SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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 |X|
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
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(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 transaction 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 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: _________________________________________________
2) Form, Schedule or Registration No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
(032796DTI)
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
The annual meeting of Stockholders of Village Bancorp, Inc., ("Bancorp")
will be held at The Village Bank & Trust Company, 25 Prospect Street,
Ridgefield, Connecticut, 06877, on Monday, April 27, 1998, at 8:00 p.m., for the
following purposes:
1. To elect four (4) members of the Board of Directors to serve for a
period of three (3) years, until the next meeting of the Stockholders in the
year the members' respective terms expire, or until their successors are duly
elected and qualified.
2. To ratify the appointment of Deloitte & Touche, LLP as Independent
Public Accountants for 1998.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Pursuant to provisions of the Bylaws, the Board of Directors has fixed the
close of business on March 27, 1998, as the record date for the determination of
Stockholders entitled to notice of and to vote at the annual meeting, and
accordingly only Stockholders of record at the close of business on that date
are entitled to notice of and to vote at said meeting.
Stockholders unable to attend the meeting in person are urged by the
Board of Directors to sign, date and mail the enclosed proxy as promptly as
possible in the envelope enclosed for that purpose.
A stockholder giving a proxy has the power to revoke it at any time before
its exercise by filing with the Secretary of the Board of Directors of Bancorp,
Enrico J. Addessi, a written revocation, or a duly executed proxy bearing a
later date, at 25 Prospect Street, P.O. Box 366, Ridgefield, Connecticut 06877.
The proxy will be suspended if the stockholder who executed it is present at the
meeting and elects to vote in person.
BY ORDER OF THE BOARD OF DIRECTORS:
--------------------------------
Enrico J. Addessi
Secretary
April 6, 1998
<PAGE>
VILLAGE BANCORP, INC.
25 Prospect Street
P. O. Box 366
Ridgefield, Connecticut 06877
Telephone No. (203) 438-9551
PROXY STATEMENT
Mailed April 6, 1998
ANNUAL MEETING OF THE STOCKHOLDERS
TO BE HELD APRIL 27, 1998
PROPOSALS FOR NEXT ANNUAL MEETING
Security holders who intend to present proposals for inclusion in the
Corporation's Proxy Statement or form of proxy at the Corporation's next annual
meeting must have such proposals delivered to the Corporation on or before
December 8, 1998.
SOLICITATION AND REVOCATION OF PROXIES
This statement is furnished in connection with the solicitation by the
Board of Directors of Village Bancorp, Inc., ("Bancorp" or "Corporation") of
proxies to be used at the annual meeting of Bancorp stockholders to be held at
The Village Bank & Trust Company, 25 Prospect Street, Ridgefield, Connecticut,
06877, on Monday, April 27, 1998, at 8:00 p.m., and at any and all adjournments
thereof. The shares represented by the proxy when properly executed shall be
voted in accordance with the specification made by the stockholder and where the
stockholder specified a choice on the proxy, the shares will be voted in
accordance with the specifications so made. IF NO SPECIFICATION AS TO VOTING IS
MADE, THE PROXY WILL BE VOTED FOR PROPOSALS 1 and 2. The accompanying proxy is
solicited by the Board of Directors of Bancorp, and a stockholder giving a proxy
has the power to revoke it at any time before its exercise. A proxy may be
revoked by filing with the Secretary of the Board of Directors of Bancorp,
Enrico J. Addessi, a written revocation or a duly executed proxy bearing a later
date at 25 Prospect Street, P. O. Box 366, Ridgefield, Connecticut, 06877. The
proxy will be suspended if the stockholder who executed it is present at the
meeting and elects to vote in person.
This solicitation is not a securities registration statement. The
solicitation is made by Bancorp's Board of Directors who are Enrico J. Addessi,
Jose P. Boa, Richard O. Carey, Madeline F. Contegni, Jeanne M. Cook, Nicholas R.
DiNapoli, Edward J. Hannafin, Joseph L. Knapp, Carl Lecher, Robert V. Macklin,
Antonio M. Resendes, Thomas F. Reynolds, Robert Scala, and James R. Umbarger,
Jr.
-1-
<PAGE>
PROXY AUTHORITY AND EXECUTION
The proxy holder shall have the discretionary authority to vote on all
matters incidental to the conduct of the meeting, approval of minutes of prior
meetings if such approval does not amount to ratification of such action taken
at those meetings; the election of any person to any office of which a bona fide
nominee is named in the proxy statement and such nominee is subsequently unable
to serve or for good cause refuses to serve, proposals omitted from the proxy
statement and form of proxy pursuant to Rule 14a-8 or Rule 14a-9 of the
Securities and Exchange Commission, and matters which management does not know
as of date may be presented at the meeting and matters which do not expressly
require the vote of stockholders. The proxy, when properly executed, will be
voted in the manner specified therein by the stockholder. Execution of the proxy
in such a manner as not to withhold authority shall be deemed a grant of
authority for approval of Directors and execution in such a manner as not to
vote against or abstain shall be deemed a grant of authority to vote for the
Independent Public Accountants. Proxies may not be voted for a greater number of
persons named as nominees for Director, which is four (4) for a three year term.
This solicitation is by mail. The cost of this solicitation will be borne
by Bancorp. THE PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PURPOSE OF MEETING
The purpose of the annual meeting is to elect four (4) members of the Board
of Directors for a period of three (3) years to serve until the next annual
meeting of stockholders in the year their respective terms expire or until their
successors are duly elected and qualified, and to ratify the appointment of
Deloitte & Touche, LLP as the Corporation's Independent Public Accountants for
1998.
SUBSIDIARY AND ADDRESS
The Village Bank & Trust Company ("VBT") is the Corporation's sole
subsidiary. The principal office of Bancorp and VBT is 25 Prospect Street, P. O.
Box 366, Ridgefield, Connecticut, 06877. Their telephone number is (203)
438-9551.
VOTING RIGHTS
As of March 27, 1998, Bancorp has 1,918,434 shares of common stock,
issued and outstanding. Each outstanding share shall be entitled to one (1)
vote. There are no cumulative voting rights. There are no other shares of stock
issued, outstanding or entitled to vote. Action on a matter, other than election
of directors, at a meeting duly held and at which a quorum is present, is
approved if the votes cast favoring the action exceed the votes cast opposing
the action. Directors are elected by a plurality of the votes cast by the shares
entitled to vote at a meeting at which a quorum is present. An abstention shall
not be considered as a vote against the matter voted on.
-2-
<PAGE>
A quorum shall constitute a number present in person or by proxy
representing the majority (959,218) of the shares of stock issued and
outstanding (1,918,434). A plurality of a quorum present or present by proxy
voting for a nominee or nominees for director shall constitute an election of
the director voted for. A majority of a quorum present, or present by proxy,
voting for ratification of the Independent Public Accountants, shall constitute
approval of that matter voted on.
DISSENTERS RIGHTS OF APPRAISAL
There is no matter to be acted upon which would give an objecting
stockholder a right of appraisal or similar right of dissenters pursuant to the
General Statutes of the State of Connecticut.
RECORD DATE
The Board of Directors of Bancorp has fixed the close of business on March
27, 1998, as the record date for the determination of stockholders entitled to
notice and to vote at the annual meeting. Only stockholders of record at the
close of business on that date are entitled to notice of and to vote at said
meeting.
ANNUAL REPORT
Bancorp is mailing simultaneously herewith to its stockholders copies of
its Annual Report for the fiscal year ended December 31, 1997, containing
financial statements reflecting the financial position and operations of the
Corporation for such fiscal year. The Annual Report is not to be regarded as
proxy soliciting material or as a communication by means of which any
solicitation is made.
