28
BAR HARBOR BANKSHARES
82 Main Street
Bar Harbor, ME 04609
September 6, 2000
Dear Stockholder:
The 2000 Annual Meeting of Bar Harbor Bankshares will
be held at 11:00 a.m. on Tuesday, October 3, 2000 in
the Atlantic Oakes Conference Center, located next to
the Bay Ferries Terminal on Route 3 in Bar Harbor,
Maine. The Directors and Officers join me in inviting
you to attend this meeting and the reception, which
will follow.
Enclosed are the Clerk's official Notice of Annual
Meeting, a Proxy Statement and the Form of Proxy.
Please sign the Form of Proxy and return it in the
envelope provided so that your shares will be voted at
the Annual Meeting if you are unable to attend. Please
also complete the reception postcard and mail it
separately from the Form of Proxy if you will be
attending the reception.
We look forward to seeing you on October 3rd. Please
join us for the reception even if you are unable to
attend the business meeting.
Very truly yours,
Dean S. Read
President and Chief
Executive Officer
Enclosures
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY
Each stockholder is urged to fill in, date and
sign the enclosed form of proxy and mail it in the
envelope provided.
If you attend the meeting, you may, if you wish,
revoke your proxy and vote your shares in person.
BAR HARBOR BANKSHARES
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 3, 2000
Notice is hereby given that the Annual Meeting of the
Stockholders of Bar Harbor Bankshares will be held at
the Atlantic Oakes Conference Center on Route 3 in Bar
Harbor, Maine on October 3, 2000 at 11:00 a.m. to
consider and act upon the following proposals.
1. To elect four persons to serve as Directors
for a term of one year.
2. To elect three persons to serve as Directors
for a term of two years.
3. To elect three persons to serve as Directors
for a term of three years.
4. To set the number of Directors for the ensuing
year at 10.
5. To approve the Bar Harbor Bankshares Incentive
Stock Option Plan
6. To approve the Bar Harbor Bankshares Non-
Qualified Directors Stock Option Plan
7. To ratify the Board of Directors' selection of
Berry, Dunn, McNeil & Parker as independent
auditors of the Company and of the Bank for the
ensuing year.
8. To transact such other business as may
properly come before the meeting or any
adjournment thereof.
Stockholders of record as of the close of business on
August 18, 2000 will be entitled to notice of and to
vote at the meeting.
By Order of the Board of Directors
Marsha C. Sawyer, Clerk
BAR HARBOR BANKSHARES
82 Main Street
Bar Harbor, ME 04609
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, OCTOBER 3, 2000
PROXY STATEMENT
This Proxy Statement is furnished to the
stockholders of Bar Harbor Bankshares (the Company) in
connection with the solicitation of proxies on behalf
of the Board of Directors for use at the Annual Meeting
of Stockholders (the Meeting). The Meeting will be held
on Tuesday, October 3, 2000 at 11:00 a.m. at the
Atlantic Oakes Conference Center on Route 3 in Bar
Harbor, Maine. The official Notice of the Annual
Meeting of Stockholders accompanies this Statement. A
Form of Proxy for use at the meeting and a return
envelope for the proxy are enclosed. A stockholder who
executes the proxy may, prior to its use, revoke it by
written instrument, by a subsequently executed proxy
or, if attending the Meeting, by notifying the Clerk or
by giving notice at the Meeting. This Proxy Statement
and the enclosed Form of Proxy will be mailed to the
stockholders of the Company on or about September 6,
2000.
Proxies are being solicited by the Board of
Directors (the Board) of the Company principally
through the mail. The Board of Directors and Management
of the Company may also solicit proxies personally or
by telephone, e-mail or facsimile transmission. The
entire expense of solicitation, including costs of
preparing, assembling and mailing the proxy material
will be borne by the Company. These expenses are not
expected to exceed the amount normally expended for an
annual meeting at which directors will be elected.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of August 18, 2000, the Company had outstanding
3,345,614 shares of its common stock (the Common
Stock), par value $2 per share, each of which is
entitled to one vote upon each matter presented at the
Meeting. Only stockholders of record at the close of
business on August 18, 2000 are entitled to vote at the
Meeting. The presence at the Meeting, either in person
or by proxy, of the holders of one-third of the shares
of Common Stock will constitute a quorum. Assuming a
quorum is present, action may be taken on any matter
considered by the holders of a majority of the shares
present and voting. Abstentions and shares otherwise
not voting will not be deemed present and voting.
