<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
Chittenden Corporation
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
Notice of 2000
Annual Meeting
and
Proxy Statement
Your Vote is Important
Every Stockholder should complete, sign, date and promptly return the proxy in
the envelope furnished for this purpose. It is necessary that enough shares be
represented by proxy to constitute, with the shares present in person, a legal
quorum (a majority of the issued and outstanding stock) so that a meeting can
be held.
[LOGO OF CHITTENDEN CORPORATION]
<PAGE>
Notice of Annual Meeting of Stockholders
The Annual Meeting of the Stockholders of Chittenden Corporation will be held
on April 19, 2000 at 4:00 p.m. in the Adirondack Ballroom (A & B) in the
Radisson Hotel Burlington, located at 60 Battery Street, Burlington, Vermont.
The annual meeting is for the purpose of considering and acting upon:
1. The election of Directors as provided by the By-Laws.
2. Any other business which may properly come before the meeting or any ad-
journment thereof.
By order of the Board of Directors.
F. Sheldon Prentice
Secretary
March 17, 2000
2
<PAGE>
CHITTENDEN CORPORATION
Two Burlington Square
Burlington, Vermont 05401
March 17, 2000
Proxy Statement
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
APRIL 19, 2000
Solicitation and Revocation of Proxies
This proxy statement is furnished to the Stockholders of CHITTENDEN CORPORA-
TION (the "Corporation"), a corporation organized under the laws of the State
of Vermont, in connection with the annual meeting of the Stockholders of the
Corporation to be held on Wednesday, April 19, 2000, at 4:00 p.m., in the Adi-
rondack Ballroom (A & B) in the Radisson Hotel Burlington, located at 60 Bat-
tery Street, Burlington, Vermont.
A proxy card is furnished by the Corporation. This proxy is being solicited
by the Board of Directors of the Corporation for use at the April 19, 2000 an-
nual meeting of its Stockholders and at any adjournment thereof. A proxy duly
executed and returned by a Stockholder will be voted as directed by the proxy,
and, if no choice is specified, the proxy will be voted in accordance with the
recommendations of the Board of Directors contained herein. As to other mat-
ters, if any, to be voted upon, the persons named in the proxy will take such
action as the Board of Directors may deem advisable.
A Stockholder who signs and returns a proxy may revoke it at any time before
it is exercised by notifying the Secretary of the Corporation in writing or by
attending the meeting and voting in person.
This Proxy Statement, the Corporation's Summary Annual Report and Form 10-K,
which contain financial statements, will be mailed on or about March 17, 2000
to Stockholders of record on March 3, 2000. The Annual Report and Form 10-K
are not to be regarded as proxy soliciting material.
All expenses of the solicitation of proxies are being borne by the Corpora-
tion. It is expected that solicitations will be made primarily by mail, but
regular employees or representatives of the Corporation may also solicit prox-
ies by telephone, telegraph and in person and arrange for nominees, custodians
and fiduciaries to forward proxies and proxy material to their principals at
the expense of the Corporation. The Corporation also has retained Georgeson
Shareholder Communications Inc. to assist with the solicitation of proxies for
a fee of $6,000 plus reimbursement of out-of-pocket expenses.
3
<PAGE>
Voting Securities
The Board of Directors of the Corporation has fixed the close of business on
March 3, 2000 as the record date for the determination of Stockholders enti-
tled to notice of and to vote at the annual meeting. Each share of common
stock will be entitled to one vote. There are no rights of appraisal or simi-
lar rights of dissenters with respect to any matter to be acted upon.
As of January 31, 2000 there were 28,385,569 shares of common stock outstand-
ing and entitled to vote. Security ownership of the Corporation's Directors
and Executive Officers is provided below in tabular form.
<TABLE>
<CAPTION>
(2) Name of beneficial (3) Amount and nature (4) Percent
(1) Title of Class owner of beneficial ownership of class(1)
- ---------------------------------------------------------------------------------
<C> <S> <C> <C>
Bertrand, Frederic
Common Stock H. 16,888(2) *
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Common Stock Boardman, David M. 33,783(3) *
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Common Stock Carrara, Paul J. 18,905(4) *
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Common Stock Cody, William P. 9,168(5) *
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Common Stock Crawford, Sally W, 1,010 *
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Common Stock Driscoll, Richard D. 2,306(6) *
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Drumheller, Philip
Common Stock M. 10,139(7) *
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Common Stock Dwight, John K. 28,085(8) *
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Common Stock Hutton, Lyn 4,063(9) *
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Common Stock Kolvoord, Philip A. 19,769(10) *
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Common Stock Morse, Stephan A. 19,836(11) *
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Common Stock Perrault, Paul A. 243,653(12) *
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Common Stock Pizzagalli, James C. 238,454(13) *
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Common Stock Pomerleau, Ernest A. 37,028(14) *
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Common Stock Richards, Mark W. 74,737(15) *
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Common Stock Spera, Pall D. 39,959(16) *
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Wilson, Martel D.,
Common Stock Jr. 34,827(17) *
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Common Stock DeShaw, Lawrence W. 92,831(18) *
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Common Stock Kelly, John W. 58,739(19) *
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Common Stock O'Brien, Danny H. 67,912(20) *
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Common Stock Walters, Kirk W. 53,446(21) *
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Common Stock Directors, Officers 1,245,478 4.39%
of the Corporation,
Senior
Management (the
"Officer Group")
</TABLE>
* Less than one percent
(1) Except as otherwise noted, each individual in the table above has the
sole voting and investment power over the shares listed.