AVAILABILITY OF ANNUAL REPORT ON
SECURITIES EXCHANGE COMMISSION
FORM 10-K
BANCORP, UPON WRITTEN REQUEST OF A STOCKHOLDER, WILL PROVIDE WITHOUT
CHARGE, A COPY OF THE CORPORATION'S ANNUAL REPORT ON SECURITIES EXCHANGE
COMMISSION FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE FINANCIAL
STATEMENT SCHEDULES FOR THE CORPORATION'S MOST RECENT FISCAL YEAR. WRITTEN
REQUESTS MUST BE DIRECTED TO ENRICO J. ADDESSI, SECRETARY OF THE BOARD OF
DIRECTORS, VILLAGE BANCORP, INC., 25 PROSPECT STREET, P. O. BOX 366, RIDGEFIELD,
CONNECTICUT 06877.
-3-
<PAGE>
INTERESTS OF CERTAIN PERSONS IN
MATTERS TO BE ACTED ON
No member of the Board of Directors has any interest, direct or indirect,
in any matter being acted on other than the election of directors.
COMMON STOCK OUTSTANDING
BANCORP
As of March 27, 1998, there were outstanding and entitled to vote 1,918,434
shares of common stock of Bancorp which is its only class of stock. To the best
knowledge and belief of the Officers and Directors of Bancorp, no person
(including any "group" as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934 is beneficially owner of more than five (5%)
percent of the outstanding voting securities of the Corporation; except as
stated below in the following table. The following table represents the percent
of class based on number of shares outstanding (1,918,434) and the number of
shares subject to options within 60 days (99,600).
- --------------------------------------------------------------------------------
(1) (2) (3) (4)
Title of Class Name & Address of Amount & Nature % of Class
Beneficial Owner of Beneficial
Ownership
- --------------------------------------------------------------------------------
Common Austin, Rosow and 189,450(3) 9.88%
---------
Rueckert (Group) (A= 94,800)
167 Old Post Road (B= 94,650)
Southport, CT 06490
Common John Sheldon Clark 100,110(3) 5.22%
---------
6102 East Mockingbird (A= 38,192)
#622 (B= 14,000)
Dallas, TX 75214 (C= 47,918)
Common Lewis J. Finch 140,411(3) 7.32%
---------
520 Main Street (A= 86,476)
Ridgefield, CT 06877 (B= 53,935)(3)
-4-
<PAGE>
The members of the Board of Directors, nominees to the Board of Directors,
and Directors and Executive Officers of Bancorp as a group beneficially own
securities of Bancorp as follows:
- --------------------------------------------------------------------------------
(1) (2) (3) (4)
Title of Class Name & Address of Amount & Nature % of Class
Beneficial Owner of Beneficial
Ownership
- --------------------------------------------------------------------------------
Common Directors and Executive
Officers (as a group) 315,110 15.61%
-------
(A= 132,188)
(B= 107,580)
(C= 6,184)
(D= 26,358)
(E= 42,800)
Directors:
Common Enrico J. Addessi 29,864 1.56%
-------
(Director and (A= 27,640)(3)
Secretary) (D= 2,224)(3)
Common Jose P. Boa 25,776 1.34%
-------
(Director) (A= 24,630)
(B= 918)
(C= 228)
Common Richard O. Carey 37,186 1.94%
-------
(Director) (A= 4,086)(3)
(B= 25,600)(3)
(C= 1,200)
(D= 6,300)(3)
Common Madeline F. Contegni 35,332 1.84%
-------
(Director) (A= 20,050)
(B= 15,282)
Common Jeanne M. Cook 4,840 .25%
-------
(Director) (A= 4,840)
-5-
<PAGE>
Common Nicholas R. DiNapoli 49,282 2.57%
-------
(Director & Vice (A= 23,294)
Chairman) (B= 23,220)(3)
(C= 2,768)
Common Edward J. Hannafin 31,310 1.63%
-------
(Director and (A= 13,074)
Chairman) (B= 2,060)
(D= 16,176)(3)
Common Joseph L. Knapp 13,722 .72%
-------
(Director) (A= 10,446)
(B= 1,800)
(C= 1,476)
Common Carl Lecher 9,560 .50%
-------
(Director) (A= 2,722)
(B= 6,838)(3)
Common Robert V. Macklin 28,606 1.48%
-------
(Director and Chief (B= 8,606)(3)
Executive Officer) (E= 20,000)(3)
Common Antonio Resendes 9,828 .51%
-------
(Director) (B= 9,600)
(C= 228)
Common Thomas F. Reynolds 280 .01%
-------
(Director) (B= 280)
Common Robert Scala 13,532 .71%
-------
(Director and (A= 1,406)(3)
Assistant Secretary) (B= 7,960)(3)
(C= 284)
(D= 3,882)
Common James R. Umbarger, Jr. 25,992 1.34%
-------
(Director) (B= 3,192)
(Executive Officer) (E= 22,800)(3)
- --------------------------------------------------------------------------------
-6-
<PAGE>
(A) equals number of shares with sole voting power.
(B) equals number of shares with shared voting power.
(C) equals number of shares with sole investment power.
(D) equals number of shares with shared investment power.
(E) equals number of shares exercisable by option within sixty (60) days (See
"Options").
1. To the best knowledge and belief of management, there are no shares to
which such persons have the right to acquire beneficial ownership within 60 days
except the President, Robert V. Macklin (20,000); Executive Vice President,
James R. Umbarger, Jr. (22,800) and other employee option shares aggregating
56,800. (See "Options")
2. Includes option to purchase 99,600 shares within sixty (60) days. (see
"Options").
3. The following Directors, Executive Officers, and owners of more than 5%
of voting securities have bought or sold Bancorp securities within the past two
fiscal years. All voting securities reflect a two (2) for one (1) stock dividend
issued in November, 1997.
(a) Lewis J. Finch disposed of 5000 shares in May 1996 which transaction
was in his name, and 2759 shares on December 15, 1997 which was in his name and
his wife's name.
(b) Joshia T. Austin, Valer C. Austin, David A. Rosow and William D.
Rueckert filed a Schedule 13D dated December 20, 1996. ("Austin, Rosow and
Rueckert") reporting that 189,450 shares of Bancorp common stock are
beneficially owned. Joshia T. Austin and Valer C. Austin each report they have
shared voting power of 94,650 shares; David A. Rosow reports he has sole voting
power of 65,500 shares; and William D. Rueckert reports he has sole voting power
of 29,300 shares.
(c) John Sheldon Clark filed a Schedule 13-D dated February 12, 1998
reporting 100,110 shares are beneficially owned. Mr. Clark reports 38,192 are
personally owned, 47,918 shares are owned by the Trust under the Will of Charles
M. Clark, Jr., of which he is Trustee, and 14,000 shares are owned by his wife
Marquerite J. Clark.
(d) Enrico J. Addessi acquired 1,000 shares on February 27, 1997 and 80
shares on March 5, 1997 in his wife's name.
(e) Richard O. Carey acquired beneficial ownership of 300 shares in June
1996, by 58 shares with title in his name, 43 shares by title in Trust, 49
shares by title in his wife's name and 150 shares by title in his daughter's
name.
(f) Nicholas R. DiNapoli acquired beneficial ownership of 800 shares in
June, 1996, 500 shares in August, 1996, and 200 shares in February, 1997, all by
title in his name and his wife's.
-7-
<PAGE>
(g) Edward J. Hannafin acquired beneficial ownership of 24 shares through a
related party, Francis J. Collins, in 1996. He had held 6,630 shares through a
related party, Lloyd Cutsumpas, who as of January 1, 1998 is no longer a related
party.
(h) Carl Lecher acquired beneficial ownership of 1000 shares in August 1996
by title in his name and his wife's.
(i) Robert V. Macklin sold 1,100 shares by title in his name and his Wife's
in June, 1996; and received an option to purchase 20,000 shares by the 1996
Stock Option Plan for Key Employees. He acquired ownership of 9,800 shares on
February 6, 1998 through the exercise of a stock option grant and sold 3,000
shares on February 6, 1998, all by title in his name and his wife's name.