Stockholders who are present will have an opportunity
to vote on each matter brought before the meeting.
As of August 18, 2000, to the knowledge of the
Company, Bernard K. Cough was the only beneficial owner
of 5% or more of the Company's common stock. Mr.
Cough's address is 5 Norman Road, Bar Harbor, ME
04609.
The following table lists, as of August 18, 2000,
the number of shares of Common Stock and the percentage
of the Common Stock represented thereby, beneficially
owned by each director and nominee and by all principal
officers and directors of the Company as a group.
<TABLE>
<CAPTION>
Amount Amount
Direct of Indirec of
Benefic Direct t Indirec Percen
Director ial Benefic Benefic t t
Ownersh ial ial Benefic of
ip Ownersh Ownersh ial Class
ip ip Ownersh
ip
<S> <C> <C> <C> <C> <C>
Paul G. Ahern Direct 0 0 *
Thomas A. Colwell Direct 5,400 Indirec 0 *
t
Warren Cook Direct 1,000 0 *
Bernard K. Cough Direct 130,830 Indirec 38,740 5.07
t
Dwight L. Eaton Direct 11,843 0 *
Ruth S. Foster Direct 3,350 0 *
H. Lee Judd Direct 2,000 Indirec 5,500 *
t
Dean S. Read Direct 1,000 0 *
John P. Reeves Direct 14,692 Indirec 11,370 *
t
Lynda Z. Tyson Direct 1,650 Indirec 150 *
t
Total Ownership of all 172,391 55,860 6.82
Directors and Executive
Officers of Company as a
group (12 persons).
*less than 1%
</TABLE>
For purposes of the foregoing table, beneficial
ownership has been determined in accordance with the
provisions of Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended, under
which, in general, a person is deemed to be the
beneficial owner of a security if he or she has or
shares the power to vote or to direct the voting of the
security, or if he or she had the right to acquire
beneficial ownership of the security within 60 days.
Beneficial ownership does not include, in the case of
each director, 97,360 shares (2.91%) of the Common
Stock held by two trusts which, for purposes of voting,
are allocated equally among the directors of the Bank
under the terms of the respective trust instruments. No
director has any other beneficial interest in such
shares. Ownership figures for directors and nominees
include directors' qualifying shares owned by each
person named. The information provided is based on the
records of the Company and on information furnished by
the persons listed.
Management is not aware of any arrangement, which
could, at a subsequent date; result in a change in
control of the Company.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities and Exchange Act of
1934 requires that directors and officers of the
Company and persons who beneficially own more than 10%
of its Common Stock file with the Company, the
Securities and Exchange Commission, and the American
Stock Exchange certain periodic reports, including an
Annual Statement of Beneficial Ownership on Form 5.
Due to an administrative oversight, no Annual
Statements of Beneficial Ownership were filed for any
officers or directors for the years ending December 31,
1998 and 1999. All such late reports subsequently were
filed on or about April 30, 2000. The following is a
listing of each reporting person who failed to file a
Form 5 for the stated periods and the number of
transactions with respect to which no Forms 5 were
filed.
Individual's name No. of
Transactions Year
Bernard K. Cough 3
1998
Dwight L. Eaton 1 1999
H. Lee Judd 1 1998
Robert M. Phillips 1 1998
In addition, Sheldon F. Goldthwait, Jr., John P.
Reeves, Dwight L. Eaton, Virginia M. Vendrell, Marsha
C. Sawyer, and Marlene S. Haskell maintain Bar Harbor
Bankshares stock within the Bank's 401K plan. Small
intermittent purchases and sales were made during 1998
and 1999 at market prices.
MANAGEMENT OF THE COMPANY
Directors
Management recommends that the number of directors
for the coming year be set at 10. The Bylaws of the
Company provide for no fewer than 9 or more than 27
directors, with directors serving staggered terms of
three years. The Board of Directors has restructured
the Board membership and is nominating for re-election
seven incumbent directors and three new directors.
Colwell, Cough, Eaton, Foster, Judd, Reeves, and Tyson
have been nominated for re-election and have been
assigned new staggered terms. Read was appointed to
the Board in April and is standing for election for a
three year term. Ahern and Cook are new nominees and
are being nominated for a one-year term and a three-
year term, respectively. Each of these persons has
consented to be named as a nominee and to serve if
elected.
