years, except for Mr. Everett Gilmour who was granted an exception to age 75 by resolution of the Board of Directors amending the By-laws. Nominations not made in accordance herewith may be disregarded by the Chairman of the meeting. The By-Laws of the Company permit the Board of Directors by a majority vote, between annual meetings of the stockholders, to increase the number of directors by not more than two members and to appoint qualified persons to fill the vacancies created thereby. The By-Laws of the Company provide for a classified Board of Directors. The Board is divided into three equal classes. Each class holds office for a term of three years, but only one class comes up for election each year (except in those cases where vacancies occur in other classes). The persons named below are being proposed as nominees for election as directors for the three-year term expiring at the annual meeting to be held in 2000, and until their successors are elected and qualify. The persons named in the enclosed proxy intend to vote for such nominees for election as directors, but if the nominees should be unable to serve, proxies will be voted for such substitute I-2 nominees as shall be designated by the Board of Directors to replace such nominees. It is believed that each nominee is available for election. The names of the nominees for election for the term as shown and certain information as to each of them are as follows:
Number of Principal Occupation During Common Shares Percent Date Past Five Years and Other Director Beneficially Owned of Shares Name of Birth Directorships (a) Since on 12/31/96(b) Outstanding Nominees for Directors with terms expiring in 2000: Andrew S. Kowalczyk, Jr. 09/27/35 Partner - Kowalczyk, Tolles, 1994 1,586 (1) * Deery & Johnston, attorneys Director of NBT Bank, N.A. since 1994 John C. Mitchell 05/07/50 President & CEO of 1994 5,634 (1) * I.L. Richer Co. 2,398 (2)(b) * (agri. business) Directorships: Preferred Mutual Ins. Co.(c); NBT Bank, N.A. since 1993 Directors for with terms expiring in 1999: Peter B. Gregory 05/07/35 Partner, Gatehouse Antiques 1987 48,943 (1) 0.58% Director of NBT Bank, N.A. 6,876 (1)(b) * since 1978 16,710 (2)(b) 0.20% 58,389 (d) 0.70% Paul O. Stillman 01/15/33 Chairman, President & CEO of 1986 16,095 (1) 0.19% Preferred Mutual Ins. Co. (c) 427 (2)(b) * Directorships: Excess Reinsurance Co.; Preferred Mutual Ins. Co. (c); Leatherstocking Cooperative Ins. Co; National Association of Mutual Ins. Companies; NBT Bank, N.A. since 1977 Directors with terms expiring in 1998: Daryl R. Forsythe 08/02/43 President & CEO of NBT 1992 5,697 (1) * Bancorp Inc. & the Bank 17 (1)(b) * since January 1995 9,457 (2) 0.11% Vice President & General 980 (2)(b) * Manager of Simmonds Precision 31,645 (3) 0.38% Engine Systems, a subsidiary of BF Goodrich Aerospace for more than 7 years previous thereto Directorships: Security Mutual Life Ins. Co. of NY; NBT Bank, N.A. since 1988 Everett A. Gilmour 05/22/21 Chairman of NBT Bancorp Inc., 1986 62,473 (1) 0.74% and the Bank since January 1995 2,964 (2) * Retired Chairman of NBT 1,807 (2)(b) * Bancorp Inc. for more than 5 years previous thereto Directorships: Preferred Mutual Ins. Co.(c); NYS Electric & Gas Co.; Delaware Otsego Corp.; Norwich Aero Products, Inc.; NBT Bank, N.A. since 1962
I-3 Executive Officers of NBT Bancorp Inc. other than Directors who are Officers
Number of Present Position Common Shares and Principal Beneficially Percent Date of Date of Position Last Owned Shares Name Birth Employment Five Years on 12/31/96(b) Outstanding John R. Bradley 9/28/43 4/19/93 Senior Vice President - 268 (1) * Commercial Banking since May 1993 458 (1)(b) * Senior Vice President and 10,806 (3) 0.13% Senior Regional Lender - Fleet Bank 1965 to 1993 Martin A. Dietrich 4/3/55 3/1/81 Senior Vice President-Retail Banking 2,684 (1)(b) * since April 1996 1,449 (2) * Senior Vice President - 7,960 (3) * Chief Credit Officer 1995 - 1996 3,037 (e) * Regional Manager 1993 - 1995 Director of Marketing 1991 - 1993 Joe C. Minor 10/7/42 3/1/93 Vice President, Chief Financial 124 (1) * Officer & Treasurer of NBT 627 (1)(b) * Bancorp Inc. since September 1995 13,200 (3) 0.16% Senior Vice President, Chief Financial Officer, Treasurer and Cashier of the Bank since September 1995 Senior Vice President and Controller of the Bank, 1993-1995 Owner, Public Accounting/Bank Consulting Firm Charlotte, NC 1983-1993 John D. Roberts 2/16/40 2/15/65 Vice President & Secretary 11,377 (1) 0.16% NBT Bancorp Inc. since September 1995 411 (1)(b) * Senior Vice President and 180 (2)(b) * Chief Trust Officer of the Bank 5,551 (3) * since February 1995 Executive Vice President Chenango Mutual Insurance Co. 1989 to 1995 All directors and executive officers as a group beneficially owned 332,445 shares as of December 31, 1996, which represented 3.96% of total shares outstanding, including shares owned by spouses and minor children, as to which beneficial ownership is disclaimed, and options exercisable within sixty days. NOTES: (a) The business experience of each director during the past five years was that typical to a person engaged in the principal occupation listed for each. (b) The information under this caption regarding ownership of securities is based upon statements by the individual nominees, directors, and officers and includes shares held in the names of spouses and minor children as to which beneficial ownership is disclaimed. These indirectly held shares total in number 34,126 for the spouses and for minor children. In the case of officers and officer directors, shares of the Company's stock held in NBT Bank, National Association Employee Stock Ownership Plan as of December 31, 1996, are included. (c) Preferred Mutual Insurance Company, of which Paul O. Stillman is President and Chief Executive Officer and Director, and Everett A. Gilmour and John C. Mitchell, are Directors, owns 95,648 shares; Messrs. Stillman, Gilmour, and Mitchell disclaim any beneficial ownership of any such shares. (d) Dr. Gregory has power of attorney for Virginia Gregory but disclaims any beneficial ownership of any such shares. (e) Mr. Dietrich has power of attorney for Veronica Ulrichs but disclaims any beneficial ownership of any such shares. (1) Sole voting and investment authority (2) Shared voting and investment authority (3) Shares under option from NBT Bancorp Inc. Stock Option Plan which are exercisable within sixty days of December 31, 1996. * Less than .1%