(j) Robert Scala acquired beneficial ownership of 400 shares in May, 1996,
by title in his name and his wife's. He acquired ownership of 100 shares in
December 10, 1997 in his name.
(k) James R. Umbarger, Jr., received an option to purchase 15,000 shares by
the 1996 Stock Option Plan for the Key Employees.
(l) Certain Directors and/or Officers have or may elect to participate in
the Corporation's Dividend Reinvest Stock Purchases Plan ("DRIP"). This plan
reinvests cash dividends in open market purchases of the Corporation's stock.
American Stock Transfer and Trust, the transfer agent, administers the DRIP.
ELECTION OF DIRECTORS
The Bylaws of Bancorp provide for not less than nine (9) and not more than
twenty-five (25) members of the Board of Directors who are elected at the annual
meeting for staggered three (3) year terms. The Bylaws further provide for nine
(9) directors and such additional number not to exceed twenty-five (25) (in
accordance with the staggered terms), which additional number must have been
approved by a two-thirds (2/3) vote of the Board of Directors. The Board of
Directors of the Corporation has, in accordance with its Bylaws, fixed the
number of directors of the Corporation at Thirteen (13). The Directors elected
at each annual or special meeting for the purpose of election of Directors shall
be for that number of Directors for the respective staggered term.
There are five (5) members of the Board of Directors whose terms are
expiring. As the bylaws provide for staggered terms, and the Board of Directors
have fixed the number of Directors at thirteen (13), the Board of Directors,
have proposed four (4) nominees to be elected for a three (3) year term to serve
until the next annual meeting in the year their respective term expires or until
their successors are sooner elected and qualified. It is intended that shares
represented by proxies solicited by the Board of Directors will, unless contrary
instructions are given, be voted in favor of the election of the nominees listed
below as directors. The Board of Directors does not contemplate that any nominee
will be unable to serve or for good cause will not serve; however, should such a
-8-
<PAGE>
situation arise prior to the meeting, the Proxy Committee will vote in
accordance with the recommendation of the Board of Directors.
All of the nominees are currently Directors of the Corporation and for its
principal and sole subsidiary, The Village Bank & Trust Company. They have all
been principally employed by their respective employers and occupations for more
than five (5) years.
The proxies solicited by this statement cannot be voted for a greater
number of persons than the number of nominees, which is four (4) for a three (3)
year term.
The following table sets forth, with respect to each nominee for director,
his or her name, age, principal occupation and other business affiliations, the
date each became a director of the Corporation and VBT, the proposed term of
office and the office with the Corporation and VBT, if any, of each nominee.
Each nominee has furnished the information set forth below, with respect to his
or her age, other business affiliates, direct or indirect beneficial ownership
of the common stock of the Corporation and principal occupation.
INFORMATION AS TO NOMINEES
DIRECTORS
- --------------------------------------------------------------------------------
Bancorp VBT Proposed
Director Director Term
Name Age Since Since Expires
- --------------------------------------------------------------------------------
THREE YEAR TERM
RICHARD O. CAREY 66 1982 1974 2001
NICHOLAS R. DINAPOLI 69 1982 1974 2001
CARL LECHER 62 1984 1984 2001
ROBERT SCALA 62 1982 1974 2001
BUSINESS EXPERIENCE
RICHARD O. CAREY: Age 66. Mr. Carey has been a Director of Bancorp since
1982 and of VBT since 1974. His present term of office expires in 1998. Mr.
Carey is owner of The Connecticut Land Company, a real estate brokerage company,
and is a licensed real estate broker, located in Washington, Connecticut.
-9-
<PAGE>
NICHOLAS R. DiNAPOLI: Age 69. Mr. DiNapoli has been a Director of Bancorp
since 1982 and VBT since 1974. He has been Vice Chairman of the Board of
Directors of Bancorp and VBT since 1988. His term of office expires in 1998. He
is President of DiNapoli Development Co., Inc., a building contracting and real
estate development firm having an office in Ridgefield, Connecticut.
CARL LECHER: Age 62. Mr. Lecher has been a Director of Bancorp and VBT
since 1984. His present term of office expires in 1998. He is President of Carl
Lecher, Incorporated, a real estate contracting and development firm, having an
office in Ridgefield, Connecticut.
ROBERT SCALA: Age 62. Mr. Scala has been a Director of Bancorp since 1982
and of VBT since 1974. He is Assistant Secretary of Bancorp and VBT. His present
term expires in 1998. He is retired. He was formerly Vice President of the Elms
Inn, Inc., a restaurant and hotel company, with a place of business in
Ridgefield, Connecticut.
INFORMATION AS TO DIRECTORS
CONTINUING IN OFFICE
- --------------------------------------------------------------------------------
Bancorp VBT
Director Director Term
Name Age Since Since Expires
- --------------------------------------------------------------------------------
ENRICO J. ADDESSI 68 1982 1975 1999
JOSE P. BOA 44 1994 1995 2000
JEANNE M. COOK 68 1989 1989 1999
EDWARD J. HANNAFIN 62 1982 1974 1999
JOSEPH L. KNAPP 68 1982 1974 1999
ROBERT V. MACKLIN 50 1990 1990 2000
ANTONIO M. RESENDES 46 1994 1995 2000
THOMAS F. REYNOLDS 49 1993 1993 1999
JAMES R. UMBARGER, JR 47 1997 1996 2000
-10-
<PAGE>
BUSINESS EXPERIENCE
ENRICO J. ADDESSI: Age 68. Mr. Addessi has been a Director of Bancorp since
1982 and of VBT since 1975. His present term expires in 1999. Mr. Addessi is
Secretary of the Board of Directors of Bancorp and VBT. He is the President of
Addessi Jewelers of Ridgefield, Inc. located in Ridgefield, Connecticut.
JOSE P. BOA: Age 44. Mr. Boa was appointed a Director of Bancorp in 1994
and a Director of VBT in 1995. His present term expires in 2000. Mr. Boa served
as a Director, Chairman and Vice Chairman of the Board of Directors of Liberty
National Bank ("LNB"), which subsequently was acquired and merged into VBT, from
1989 to 1995. Mr. Boa is President and owner of Diversified Maintenance
Corporation of Danbury, Connecticut.
JEANNE M. COOK: Age 68. Mrs. Cook has been a Director of Bancorp and VBT
since 1989. Her present term of office expires in 1999. Mrs. Cook is a travel
industry consultant and was the owner of Jeanne Cook Travel Service, a travel
agency in Ridgefield, Connecticut.
EDWARD J. HANNAFIN: Age 62. Mr. Hannafin has been a Director of Bancorp
since 1982 and VBT since 1974. He has been Chairman of the Board of Directors of
Bancorp and VBT since 1988. His term of office expires in 1999. He was a
Director of LNB from 1994 to 1995. He was formerly Vice Chairman of the Board of
Directors of Bancorp and VBT from 1982 to 1988. He is an attorney at law and a
principal of the Law Firm of Collins, Hannafin, Garamella, Jaber & Tuozzolo,
P.C. of Danbury, Connecticut.
JOSEPH L. KNAPP: Age 68. Mr. Knapp has been a member of the Board of
Directors of Bancorp since 1982 and of VBT since 1974. His present term of
office expires in 1999. Mr. Knapp is an officer of Knapp Brothers, Inc.,
arborist, having an office in Ridgefield, Connecticut.
ROBERT V. MACKLIN: Age 50. Mr. Macklin has been a Director, President and
Chief Executive Officer of Bancorp and VBT since 1990. His present term as a
Director expires in 2000. He was formerly Executive Vice President of Bancorp
(1984 to 1990) and VBT (1979 to 1990). He was a Director of LNB from 1994 to
1995.