The following table sets forth the names,
occupations, ages and terms of service of all
directors:
<TABLE>
<CAPTION>
Principal Occupation Age Year
Now and for as of First
Name past 5 Years 8/18/0 Elected
0 Directo
r
<S> <C> <C> <C>
Nominated for a
Term Expiring in
2001
Paul G. Ahern President and CEO of BTI 40 NOMINEE
Financial Group, a wholly
owned subsidiary of the
Company, since March 2000.
Previously Vice President
and Trust Investment
Officer the Bank.
Bernard K. Cough Treasurer of Atlantic 73 1985
Oakes, Inc., Atlantic Eyrie
and several other resort
motels, Bar Harbor, Maine
Ruth S. Foster Former State Senator and 71 1986
owner of Ruth Foster's
(retail clothing),
Ellsworth, Maine
John P. Reeves Retired; formerly President 66 1984
and Chief Executive Officer
of the Company and the
Bank, Bar Harbor, Maine
Principal Occupation Age Year
Now and for as of First
Name past 5 Years 8/18/0 Elected
0 Directo
r
Nominated for a
Term Expiring in
2002
Thomas A. Colwell President of Colwell Bros., 56 1991
Inc. (lobster pounding) of
Stonington, Maine
Dwight L. Eaton Retired February 2000. 65 1988
Formerly President and CEO
of BTI Financial Group and
Senior Vice President and
Trust Officer of Bar Harbor
Banking and Trust Company;
Vice President of the
Company since 1987
H. Lee Judd President of Hinckley 54 1997
Insurance Group and
Hinckley Real Estate,
Southwest Harbor, Maine
Nominating for a
term expiring in
2003:
Warren S. Cook President of JAX Research 55 NOMINEE
Systems of Bar Harbor,
Maine since 1999.
Previously served as a
senior executive of
American Skiing Company and
Sugarloaf Mountain
Corporation
Dean S. Read President and Chief 53 2000
Executive Officer of the
Company and the Bank since
April 2000. Executive Vice
President of the Company
and the Bank since January
2000. Formerly, Senior
Relations Manager of Key
Bank Corporation, Augusta,
Maine.
Lynda Z. Tyson Self employed writer and 45 1993
marketing consultant.
Formerly Chief Operating
Officer and Marketing
Director of Tyson &
Partners, Marketing
Consultants of Bar Harbor,
Maine
</TABLE>
Nominees for election to the Board are selected by
the full Board. The Board will consider nominees
recommended by stockholders if submitted in writing to
Marsha C. Sawyer, Clerk, Bar Harbor Bankshares, 82 Main
Street, Bar Harbor, Maine 04609, not less than three
months in advance of the date of the Annual Meeting.
The Board of Directors of the Company held seven
meetings in 1999. The Bylaws of the Company provide for
quarterly meetings. Each director attended at least 75%
of the total number of meetings held by the Board of
Directors in 1999.
The Board of Directors of the Bank met monthly
during 1999. Each director attended at least 75% of the
total number of Bank directors' meetings and committee
meetings of which he or she was a member.
Executive Officers
Each principal executive officer of the Company is
identified in the following table, which also sets
forth the respective office, age, and period served in
that office for each person listed.
<TABLE>
<CAPTION>
Year
Principal Occupation Now and Age as First
Name for of Electe
Past 5 Years 8/18/00 d
Office
r
<S> <C> <C> <C>
John P. Reeves Chairman of the Board of the 66 1984
Company and the Bank since
October 1999. Formerly served
as President and Chief
Executive Officer of the
Company and the Bank. Mr.
Reeves retired effective
December 31, 1995.
62 1984
Sheldon F. Former President and Chief
Goldthwait, Jr. Executive Officer of the
Company and the Bank. Retired
April 2000.
Dean S. Read President and Chief Executive 53 2000
Officer of the Company and the
Bank since April 2000.
Executive Vice President of the
Company and the Bank since
January 2000. Formerly Senior
Relations Manager of Key Bank
Corporation in Augusta, Maine.
Dwight L. Eaton Chairman of the Board of BTI 65 1987
Financial Group. Retired
Senior Vice President and Trust
Officer of the Bank; Vice
President of the Company since
1987; formerly Vice President
and Trust Officer of the Bank.