I-4 BOARD MEETINGS AND COMMITTEES OF THE BOARD During 1996, there were six meetings of the Board of Directors. Each member attended at least 75% of the meetings of the Board and those committees on which he served. The full Board performed the duties of the Executive Committee. The following committees perform a dual role for the Company and the Bank. Nominating and Organization Committee: Chairman: Andrew S. Kowalczyk, Jr. Members: Daryl R. Forsythe Dr. Peter B. Gregory Everett A. Gilmour J. Peter Chaplin Paul O. Stillman This committee, which met one time during 1996, nominates directors for election for the Company and the Bank. The committee also functions to insure a successful evolution of management at the senior level. COMPENSATION AND BENEFITS COMMITTEE: Chairman: Paul O. Stillman Members: Everett A. Gilmour Dr. Peter B. Gregory Andrew S. Kowalczyk, Jr. John C. Mitchell Richard F. Monroe This committee has the responsibility of reviewing the salaries and other forms of compensation of the key executive personnel of the Company and the Bank. The committee met four times in 1996. The committee administers the Company's stock option plan. AUDIT, COMPLIANCE AND LOAN REVIEW COMMITTEE: Chairman: John C. Mitchell Members: J. Peter Chaplin Everett A. Gilmour Janet H. Ingraham Dan B. Marshman Richard F. Monroe Plus 2 rotating members each quarter The Audit, Compliance and Loan Review Committee represents the Board of Directors in fulfilling its statutory and fiduciary responsibilities for independent examinations of the Company including monitoring accounting and financial reporting practices and financial information distributed to stockholders and the general public. Further, the committee determines that the Company operates within prescribed procedures in accordance with adequate administrative, operating and internal accounting controls. It also makes recommendations to the Board with respect to the appointment of independent auditors for the following year. This committee met four times in 1996. I-5 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Directors and Executive Officers must, under Section 16(a) of the Securities Exchange Act of 1934, file certain periodic reports of changes in beneficial ownership of Company securities. The Bank endeavors to assist Directors and Executive Officers in filing the required reports. To the Company's knowledge all filing requirements under the Securities Exchange Act were satisfied. COMPENSATION OF DIRECTORS AND OFFICERS BOARD OF DIRECTORS FEES For 1996, members of the Board of Directors received a $2,000 annual retainer and $600 per Board meeting attended. Board members also received $600 for each committee meeting attended. Chairmen of the committees received $900 for each committee meeting attended. Officers of the Company, who are also Directors, do not receive any fees. For 1997, members of the Board of Directors will receive an annual retainer in the amount of $3,000 which will be payable in the form of restricted stock which will vest over a three year period. EXECUTIVE COMPENSATION The following table sets forth information concerning the chief executive officer of the Company and the four most highly compensated executive officers, other than the chief executive officer, of the Company or the Bank who were serving as executive officers at the end of 1996 and whose total annual salary and bonus exceeded $100,000 in 1996. I-6 SUMMARY COMPENSATION TABLE
Long Term Compensation ---------------------- Annual Compensation Awards Payouts ----------------------------------------------------------------------- Securities Name and Other Annual Underlying LTIP All Other Principal Position Year Salary Bonus(4) Compensation(5) Options(6) Payouts Compensation(7) Daryl R. Forsythe, 1996 $240,000 $120,000 30,660 $-0- $24,788 President and Chief 1995 (1) $240,000 $120,000 30,765 $-0- $13,756 Executive Officer of the Company and the Bank Joe C. Minor (3), 1996 $115,000 $ 38,352 7,350 $-0- $11,446 Vice President, Chief 1995 (2) $ 94,154 $ 23,007 5,355 $-0- $ 7,956 Financial Officer, and Treasurer of the Company John D. Roberts (3) 1996 $ 95,670 $ 32,015 5,775 $ 8,779 Senior Vice President Chief Trust Officer of the Bank and Vice President and Secretary of the Company Martin A. Dietrich (3) 1996 $100,000 $ 33,349 6,405 $10,028 Senior Vice President - Retail Banking Division of the Bank John R. Bradley (3) 1996 $ 91,315 $ 29,981 5,670 $ 9,320 Senior Vice President and Senior Commercial Lender of the Bank NOTES: (1) Mr. Forsythe's employment with the Company and the Bank commenced effective January 1, 1995. (2) Mr. Minor assumed these positions in September 1995. Prior thereto he was assistant treasurer and chief financial officer of the Company. (3) Did not meet reporting requirements for previous years. (4) Represents bonuses under the Company's Executive Incentive Compensation Plan earned in the specified year and paid in January of the following year. (5) Individual amounts, and in the aggregate, are immaterial. (6) Grant amount adjusted for the 5% stock dividends in December 1995 and 1996. (7) In 1996, 1995, and 1994 the Bank contributed $607,557, $483,240, and $420,000, respectively, to the Bank's Employees' Stock Ownership Plan ("ESOP"). With the 1996 contribution, the Bank as trustee of the ESOP will purchase shares of Common Stock of the Company at the fair market value on the dates of purchase and will allocate these shares to the accounts of the participants. The amount shown includes the amount allocated to the named executive. An individual's maximum compensation eligible for the ESOP contribution is $150,000. Includes payments by the Company with respect to the death benefits agreement ($726 for Mr. Forsythe), disability agreement ($7,734 for Mr. Forsythe), and matching contributions by the Company or the Bank pursuant to the Company's and Bank's Section 401(k) retirement plan in the amount of $4,500, ESOP contribution of $8,664, and the value of personal share of the auto of $3,164 for Mr. Forsythe. ESOP contributions of $7,972, $7,013, $6,562 and $6,763 and 401(k) matching contributions of $3,474, $3,015, $2,758 and $2,016 were made for Mr. Minor, Mr. Dietrich, Mr. Bradley and Mr. Roberts respectively.