ANTONIO M. RESENDES: Age 46. Mr. Resendes was appointed a Director of
Bancorp in 1994. He was appointed a Director of VBT in 1995. Mr. Resendes served
as a Director and Chairman of the Board of Directors of LNB from 1989 to 1995.
His present term expires in 2000. Mr. Resendes has been a Department Head of
Henry Abbott Technical School in Danbury, Connecticut, since 1987. He was a Vice
President of DaSilva Fuel Company, Inc. of Danbury, Connecticut from 1979 to
1987.
-11-
<PAGE>
THOMAS F. REYNOLDS: Age 49. Mr. Reynolds has been a Director of Bancorp and
VBT since 1993. His present term expires in 1999. He is a certified public
accountant who is a partner in the accounting firm of Reynolds & Rowella, CPA,
having its principal office in Ridgefield, Connecticut.
JAMES R. UMBARGER, JR.: Age 47. Mr. Umbarger has been the Executive Vice-
President of Bancorp since 1994, VBT since 1995, a Director of VBT since 1996
and a Director of Bancorp since 1997. His present term expires in 2000. Prior to
that he was the Senior Vice- President and Treasurer of Bancorp and VBT. He was
President, Chief Executive Officer and a Director of Liberty National Bank in
1995.
No nominee for election as a Director is proposed to be elected pursuant to
any arrangement or understanding between the nominee and other person or
persons; except the Directors and Officers acting solely in that capacity. There
is no family relationship between any Director, Executive Officer or person
nominated by the Corporation to become a Director or Executive Officer of either
Bancorp or VBT.
DIRECTORS' COMMITTEES AND MEETINGS
In 1997, the Board of Directors of VBT and Bancorp had a six (6) member
standing Audit Committee consisting of Jose Boa, Madeline Contegni, Edward J.
Hannafin, Carl Lecher, Thomas Reynolds and Robert Scala who are Directors
independent of management. The Committee meets on call. In 1998, the Audit
Committee will consist of five (5) Directors: Jose Boa, Jeanne Cook, Joseph
Knapp, Antonio M. Resendes, and Thomas F. Reynolds. The function of the
Committee is to determine through external and internal audit and investigation
programs that the interests of customers and stockholders are properly advanced
and safeguarded. The Committee reviews and supervises an internal audit program;
reviews the engagement and actions of the independent auditor and makes
recommendations to the Board of Directors; reviews the services, qualifications,
engagement and results of the independent audit; reviews the audit and non-audit
fees and meets on matters relative to the annual examination by Bancorp's
accounting firm including a discussion of the accounting firm's memorandum on
accounting procedures and internal control. The Committee and the Board of
Directors also consider the independence of the accounting firm for non-audit
functions. The Committee also recommends the selection of an external
independent accounting firm to the Board of Directors. It met two (2) times in
1997.
The Executive Committee of Bancorp and VBT each consists of five (5)
members of the Board of Directors; Enrico Addessi, Richard O. Carey, Nicholas R.
DiNapoli, Edward J. Hannafin, and Robert V. Macklin. The Committee acts on
behalf of the Board of Directors in the implementation of its policies and
directives. It also acts as its Nominating Committee with the function of
seeking qualified candidates (including consideration of the performance of the
incumbent Directors) for the Board of Directors of Bancorp and VBT and Advisory
Board of Directors of VBT and recommending nominees to the respective Board of
Directors. The Committee will consider nominees recommended by stockholders
provided stockholders submit the name or names of new
-12-
<PAGE>
nominees, in writing, to the Secretary of the Board of Directors by December 21,
1998. Nominees for election as a director at an annual meeting are reviewed by
the Committee on or before February 1st preceding the annual meeting. As a
nominating committee, it met one (1) time during 1997.
Neither Bancorp nor VBT has a compensation committee. This function is
performed by their respective Boards of Directors. The Board of Directors sets
the compensation for the members of the Board of Directors and the
President/Chief Executive Officer and Executive Vice President. See
"Compensation Committee Report of Executive Compensation".
The Board of Directors of Bancorp and VBT held thirteen (13) regular or
special meetings in 1997. All Directors attended more than 75% of the aggregate
of the Board of Directors meetings and their Committee meetings; except Joseph
L. Knapp who attended 71.43% of his aggregate Board of Directors and Committee
meetings.
REMUNERATION OF DIRECTORS
AND CERTAIN BUSINESS RELATIONSHIPS
Members of the Board of Directors of Bancorp, who are not employees, do not
receive any remuneration except for attendance at meetings. In 1997, members of
the Board of Directors of Bancorp and VBT received the sum of $550 each for
attendance at the joint meetings of the Board of Directors and $150 each for
attendance at committee meetings of the Board of Directors. In 1998, members of
the Board of Directors of Bancorp and VBT will receive the same compensation
each for attendance at the joint meeting of the Board of Directors of Bancorp
and VBT and for attendance at committee meetings of the Board of Directors. In
1997, each member of the Board of Directors received a bonus of $1,000.00. The
Chairman of the Board of Directors receives additional compensation of $10,000
per annum for his additional work and services provided to the Corporation
during the course of the year and will receive the same additional compensation
for the additional work and services in 1998. Mr. Macklin and Mr. Umbarger do
not receive remuneration as members of the Board of Directors for attendance at
Director and Committee meetings.
Edward J. Hannafin, who is Chairman of the Board of Directors of VBT and
Bancorp, is a principal in the Law Firm of Collins, Hannafin, Garamella, Jaber &
Tuozzolo, P. C., which is counsel to the Corporation and VBT. The Law Firm
received a total remuneration for ordinary and extraordinary fees to the
Corporation and VBT in 1995 of $53,548.00, in 1996 of $53,816.00 and in 1997 of
$40,452.00. The Law Firm has been retained as counsel to Bancorp and VBT for
services to be rendered in the ordinary course of business in 1998 for the sum
of $600 per month (an annual aggregate amount of $7,200).
-13-
<PAGE>
Mr. Nicholas R. DiNapoli and Mr. Carl Lecher are partners in Skylands
Associates, a Connecticut partnership, which leases real estate to VBT at 96
Danbury Road, Ridgefield, Connecticut. The premises contain approximately 7000
sq. ft. of office space with parking. VBT paid $109,562.00 to Skylands in 1995,
$114,251.00 in 1996 and $111,499.00 in 1997. VBT will pay a base rental fee of
$71,560.00 plus common charges to Skylands Associates in 1998. The lease expires
October 31, 1998.
Jose P. Boa is President and Owner of Diversified Maintenance Corporation
of Danbury, Connecticut, which provides cleaning and janitorial services to VBT
and received fees of $38,950.00 in 1995, $40,035.00 in 1996 and $46,537.00 in
1997. Diversified Maintenance Corporation is providing cleaning and janitorial
services in 1998 to VBT.
Carl Lecher provided construction supervision for VBT's new office building
in Danbury, Connecticut, and received $22,500.00 in compensation in 1996, and
$24,000.00 in 1997 for this service.
Other Directors have minimal or no business contact with the Corporations.
DIRECTORS AND EXECUTIVE OFFICERS
DEFERRED INCOME PLAN
In 1986, the Corporation adopted a voluntary deferred income plan for
Directors which permits Directors to defer receipt of a part of their director's
fees. There are presently twelve (12) Directors eligible for the plan. Robert V.
Macklin and James R. Umbarger, Jr., are not eligible for the Directors Deferred
Income Plan as Mr. Macklin is the President and Chief Executive Officer of the
Corporation and Mr. Umbarger is Executive Vice President of the Corporation and
are members of active management. Five (5) Directors have elected to participate
in the plan.