Year
Principal Occupation Now and Age as First
Name for of Electe
Past 5 Years 8/18/00 d
Office
r
Virginia M. Treasurer and Chief Financial 50 1991
Vendrell Officer since December 1992;
formerly Treasurer of the Bank
since December 1989 and
Treasurer of the Company since
October 1990.
Marsha C. Clerk of the Company since July 47 1986
Sawyer 1986; Clerk and Senior Vice
President of the Bank since
1999; formerly Vice President
of the Bank.
</TABLE>
The Bylaws of the Company provide that the
executive officers be elected annually by the Board of
Directors and that the President, Chairman of the
Board, Treasurer and Clerk shall serve at the pleasure
of the Board and until their successors have been
chosen and qualified. All other officers serve at the
pleasure of the Chief Executive Officer.
Committees
The Bylaws of the Company provide that after each
Annual Meeting of Directors, the Board shall designate
from among its members an Executive Committee which has
the authority to exercise all the powers of the Board
of Directors in regard to ordinary operations of the
business of the Company when the Board is not in
session, subject to any specific vote of the Board. The
Executive Committee for 1999 included Messrs. Reeves,
Colwell, Eaton, Dodge, and Ms. Tyson, and until his
retirement in April, Mr. Goldthwait. The Executive
Committee did not meet in 1999.
The Bylaws provide that the Board may elect or
appoint such other committees, as it may deem necessary
or convenient to the operations of the Company. The
Board has appointed a standing Audit Committee and a
standing Compensation Committee. It has not appointed
a Nominating Committee, and nominations are considered
by the Board as a whole.
The Audit Committee is responsible for assisting
the Board of Directors to fulfill its fiduciary
obligations with respect to the accounting, financial
reporting, internal control and compliance functions of
the Company and its subsidiaries. The Committee
recommends to the Board and the shareholders the
appointment of independent accountants and oversees the
audit function. It meets with and reviews the audit
plans and reports of both the internal and independent
auditors for the Company, including the matters
required to be discussed by Statement on Accounting
Standards 61. The Audit Committee has received the
written disclosures and the letter from the independent
accountants for the Company required by Independence
Standards Board Standard No. 1 (Independent Discussions
with Audit Committees) and has discussed with the
independent accountant the independent accountant's
independence. Based on these reviews and discussions,
the Audit Committee recommended to the Board of
Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K as
filed with the Securities and Exchange Commission. The
current members of the Audit Committee include Messrs.
Carter, Colwell, Gilfillan, Friend, McCurdy and Newman
and Ms. Foster. The Audit Committee met four times
during 1999.
The Board has adopted a written charter for the
Audit Committee, a copy of which is attached to this
Proxy Statement and labeled "Appendix A." All members
of the Audit Committee are independent within the
meaning of Section 121(A) of the listing standards of
the American Stock Exchange.
The Compensation Committee is responsible for
setting compensation levels for all employees,
including executive officers. The Compensation
Committee for 1999 included Messrs. Eaton, Brown,
Dodge, Phillips, Reeves, Ms. Sawyer, and until his
retirement in April 2000, Mr. Goldthwait. The
Compensation Committee met nine times during 1999.
.
Family Relationships and Other Arrangements
There are no family relationships among any
director, executive officer, or person nominated by the
Company to become a director or executive officer.
There are also no arrangements or understandings
between any nominee, director, executive officer, or
associate of any of the foregoing and any other person
pursuant to which the nominee was or is to be elected
as a director or an executive officer. No person or
entity listed above as the employer of an officer or
director, other than the Bank, is an affiliate of the
Company.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth all annual
compensation received during each of the Company's last
three fiscal years by Sheldon F. Goldthwait, Jr., Lewis
H. Payne, l and Dwight L. Eaton who are the only
executive officers for whom compensation exceeded
$100,000 in any year. Compensation for all officers
was paid by the Bank.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE Other
ANNUAL COMPENSATION Year Salary Incent Annual
($) ive Compensati
($) on ($)
<S> <C> <C> <C> <C>
Sheldon F. Goldthwait, Jr. 1997 155,000 19,737 0
Retired President and 1998 158,000 22,202 0
Chief Executive Officer 1999 160,380 6,309 0
Dwight L. Eaton 1997 98,000 12,984 0
Retired Senior Vice 1998 100,950 14,115 0
President and
Trust Officer 1999 102,470 9,546 0
Lewis H. Payne 1997 93,500 12,237 0
Past Executive Vice 1998 99,300 13,683 0
President
1999 106,512 3,795 0
</TABLE>
<TABLE>
<CAPTION>
ALL OTHER COMPENSATION ($)
Deferred Other
CompensatiCompensat
Year on ion
<S> <C> <C> <C>
Sheldon F. Goldthwait, Jr. 1997 26,656 3,885
1998 46,223 6,683
1999 48,808 4,097
Dwight L. Eaton 1997 37,450 4,747
1998 44,039 4,065
1999 50,857 2,933
Lewis H. Payne 1997 0 1,848
1998 0 1,561
1999 0 616
</TABLE>
Items included in the Deferred Compensation reflect
accounting entries for the Company's Deferred
Compensation Plans. Items included in the Other
Compensation column include social club dues, imputed
life insurance amounts, and reimbursed spousal travel
expenses.
