NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF BATH NATIONAL CORPORATION
TO BE HELD APRIL 26, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders
of Bath National Corporation will be held April 26, 2000 at
2:30 p.m. at the Bath Country Club, 330 May Street, Bath, New York.
The meeting will convene for the following purposes:
1. To elect four Directors for terms of three years;
2. To ratify the appointment of Urbach Kahn & Werlin PC as
independent auditors;
3. To transact such other business as may properly be
brought before the meeting or any adjournment thereof.
The Board of Directors has fixed March 31, 2000 as the record
date for the meeting and only holders of Common Stock of record at
the close of business on that day are entitled to receive notice
of and vote at the meeting. All shareholders are cordially
invited to attend the meeting in person, but those who are unable
to do so are respectfully urged to execute and return the enclosed
proxy at their earliest convenience. If you attend the meeting in
person, you may withdraw your proxy and vote your own shares at the
meeting.
April 5, 2000
By Order of the Board of Directors
Patricia H. Crippen
Secretary
PROXY STATEMENT
This Proxy Statement is furnished in connection with
solicitation of the enclosed proxy by the Board of Directors of Bath
National Corporation (the "Company") in connection with the annual
meeting of shareholders of the Company to be held April 26, 2000 at
2:30 p.m. at the Bath Country Club, 330 May Street, Bath, New York.
The principal executive offices of the Company are located
at 44 Liberty Street, Bath, New York 14810. The approximate date
on which this proxy statement and the enclosed proxy are being
sent to the shareholders is April 5, 2000.
The close of business on March 31, 2000 has been fixed as
the record date for determination of the shareholders entitled
to notice of, and to vote at, the meeting. On that date there
were outstanding 1,327,848 shares of Common Stock, each of
which is entitled to one vote on each matter at the meeting.
The enclosed proxy, if properly completed, signed and
returned prior to the meeting, will be voted at the meeting in
accordance with the choices specified thereon and, if no choices
are specified, it will be voted in favor of the proposals set forth
in the notice attached hereto. A shareholder giving a proxy has the
right to revoke it at any time before it has been voted by (i) giving
written notice to that effect to the Secretary of the Company, (ii)
executing and delivering a proxy bearing a later date which is
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voted at the Annual Meeting, or (iii) attending and voting in
person at the Annual Meeting. Directors are elected by a plurality
of the votes cast by shareholders entitled to vote in the election
and the proposal to ratify the appointment of independent auditors
requires the affirmative vote of holders of a majority of shares
entitled to vote, who are present at the meeting if a quorum is
present. A quorum will be present if the holders of a majority of the
outstanding shares of the Company entitled to vote are present at the
meeting in person or by proxy. Abstentions and broker non-votes are
counted for quorum purposes but are not counted for or against the
election of directors. An abstention on the proposal to appoint the
auditors has the same legal effect as a vote "against" the proposal
even though a shareholder may interpret such action differently.
ELECTION_OF_DIRECTORS
The Company's Board of Directors is divided into three
classes, one of which is elected at each Annual Meeting for a
term of three years and until their successors have been elected
and qualified. The terms of Edward C. Galpin, Lisle E. Hopkins,
Lawrence C. Howell and Freeman H. Smith, III expire this year and the
Board of Directors has nominated each of them to serve as a director
for a three year term.
Edward C. Galpin three years
Lisle E. Hopkins three years
Lawrence C. Howell three years
Freeman H. Smith, III three years
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The Board of Directors believes that the nominees will be
available and able to serve as directors, but, if for any reason any
of them should not be, the persons named in the proxy may exercise
discretionary authority to vote for a substitute proposed by the Board
of Directors.
The Board of Directors of the Company has no committees. The Board
of Directors of Bath National Bank (the Bank), comprising the same
individuals as the Board of Directors of the Company, has the following
committees: an Asset/Liability Management Committee; an Audit
Committee; a Building Committee; a Compliance Committee; an Electronic
Data Processing (EDP) Steering Committee; an Investment Committee; a
Long Range Planning Committee; a Pension Fund Review Committee; a
Salary and Personnel Committee; and a Trust Committee.