The Corporation has adopted a deferred income plan for Robert V. Macklin
and James R. Umbarger, Jr., (Executive Officer). Under this program, the
participants elect to defer a portion of their salary. The amount deferred is
used by VBT to purchase life insurance on the lives of the participants. The
life insurance proceeds will be used to reimburse VBT for the benefit payments
made under the program. The amounts referred were: Robert V. Macklin - 1997
$9,000, 1996 $9,000, 1995 $9,000; James R. Umbarger - 1997 $4,000, 1996 $4,000,
1995 $4,000.
Under the programs, a Director or Officer may elect to have all or a
portion of their director's fees or officer salary deferred. These deferred
awards are paid out in one hundred twenty (120) monthly installments at the age
selected by the participant. The amount of the benefit varies with the amount
deferred, the participant's age at time of commencement and time of termination,
and the circumstances of the termination. The program also includes special
provisions for payment to the beneficiary of the participant who dies while
participating in the Plan. The right to the amount deferred vests immediately on
payment. The right to additional sums will vary and vest at different times in
accordance with the amount deferred, age of participant and length of
participation.
-14-
<PAGE>
The amount deferred is used by VBT to purchase life insurance on the lives
of the deferring participants. The proceeds from the insurance will be used to
reimburse VBT for the benefit payments made under the program. The insurance is
designed so that if the assumptions made as to mortality experience, policy
dividends, and other factors are realized, the proceeds paid VBT will be at
least equal to all the premium payments.
EXECUTIVE OFFICERS
The Executive Officers of Bancorp and VBT are listed below, together with
their age, position and office, principal occupation and their term and period
during which they have served as such:
Position, Office, & Term and
Name and Age Principal Occupation Period
- --------------------------------------------------------------------------------
ROBERT V. MACKLIN President, Chief Executive 1990 to date
Age 50 Officer, and Director of
Bancorp and VBT;
formerly Executive Vice
President of Bancorp
and VBT (VBT 1979-1990;
Bancorp 1984 to 1990).
JAMES R. UMBARGER, JR. Executive Vice-President 1990 to date
Age 47 of Bancorp and VBT,
Director of VBT (1996 to date);
Director of Bancorp (1997 to date),
President of LNB (1995); Sr.
Vice-President and Treasurer of
Bancorp and VBT (1982 to 1990) and
Executive Vice-President of VBT
(1990 to 1995).
The salaries of Bancorp officers are paid by VBT.
There are no arrangements or understandings between the Officers and any
other persons pursuant to which he is to be selected as an officer. There is no
family relationship between any Director, Executive Officer or person chosen to
be a Director or Executive Officer. There are no employment contracts,
compensation plans or arrangements with the Executive Officers other than their
respective interests in the Corporations 401(k) Incentive Savings and Salary
Reduction Plan
-15-
<PAGE>
(See "Incentive Savings and Salary Reduction Plan"), Stock Option Plan (See
"Options") and insurance (See "Executive Compensation") and an agreement
regarding termination resulting from a change in control of Bancorp or VBT (See
"Termination of Employment: Change In Control Agreement").
TRANSACTIONS WITH MANAGEMENT
Bancorp and VBT have had no transactions and have no proposed transactions
with their Directors, Officers, any of their relatives, or firm, corporation or
other entity, in which they may have an interest, directly or indirectly; except
as noted below.
All Directors and Officers of Bancorp and VBT are depositors of VBT and
several have had credit extended to them in varying degrees in the ordinary
course of business.
VBT has had and expects to have in the future, banking transactions in the
ordinary course of business, with its and Bancorp's Directors, Advisory
Directors, Officers, principal stockholders, their immediate families,
corporations, organizations, and associates, on substantially the same terms,
including interest rates, collateral and repayment terms as those prevailing at
the same time for comparable transactions with others, which do not involve more
than normal risk of collectability or present unfavorable features.
See "Remuneration of Directors and Certain Business Relationships" for
further transactions with Directors.
REMUNERATION OF DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
There are no Directors or Officers of VBT or Bancorp (other than the
President, Robert V. Macklin and the Executive Vice President, James R.
Umbarger, Jr.), who individually received a total annual salary and bonus
remuneration from VBT or Bancorp in excess of $100,000 in 1997. There is no
compensation paid by Bancorp to its Directors or Officers. All compensation to
them is paid by VBT. See "Remuneration of Directors and Certain Business
Relationships." The following table sets forth the 1997 remuneration for VBT's
highest paid Executive Officers and Directors as a group.
-16-
<PAGE>
VBT
- --------------------------------------------------------------------------------
(A) (B) (C)
Name of individual or Capacities in Cash Remuneration
number of persons in which served
group
- --------------------------------------------------------------------------------
(14) Directors & Executive $ 519,719 (2),(3),(4)
Officers as a group
(24) Officers as a group $1,395,624 (2),(3),(4)
- --------------------------------------------------------------------------------
1. The term "Director" does not include salaried employees who do not
receive fees as a Director. The term "Directors" does include the Chairman,
Vice-Chairman and Secretary of the Board of Directors. The term "Executive
Officers" and eligible "Officers" includes the President and Executive
Vice-President.
2. Officers of the Corporation receive life, health, hospitalization and
medical insurance as part of a group plan, which does not discriminate in scope,
term or operation in favor of officers or directors, and is generally available
to all salaried employees. The personal benefits to any officer, which are not
directly related to job performance or those provided to broad categories of
employees and which do not discriminate in their favor, of Officers or
Directors, do not exceed either $50,000 or 10% of their cash compensation as set
forth in the Summary Compensation Table. Certain of the Executive Officers of
the Corporation utilize Corporation automobiles in the ordinary course of its
business. Any personal use of Corporate automobiles is minimal.
3. Includes payments under Employee Incentive Thrift Plan. See "Incentive
Savings and Salary Reduction Plan".
4. Includes bonus payments. All the employees earned a bonus at year end in
1995, 1996 and 1997. The entire bonus amount was: 1995 ($41,823.00); 1996
($60,090.00); 1997 ($64,461.00). Executive Officers did not participate in these
bonuses.
INCENTIVE SAVINGS AND SALARY REDUCTION PLAN
VBT has a 401(k) Incentive Savings and Salary Reduction Plan. The Plan is
available to all eligible employees. The Plan is designed to be a qualified
pension plan under Section 401 and 501 of the Internal Revenue Code. The Plan
provides for 50% matching contributions to be made by VBT if the employee
voluntarily agrees to contribute to the Plan by a salary reduction election. An
employee may contribute no more than the maximum I.R.S. index amount to the
Plan; however the Company only matches contributions up to 6% of the employee's
eligible salary. The entire amount
-17-
<PAGE>
of contributions made by the employee and VBT and credited to the account of the
participating employee is fully vested within five (5) years. Withdrawals from
the Plan are only allowed upon retirement, disability, separation from service,
attainment of the age of 59 1/2 or in the event of financial hardship as defined
by the Internal Revenue Service. The employee's election to participation is
revocable. Directors are not eligible for participation in the Plan other than
in their capacity as an employee. (The President, Robert V. Macklin, and
Executive Vice-President, James R. Umbarger, Jr., who are also Directors,
participate in the Plan as employees).
The total amount contributed by VBT to the Plan in the past three (3) years
is set forth in the following table.
- --------------------------------------------------------------------------------
1995 1996 1997
- --------------------------------------------------------------------------------
Robert V. Macklin, President $ 4,038 $ 4,224 $ 4,410
and Chief Executive Officer
of Bancorp and VBT
James R. Umbarger, Jr., Executive $ 2,751 $ 3,782 $ 3,612
Vice-President of Bancorp and
VBT
Executive Officers as a Group $ 6,789 $ 8,006 $ 8,022
Employees as a Group
(excluding executive officers) $41,619 $42,979 $47,999
-18-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------
Annual Compensation Awards Payouts
- -------------------------------------------------------- ---------- ----------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name Annual Restricted All other
and Compen- Stock TIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary ($) Bonus ($) ($) ($) SARs (#) ($) ($)
- -------- ---- ---------- --------- ------- --------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert V.