Pursuant to Non-Qualified Deferred Compensation
Agreements Mr. Goldthwait, Mr. Payne and Ms. Vendrell
each voluntarily deferred a portion of their 1997,
1998, and 1999 base salaries. These deferred amounts
are included in the base salaries disclosed in the
Compensation Table. All three plans have been paid
out or are in paying status as of the year 2000.
The Bank has an incentive plan for which all
employees, including the executive officers listed
above, are eligible. The Bank utilizes the Performance
Compensation Plan for Stakeholders developed by Mike
Higgins & Associates, Inc. The plan creates an
incentive model based on multiple goal achievements and
is weighted to provide potential payments based on
improvement over pre-established measures. Goals are
established in the areas of profit, growth,
productivity, and quality. Examples of these measures
include growth in the area of deposits, loans, and Net
Interest Margin, and reduction in the Bank's efficiency
ratio. A before tax earnings threshold for 1999 of
$8,600,000 was established before any incentive began
to accrue. Payments to each Bank employee were made
in December 1999 and January 2000 for the 1999 calendar
year equal to 6.5% of each employee's salary.
Compensation Committee
The Company has a seven member Compensation
Committee that includes both directors and
representatives of management. The Compensation
Committee meets several times each year and makes
compensation recommendations for the ensuing year to
the full Board of Directors for all employees,
including executive officers. The recommendations of
the Compensation Committee are then considered by the
full Board.
Compensation Committee Interlocks and Insider
Participation
The Compensation Committee for 1999 included
Messrs. Brown, Dodge, Eaton, Goldthwait, Phillips,
Reeves, and Ms. Sawyer. Messrs. Brown, Dodge, Eaton,
Goldthwait, Phillips and Reeves served on the Board of
Directors. Ms. Sawyer did not serve on the Board of
Directors, but served as a voting member of the
Committee. Messrs. Eaton and Goldthwait and Ms. Sawyer
were full time employees of the Bank during 1999. Each
abstained from participating in discussion, formulating
recommendations or voting with respect to his or her
own compensation. Mr. Dodge served as chairman of the
Committee.
Report of the Compensation Committee on Executive
Compensation
The Board of Directors of the Bank has no formal
compensation policy applicable to compensation
decisions with respect to its executive officers. While
there are no objective criteria which specifically
relate corporate performance to compensation
determinations, in formulating its recommendation with
respect to compensation of Messrs. Goldthwait, Eaton,
and Payne during the last fiscal year, the Board of
Directors considered, among other factors, individual
performance, years of service, and salary surveys of
executive officers at comparable financial institutions
in Maine and New England. The Board of Directors also
reviewed the Bank's overall performance and the
performance of the Bank in relationship to that of
other similarly situated banks in Maine and New
England.
The foregoing report to stockholders regarding
compensation has been submitted by the 1999
Compensation Committee, including Messrs. Brown,
Goldthwait, Reeves, Dodge, Phillips, Eaton and Sawyer.
Compensation of Directors
Each of the directors of the Company is a director
of the Bank and as such receives a fee of $300 for each
Full Board meeting of the Bank attended and $250 for
each committee meeting attended. The fee paid for the
attendance at the Annual Meeting is $500.00 per member
of the Board of Directors. The Chairman of the Board
receives an annual retainer of $3,000 in addition to
meeting fees. Meetings of the Board of Directors of the
Bank are held monthly. No directors' fees are paid to
directors of the Company as such. Those directors of
the Bank who are also officers do not receive
directors' fees.