The members of the Asset/Liability Management Committee are:
Laverne H. Billings, Herbert Fort, Edward C. Galpin, Douglas L.
McCabe and Freeman H. Smith, III. This committee is responsible
for establishing goals with respect to the interest rate "gap"
between earning assets and liabilities and liquidity, and reviewing
performance against those goals. In 1999 this Committee held three
meetings.
The members of the Audit Committee are Theodore P. Capron, Lisle
E. Hopkins, Lawrence C. Howell and Constance Manikas. This committee
is responsible for evaluating internal and external audits, the
independence of the Company's auditors, compliance with banking
laws and regulations and accounting principles, internal controls
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and compliance with certain Bank policies. The committee is
also responsible for recommendations to the Board of Directors in
matters within its jurisdiction, including the Company's choice of
external auditors for the Bank and the results of any audit. In 1999
this Committee held four meetings.
The members of the Building Committee are Laverne H. Billings,
Theodore P. Capron, Robert H. Cole, Joseph F. Meade, Jr., Freeman H.
Smith, III and Alan J. Wilcox. This committee, which met three times
in 1999, is responsible for the review of facilities and renovations.
The members of the Compliance Committee are Laverne H. Billings,
Herbert Fort, Edward C. Galpin, Lisle E. Hopkins and Douglas L.
McCabe. This Committee, which held two meetings in 1999, is charged
with the oversight of compliance by the Company and the Bank with
applicable bank holding company and banking laws and regulations.
The members of the EDP Steering Committee are Herbert Fort,
Edward C. Galpin and Lawrence C. Howell. This Committee, which held
four meetings in 1999, reviews developments in bank electronic data
processing, establishes guidelines for electronic data processing by
the Bank, monitors implementation of the guidelines.
The members of the Investment Committee are Laverne H. Billings,
Herbert Fort, Edward C. Galpin and Alan J. Wilcox. This Committee was
established in September 1993 to provide additional oversight and
monitoring of the investment officer and to review broker-dealers,
consultants and quality of the portfolio. The Committee held three
meetings in 1999.
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All of the directors serve on the Long-Range Planning Committee.
This Committee, which held one meeting in 1999, which was a
day long retreat, is responsible for developing long-range goals for
the Bank.
The members of the Pension Fund Review Committee are Theodore P.
Capron, Herbert Fort, Edward C. Galpin, Douglas L. McCabe and
Patrick Sullivan. This Committee reviews the performance of the
investment manager of the Company's defined contribution plan and the
profit sharing/401(k) plan, and oversees certain aspects of the
administration of the plans. This Committee met once in 1999.
The members of the Salary and Personnel Committee are Robert
H. Cole, Herbert Fort, Constance Manikas, Joseph F. Meade, Jr., Freeman
H. Smith, III, Patrick Sullivan and Alan J. Wilcox. This Committee,
which held one meeting in 1999, makes recommendations to the Board of
Directors with respect to officer salaries and benefits.
The members of the Trust Committee are Robert H. Cole,
Douglas L. McCabe, Joseph F. Meade, Jr. and Alan J. Wilcox.
This Committee, which did not meet in 1999, is responsible for
oversight of the trust operations of the Bank.
All the Directors of the Bank receive a monthly fee of $1,000,
but do not receive a separate fee for attending committee meetings.
Directors of the Company are not paid any compensation in this
capacity as such.
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The Bank has a deferred trustee fee plan which provides that
following ten year's continuous service on the Board of Directors,
and after attaining the age of sixty-two, those directors serving on
the Board on June 15, 1989 and who met such criteria after leaving
the Board are entitled to receive $250 per month for a period of
five years. The estimated present value of the benefit obligation,
which is included in other liabilities in the Company's 1999
consolidated balance sheet, was $143,853.
The Board of Directors of the Company met four times during 1999.
and the Board of Directors of the Bank met thirteen times during 1999.
In 1999 all of the directors attended at least 75% of the total number
of meetings of the Board of Directors of the Company and committees of
which the Director is a member, with the exception of Joseph F. Meade,
Jr. who attended 50% of the Board meetings of the Company.