OPTION GRANTS INFORMATION The following table presents information concerning grants of stock options made during 1996 to each of the executive officers named in the Summary Compensation Table above. All information has been adjusted for the December 1996 stock dividend. No gain to the optionees is possible without an increase in stock price which will benefit all shareholders proportionately. These potential realizable values are based solely on arbitrarily assumed rates of appreciation required by applicable SEC regulations. Actual gains, if any, on option exercises and common stockholdings are dependent on the I-7 future performance of NBT Bancorp Inc. Common Stock. There can be no assurance that the potential realizable values shown in this table will be achieved. OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation Individual Grants for Option Term (2) # of Securities % of Total Underlying Options Granted Exercise Options to Employees Price Name Granted(1) in Fiscal Year ($/Sh) Expiration Date 5% 10% - ---- ---------- --------------- -------- --------------- -- --- Daryl R. Forsythe 30,660 30.9% $16.46 January 2006 $317,380 $804,304 Joe C. Minor 7,350 7.4% $16.46 January 2006 $ 76,084 $192,813 John R. Bradley 5,670 5.7% $16.46 January 2006 $ 58,694 $148,741 John D. Roberts 5,775 5.8% $16.46 January 2006 $ 59,781 $151,496 Martin A. Dietrich 6,405 6.4% $16.46 January 2006 $ 66,302 $168,022 NOTES: (1) Non-qualified options have been granted at fair market value at the date of grant. At the time of grant, options are 40% vested after one year from grant date; an additional 20% vests each year thereafter. (2) The potential realizable value of each grant of options, assuming that the market price of the underlying security appreciates in value from the date of grant to the end of the option term, at the specified annualized rates. The assumed growth rates in price in the Company's stock are not necessarily indicative of actual performance that may be expected. The amounts exclude the cost by the executive to exercise such options.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table presents information concerning the exercise of stock options during 1996 by each of the executive officers named in the Summary Compensation Table above, and the value at December 31, 1996, of unexercised options that are exercisable within sixty days of December 31, 1996. These values, unlike the amounts set forth in the column headed "Value Realized," have not been, and may never be realized. The underlying options have not been, and may never be, exercised; and actual gains, if any, on exercise will depend on the value of NBT Bancorp Inc. Common Stock on the date of exercise. There can be no assurance that these values will be realized. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised Underlying Unexercised In-the-Money Options Options at FY-End(2) at FY-End(2) ---------------------- -------------------- Shares Acquired Exercisable/ Exercisable/ Name on Exercise Value Realized(1) Unexercisable Unexercisable - ---- --------------- ----------------- ------------- ------------- Daryl R. Forsythe -0- $-0- 31,645/31,318 $97,184/91,094 Joe C. Minor -0- $-0- 13,200/ 7,469 $52,686/21,327 John R. Bradley -0- $-0- 10,806/ 6,722 $35,765/20,250 John D. Roberts -0- $-0- 5,551/ 5,626 $16,919/16,234 Martin A. Dietrich -0- $-0- 7,960/ 5,741 $28,324/16,087 NOTES: (1) Represents difference between the fair market value of the securities underlying the options and the exercise price of the options on the date of exercise. (2) Represents difference between the fair market value of the securities underlying the options and the exercise price of the options at December 31, 1996.
I-8 RETIREMENT PLAN The following table presents information with respect to the pension plan of the Company and the Bank. The table shows estimated annual benefits payable upon retirement in specified compensation and years of service classifications for participants retiring on December 31, 1996. Years of Participation --------------------------------------------------------
Final Average Earnings 10 Years 20 Years 30 Years 40 Years - ------------- ---------- ---------- ---------- ----------- $15,000 N $ 1,979.00 $ 3,994.00 $ 6,213.00 $ 8,432.00 Q 1,841.00 3,716.00 5,780.00 7,845.00 $25,000 N 3,353.00 6,657.00 10,355.00 14,053.00 Q 3,119.00 6,193.00 9,634.00 13,074.00 $40,000 N 5,996.00 11,751.00 18,280.00 24,625.00 Q 5,578.00 10,933.00 17,007.00 22,910.00 $70,000 N 11,632.00 22,985.00 35,754.00 47,799.00 Q 10,822.00 21,384.00 33,263.00 44,469.00 $100,000 N 17,305.00 34,218.00 53,228.00 70,973.00 Q 16,099.00 31,835.00 49,520.00 66,029.00 $200,000 N 28,587.00 57,524.00 89,481.00 116,732.00 Q 26,595.00 53,517.00 83,248.00 108,600.00 $300,000 N 30,897.00 64,432.00 97,966.00 116,732.00 Q 28,745.00 59,944.00 91,142.00 108,600.00 $400,000 N 30,897.00 64,432.00 97,966.00 116,732.00 Q 28,745.00 59,944.00 91,142.00 108,600.00 $500,000 N 30,897.00 64,432.00 97,966.00 116,732.00 Q 28,745.00 59,944.00 91,142.00 108,600.00 N=Normal Form of Benefit for a Single Participant-5 Years Certain and Continuous. Q=Normal Form of Benefit for a Married Participant-Qualified Joint and Survivor (50% of benefit payable to spouse at death of Participant). Spouse's age assumed to be equal to Participant's age for above calculations. Salaries are assumed to increase at a rate of 4% per year from date of hire through date of retirement for above calculations.