4
<PAGE>
(2) Includes 9,329 shares issuable upon the exercise of stock options that
have vested.
(3) Includes 2,000 shares issuable upon the exercise of stock options that
have vested.
(4) Includes 14,215 shares issuable upon the exercise of stock options that
have vested.
(5) Includes 3,140 shares issuable upon the exercise of stock options that
have vested.
(6) Includes 2,000 shares issuable upon the exercise of stock options that
have vested.
(7) Includes (a) 7,420 shares issuable upon the exercise of stock options
that have vested, and (b) 2,000 shares owned by Lane Press.
(8) Includes (a) 16,675 shares issuable upon the exercise of stock options
that have vested, and (b) 5,766 shares owned by a Rabbi Trust.
(9) Includes 2,000 shares issuable upon the exercise of stock options that
have vested.
(10) Includes (a) 14,215 shares issuable upon the exercise of stock options
that have vested, and (b) 1,697 shares owned by Mr. Kolvoord's spouse.
(11) Includes (a) 3,140 shares issuable upon the exercise of stock options
that have vested, and (b) 1,010 shares owned by Mr. Morse's spouse.
(12) Includes (a) 187,722 shares issuable upon the exercise of stock options
that have vested, (b) 12,237 shares owned through a 401(k) plan and (c)
43,694 shares owned by Mr. Perrault's spouse.
(13) Includes (a) 2,000 shares issuable upon the exercise of stock options
that have vested, (b) 571 shares owned by Mr. Pizzagalli's son, (c) 6,330
shares owned by Pizzagalli Construction Company and (d) 148,925 shares
owned by Pizzagalli Brothers Company, which are entities controlled by
Mr. Pizzagalli. Mr. Pizzagalli disclaims beneficial ownership of the
shares described in paragraph (b).
(14) Includes (a) 16,674 shares issuable upon the exercise of stock options
that have vested and (b) 10,960 shares owned by a Rabbi Trust.
(15) Includes (a) 9,560 shares issuable upon the exercise of stock options
that have vested and (b) 9,383 shares held in custodial accounts.
(16) Includes 14,215 shares issuable upon the exercise of stock options that
have vested.
(17) Includes (a) 14,215 shares issuable upon the exercise of stock options
that have vested and (b) 1,781 shares owned through an individual retire-
ment account of Mr. Wilson's spouse.
(18) Includes (a) 45,900 shares issuable upon the exercise of stock options
that have vested and (b) 7,888 shares owned through a 401(k) plan.
(19) Includes (a) 31,250 shares issuable upon the exercise of stock options
that have vested and (b) 1,855 shares owned through a 401(k) plan.
(20) Includes 58,300 shares issuable upon the exercise of stock options that
have vested.
(21) Includes (a) 46,250 shares issuable upon the exercise of stock options
that have vested and (b) 946 shares owned through a 401(k) plan.
5
<PAGE>
Notes Regarding Directors' Stock Ownership
Beneficial ownership is determined in accordance with Rule 13(d)(3) under the
Securities Exchange Act of 1934. Unless otherwise indicated, the listed per-
sons have sole voting power and sole investment power with respect to the
shares of common stock set forth.
No one is the beneficial owner of more than five percent of any class of the
Corporation's voting securities.
The Corporation's principal subsidiary, Chittenden Trust Company (the
"Bank"), held in a fiduciary or representative capacity, in the aggregate, ap-
proximately 1,201,687 shares, or 4.23 percent, of the outstanding shares of
common stock of the Corporation as of December 31, 1999. The Corporation and
the Bank disclaim beneficial ownership of these shares.
Election of Directors of Chittenden Corporation
(Item 1 on Proxy Card)
Classified Board of Directors
The number of Directors, which is presently set at seventeen, is established
periodically by the Board. All Directors are elected for staggered three-year
terms so that approximately one third of the Directors are elected at each an-
nual meeting. At the annual meeting three Directors will stand for election to
serve for a term of three years.
It is the intention of the persons named in the proxy to vote for the nomi-
nees named for the terms indicated.
Election of Directors requires a majority vote. The three nominees for Direc-
tors and the fourteen continuing Directors are listed on the following pages
with brief statements of their principal occupations and other information.
All of the nominees are serving currently on the Board of Directors of the
Corporation. According to information supplied by them, these persons, as of
January 31, 2000 owned beneficially the number of shares of common stock of
the Corporation indicated.
Director Nominees
The following persons have been nominated to serve as Directors for terms to
expire in 2003.
Richard D. Driscoll. Mr. Driscoll, 68, has been a Director of Chittenden
since 1997. He served as President and Chief Executive Officer of the Massa-
chusetts Bankers Association from 1990 to 1997. From 1957 to 1990,
Mr. Driscoll was employed by the Bank of New England, N.A., in Boston, Massa-
chusetts in many capacities, culminating in the position of Chairman and
C.E.O. where he was responsible for all activities of the Boston Bank and af-
filiate banks in eastern New England, including affiliates in Maine and Rhode
Island, representing approximately $20 billion in assets. Mr. Driscoll is a
graduate of Boston College and holds an MBA from Harvard Business School. Mr.
Driscoll serves on the Board of the Charlesbank Homes, Greater Boston YMCA,
the Massachusetts Business Development Corp., and the Morgan Memorial, Good-
will Industries.