Macklin
President Chief
Executive 1997 186,506 27,000 9,000 0 0 0 4,410
Officer: 1996 141,400 24,000 9,000 0 20,000 0 4,224
Director 1995 135,375 19,000 9,000 0 0 0 4,038
James R.
Umbarger, Jr. 1997 121,291 18,000 4,000 0 0 0 3,612
Executive 1996 116,502 16,000 4,000 0 15,000 0 3,782
Vice-President 1995 110,040 11,000 4,000 0 0 0 2,751
</TABLE>
NOTES:
SALARY: The amounts shown for Mr. Macklin and Mr. Umbarger under (i)
include amounts deferred under Section 401K of the Internal Revenue Code. See
"Incentive Savings and Salary Reduction Plan". The amount shown for Mr. Macklin
includes $38,448 for his initiation, membership, and enrollment in a local
country club to be used for business purposes.
BONUS: Bonuses were paid to the Executive Officers as determined by The
Board of Directors after consideration of financial performance, including cash
flow, profitability, return on capital, growth, administration, compliance and
regulatory reports of the Bank. See "Compensation Committee Report of
Executives".
OTHER ANNUAL COMPENSATION: Mr. Macklin and Mr. Umbarger utilize Corporation
automobiles in the ordinary course of business. Any personal use is minimal.
They receive life, health, hospitalization and medical insurance as part of a
group plan; which does not discriminate in scope, term or operation in favor of
officers and is generally available to all salaried employees. These perquisites
and other benefits do not exceed the lesser of $50,000.00 or 10% of their
respective total annual salary and bonuses. The amounts shown are deferred
income. See "Directors and Officers Deferred Income Plan".
OPTIONS/SARs: In 1993, and 1996 Stock Options were granted. See
"Options/SAR Grants In Last Fiscal Year".
ALL OTHER COMPENSATION: Mr. Macklin and Mr. Umbarger received employer
contributions under its 401K Plan. See "Incentive Savings and Salary Reduction
Plan".
-19-
<PAGE>
There were no options granted to executive officers in 1997.
The following table sets forth information with respect to the named
Executive Officers concerning the exercise of options during 1997 and the
unexercised options held as of December 31, 1997.
Aggregated Option/SAR Exercises in Last Year.
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number Value of
Unexercised Unexercised
Shares Options/SAR's Options/SAR's
Acquired At FY-End (#) FY-End ($)
On Value Exercisable/ Exercisable
Exercise (#) Realized ($) Unexercisable Unexercisable
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Robert V. Macklin -0- -0- 29,800/0 $370,725/0
James R. Umbarger, Jr. -0- -0- 22,800/0 $284,850/0
- ---------------------------------------------------------------------------------------------
</TABLE>
1. The options were granted under the "Stock Option Reserve Plan".
-20-
<PAGE>
1. The President of VBT, Robert V. Macklin, was granted an option in 1993
to purchase 9,800 shares of common stock of Bancorp at a price of $5.50 per
share to be exercised on or before October 14, 1998. In 1996 he was granted an
option to purchase 20,000 shares of common stock at $9.50 per share to be
exercised on or before April 8, 2001 under the 1996 Stock Option Plan for Key
Employees. See footnotes 3, 4, and 5.
2. The Executive Vice-President of VBT, James R. Umbarger, Jr. was granted
an option in 1993 to purchase 7,800 shares of common stock of Bancorp, at a
price of $5.50 per share to be exercised on or before October 14, 1998. In 1996
he was granted an option to purchase15,000 shares of common stock under the 1996
Stock Option Plan for Key Employees at $9.50 per share to be exercised on or
before April 8, 2001. See footnotes 3, 4, and 5.
3. In 1993, Bancorp granted options to purchase 32,600 shares of its common
stock to sixteen (16) of VBT's officers. The officers and the number shares
granted to them varied from 200 shares to 9,800 shares, including Robert V.
Macklin (9,800 shares) and James. R. Umbarger, Jr. (7,800 shares). The purchase
price is $5.50 per share and is subject to adjustment for stock dividends, stock
splits and issuance of additional shares. The expiration date is October 14,
1998; but sooner expire upon the expiration of fourteen (14) days from the date
on which the respective officers employment is terminated or three (3) calendar
months from date of death during employment to be exercised by personal
representatives. These options are granted by the Board of Directors under the
Stock Option Reserve Plan.
4. In 1996, Bancorp granted options to purchase 78,400 shares of its common
stock to Key Employees under the 1996 Stock Option Plan for Key Employees. The
Officers and member of shares granted to them varied from 200 to 20,000 shares
including Robert V. Macklin (20,000 shares) and James R. Umbarger (15,000
shares). See "1996 Stock Option Plan".
5. In 1997, Bancorp granted options to purchase 23,800 shares of its common
stock to Key Employees under the 1996 Stock Option Plan for Key Employees. The
Officers and number of shares granted to them varied from 200 to 6,000 shares.
6. The market value of the October 14, 1993 grants were the last known
sales price of Bancorp as represented by NASDAQ, and the market value under the
1996 Stock Option Plan was the last known sales price of Bancorp as represented
by NASDAQ. The number of shares were increased by the two (2) for one (1) stock
dividend in November, 1997.
TERMINATION OF EMPLOYMENT: CHANGE IN CONTROL
In 1993, the Board of Directors of VBT entered into an agreement with
Robert V. Macklin, its President and Chief Executive Officer, and James R.
Umbarger, Jr., its Executive Vice-President (both individually referred to as
"Executives"), which provides for compensation in the event their employment is
terminated or resigns for any reason, or dies or is disabled after a change in
control of VBT or Bancorp. This Agreement was amended in 1996 and in 1997. The
agreements provide
-21-
<PAGE>
for a salary continuation in the amount equal to a multiple of 2.99 times their
average annual salary for the previous five (5) calendar years for a period of
two (2) years in the event of termination within one (1) year of the change in
control or in the amount equal to a multiple of 1.99 times their average annual
salary for the previous five (5) calendar years for a period of one (1) year in
the event of termination within the second (2nd) year after change in control.
The agreement also provides for salary continuation in the event of salary
reduction during the first two (2) years following a change in control. These
payments may be terminated in the event the Executives' employment is terminated
for cause. The agreement terminates January 1, 2000. In 1996 The Board of
Directors of VBT entered into a similar change of control agreement with Senior
Vice-President George W. Hermann and Senior Vice-President Gerard Shpunt
providing for one (1) year compensation if terminated within the first year and
in 1997, the Board of Directors of VBT entered into a similar agreement with its
Senior Vice-President Kenneth M. Griffin.
In 1996, The Board of Directors adopted a change of control Severance
Policy for directors and employees of VBT and Bancorp in the event their
employment is terminated after a change of control of Bancorp or VBT. The policy
for Directors provides for a continuation of directors compensation equal to
2.99 times the annual compensation received by the respective director for the
preceding two (2) years, based on a percentage determined by the number of years
in service, payable monthly on the date directors are customarily compensated.
The Compensation for employees shall equal three (3) weeks average salary and is
prorated on a formula based on a percentage of the number of years of
employment. The compensation for any employee or director shall at no times
exceed 2.99 times their annualized compensation for the most recent five (5)
year taxable years ending before the date on which the change in control or
ownership occurs of control.
The Officers Agreement defines a "change in control" as (a) a purchase,
sale, or exchange, legally or equitably, of more than fifty (50%) percent of the
outstanding shares of the Corporation, with a corresponding change of forty
(40%) percent or more of the Directors of the Corporations Board of Directors in
any one (1) year; (b) the appointment or election of fifty (50%) percent or more
of new members to the Board of Directors of the Corporation in any one (1) year;
(c) the purchase, sale or exchange of thirty (30%) or more of the outstanding
shares of the Corporation by one person, one entity, or related person and/or
entities with a corresponding change of forty (40%) percent or more of the
Directors of the Corporations Board of Directors, in any one (1) year period;
(d) an event under (a) or (c) above where the Executives employment is
terminated other than for cause within two (2) years of the event or (e) a
merger, consolidated of dissolution of the Corporation.