The Company has in effect a non-contributory pension plan for all eligible employees which is self-administered. Eligible employees are those who work in excess of 1,000 hours per year, have completed one year of service and have attained age 21. The plan is qualified under Section 401(a) of the Internal Revenue Code. Employer contributions to the plan are computed on an actuarial basis using the projected unit credit cost method including amortization of any past service costs over a thirty-year period. Pension costs are funded as accrued. The minimum required and maximum deductible contributions for the plan year ending December 31, 1996, were $604,974 and $715,184, respectively. The plan provides for 100% vesting after five years of qualified service. Earnable compensation for the plan is defined as fixed basic annual compensation, including bonuses, overtime and other taxable compensation, but excluding the Company's cost for any public or private employee benefit plan, including this retirement plan. Benefit computations are based on an average final compensation amount which is the average annual earnable compensation during the five consecutive year period in an employee's last ten years of qualified service which produces the highest such average. As of December 31, 1996, the end of the plan year, the executive officers named in the Summary Compensation Table above were credited with the following years of service for purposes of the above table: Daryl R. Forsythe I-9 (2), Joe C. Minor (4), Martin A. Dietrich (6), John R. Bradley (4) and John D. Roberts (1). The annual normal retirement benefit of a participant who becomes eligible for benefits shall equal the greater of the amounts described in A and B below, with that sum then reduced by the amount described in C below. A. The sum of (i), (ii), and (iii) below: i. The participant's accrued benefit under the predecessor plan as of September 30, 1989. ii. For years of benefit service earned after September 30, 1989 and before January 1, 1995, the sum of 1.60% of the participant's final average earnings for each year of benefit service plus .60 percent of the participant's final average earnings that is in excess of covered compensation for such year of benefit service. iii. For years of benefit service earned after December 31, 1994, the sum of 1.25% of the participant's final average earnings for each such year of benefit service, plus .60% of the participant's final average earnings that is in excess of covered compensation for each such year of benefit service. B. The sum of 1.60% of the participant's final average earnings for each year of benefit service through December 31, 1994, plus .65% of the participant's final average earnings that is in excess of covered compensation for each year of benefit service through December 31, 1994. C. The annual normal retirement benefit payable to the participant from the Retirement Plan of Irving Bank Corporation and Affiliated Companies. The number of years of benefit service taken into account under the plan shall be limited to the greater of 30, or the number of years of benefit service completed by the participant as of December 31, 1994 (up to a maximum of 40 for the basic benefit and a maximum of 35 for the excess portion of the benefit). I-10 EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT There are no employment contracts between the Company or the Bank and the named executive officers. CHANGE IN CONTROL CONTRACTS The Company has entered into a change in control contract with each of Messrs. Forsythe, Minor, Dietrich, Bradley and Roberts. The contract provides in general that, in the event that the Company or the Bank is acquired by another company or any of certain other changes in control of the Company or the Bank should occur and further if within 24 months from the date of such acquisition or change in control Messrs. Forsythe, Minor, Dietrich, Bradley or Roberts respective employment with the Company or the Bank is terminated without cause or their salary is reduced or their duties or responsibilities are changed (except in a promotion) Mr. Forsythe will be entitled to receive severance pay equal to 2.99 times a base amount and Messrs. Minor, Dietrich, Bradley and Roberts will be entitled to receive 2.0 times a base amount. An executive's base amount for these purposes is his average annual compensation includible in his gross taxable income for the five years preceding the year in which the change in control occurs (or, if he has been employed by the Company for less than those five years, for the number of those years during which he has been employed by the Company, with any partial year annualized), including base salary, non-deferred amounts under annual incentive, long-term performance, and profit-sharing plans, distributions of previously deferred amounts under such plans, and ordinary income recognized with respect to stock options. The agreement is effective until December 31, 1997, and is automatically renewed for one additional year commencing at December 31, 1997 and each December 31 thereafter. SUPPLEMENTAL RETIREMENTS BENEFITS The Company agreed in January 1995 to provide Mr. Forsythe with supplemental retirement benefits ("SERP"). The SERP will provide that annual supplemental benefits at normal retirement will be equal to 50% of Mr. Forsythe's average base salary and bonuses for the five salary years immediately preceding the date of retirement, less the sum of annual amounts payable to the individual under (a) the Company's pension plan, (b) the Company's ESOP, (c) social security, and (d) the pension plan of former employers, as the case may be. Reduced amounts will be payable under the SERP in the event Mr. Forsythe takes early retirement. Except in the case of early retirement, payment of benefits will commence upon Mr. Forsythe's attainment of age 65. The SERP provides that it shall at all times be unfunded. A Supplemental Retirement Plan has also been provided to Mr. Roberts who was employed by the Bank between February 15, 1965, through November 1, 1989 and from February 6, 1995, to date. The purpose of the plan is to provide the benefits Mr. Roberts would have earned under the Bank's Qualified Retirement Plan had he been employed continuously by the Bank from February 15, 1965, through his actual termination of employment at anytime after February 6, 1995. The plan will provide supplemental retirement income in excess of the retirement benefits otherwise provided to the Executive under the Bank's Qaulified Retirement Plan. DARYL R. FORSYTHE EMPLOYMENT Mr. Forsythe was hired effective January 1, 1995 as president and chief executive officer of the Company and the Bank. Mr. Forsythe is employed at will without an employment contract at an annual salary of $240,000 for the I-11 past year and at $280,000 for 1997. As an executive officer, Mr. Forsythe is eligible to participate in the Company's and the Bank's various employee benefit plans, including the Executive Incentive Compensation Plan, the Stock Option Plan, the retirement plan, the ESOP, and the various health, disability, and life insurance plans. The Company and Mr. Forsythe have entered into a wage continuation plan which provides that during the first three months of disability Mr. Forsythe will receive 100% of his regular wages reduced by any benefits received under social security, workers' compensation, state disability plan or any other government plan or other program, such as group coverage, paid for by the Bank. Additionally, if the disability extends beyond three months, Mr. Forsythe will receive payments of $7,000 per month under an insurance policy with New England Mutual Life Insurance Company. The annual cost of the policy is $7,734, which is reflected in the Summary Compensation Table above. Mr. Forsythe and the Company have entered into a death benefits agreement. The policy is a split-dollar life insurance policy on Mr. Forsythe's behalf in the face amount of $800,000. The Company is the owner of the policy. Upon Mr. Forsythe's death, his named beneficiary will receive $600,000 from the policy's proceeds, while the Company will receive the remainder of the policy's proceeds. Upon termination of the death benefits agreement (e.g., upon termination of Mr. Forsythe's employment), Mr. Forsythe is required to transfer all of his right, title, and interest in the policy to the Company. The Company pays the premium on the policy, 75% of the cost being attributable to Mr. Forsythe and is reflected in the Summary Compensation Table above. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During the fiscal year ending December 31, 1996, Everett A. Gilmour, Chairman of the Company and a member of the Compensation and Benefits Committee served on the Board of Directors of Preferred Mutual Insurance Company whose Chairman and CEO is Paul O. Stillman who is Chairman the Company's and of NBT Bank's Compensation and Benefits Committee. Mr. Gilmour was Chairman of the Company and the Bank from 1972 to 1988 and January 1995 to present. The law firm of Kowalczyk, Tolles, Deery and Johnston, of which Director Andrew S. Kowalczyk, Jr. is a partner and a member of the Compensation and Benefits Committee, provides legal services to the Company and the Bank from time to time. Payments for services for 1996 totaled $114,000. These services occur in the ordinary course of business and at the same terms ad those prevailing for comparable transactions with other law firms. John D. Roberts, an Executive Officer of the Company is a director of the I.L. Richer Co. whose President and CEO, John C. Mitchell, serves on the Compensation and Benefits Committee. Richard Monroe, a member of the Compensation and Benefits Committee, is a retiree of the Company and served as Senior Vice President - Manager of Newark Valley Office from 1973 to 1985. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The primary responsibility of the Compensation and Benefits Committee ("Committee") is to design, implement, and administer all facets of the compensation and benefits programs of the Company for all employees. The Committee is composed entirely of outside, non-employee directors. The Committee approves participants who are eligible for the Executive Incentive I-12 Compensation Plan, sets the Plan targets for each year and approves payouts thereon, awards stock option grants, approves the annual contribution to the Employee Stock Ownership Plan for all employees, approves executive compensation, annually reviews the performance of the CEO and recommends the CEO compensation package to the Board. Actions of the Committee are presented to the Board of Directors for approval. The objective of the Company's executive compensation program is to develop and maintain executive reward programs which contribute to the enhancement of shareholder value, while attracting and retaining key executives who are critical to the long-term success of the Company. It is expected that total compensation will vary annually, based on Company and individual performance. The Compensation Committee retains the services of an executive salary and benefits consultant, who is independent and unassociated with the Company, the CEO, or any member of the Board or management to assist in setting the total compensation package of senior management. To assist the Committee in fulfilling its responsibilities, the independent consultant provides advice and guidance directed toward ensuring that the Board's practices are consistent within the industry, consistent with and in support of the goals and objectives of the Company and fairly applied throughout the Company. The Committee believes it is critical to the ongoing success of the Company that its executives continue to be among the most highly qualified and talented available to lead the organization in the creation of shareholder value. In support of this objective, the philosophy of the Committee in approving and recommending executive compensation is based upon the following criteria: * Design a total compensation package that includes a base salary, an annual incentive plan that is linked to shareholder interests, and a stock option plan that encourages share ownership and is also linked with shareholder interests. * Set base salaries that are commensurate with each individual's responsibility, experience, and contribution to the Company. * Ensure that salaries are competitive within the industry so as to be able to attract and retain highly qualified executives. * Promote a pay for performance culture. The Company's executive compensation program, discussed in detail below, is made up of both fixed (base salary) and variable (incentive) compensation elements. Variable compensation consists of annual cash incentives and stock option grants. The Committee and the management of the Company believe that variable compensation should be based both on short-term and long-term measurements and be directly and visibly tied to Company performance, so that, while introducing appropriate risk in the payout levels, such compensation will promote a pay for performance culture within the executive team. In reviewing executive compensation, the Committee considers a variety of factors including past performance and the Board's expectations for improvement in the future. The CEO and senior executive management review executive compensation throughout the year. The CEO presents recommendations for compensation for the Senior Management Team to the Committee each year prior to year-end for their approval. The Committee annually reviews the CEO's performance against pre-established goals and with respect to the performance of the Company. Improvements in historical measures such as ROA, ROE, profit improvement, non-performing assets to total assets and net non-interest expense to total expense are considered in the Committee's assessment of performance. During 1996, all of these measures showed I-13 improvement from 1995. ROA and ROE rose from .9% and 9.18% to 1.11% and 11.80%, respectively, improvements of 21% for ROA and 28% for ROE. The Committee maintained safety and soundness and once again received a "blue ribbon" and "five star" ratings by outside agencies. The Company maintained its satisfactory ratings from regulatory examinations as well. BASE SALARY. Although not specifically weighted, the performance of each executive, the level of responsibility, and current inflationary indices were considered in establishing base salaries for executive officers. Salary ranges have been established with the assistance of the salary and benefits consultant and are based upon responsibility, experience, and individual performance. Mr. Forsythe receives an annual salary of $280,000 for 1997. No written employment agreement has been entered into between the Company or the Bank and Mr. Forsythe. In determining Mr. Forsythe's salary, the Committee took into consideration the salaries of CEOs of similar-sized banks, the performance of the Bank, and the recommendations of the salary consultant. EXECUTIVE INCENTIVE COMPENSATION PLAN. The Committee, working with an outside salary and benefits consultant designed the current incentive plan that would link the payout with shareholder interests. The Plan is reviewed annually by the Committee. The Plan, as it now exists has three components which determine the potential award within the Plan: Return on Assets, Return on Equity, and the dollar increase in net income over the prior year. The Plan has a minimum net income requirement before any