6
<PAGE>
Lyn Hutton. Ms. Hutton, 50, has been a Director of Chittenden since 1995. She
is Vice president and Chief Financial Officer of the John D. and Catherine T.
MacArthur Foundation. From 1990 to 1998 she served as Vice President and Trea-
surer of Dartmouth College. From 1982 to 1990 she was associated with the Uni-
versity of Southern California, first as Treasurer and then as Senior Vice
President for Finance and Administration. In 1994, the National Association
for College and University Business Officers awarded Ms. Hutton the Rodney
Adams prize in recognition of her contributions to professional development
and research activities in the field of college and university endowment and
investment management. Both a Certified Public Accountant and a Chartered Fi-
nancial Analyst, Ms. Hutton serves on the Board of Trustees of Commonfund Cap-
ital, Inc., of Commonfund Realty Inc., the University Corporation for Atmo-
spheric Research, and The College Board. She has previously served on the
Board of Directors of First Interstate Bank of California.
Paul A. Perrault. Mr. Perrault, 48, is Chairman, President and Chief Execu-
tive Officer of Chittenden Corporation and Chittenden Bank. Mr. Perrault
joined the Corporation in 1990 and has served as a Director since that time.
Prior to joining Chittenden, he was President of Bank of New England-Old Colo-
ny, Providence, Rhode Island. Before becoming President, Mr. Perrault was Ex-
ecutive Vice President and Senior Loan Officer at Bank of New England-Old Col-
ony. Prior to that, he served in a variety of commercial banking positions in
Rhode Island and Boston. He is a 1973 graduate of Babson College and received
his MBA from Boston College School of Management in 1975. He is a Director of
Lake Champlain Regional Chamber of Commerce, Director of the Greater Burling-
ton Industrial Corporation, member of the Advisory Board of Fleming Museum and
a Trustee of Champlain College.
Continuing Directors
Frederic H. Bertrand. Mr. Bertrand, 63, has been a Director of Chittenden
since 1989. He is Chairman of Central Vermont Public Service Corporation,
Chairman of Catamount Energy Corporation, and is former Chairman of the Board
and Chief Executive Officer of National Life Insurance Company. He is a Direc-
tor of Union Mutual Fire Insurance Company and the Vermont Electric Power Com-
pany. He is a graduate of Norwich University and the College of William and
Mary Law School. He is a former Chairman of the American Council of Life In-
surance, the Vermont Business Roundtable and a former Mayor of Montpelier. Mr.
Bertrand is chairman of the Corporation's Audit Committee. Mr. Bertrand's term
expires in 2001.
David M. Boardman. Mr. Boardman, 65, has been a Director of Chittenden since
1978. He is Senior Vice President of Hickok and Boardman, Inc., President of
Associates in Financial Planning Inc., and Coldwell Banker Hickok & Boardman,
Inc., affiliates of Hickok and Boardman Financial Services, with which he has
been associated since 1956. He has also been a representative of National Life
Insurance Company since 1956. He is a Chartered Life Underwriter, a Life and
Qualifying Member of the Million Dollar Round Table and a Certified Financial
Planner. He is a Past Trustee of Vermont Catholic Charities, past Chairman
7
<PAGE>
of the Burlington City Retirement Board and a member of The Burlington Boys
and Girls Club Development Steering Committee. He is past Chairman of the
Board of Champlain College, where he has been a Trustee since 1974. He is a
member of the American Society of Chartered Life Underwriters, the Institute
of Certified Financial Planners and the Association of Advanced Life Under-
writers. Mr. Boardman's term expires in 2001.
Paul J. Carrara. Mr. Carrara, 63, has been a Director of Chittenden since
1982. He is President of J. P. Carrara & Sons, Inc., a ready-mixed and precast
concrete supplier located in Middlebury, Vermont. He is also President of Ot-
ter Valley Equipment, Inc., an equipment-leasing firm in Rutland. Mr.
Carrara's term expires in 2002.
William P. Cody. Mr. Cody, 46, has been a Director of Chittenden since 1999.
He is President and Dealer Operator of Cody Chevrolet, Inc., in Montpelier,
Vermont. Prior to joining the Chittenden board, he had been a Director of Ver-
mont Financial Services since 1996. A graduate of the United States Military
Academy at West Point, Mr. Cody was an officer in the Regular Army, and still
serves as a member of the Vermont National Guard. He is a former Alderman for
the City of Montpelier, and co-founded and chairs the Montpelier Foundation.
Mr. Cody is President of the Montpelier Rotary Club, a Trustee of Champlain
College, and Vice President and Director of the Vermont Automobile Dealers As-
sociation. Mr. Cody's term expires in 2001.
Sally W. Crawford. Ms. Crawford, 45, has been a Director of Chittenden since
1998. She is a health care consultant based in Exeter, New Hampshire. Since
1997, she has worked with payers, providers, regulators and investors on man-
aged care initiatives. From 1985 to 1997, Ms. Crawford was Chief Operating Of-
ficer of Healthsource, Inc., a publicly traded HMO and managed care company.