Certain information about the nominees and those directors
whose terms of office will continue after the Annual Meeting is
set forth below.
PRINCIPAL OCCUPATION
DIRECTOR TERM AND OTHER DIRECTORSHIPS
NAME_AND_AGE SINCE___ EXPIRES HELD_IN_PUBLIC_COMPANIES
Nominees:
Edward C. Galpin 1983 2000 Vice President/Treasurer
(53) Bath National Corporation
Executive Vice President
Bath National Bank
Lisle E. Hopkins 1983 2000 Retired Dairy Farmer
(84)
Lawrence C. Howell 1986 2000 Retired Dairy Farmer
(62)
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Freeman H. Smith, III 1992 2000 Vice President-State
(56) and Local Government
Relations
Corning, Inc.
Other Directors:
Laverne H. Billings 1990 2001 President
(68) R. C. Billings, Inc.
(Paving Contractor)
Theodore P. Capron 1983 2001 Retired Bank President
(76)
Constance Manikas 1993 2001 President
(58) Pecon Company, Inc.
(McDonald's Restaurant)
Douglas L. McCabe 1993 2001 President
(51) Bath National Corporation
Bath National Bank
Joseph F. Meade, Jr. 1983 2001 Chairman of the Board
(77) Mercury Aircraft Inc.
(Sheet metal fabricators
for business machines)
Robert H. Cole 1983 2002 Chairman of the Board
(72) Bath National Corporation
Bath National Bank
Cole Law Offices, P.C.
Herbert Fort 1983 2002 Chairman Emeritus
(75) Retired Bank President
since December 31, 1989
Patrick Sullivan 1989 2002 Retired Auto Dealer
(69)
Alan J. Wilcox 1994 2002 President
(45) A H Wilcox & Sons, Inc.
(Retail building material
and hardware)
In addition to Messrs. McCabe and Galpin, Ellsworth W. Beckman,
Jr., age 59, Senior Vice President of Bath National Bank since
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1996, and R. Michael Briggs, age 45, Senior Vice President of Bath
National Bank since 1997, are the executive officers of the Bank.
STOCK OWNERSHIP
The Company does not know of any persons who beneficially own
more than 5% of its outstanding Common Stock.
The following table sets forth information, as of March 1, 2000,
with respect to the beneficial ownership of the Company's Common
Stock by (a) each of the directors of the Company, (b) the Company's
Chief Executive Officer and (c) all directors and executive officers
of the Company as a group.
Number of Shares Percent
Name of_Common_Stock of_Class
Laverne H. Billings 7,070 *
Theodore P. Capron 2,400 *
Robert H. Cole 15,653 1.18%
Herbert Fort 842 *
Edward C. Galpin 7,909 *
Lisle E. Hopkins 10,969 *
Lawrence C. Howell 2,955 *
Constance Manikas 1,020 *
Douglas L. McCabe 2,423 *
Joseph F. Meade, Jr. 12,000 *
Freeman H. Smith, III 12,000 *
Patrick Sullivan 10,314 *
Alan J. Wilcox 700 *
Executive Officers
Ellsworth W. Beckman, Jr. 5,031 *
R. Michael Briggs 1,622 *
ALL DIRECTORS AND EXECUTIVE
OFFICERS AS A GROUP (15 PERSONS) 92,908 6.99%
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* Represents less than one percent of the outstanding shares of
common stock of the Company with respect to the beneficial ownership
(as defined by the rules of the Securities and Exchange Commission).
For purposes of the table above, under the rules of the
Securities and Exchange Commission, an individual is considered to
"beneficially own" any shares of common stock of the Company, (i)
over which he or she exercises sole or shared voting or investment
power, or (ii) of which he or she has the right to acquire beneficial
ownership within sixty days. As used herein, "voting power" is the
power to vote or direct the voting of shares and "investment power"
is the power to dispose or direct the disposition of shares. All
persons shown in the table above have sole voting and investment power
with respect to the shares listed.
COMPENSATION OF EXECUTIVE OFFICERS
Executive officers of the Company are not compensated as such.
The Board of Directors of the Bank establishes the compensation
for executive officers of the Bank. The Board of Directors of the
Company, which comprises the same persons as the Bank Board, reviews
any such compensation.