All payments are paid as salary or compensation in the same increments and
payment schedule as the Corporation pays its Directors management, or employers
in the regular cause of business.
Notwithstanding, the aggregate present value of all payments in the nature
of compensation, such as cash advances, cash benefits, severance plan, etc.
which are made or to be made to the individual, shall not exceed 2.99 times the
average base amount. If the aggregate present value of such payment exceed 2.99
times the individuals base amount, the aggregate present value of such amount
shall be reduced to an amount equal to 2.99 times the individuals base amount.
The purpose
-22-
<PAGE>
of the limitation is to prevent any part of the compensation from being treated
as an "excess parachute payment" under the provisions of Section 280 of the
Internal Revenue Code.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors acts as the Compensation Committee. All Directors
had and have transactions with Bancorp as noted in "Transactions With
Management". Edward J. Hannafin, Chairman of the Board of Directors, Nicholas R.
DiNapoli, Vice-Chairman of the Board of Directors, and Jose P. Boa and Carl
Lecher members of the Board of Directors, had certain business relations with
Bancorp and VBT during 1997. See "Remuneration of Directors and Certain Business
Relationships", "Transactions With Management", and "Compensation Committee
Report of Executive Compensation".
COMPENSATION COMMITTEE REPORT OF EXECUTIVE COMPENSATION
The Board of Directors acts as the Compensation Committee with respect to
compensation for Robert V. Macklin, President and Chief Executive Officer and
James R. Umbarger, Jr., Executive Vice President.
Robert V. Macklin and James R. Umbarger, Jr., who are also members of the
Board of Directors, do not participate as board members relative to discussion,
determination, policies and review of executives and executive compensation. See
"Compensation Committee Interlocks and Insider Participation."
The Board considers earnings, return on assets, return on equity, growth,
administration, compliance and regulatory reports, development and maintenance
of business and customers, and general economic industry conditions.
Consideration was given to profitability of the bank under economic
conditions that have existed in VBT's banking market for the past three (3)
years, the development of VBT in its existing and new market areas, the
expansion projects in Danbury and Westport, Connecticut, the increase in
deposits and personnel of VBT as a result of its expansion and the development
of the Trust Department. The Board further reviewed the start-up cost for the
Danbury and Westport facilities. VBT now has six (6) offices. While peer banks
in Western Connecticut have similar or better performances on the average, the
solid performance of VBT has permitted the Board to continue to pay dividends
while VBT grows.
The Board also reviewed known compensation packages of executives at peer
banking institutions located in Western and Southwestern Connecticut. This is a
self selected group of comparable size and banking business. The salaries
provided to Bancorp and VBT executives are targeted at a competitive median
range of these peer groups.
-23-
<PAGE>
In addition, the Board considered the overall performance of VBT and
Bancorp for the past three (3) years, and in particular the continued
profitability of Bancorp, the earnings per share in 1996, the continued
executive efforts to improve the Corporation and the corresponding results, the
competitive environment, earnings, return on assets, return on equity, growth,
administration, compliance and regulatory reports, the initiation of a new
development team, development of its business, customers, the Trust Department
and the expansion of VBT with related costs. The criteria are typically
subjective and not specifically specified; however certain performance measures
are available.
The Board determined the executive compensation paid in 1997 to be fair and
reasonable. It believes the extension of certain stock options (See "Options"
and footnotes thereto) are an incentive to a continuing profitability and a
vehicle for retention of qualified personnel. Stock options were extended with
incentives and retention in mind and not as a form of current compensation. (see
"1996 Stock Option Plan"). Senior Management also have change of control
agreements (see "Termination of Employment, Change In Control") and a 401(k)
Plan (see "Incentive Savings and Salary Reduction Plan").
The Board of Directors acting as the Compensation Committee were:
Enrico J. Addessi Nicholas R. DiNapoli Antonio Resendes
Jose P. Boa Edward J. Hannafin Thomas F. Reynolds
Richard O. Carey Joseph L. Knapp Robert Scala
Jeanne M. Cook Carl Lecher
COMPARISON OF TOTAL STOCKHOLDER RETURN
Set forth below is a line graph comparing the five year cumulative total return
of the Company's common stock with that of the SNL Securities Corporation
Performance New England Bank Index Value and the NASDAQ Stock Market (U.S.)
Total Return Index. The graph compares the value of $100 invested on December
31, 1992 in the Company's stock with that of the two indexes. The SNL New
England Bank Index was chosen as it represents a broad market group in which the
company participates, and the NASDAQ Stock Market (U.S.) Total Return Index was
chosen as having a representative peer group of companies. The total return
includes reinvestment of dividends.
-24-
<PAGE>
Village Bancorp, Inc.
Total Return Performance
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
Period Ending
--------------------------------------------------------------------
Index 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Village Bancorp, Inc. 100.00 140.09 160.71 262.13 317.00 558.35
NASDAQ-Total US 100.00 114.80 112.21 158.70 195.19 239.53
SNL New England Bank Index 100.00 102.57 98.57 161.62 220.39 350.81
</TABLE>
-25-
<PAGE>
STOCK OPTION RESERVE PLAN
Bancorp has two (2) present stock option reserve plans for the officers and
employees of it and VBT to be granted and issued by The Board of Directors from
time to time.
1988 PLAN
The first plan, adopted in 1988, provides for the Corporation setting aside
43,292 shares of its common stock to be granted and issued from time to time by
the Board of Directors to the officers and employees. The grant of options will
be issued in consideration of employment and as an incentive to advance the
growth, development and interests of Bancorp and VBT. In November, 1997, the
Corporation issued a two (2) for one (1) stock dividend which resulted in an
adjustment to the number of stock options.
The price per share at the time of a grant or establishment of an option
shall be the then fair market value as of the latest practicable date to the
grant or establishment. The exercise and termination date and other material
conditions are to be set by the Board of Directors at the time of the grant. The
plan (and options granted thereunder) provide for stock adjustment for
additional shares in the event of a stock dividend, split-up, reclassification,
or subdivision, and issuance of additional shares to existing stockholders or
the general public. Options are intended to qualify as incentive stock options
under the Internal Revenue Code and expire no more than five (5) years after the
date of granting thereof or on such date prior thereto as may be fixed by the
Board of Directors subject to earlier termination if the Optionee dies or leaves
the service of the Corporation or any of its subsidiaries. Payment for shares
upon the exercise of an option shall be in cash. It is intended that there will
be no Federal Income Tax consequences upon the granting of an option for either
the Bank or the recipient. Upon the sale of the option shares exercised, there
will be taxable income to the recipient equal to the excess of sales price of
the stock at the date of the sale over the option price. The income will be
taxed to the recipient as earned income and therefore subject to the maximum
personal income rate. The Corporation will have a tax deduction in the same
amount as and at the same time as the recipient receives income.
The options when granted will be documented in writing. The Board of
Directors has a written stock option plan for the setting aside and reserve of
the shares which is on file in the office of the Corporation.
These options and option prices are subject to adjustment for stock
dividends, stock splits and issuance of additional shares.
In 1993, the Board of Directors granted options to purchase 32,600 shares
of its common stock to sixteen (16) of VBT's Officers. The Officers and the
number of shares granted to them varied from 200 shares to 9,800 shares,
including Robert V. Macklin (9,800 shares) and James R. Umbarger, Jr. (7,800
shares). The purchase price is $5.50 per share and is subject to adjustment for
stock dividends, stock splits and issuance of additional shares. Reference is
made to "Options" and its footnotes as to the number of shares, expiration dates
and other material conditions. See "Options".