From 1978 to 1985, she was Marketing Director for two New Hampshire HMOs, Mat-
thew Thornton Health Plan and Beacon Health. She graduated from Smith College
and received an MS degree from Boston University. Ms. Crawford is a Director
of Cytyc Corporation, a health care company that develops, manufactures and
markets the Thin Prep System for medical diagnostic systems. She also serves
on the Board for Medical Resources, Inc., which specializes in the ownership,
operation and management of 90 diagnostic imaging centers in the United
States. From 1996 to 1998, Ms. Crawford served as Director for Harborside
Healthcare, a long term and subacute care company headquartered in Boston,
Massachusetts. She is a Director of Leadership New Hampshire, Odyssey House
and Yankee Publishing, which are the publisher of Yankee Magazine and the Old
Farmer's Almanac. Ms. Crawford's term expires in 2002.
Philip M. Drumheller. Mr. Drumheller, 42, has been a Director of Chittenden
since 1999. He is President of The Lane Press, Inc., New England's largest
magazine printer. He joined the firm in 1986. He is a 1975 graduate of the
United States Merchant Marine Academy and received his MBA from The Wharton
School, University of Pennsylvania in 1984. He also is a Master Mariner, li-
censed by the U.S. Coast Guard to captain U.S. ships of any size and is a re-
cently
8
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retired commissioned officer in the United States Navy, Reserve. Mr.
Drumheller currently serves on the Boards of the Lane Press, Fanny Allen Hos-
pital, Fletcher Allen Health Care, Covenant Health Systems, Vermont Business
Roundtable, Lake Champlain Maritime Museum and the Greater Burlington Indus-
trial Corporation. Mr. Drumheller's term expires in 2002.
John K. Dwight. Mr. Dwight, 55, has been a Director of Chittenden since 1999.
He is President of Dwight Asset Management Co. He is a graduate of the Univer-
sity of North Carolina in Chapel Hill, North Carolina. Mr. Dwight is a Direc-
tor of United Asset Management Company, Trustee of the Shelburne Museum, a Di-
rector of Resolution, Inc., member of the Vermont Business Round Table and a
founding member of the Vermont Security Analysts Chapter. Mr. Dwight's term
expires in 2001.
Philip A. Kolvoord. Mr. Kolvoord, 67, has been a Director of Chittenden since
1983. He is of counsel in the law firm of Kolvoord, Overton & Wilson in Essex
Junction, Vermont. He received his law degree from the University of Virginia
and commenced his law practice in Vermont in 1958. Mr. Kolvoord is a member of
the Board of Directors of the Discovery Museum for Children in Essex Junction,
Vermont and the Lake Champlain Aquarium. He is a former President of the Ver-
mont Trial Lawyers Association and the Chittenden Country Bar Association. He
is a former Chairman of the Judicial Nominating Board and the Professional
Conduct Board. Mr. Kolvoord is also Past President of The Discovery Museum for
Children in Essex Junction, Vermont. Mr. Kolvoord and other members of his
firm are retained from time to time for legal services by the Essex Junction
office of the Bank. Mr. Kolvoord's term expires in 2002.
Stephan A. Morse. Mr. Morse, 52, has been a Director of Chittenden since
1999. He is President and Chief Executive Officer of The Windham Foundation,
Inc. located in Grafton, Vermont. In that capacity he also serves as President
and CEO of two for profit corporations owned by the foundation, The Grafton
Village Cheese Company and The Old Tavern at Grafton. Mr. Morse joined the
corporation after serving as a Director of the Vermont Financial Services Cor-
poration since the mid 1980s. Prior to his current position, Mr. Morse served
in the Vermont House of Representatives from 1977 to 1984. From 1981 to 1984
he served as Speaker of the House. Mr. Morse is a graduate of the University
of Vermont, graduating in 1969 with a BA Degree in Political Science. He is a
Director of Orton Family Foundation, Director of the Bunbury Company, Chairman
of the Brattleboro Retreat, president of the Snelling Center of Government and
serves as a trustee of the Windham Foundation. Mr. Morse's term expires in
2001.
James C. Pizzagalli. Mr. Pizzagalli, 55, has been a Director of Chittenden
since 1980. He is Co-Chairman of Pizzagalli Construction Company. He joined
the company in 1969 after graduating from the University of Vermont and Boston
University Law School. He is a Director of the Associated General Contractors
of America, Vice President and a Director of the AGC Education and Research
Foundation and a Trustee of the University of Vermont. Mr. Pizzagalli is
chairman of Chittenden's Executive Committee. Mr. Pizzagalli's term expires in
2002.
9
<PAGE>
Ernest A. Pomerleau. Mr. Pomerleau, 52, has been a Director of Chittenden
since 1999. He is President of Pomerleau Real Estate, a real estate develop-
ment brokerage and property management firm which he joined in 1969 after
graduating from St. Michael's College. He served as Chairman of the Vermont
Federal Bank and was a Director of the Vermont National Bank prior to the
merger. Mr. Pomerleau is Chairman of the Greater Burlington Industrial Corpo-
ration and Director of the Vermont Visiting Nurses Association. Mr.
Pomerleau's term expires in 2001.
Mark W. Richards. Mr. Richards, 54, has been a Director of Chittenden since
1999. Prior to that he was a Director of Vermont Financial Services Corpora-
tion for 11 years. He attended Williams College and Columbia Graduate School
of Business, as well as having served 3 years as a US Naval officer. He is
President of Richards, Gates, Hoffman & Clay Insurance in Brattleboro, Vermont
and is currently a Trustee of the Brattleboro Development Credit Corp., the
Brattleboro Retreat and a corporator of Brattleboro Memorial Hospital. Mr.
Richards term expires in 2002.