payout is possible. There are participative levels within the Plan which range from the maximum payout being 40% of salary for Level I to 10% at the lowest level. Each level has a corporate performance component and an individual performance component. At Level I the corporate component is 80% and the personal component is 20%. The Committee sets "stretch" targets in order to achieve the maximum payout. As part of the executive incentive compensation plan a separate level was established for the CEO. The Plan provided for a maximum payout of 60% of salary with the range of the bonus awarded being based on corporate performance. Mr. Forsythe's bonus earned in 1996 was $120,000 (50%). The bonus was paid in 1997. Other executives receiving bonuses were evaluated based on comparisons to predetermined corporate and personal goals. Each officer achieved a majority of their goals and were comparably rewarded. I-14 STOCK OPTION PLAN. In order to provide long-term incentives to key employees, including executive officers, to encourage share ownership by key officers, and to retain and motivate key officers to further shareholder returns, the Company has a Stock Option Plan. The Committee believes that stock options, which provide value to participants only when the Company's shareholders benefit from stock price appreciation, are an important component of the Company's executive compensation program. The number of options currently held by an officer is not a factor in determining individual grants. The value of stock options granted in 1996 ranged from 200% of base compensation at the CEO level down to 50% of base compensation. "Value" is determined by multiplying the number of options granted by the fair market value of the Company's Common Stock which underlies such options on the date of the grant. With respect to the options granted in 1996 to the CEO and to all other executive officers, the Committee in making the awards considered the various factors referred to above, especially the positive growth of the Company, its financial condition, and profitability. The Committee did not apply any specific weighting to the factors considered. The number of options which the Committee granted to the officers was based upon individual performance and level of responsibility, subject to Committee-imposed restrictions. The Committee determined that the award level must be sufficient in size to provide a strong incentive for participants to work for long-term business interests of the Company, thereby creating additional shareholder value resulting from the appreciation of the Company's stock, and to become significant owners of the Company. Options are granted at the fair market value of the Company's stock at the time of grant. Under the 1993 Plan, options vest at the rate of 40% after one year of date of grant and an additional 20% each year thereafter. Since an option gives the officer only the right to buy these shares at a fixed price over a future period, the compensation value is derived by the incentive to increase shareholder value in the future; hence, the motivation to improve the Company's performance. MEMBERS OF THE COMPENSATION AND BENEFITS COMMITTEE Paul O. Stillman - Chairman Everett A. Gilmour Dr. Peter B. Gregory Andrew S. Kowalczyk, Jr. John C. Mitchell Richard F. Monroe EMPLOYEES' STOCK OWNERSHIP PLAN The Company sponsors a non-contributory, IRS qualified Employees' Stock Ownership Plan. The plan is administered by the Bank and plan investments are primarily in the Company's Common Stock. The stock is voted by the plan's Trustees only as participants direct the Trustees to vote by properly executing a proxy. At December 31, 1996, the plan owned 493,613 shares of the Company's Common Stock, 5.97% of total shares outstanding. Employees eligible to participate in the plan are those who work in excess of 1,000 hours per year, have completed one year of service and have attained age 21. The plan provides for partial vesting of an employee's interest in the plan at approximately 20% per year, with 100% vesting being achieved after seven years of qualified service. Discretionary contributions, as determined annually by the Board of Directors, are made by the Company to a separate trust for the benefit of the participating employees. Annual contributions may not exceed amounts deductible for Federal income tax purposes. Employer contributions are allocated among all participants in proportion that each participant's I-15 compensation for the plan year bears to the total compensation of all participants for the plan year. (Compensation for the plan is defined as fixed basic annual compensation, including bonuses, overtime and other taxable compensation, but excluding the Company's cost for any public or private employee benefit plan, including the retirement, executive incentive compensation and ESOP plans.) The Board of Directors may amend the plan at any time. The value of a participant's account is the total of allocated employer contributions, plus the earnings on those contributions, plus or minus any gain or loss on the investment of the contributions. Normal retirement age under the plan is 65. The plan also provides for early retirement at age 55 and disability retirement at any age. In the event a participant dies before retiring under the plan, the value of his account in the plan will be paid to his beneficiary. A participant's retirement benefit under the plan is the value of his account at the date of retirement. Effective January 1, 1985, the normal form of retirement benefit for a married employee is a joint and survivor annuity; for an employee who is not married, a lump sum distribution of cash. Other available retirement options are: 1) installment payments of cash and 2) distribution of the account value in employer securities, both subject to obtaining spousal waivers. As a qualified plan (under current law) employer contributions and plan earnings are not currently taxed to employees; retirement benefits will be taxable to employees when received from the plan. In 1996 the Company made a contribution of 607,557 to the plan. The Summary Compensation Table above reflects payments made to the Company's named executive officers under the plan. 401(K) PLAN The Company and the Bank have adopted a Section 401(k) retirement plan. All employees of the Company and the Bank are eligible to participate in the plan after one year's service, are at least 21 years of age, and complete 1,000 hours of service during the year. The plan provides that any employee may elect to defer up to 15% of his or her salary for retirement (subject to a maximum limitation of $9,500) and that the Company or the Bank will provide a matching contribution of 75% of the first 4% of the employee's deferred amount. In 1996, the Company or the Bank provided matching contributions to Mr. Forsythe of $4,500, Mr. Minor of $3,474, Mr. Dietrich of $3,015, Mr. Bradley of $2,758, and Mr. Roberts of $2,016. These payments are reflected in the Summary Compensation Table. STOCK OPTION PLAN The Board of Directors adopted Stock Option Plans in 1986 and in 1993, which were subsequently approved by the Company's stockholders at the 1987 and 1993 Annual Meetings, respectively. The purposes of the plans are to encourage ownership of capital stock of the Company by officers and other key employees of the Company and its subsidiaries in order to help the Company attract and retain in its service persons of exceptional competence, to furnish added incentives for them to increase their efforts on behalf of the Company, and to gain for the Company the advantages inherent in key employees having an ownership interest in the Company. Pursuant to the approval of the 1993 Stock Option Plan, the 1986 plan was "frozen" and no new