-26-
<PAGE>
1996 STOCK OPTION PLAN FOR KEY EMPLOYEES
The second plan is the "1996 Stock Option Plan" which was adopted by
Stockholders in 1996. The Plan provides for 150,000 shares of common stock to be
issued to a class of officers considered Key Employees. The purpose is to
provide long term incentives in the form of stock options to Key Employees. The
grant of options are issued in consideration of employment and as an incentive
to advance the growth, development and interest of Bancorp and VBT.
The class of officers listed in the Plan are entitled to receive the total
number of options, in the aggregate, with respect to the officers title, upon
their attainment of the respective position. The purchase price is the fair
market value of Bancorp common stock on the date of grant; as defined in the
Plan. The number of shares available for the options or optionee and the option
price thereof will be increased or decreased proportionally for any stock split,
stock dividend or other similar adjustment. Accordingly, the number of shares
available and granted were increased by 100% on the insurance of a two (2) for
one (1) stock divided by Bancorp in November, 1997.
Each option may be exercised at any time, in whole or in part, within five
(5) years from the date of grant unless sooner expired, terminated or canceled
pursuant to the plan. In order to exercise the option the officer must have
remained in the employ of the Company for at least one (1) year and in that
position for at least three (3) months. No options under the 1996 Plan may be
granted after 10 years from the effective date of the plan.
Under present Federal Income Tax laws and regulations, the holder of an
option granted under the 1996 Plan which qualifies as an Incentive Stock Option,
("ISO") will not be subject to any tax with respect to the grant of the Option.
The ISO holder will not realize income at the time the ISO is exercised
(although an item of tax preference may arise as a result) and any gain realized
upon the disposition of the stock received upon exercise will be taxed as a long
term capital gain; provided that certain holding period requirements are met. If
such holding period requirements are not met, the gain may be characterized as
ordinary income. Bancorp will not receive an income tax deduction with respect
to an ISO unless upon disposition of the underlying stock the Employee realizes
ordinary income as a result of having failed to satisfy the holding period
requirements.
The holder of an option granted under the 1996 Plan which is not an ISO but
is a non-qualified option ("NQO") will not recognize income with respect to the
grant of the option; but will recognize ordinary income at the time of exercise
of the Option to the extent the fair market value of the shares purchased exceed
the Option price. However, a holder subject to Section 16(b) of the Securities
Exchange Act of 1934 will instead, unless he or she elects otherwise, be taxed
based on the value of the shares received six months after (rather than at the
time of) exercise of the Options. Bancorp will be entitled to a deduction for
Federal Income Tax purposes in an amount equal to the income realized by the
holder upon the exercise of a NQO.
In 1996, the Board of Directors granted options to purchase 78,400 shares
of Bancorp common stock to twenty (20) of VBT's officers. The officers and the
number of shares granted to them varied from 200 to 20,000 shares, including
Robert V. Macklin (20,000 shares) and James R. Umbarger (15,000 shares). In
1997, Bancorp granted options to purchase 23,800 shares of Bancorp common stock
to Key Employees. The Officers and number of shares granted to them varied from
-27-
<PAGE>
200 to 6,000 shares. The purchase price is $9.50 per share and must be exercised
on or before April 8, 2001. See "Options"
RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS
On recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP as independent auditors of the Corporation for
the year ending December 31, 1997. Deloitte & Touche LLP was formed in 1989 when
Deloitte Haskins & Sells and Touche Ross & Co. combined their practices.
Deloitte & Touche, LLP, has been Bancorp's and VBT's independent public
accountant since 1986.
The stockholders are asked to ratify the appointment pursuant to its fee
arrangement. Deloitte & Touche, LLP, will audit the consolidated balance sheet
as of the end of the fiscal year and related consolidated statements of income,
and changes in stockholders' equity and cash flows for the year in accordance
with generally accepted auditing standards. The accounting firm also is
responsible for the preparation of Bancorp's consolidated state and federal
income tax returns. The services and independence of the accountants were
considered and approved by the Audit Committee of the Board of Directors of VBT
and the Board of Directors of VBT and Bancorp.
A representative of Deloitte & Touche, LLP, will be present at the annual
meeting to be held on April 27, 1998, with an opportunity to make a statement if
the representative desires to do so, and will be available to respond to
appropriate questions.
In the event stockholders vote against the appointment of Deloitte &
Touche, LLP, the Board of Directors will submit an additional independent
accountant to the stockholders for approval at a special meeting called for that
purpose.
MISCELLANEOUS
The annual meeting is called for the purposes set forth in the Notice.
Management does not know of any matter for action by stockholders other than the
matters described herein. The enclosed proxy will confer discretionary authority
to vote on all matters incidental to the conduct of the meeting, approval of
minutes of prior meetings, the election of any office for which a bona fide
nominee is named in this proxy statement and such nominee is subsequently unable
to serve or for good cause refuses to serve, and matters which management does
not know as of date may be presented at the meeting. It is the intention of the
Proxy Committee to vote in pursuance of the proxy in accordance with the
recommendation of the Board of Directors.
BY ORDER OF THE BOARD OF DIRECTORS
Enrico J. Addessi, Secretary
-28-
<PAGE>
April 6, 1998
Revocable Proxy
Proxy for Annual Meeting of Stockholders
VILLAGE BANCORP, INC.
The undersigned, having received notice of the Annual Meeting of Stockholders
for date of April 27, 1998, appoints and authorizes Enrico J. Addessi and Joseph
L. Knapp and each of them (with power to act without the other and with power of
substitution) as proxy to vote all stock of Village Bancorp, Inc., which the
undersigned is entitled to vote if personally present at the Corporation's
Annual Meeting of Stockholders to be held at The Village Bank & Trust Company,
25 Prospect Street, Ridgefield, Connecticut, 06877, on Monday, April 27, 1998,
at 8:00 p.m., and at all adjournments thereof, for the election of Directors (if
authority is withheld, indicate below), and ratification of Independent Public
Accountants.
(1) Election of Directors:
FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY [ ]
(except as marked to the contrary) (to vote for all nominees listed below)
Three Year Term
Richard O. Carey Carl Lecher
Nicholas R. DiNapoli Robert Scala
YOU AS A SECURITY HOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE BY
LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME OF ANY NOMINEE:
(2) Ratification of Deloitte & Touche, LLP as Independent Public Accountants
for 1998
For [ ] Against [ ] Abstain [ ]
The proxy holder shall have the discretionary authority to vote on all matters
incidental to the conduct of the meeting, approval of minutes of prior meetings,
the election of any person to any office of which a bona fide nominee is named
in the proxy statement and such nominee is subsequently unable to serve or for
good cause will not serve, proposals omitted from the proxy statement and form
of proxy pursuant to Rule 14a-8 or Rule 14a-9 of the Securities and Exchange
Commission and matters which management does not know as of date may be
presented at the meeting. This proxy when properly executed will be voted in the
manner specified herein by the undersigned stockholder. EXECUTION OF THIS PROXY
IN SUCH A MANNER AS NOT TO WITHHOLD AUTHORITY SHALL BE DEEMED A GRANT OF
AUTHORITY FOR APPROVAL OF DIRECTORS AND
<PAGE>
EXECUTION IN SUCH A MANNER AS NOT TO VOTE AGAINST OR ABSTAIN SHALL BE
DEEMED A RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS;
Dated.......................................................................1998
..........................................................................(L.S.)
..........................................................................(L.S.)
IMPORTANT: Please sign exactly as your name or names appear on the stock
certificate or certificates, and when signing as attorney, executor,
administrator, trustee or guardian, give your full title as such. If the
signatory is a corporation, sign the full corporate name by a duly authorized
officer. If stock is held in joint tenancy, with rights of survivorship, either
joint tenant may sign. If stock is held as tenants in common, both joint tenants
must sign.
Please sign and return this proxy promptly
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