Pall D. Spera. Mr. Spera, 55, has been a Director of Chittenden since 1985.
He is President of Pall Spera Company, Realtors LLC and Pall Spera Financial
Group of Florida. A Past President and Director of the Vermont Association of
Realtors, who recognized him as the Realtor of the Year. Mr. Spera was re-
cently a director of National Association of Realtors and chaired its Legal
Affairs Committee. He is also a director of the Lake Mansfield Trout Club and
the Vermont Granite Museum. Mr. Spera was an incorporator and a charter Direc-
tor of Mountain Trust Company in 1977, was elected Vice Chairman in 1978,
served as Acting President in 1980-81 and was Acting Chairman of the Board
prior to the Merger of Mountain Trust Company with Chittenden Trust Company.
Mr. Spera's term expires in 2001.
Martel D. Wilson, Jr. Mr. Wilson, 63, has been a Director of Chittenden since
1983. He is the former Vice President, Chief Financial Officer and Director of
S-K-I Ltd. He graduated from the University of Colorado with a degree in me-
chanical engineering and received a MBA from Cornell University. Mr. Wilson is
a Director and Chairman of the Board of Building Material Distributors, Inc.
of Stockton, California, a building material wholesaler in California, Nevada,
Arizona and Utah. He is a former President and Director of the Rutland Region
Chamber of Commerce, a former Trustee of the College of St. Joseph the Provid-
er, a former President and Director of the Rutland Regional Medical Center and
a member of the Investment Committee and former Chairman of the Board of
Trustees of Comprehensive Health Resources, a health care holding company. Mr.
Wilson's term expires in 2001.
Meetings of the Board of Directors and Its Audit and Executive Committees
The Board of Directors of the Corporation and the Bank held twelve meetings
during the calendar year 1999. No Director attended fewer than seventy-five
percent of the aggregate of the meetings of the Board and the total number of
meetings held by committees of the Board on which they served during 1999.
10
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Audit Committee
The Corporation has a standing Audit Committee comprised of Messrs. Bertrand
(Chair), Boardman, Wilson and Ms. Hutton. The audit committee makes recommen-
dations concerning the engagement of independent public accountants, approves
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, considers the range of
audit and non-audit fees and reviews the adequacy of Chittenden's internal ac-
counting controls. The audit committee met three times during 1999.
Executive Committee
The Corporation has a standing Executive Committee comprised of Messrs.
Perrault, ex officio, Pizzagalli (Chair), Bertrand, Spera, Wilson and Ms. Hut-
ton. The executive committee is responsible for strategic planning, officer
and non-officer compensation and directors' succession, among other duties. In
carrying out these responsibilities, the executive committee considers and
recommends nominees for election to the board as vacancies occur and performs
all of the functions of a compensation committee. The executive committee met
seven times during 1999.
The Chittenden Board does not have a standing nominating or compensation com-
mittee. The executive committee performs all of the functions of these commit-
tees.
Remuneration of Directors and Officers
The Corporation does not presently remunerate its officers, nor does it pro-
vide retirement benefits. The Corporation compensates its Directors, other
than Mr. Perrault, in quarterly retainer fees of $500 of which 50% is paid in
the form of Corporation stock.
All of the officers of the Corporation serve and are remunerated as officers
of the Bank. Directors of the Bank, other than Mr. Perrault, are paid an an-
nual retainer of $3,000 without regard to attendance, $1,000 per meeting at-
tended for monthly meetings, and $500 per telephone conference meeting of the
Board. Fifty percent of retainers and fees are paid in the form of Corporation
stock.
Directors serving on the Bank's Audit and Executive Committees receive a
meeting fee of $500 per meeting attended and $250 per telephone conference
meetings, 50% of which is paid in the form of Corporation stock.
The chair of the Board of the Bank, who is also an employee (i.e.,
Mr. Perrault), does not receive additional compensation for service as Chair.
The chair of the Executive Committee receives an annual retainer of $3,000 and
the chair of the Audit Committee receives an annual retainer of $1,000. Fifty
percent of retainers are paid in the form of Corporation stock.
The payment of Directors' fees by the Corporation and the Bank may be de-
ferred by a Director pursuant to a Director's Deferred Compensation Plan,
adopted April, 1972, and most recently amended January 1, 1992.
11
<PAGE>
Summary Compensation Table
The following table sets forth the cash and non-cash compensation for each of
the last three fiscal years awarded to or earned by the Chief Executive Offi-
cer of the Corporation and the four highest paid Executive Officers of the
Corporation whose salary and bonus earned in 1999 exceeded $100,000.