options or stock appreciation rights may be granted under that plan. I-16 Options may be issued to full-time key employees (officers, whether or not they are Directors, and Directors who are also employees, including, but not limited to, President, Chief Executive Officer, Branch Manager, Department Head or Division Manager) of the Company or any subsidiary. Any employee of the Company or any subsidiary may be determined to be a key employee and may be granted an option at the discretion of the Board of Directors. The Plan permits the grant of either non-qualified stock options or incentive stock options as determined by the Board of Directors. The grants, when exercised, may not exceed any limit specified by the Internal Revenue Code, Section 422A, or $100,000 annually, whichever is smaller, in the event that the optionee has incentive stock options. The exercise price and expiration dates with respect to each option are determined by the Compensation and Benefits Committee, but in no event may the price be less than 100% of the fair market value of the Company's Common Stock. "Fair Market Value" is defined as the average between the highest and lowest quoted selling prices of the Common Stock on the National Market System of NASDAQ on the date of grant with respect to incentive stock options, and on the five preceding trading days prior to the grant with respect to nonqualified options. Payment of the exercise price may be made by check or, with the consent of the Company, by delivery of shares of Common Stock of the Company, having fair market value equal to the exercise price or by the purchaser's fully-secured promissory note, bearing interest at such rate as may be determined by the Board of Directors. No option may be transferred, and each option is exercisable only by the optionee during its term in accordance with the provisions of the grant, provided he is currently employed by, or retired from, the Company or one of its subsidiaries. In the event that an optionee dies or becomes permanently disabled, an option will become exercisable in full on the date of death or determination of disability, and such option will remain exercisable by the optionee or his legal representative for six months after the date of death or disability. In the event that an optionee's employment by the Company is terminated for reasons other than retirement, disability or death, an option may be exercised within thirty days of termination of employment to the extent that it was exercisable at the date of such termination. No option granted under the Plan may extend for a period exceeding ten years from the date of the grant, and the Committee will determine the sequence in which grants may be exercised. The Plan is administered by the Compensation and Benefits Committee. The Board may, in its discretion, at any time, or from time to time, while the Plan is operative, make changes therein or amendments thereto without stockholder approval which, in its opinion, are not inconsistent with the purpose of the Plan, including, but not limited to, changes in the allocation of benefits which may increase the cost to the Company. The Plan contains provisions for adjustments in the event of stock splits, stock dividends and similar changes. As of December 31, 1996, 607,452 shares of the Company's Common Stock have been reserved for issuance under the Plan. In 1996, non-qualified options, which expire in 2006, for 109,100 shares were granted to 30 key employees, at option prices of $15.68 to $15.89. Options for 276,984 shares were outstanding at December 31, 1996 with option prices ranging from $9.01 to $15.89 per share for all officers as a group. All options were at 100% of fair market value as of date of the grant. Options and option prices have been adjusted for all stock dividends to date. Under current law, a participant who received non-qualified stock options or incentive stock options, will not realize any income, nor will the Company receive a deduction, for Federal income tax purposes, in the year of I-17 the grant. Ordinary income will be realized by the recipient of an option at the time shares are transferred, or cash paid to him, pursuant to his exercise of a non-qualified stock option. In the case of a non-qualified stock option, the amount of such income will be equal to the difference between the option price and the fair market value of the shares of common stock on the date of exercise. EXECUTIVE INCENTIVE COMPENSATION PLAN The Company adopted, effective January 1, 1992, an Executive Incentive Compensation Plan (hereinafter, the "Plan") to promote individual motivation for the achievement of the Company's financial and operating objectives and to aid in attracting and retaining highly qualified personnel. Pursuant to the Plan, officers of the Bank are eligible to receive cash in the event certain performance criteria are satisfied. The operation of the Plan is predicated on the Bank's attaining and exceeding management performance goals. The goals consist of return on average assets, return on stockholders' equity, and profit improvement. Unless a participant elects to have all or a portion of his award deferred, distribution of awards will be made in cash during the first quarter after year-end. All distributions must be approved by the Compensation and Benefits Committee. This Committee has broad discretion in determining who will be eligible to receive incentive compensation awards and has full power and authority to interpret, manage, and administer the Plan. The Plan provides that the President and Chief Executive Officer of the Company will recommend to the Committee the amounts to be awarded to individual participants. The President and Chief Executive Officer may also recommend a change beyond the formula to a bonus award to a participant. The Committee has the authority to amend such recommendation. Bonus awards are made pursuant to an established formula. An employee will be placed into a particular level, according to the participant's office and responsibility. Depending upon the particular level, the award will range from 0% to 20% of the participant's regular salary at the lowest level to 0% to 60% of the salary at the CEO level. The formula provides that the financial criteria necessary for plan operation consist of return on average assets, return on equity, and profit improvement. Incentive distributions will be based upon attainment of corporate performance goals to establish the total awards. The total awards, in turn, will be determined by reference to both corporate and individual components. The corporate component will be determined by attainment of corporate goals (as established by the Committee) and the individual component will be determined by attainment of individual goals (objectives mutually agreed upon between participants and the division head and approved by the Chief Executive Officer). The corporate component will range from 100% for the highest level (the President and Chief Executive Officer) to 60% for the lowest level, whereas the individual component will range from 0% for the highest level to 40% for the lowest level. The Plan also provides that, in order that the Chief Executive Officer will own such number of shares of Company Common Stock as will equal at the end of the five years twice his current base salary. The amount of incentive compensation awards to the individuals named in the Summary Compensation Table is included in the "Bonus" column of that table. Payments of bonuses for 1996 pursuant to the Plan were made January 1997. I-18 PERSONAL BENEFITS During the past fiscal year, no director, officer or principal stockholder or members of their respective families received any banking services or other benefits, including use of any