The Bank's Executive Compensation policy, which applies to the
CEO and all other executive officers of the Bank is intended to align
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executive compensation with the long-term interests of Company's
shareholders. In applying this policy, the Board of Directors of the
Bank (the "Board") has followed a program to:
establish salary and annual bonus opportunities to
attract, motivate and retain executive talent
necessary for the long-term success of the Bank and
the Company; and
integrate cash and compensation so as to reward
executives for performance that enhances the long
term value of the Company's shareholder equity.
The total executive compensation program consists of cash based
compensation. Cash compensation consists of a base salary, with
an opportunity for an annual bonus for the Chief Executive Officer,
Executive Vice President, Senior Vice President - Branch Administration
and Senior Vice President - Loan Administration.
The Bank participates in salary surveys both on a regional
and national level to help ensure that the Bank's salary structure
is competitive within the banking industry. The Board determines
salary ranges for key executives. The Board evaluates at least
annually the performance of executive officers and approves any
adjustment in base compensation.
The following table shows the compensation of those executive
officers of the Bank who received aggregate annual salary and bonus in
excess of $100,000 in 1999.
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SUMMARY COMPENSATION TABLE
_______________________________________________________________________
ANNUAL_COMPENSATION
_______________________________________________________________________
Name and
Principal
Position Year Salary Bonus All_Other_Compensation <F1>
Douglas McCabe 1999 $140,000 $60,600 $24,400
President 1998 130,000 54,200 24,000
1997 130,000 29,800 25,000
Edward C. Galpin 1999 $112,500 $30,500 $37,900
1998 107,500 27,100 31,779
1997 100,000 29,800 29,471
_______________________________________________________________________
[FN]
<F1> Represents the Bank's contribution to Mr. Galpin's and
Mr. McCabe's account in the Company's non-contributory profit
sharing plan and defined contribution retirement plan. There is
a deferred compensation plan in effect which allows Mr. Galpin
and Mr. McCabe the opportunity to defer a portion of the
compensation otherwise due them. Investment returns are
calculated at the highest rate of return produced by any of the
investment options available under the 401(k) retirement plan.
Mr. Galpin deferred the bonus amount of his compensation and the
bank credited investment interest of $18,000 to the deferred
account at an above market rate.
Employment Agreements
The Bank has entered into a severance compensation agreement with
Mr. Galpin and Mr. McCabe.
In the case of Mr. Galpin, the agreement provides that upon
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terminating Mr. Galpin's employment, as a result of or following
any change in control of the Bank, he is entitled as a severance
fee an amount equal to 3 times the previous five year's
average compensation (including bonuses and profit sharing plan
contributions). If Mr. Galpin's employment had terminated at the
end of 1999 under circumstances requiring payment under the
agreement, he would have been entitled to receive a lump sum of
$419,000.
In the case of Mr. McCabe, the agreement provides that upon
terminating Mr. McCabe's employment, as a result of or following
any change in control of the Bank, he is entitled as a severance
fee an amount equal to 3 times the previous five year's average
compensation (including bonuses and profit sharing plan
contributions). If Mr. McCabe's employment had terminated at the
end of 1999 under circumstances requiring payment under the
agreement, he would have been entitled to receive a lump sum of
$489,000.
REPORT OF THE SALARY AND PERSONNEL COMMITTEE
(Robert H. Cole, Herbert Fort, Constance Manikas, Joseph F. Meade,
Jr., Patrick Sullivan and Alan J. Wilcox)
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return on its common stock
over the last five years (assuming reinvestment of dividends at date
of payment into common stock of the Company) with the cumulative
total return of the Russell 2000 stock index and the cumulative total
return of the NASDAQ bank index. The Company believes that while
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total shareholder return is an important criteria of corporate
performance, it is subject to the vagaries of the market. In addition
to the creation of shareholder value, the Company's executive
compensation program is based on operating and strategic results.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Bank has extended credit to directors and officers of both
the Company and the Bank since the Company and Bank commenced business.
In the opinion of management, these loans were made in the ordinary
course of business and were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and did not involve
more than the normal risk of collectibility or present other
unfavorable features.