<TABLE>
<CAPTION>
Annual Compensation Awards Payouts
- ------------------------------------------------------- --------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
<CAPTION>
Securities Incentive Long-Term
Name and Other Restricted Underlying Plan(LTIP) All Other
Principal Annual Stock Options Payouts Compensation
Position Year Salary Bonus/1/ Compensation Awards (#)/2/ ($)/3/ ($)/4/
- ------------------ ---- -------- -------- ------------ ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul A. Perrault 1999 $441,307 $211,250 -0- -0- -0- $200,375 $185,131
President/CEO 1998 $328,846 $321,875 -0- -0- -0- $101,146 $208,240
1997 $282,692 $328,149 -0- -0- -0- $ 77,343 $149,012
Lawrence W. DeShaw 1999 $185,769 $107,250 -0- -0- 20,000 $ 99,425 $ 13,307
Executive Vice 1998 $170,480 $ 61,875 -0- -0- 15,000 $ 50,720 $ 9,773
President 1997 $149,961 $ 56,250 -0- -0- -0- $ 43,261 $ 6,969
John W. Kelly 1999 $184,615 $107,250 -0- -0- 20,000 $ 99,425 $ 13,285
Executive Vice 1998 $169,596 $ 61,875 -0- -0- 15,000 $ 50,720 $ 9,788
President 1997 $149,769 $ 56,250 -0- -0- -0- $ 42,956 $ 8,246
Kirk W. Walters 1999 $184,615 $107,250 -0- -0- 20,000 $ 90,000 $ 11,446
Executive Vice 1998 $169,615 $ 61,875 -0- -0- 15,000 $ 28,125 $ 8,129
President 1997 $149,769 $ 56,250 -0- -0- -0- -0- -0-
Danny H. O'Brien 1999 $161,153 $ 87,750 -0- -0- 20,000 $ 82,187 $ 11,197
Executive Vice 1998 $139,038 $ 50,625 -0- -0- 12,000 $ 43,410 $ 8,075
President 1997 $125,000 $ 46,875 -0- -0- -0- $ 38,021 $ 6,173
</TABLE>
12
<PAGE>
Summary Compensation Table--Footnotes
(1) The 1999 compensation shown in this column represents the EMICP payments
earned for that year. Totals shown for 1998 and 1997 are comprised of 50% of
the EMICP award that was earned in the year shown. Additionally, based on a
short-term incentive plan established in 1996, Mr. Perrault was paid a bonus
of $200,000 in 1998 and $203,649 in 1997. This short-term incentive plan was
discontinued in 1999, and thus, no payment was made.
(2) The grant price for one-half of the options awarded to Messrs. DeShaw,
Kelly, Walters, and O'Brien in 1999 was set at the fair market value (FMV) of
Chittenden Corporation stock on the date of grant. The exercise price of the
remaining one-half of the option award was set at a premium of 10% above this
price. The options awarded to Messrs. DeShaw, Kelly, Walters, and O'Brien
during 1998 vest in four equal installments on 1/21/98, 1/1/99, 1/1/2000 and
1/1/2001.
(3) The 1999 Long-Term Incentive Plan (LTIP) payout from the EMICP reflects
the payment of all balances held in the plan; 50% of the 1998 award, 25% of
the 1997 award and 10% of the 1996 award. The 1998 LTIP payout from the EMICP
reflects 25% of the 1997 award earned in 1998, 15% of the 1996 award that was
earned in 1998 and 10% of the 1995 award that was earned in 1998. The 1997
LTIP payout from the EMICP reflects 25% of the 1996 award that was earned in
1997, 15% of the 1995 award that was earned in 1997 and 10% of the 1994 award
that was earned in 1997.
(4) Totals in this column are comprised of: (1) a 401(k) Corporation match of
35% and an additional profit-sharing match of 35% shown as one total; (2) the
parallel match made under the Savings Plan Restoration portion of the Supple-
mental Executive Retirement Plan established in January 1997, and; (3) that
piece of Mr. Perrault's supplemental executive retirement plan (SERP) benefit
which may be granted based on the Corporation's annual results as measured by
ROE. The figures, respectively, are as follows: Mr. Perrault--$6,597, $6,023
and $172,511; Mr. DeShaw--$6,124 and $7,183; Mr. Kelly--$6,124 and $7,161;
Mr. Walters--$6,007 and $5,439; and Mr. O'Brien--$5,988 and $5,209.
13
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth the options granted during fiscal year ended
December 31, 1999 to Chittenden's Named Executive Officers.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Potential
Realizable Value
At Assumed Annual
Rates of
Stock Price
Appreciation
Individual For Option Term
Grants (1)
---------- -----------------
(a) (b) (c) (d) (e) (f) (g)
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ------------------ ----------- ------------ ----------- ---------- -------- --------
Paul A. Perrault -0- -0- -0- -0- -0- -0-
Lawrence W. DeShaw 10,000 7.41% $32.594 11/17/2009 $204,981 $519,464
10,000 7.41% $35.834 11/17/2009 $225,358 $571,101
John W. Kelly 10,000 7.41% $32.594 11/17/2009 $204,981 $519,464
10,000 7.41% $35.834 11/17/2009 $225,358 $571,101
Kirk W. Walters 10,000 7.41% $32.594 11/17/2009 $204,981 $519,464
10,000 7.41% $35.834 11/17/2009 $225,358 $571,101
Danny H. O'Brien 10,000 7.41% $32.594 11/17/2009 $204,981 $519,464
10,000 7.41% $35.834 11/17/2009 $225,358 $571,101
</TABLE>
- ----
(1) Potential realizable values are calculated as the product of (A) assumed
annual gains in the initial exercise price of 5% and 10% over the term of
the options less the initial exercise price and (B) the number of op-
tions.
14
<PAGE>
The following table sets forth the aggregate number of options exercised in
1999 and the value of options held as of December 31, 1999 by Chittenden's
Named Executive Officers.