staff, facilities or properties of the Company, not directly related to job performance and not generally available to all employees of the Company. Health insurance and group life insurance are routinely provided all staff members. RELATED PARTY TRANSACTIONS The Bank has had, and expects in the future to have, transactions in the ordinary course of business with directors and officers of the Company and the Bank on the same terms as those prevailing at the time for comparable transactions with others. The Bank has extended credit to its directors and officers and their business interests. The total of these loans was $3,330,297, $3,932,537, and $4,238,002 at December 31, 1994, 1995, and 1996 respectively, representing 3.4%, 3.6%, and 4.0% of equity capital at those dates. The highest aggregate amounts outstanding on such loans during 1994, 1995, and 1996 were $4,189,790 $4,650,773 and $4,238,002 which represented 4.3%, 4.3%, and 4% of equity capital at those interim dates. All outstanding loans made by the Bank to such persons were made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons, and, in the opinion of management, do not present more than normal risk of collectability or present other unfavorable features. Based upon the information available to it, the Bank does not consider that any of the officers or directors of the Bank or the Company had a material interest in any transactions during the last year, except as stated above, or have such an interest in any proposed transactions. I-19 PERFORMANCE GRAPH The following graph compares the cumulative total shareholder return (i.e., price change, reinvestment of cash dividends and stock dividends received) on the Company's Common Stock against the cumulative total return of the NASDAQ Stock Market (US Companies) Index and the Index for NASDAQ Financial Stocks. The stock performance graph assumes that $100 was invested on December 31, 1991. The graph further assumes the reinvestment of dividends into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the relevant fiscal year. The yearly points marked on the horizontal axis correspond to December 31 of that year. Each of the referenced indices is calculated in the same manner. All are market-capitalization-weighted indices, so companies judged by the market to be more important (i.e., more valuable) count for more in all indices. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG NBT BANCORP INC., THE INDEX FOR NASDAQ FINANCIAL STOCKS, AND THE NASDAQ STOCK MARKET (US COMPANIES) INDEX. {FOLLOWING IS A TABULAR PRESENTATION OF DATA POINTS FOR THE GRAPH WHICH APPEARS HERE IN THE PAPER COPY} Measurement NBT NASDAQ NASDAQ Period (Fiscal BANCORP Financial Market Index Year Covered) INC. Stocks Index (US Companies) - -------------- ------- ------------ -------------- 4Q91 $100.00 $100.00 $100.00 1Q92 $101.34 $110.89 $102.97 2Q92 $121.02 $118.76 $ 96.12 3Q92 $119.82 $122.56 $ 99.48 4Q92 $129.01 $140.67 $115.45 1Q93 $150.12 $153.52 $117.70 2Q93 $151.11 $148.89 $120.06 3Q93 $158.94 $161.74 $130.10 4Q93 $175.07 $159.20 $132.49 1Q94 $168.98 $155.49 $126.81 2Q94 $160.46 $165.53 $120.40 3Q94 $156.74 $167.30 $130.38 4Q94 $169.72 $153.97 $128.26 1Q95 $165.80 $168.75 $139.69 2Q95 $169.61 $186.60 $159.91 3Q95 $173.51 $212.95 $179.09 4Q95 $194.63 $226.90 $180.84 1Q96 $190.60 $237.54 $189.48 2Q96 $184.99 $240.49 $204.00 3Q96 $192.17 $266.70 $211.32 4Q96 $216.88 $300.44 $221.91 I-20 PROPOSAL NUMBER 2 PROPOSAL TO RATIFY THE BOARD OF DIRECTORS ACTION IN SELECTION OF KPMG PEAT MARWICK LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY The Board of Directors upon the recommendation of the Audit, Compliance and Loan Review Committee has appointed KPMG Peat Marwick LLP as independent public accountants of the Company to examine the financial statements for the fiscal year ending December 31, 1997. KPMG Peat Marwick LLP has served as the Company's independent public accountants since January 1987. Ratification of such employment will require the affirmative vote of the holders of a majority of the shares represented at the Meeting in person or by proxy and entitled to vote. The Board of Directors recommends a vote FOR Proposal Number 2. In the event the stockholders fail to ratify this employment, it will be considered as a directive to the Board of Directors to select other auditors for the current year. Representatives of KPMG Peat Marwick LLP are expected to be present at the Meeting and will have an opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate questions. STOCKHOLDER PROPOSALS Management anticipates mailing the proxy materials for the 1998 Annual Meeting on or about March 16, 1998. If any security holder wishes a proposal to be considered for inclusion in the 1998 Proxy Statement, this material must be received by the Chief Executive Officer no later than November 14, 1997. OTHER MATTERS Management does not know of any other matters which may come before the Meeting. However, if any matters properly come before the Meeting, it is the intention of the persons named in the enclosed proxy to vote such proxy in accordance with the recommendations of the Board of Directors. It is important that proxies be returned promptly. Therefore, the stockholders who do not expect to attend in person are urged to mark, date, sign and return the enclosed proxy in the accompanying postage paid envelope. By Order of the Board of Directors /s/DARYL R. FORSYTHE Daryl R. Forsythe President and Chief Executive Officer /s/JOE C. MINOR Joe C. Minor Vice President, Chief Financial Officer and Treasurer Dated: March 17, 1997 I-21 PROXY FOR 1997 ANNUAL MEETING OF NBT BANCORP INC. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. KNOWN ALL MEN BY THESE PRESENTS that I (we), the undersigned Stockholder(s) of NBT Bancorp Inc. (the "Company"), do hereby nominate, constitute and appoint John R. Huhtala and James A. Hoy or any one of them (with full power to act alone), my true and lawful attorney(s) with full power of substitution, for me and in my name, place and stead to vote all the Common Stock of said Company, standing in my name on its books February 28, 1997, at the Annual Meeting of its Stockholders to be held at Norwich Senior High School, Midland Drive, Norwich, New York 13815 on April 19, 1997, at 11:00 a.m., or at any adjournments thereof, with all the powers the undersigned would possess if personally present. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BELOW. IN THE ABSENCE OF ANY DIRECTION, THE SHARES REPRESENTED HEREBY SHALL BE VOTED TO FIX THE NUMBER OF DIRECTORS AT SIX, FOR THE ELECTION OF THE NOMINEES LISTED, AND FOR RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS. Comments/Address Changes: ___________________________________________ [ X ] Please mark your votes as in this example.
FOR ALL WITHHOLD FROM NOMINEES ALL NOMINEES 1) Election of Directors. [ ] [ ] Fix the number of Directors at six and the election of nominees listed below:
Andrew S. Kowalczyk, Jr. John C. Mitchell The Board of Directors recommends a vote FOR the Nominees. IF YOU DO NOT WICH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, DRAW A LINE THROUGH THAT PERSON'S NAME AT LEFT.
FOR AGAINST ABSTAIN 2) Approval of the appointment [ ] [ ] [ ] of KPMG Peat Marwick LLP as Independent Public Accountants for the Company for 1997.
The Board of Directors recommends a vote for APPROVAL. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before such meeting or any adjournment or postponed thereof. Mark box at right if comments or address change have been noted on the [ ] reverse side of this card. SIGNATURE(S)__________________________DATE_________ NOTE: Please sign exactly as name appears hereon. Joint owners should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. -----END PRIVACY-ENHANCED MESSAGE-----