Mr. Robert H. Cole, a Director of the Company and the Bank,
is a member of Cole Law Offices, P.C. The Company and the Bank
paid a total of $66,799 to Cole Law Offices, P.C. for legal services
rendered during 1999.
INDEPENDENT_AUDITORS
The Board of Directors has recommended ratification of the
appointment of Urbach Kahn & Werlin PC as independent
auditors of the Company for 2000. A representative of that firm will
be present at the meeting, will have the opportunity to make a
statement and will be available to respond to appropriate questions.
PROPOSALS_OF_SHAREHOLDERS
In order to be eligible for inclusion in the Company's proxy
statement and form of proxy for next year's Annual Meeting, shareholder
proposals that action be taken at the meeting must be received at the
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Company's principal executive offices by December 20, 2000. If a
notice of a proposal by a shareholder of the Company is intended
to be presented at next year's Annual Meeting is received by the
Company after December 20, 2000, the persons authorized under the
Company's management proxies may exercise discretionary authority
to vote or act on such proposal if the proposal is raised at next
year's Annual Meeting.
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
that the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common
Stock of the Company. To the Company's knowledge, based solely on
review of copies of reports furnished to the Company and written
representations that no other reports were required, during the fiscal
year ended December 31, 1999 all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent
beneficial owners were complied with.
SHAREHOLDERS MAY RECEIVE A COPY OF THE COMPANY'S ANNUAL REPORT
ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT
CHARGE ON REQUEST TO THE SECRETARY, BATH NATIONAL BANK, 44 LIBERTY
STREET, BATH, NEW YORK 14810.
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OTHER_MATTERS
The Board of Directors of the Company knows of no other matters
to be presented at the meeting. However, if any other matters properly
come before the meeting, the persons named in the enclosed proxy will
vote on such matters in accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company.
In addition to solicitation by mail, some officers and regular
employees of the Company may, without extra compensation, solicit
proxies personally or by telephone or telegraph and the Company will
request brokerage houses, nominees, custodians and fiduciaries to
forward proxy materials to beneficial owners and will reimburse their
expenses.
April 5, 2000
By Order of the Board of Directors
Patricia H. Crippen
Secretary
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PROXY
BATH NATIONAL CORPORATION
ANNUAL MEETING
APRIL 26, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF BATH NATIONAL
CORPORATION
The undersigned hereby appoints ROBERT DENNO and PATRICIA C.
SHUART or either of them, proxies, with power of substitution, to
represent and to vote at the annual meeting of shareholders (including
adjournments) of BATH NATIONAL CORPORATION, to be held on April 26,
2000, with all powers the undersigned would possess if personally
present, as specified on the ballot below and in accordance with their
discretion with respect to any other business that may come before the
meeting, and the undersigned hereby revokes all proxies previously
given by the undersigned with respect to the shares of common stock
covered hereby.
1. With authority to vote for the following nominees for
director:
(THE SHAREHOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR
ANY NOMINEE BY LINING THROUGH THE NAME OF THE NOMINEE)
Name Term
Edward C. Galpin three years
Lisle E. Hopkins three years
Lawrence C. Howell three years
Freeman H. Smith, III three years
2. To ratify appointment of Urbach Kahn & Werlin PC as
independent auditors.
( ) FOR ( ) AGAINST ( ) ABSTAIN
3. In accordance with their judgment in connection with the
transaction of such other business as may properly come
before the meeting or any adjournment thereof.
( ) FOR ( ) AGAINST ( ) ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR ALL DIRECTORS IN ITEM 1 AND FOR
ITEMS 2 and 3.
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When shares are held by joint owners, all should sign. When
signing as attorney, executor, administrator, trustee, guardian or
other fiduciary or in a representative capacity, please add your title
as such. If a partnership, please sign in partnership name by an
authorized person. If a corporation, please sign in full corporate
name by an authorized officer, giving title.
_____________________________
Signature
Date: ___________________, 2000 _____________________________
Signature if held jointly
Please sign, date and return the proxy promptly using the enclosed
envelope.
Do you plan to attend the meeting?
Yes___ No___
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