Aggregated Option Exercises in Last Fiscal Year 1999
and Fiscal Year-End 1999 Option Values
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
(a) (b) (c) (d) (e)
Shares Value of Unexercised In-The
Acquired on Value Number of Unexercised Money Options at Fiscal Year-
Name Exercise (#) Realized Options at Fiscal Year-End (#) End ($) (1)
- ---- ----------- -------- ------------------------------ -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
-------------- ---------------- ------------- ---------------
Paul A. Perrault........ 6,800 $167,110 187,722 -0- $ 1,666,559 -0-
Lawrence W. DeShaw...... 26,859 $525,988 42,150 7,500 $ 260,550 -0-
John W. Kelly........... 35,405 $646,501 27,500 7,500 -0- -0-
Kirk W. Walters......... -0- -0- 42,500 7,500 $ 149,625 -0-
Danny H. O'Brien........ -0- -0- 55,300 6,000 $ 521,100 -0-
</TABLE>
- ----
(1) Based on the last reported sale price of Chittenden common stock on the
NYSE on December 31, 1999 of $29.625.
15
<PAGE>
Employment Agreements
Chittenden currently has severance agreements with each of Messrs. Perrault,
DeShaw, Kelly, Walters and O'Brien. These agreements provide for payments to
such persons that are conditioned upon a "change of control" of Chittenden
followed within three years by either (1) termination of employment by
Chittenden for any reason other than death or (2) termination by the executive
for any reason. If these conditions are satisfied, the required payments would
equal a multiple of the employee's annual salary, bonus and pension plan con-
tributions. For Mr. Perrault, such payments would equal 2.99 times annual sal-
ary, bonus and pension plan contributions, and for Messrs. DeShaw, Kelly, Wal-
ters and O'Brien, such payments would equal 2.0 times annual salary, bonus and
pension plan contributions. In addition, the CEO's compensation plan provides
for certain long-term disability payments in the event of a disability result-
ing in termination of employment, in which case a monthly benefit would be
paid at age 60 based upon 60% of the base salary of Mr. Perrault at the time
of disability.
Report of the Committee Responsible for Compensation
The Executive Committee of the Board of Directors is responsible for the ad-
ministration of executive compensation with all recommendations receiving fi-
nal approval of the full Board. Board members serving on the Executive Commit-
tee during 1999 were: Messrs. Pizzagalli (Chair), Perrault, ex officio, Ber-
trand, Spera, Wilson and Ms. Hutton.
The corporate compensation philosophy continues to be heavily weighted toward
incentive-based compensation. Annual incentive payments made in the Executive
Management Incentive Compensation Plan (EMICP) are based primarily on the per-
formance of the entire corporation. Additionally, approximately 130 senior and
middle managers participate in the Incentive Compensation Plan (ICP). This
plan has both a division and a corporate performance component. In order to
receive payments at the highest accrued level, all performance targets must be
met. Performance targets are established annually by the Board of Directors.
As a result of the acquisition of Vermont Financial Services Corp. (VFSC),
the Board felt that it was appropriate to conduct a complete review of exist-
ing compensation levels and practices for Mr. Perrault and his executive man-
agement group. The consulting firm of Towers Perrin was retained to complete
this review. In completing this review, the committee gave full consideration
to the total compensation package for each executive including base compensa-
tion, incentive compensation, stock options granted and supplemental retire-
ment benefits.
Pursuant to their review and analysis, the following actions were taken and
guidelines established:
. Two peer groups have been established using parameters of asset size and
performance. Sixty (60) banks with assets of $1--$10 billion have
16
<PAGE>
been identified, and approximately twenty (20) banks are defined as
"high performing" using the criteria of a return on equity (ROE) of 15%
or greater.
. Base compensation will be reviewed annually against these peer groups
and will be targeted at the 25th percentile.
. Total cash compensation will continue to be highly leveraged with an em-
phasis on performance-based incentives. Assuming that annually estab-
lished performance targets are met, total cash compensation will be
targeted at the median of this group.
In order to become better aligned with these guidelines, the following adjust-
ments were made in December 1999:
. Adjustments to base salaries were made as appropriate and became effec-
tive May 1, 1999.
. Incentive compensation will continue to be reviewed against annual per-
formance targets and will be paid annually with no deferrals. This re-
sulted in the payment of all EMICP payments that had been deferred from
1996, 1997 and 1998.
. Stock option awards were made to most members of the executive manage-
ment group. One-half of each award had an option price set at the fair
market value (FMV) of Chittenden Corporation stock at the date of grant.
The grant price of the remaining 50% of each award was set at 110% of
the FMV on this date. It is expected that similar grants will be made in
the future.
Specific to Mr. Perrault's compensation, the following actions were taken:
. An adjustment was made to his base salary effective April 20, 1999.
. The short-term incentive plan (STI) under which annual incentives had
been made since 1996 was discontinued effective January 1, 1999.
. The final one-third of options (62,500) granted in 1996 vested on June
19, 1999.
. An additional award of 110,000 was approved effective April 19, 2000.
Fifty percent of this award will be granted at a price equal to the FMV
on the date of grant. The remaining 50% will be granted at 110% of this
price.
In addition to the supplemental executive retirement plan (SERP) that was es-
tablished for all members of the executive management group in January 1996,
Mr. Perrault continues to be covered by a separate agreement. Under this
agreement an additional award may be granted based upon the current year's re-
sults. In 1999, with a reported operating ROE of 14.69%, the sum of $262,981
was accrued for Mr. Perrault under the SERP and his separate agreement.
17
<PAGE>
Stock Performance Graph
The following graph provides a comparison, from December 31, 1994 through De-
cember 31, 1999, of the cumulative total stockholder return (assuming rein-
vestment of dividends) among Chittenden; the Standard & Poor's 500 Index; the
SNL New England Bank Index, an industry index of 32 New England based institu-
tions, and the SNL $1B-$5B Bank Index. The historical information set forth
below is not necessarily indicative of future performance.
[LINE GRAPH]
Period Ending
-----------------------------------------------------
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------------------------------------------------------------------------------
Chittenden Corporation 100.00 197.66 189.95 363.71 340.11 324.35
S&P 500 100.00 137.58 169.03 225.44 289.79 350.50
SNL New England Bank Index 100.00 163.97 223.59 355.91 389.49 364.09
SNL $1B-$5B Bank Index 100.00 134.48 174.33 290.73 290.06 266.58
Interests in Certain Transactions
The Corporation's officers, its Directors and their associates have had, and
can be expected to have in the future, financial transactions with the Bank.
As of December 31, 1999, the aggregate of loans by the Bank outstanding to the
Corporation's officers, Directors and their associates amounted to
$25,773,000.
During 1999, loans by the Bank to their officers and Directors, and their as-
sociates, and to the officers and Directors of the Corporation, and their as-
sociates, 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.
18
<PAGE>
Material transactions during 1999 between the Bank's and the Corporation's
officers, its Directors, and their associates occurred in the ordinary course
of business and were on terms equivalent to those prevailing at the time for
comparable transactions with other, unrelated persons.
Availability of Independent Public Accountants
The Board of Directors of the Corporation, in accordance with the recommenda-
tion of its Audit Committee, none of whom is an employee of the Corporation,
appointed Arthur Andersen LLP as independent public accountants of the Corpo-
ration for the year ending December 31, 1999. The Corporation was advised by
Arthur Andersen LLP that neither the firm nor any of their associates have any
relationship with the Corporation or any affiliate of the Corporation. Arthur
Andersen LLP will have a representative at the meeting who will have an oppor-
tunity to make a statement and will be available to respond to appropriate
questions.
During 1999, Arthur Andersen LLP examined the consolidated financial state-
ments of the Corporation and its subsidiaries, provided other audit services
to the Corporation and to certain of its subsidiaries in connection with Secu-
rities and Exchange Commission filings of periodic financial statements. In
addition, Arthur Andersen LLP provided tax and consulting services to the Cor-
poration and certain of its subsidiaries.
Deadline for Stockholder Proposals
In order to be included in the Corporation's proxy statement and proxy card
for the 2001 annual meeting, proposals which stockholders intend to present at
that meeting must be submitted in writing to the Secretary of the Corporation
on or before November 10, 2000.
Other Business
The Board of Directors of the Corporation knows of no other matters which may
come before the meeting. However, if any other business should properly come
before the meeting, the proxies relating to such meeting will be voted with
respect thereto in accordance with the best judgment of the Board of Direc-
tors.
A copy of the Corporation's Annual Report for 1999 (on Form 10-K), as filed
with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, will be furnished free of charge to bene-
ficial owners of the Corporation's stock upon written request to:
F. Sheldon Prentice, Secretary
Eugenie J. Fortin, Assistant Secretary
Chittenden Corporation
P.O. Box 820
Burlington, Vermont 05402-0820
Any person requesting a copy of the report must set forth in his/her written
request a good faith representation that he/she was in fact a beneficial owner
of stock of the Corporation on the record date for the annual meeting.
19
<PAGE>
SKU#667-PS-00
<PAGE>
CHITTENDEN CORPORATION
c/o EquiServe
P.O. Box 8040
Boston, MA 02266-8040
Dear Shareholder:
Please take note of the important information enclosed with this Proxy. Your
vote counts, and you are strongly encouraged to exercise your right to vote your
shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
CHITTENDEN CORPORATION
DETACH HERE
CHT26A
Please mark
[X] votes as in
this example.
1. To elect three directors, each to serve for a term of three years. The
Board of Directors has nominated the following three individuals for
election as such directors: Richard D. Driscoll, Lyn Hutton and Paul A.
Perrault.
FOR ALL WITHHOLD
NOMINEES AUTHORITY
(except as [ ] [ ] to vote for
indicated to the the nominees
contrary). listed.
[ ] -------------------------------------------------------
INSTRUCTIONS: To withhold authority to vote for any nominee,
write the nominee's name in the space provided above.
Signature: __________________________________________ Date: ________________
2. The proxies are authorized to vote in their discretion upon such other
business and matters or proposals as may properly come before the Chittenden
Meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
Please sign exactly as your name(s) appear(s) hereon. All holders must sign.
When signing in a fiduciary capacity, please indicate full title as such. If a
corporation or partnership, please sign in full corporate or partnership name by
authorized person.
Signature: __________________________________________ Date: ________________
<PAGE>
PROXY
CHITTENDEN CORPORATION
Two Burlington Square, Burlington, Vermont 05401
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David M. Boardman, Philip M. Drumheller and Pall
D. Spera as Proxies, each with the power to appoint his/her substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side, all the shares of common stock of Chittenden Corporation held of record by
the undersigned on March 3, 2000 at the annual meeting of stockholders to be
held at the Radisson Hotel Burlington, 60 Battery Street, Burlington, Vermont on
April 19, 2000 at 4:00 p.m., or at any adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS INDICATED, IT WILL BE VOTED FOR THE PROPOSALS
SET FORTH ON THE REVERSE SIDE.