EMPLOYEE BENEFIT PLANS
The Company has two non-qualified supplemental
retirement plans for certain officers, including
Messrs. Reeves, Eaton, Goldthwait and MacDonald. The
agreements provide supplemental retirement benefits
payable in installments over a period of years upon
retirement or death. The Company recognizes the cost
associated with the agreements over the service lives
of the participating officers. For 1999, 1998, and
1997, the expense of these supplemental plans was
$140,900, $138,600, and $127,600, respectively.
401(k) Plan
The Bank has a contributory 401(k) plan available
to all employees. Employees may contribute between 1%
and 15% of their compensation, to which the Bank will
match 25% of the first 6% contributed. For the years
ended December 31, 1999, 1998, and 1997, the Bank
contributed $52,250, $51,300, and $49,500,
respectively. In 1999, 1998 and 1997, the Board of
Directors voted to credit each eligible participant's
401(k) account with 3% of salary. Total contributions
made were $133,950, $127,400 and $122,800 for the years
ended December 31, 1999, 1998, and 1997, respectively.
Retirement Plans
The Bank has entered into deferred compensation
agreements with Messrs. Reeves, Goldthwait, and Eaton
whereby those individuals, or their beneficiaries, will
receive upon death or retirement, an annual
supplemental pension benefit over a period of 10 years
in the amount of $15,000 per annum (in the case of Mr.
Reeves), and in the amount of $10,000 per annum (in the
case of Messrs. Goldthwait and Eaton). These plans are
unfunded and benefits are paid out of Bank earnings.
All three are now retired. Mr. Reeves began drawing his
annual installment on January 1, 1996. He receives
$5,300 annually, reduced for early retirement, under
the terms of his agreement. Messrs. Eaton and
Goldthwait retired in February and April 2000,
respectively. Because he elected early retirement, Mr.
Goldthwait's annual benefit was reduced under the terms
of his agreement to $6,800. Messrs. Eaton and
Goldthwait began drawing their annual installments of
$10,000 and $6,800, respectively in 2000.
In 1993 the Company established a non-qualified
supplemental retirement plan for Messrs. Reeves, Eaton,
Goldthwait, and MacDonald. The agreements provide
supplemental retirement benefits payable in
installments over twenty years upon retirement or
death. The Company recognizes the costs associated with
the agreements over the service lives of the
participating officers. In 1999, the Company modified
the plan for Mr. Goldthwait, which resulted in a one-
time expense of $639,700. The cost relative to the
supplemental plan was $866,200, $138,600, and $127,600
for 1999, 1998, and 1997 respectively. The agreements
with Messrs. Reeves, Eaton, Goldthwait, and MacDonald
provide for annual installment payments in the amounts
of $49,020, $22,600, $87,176 and $7,700 respectively.
Mr. Reeves began drawing his annual installment in
January 1995, Mr. Eaton in March 2000, and Mr.
Goldthwait in April 2000. Mr. Reeves and Mr.
Goldthwait are both receiving reduced payments under a
predetermined early retirement schedule.
Officers of the Bank are entitled to participate
in certain group insurance benefits. In accordance with
Bank policy, all such benefits are available generally
to employees of the Bank.
TRANSACTIONS WITH DIRECTORS, OFFICERS AND PRINCIPAL
STOCKHOLDERS
The Company utilizes the occasional services of
self-employed marketing consultants Charles and Lynda
Tyson. Ms. Tyson serves as a director of the Company.
Management believes that the fees charged by the
Tyson's are at least as favorable as any that could be
obtained from persons not affiliated with the Company.
The Bank has had, and expects to have in the
future, banking transactions in the ordinary course of
its business with other directors, officers, principal
stockholders, and their associates, including members
of the Compensation Committee and Audit Committee. All
such transactions have been and will be made on
substantially the same terms, including interest rates
and collateral, as those prevailing at the time for
comparable transactions with others. No such
transactions have involved more than normal risk of
collectability or presented other unfavorable features,
and no loans outstanding to directors, officers,
principal stockholders, or their associates in an
amount in excess of $60,000 are non-accruing or past
due or are otherwise considered to be potential problem
loans.
PERFORMANCE GRAPH
The following graph illustrates the estimated yearly
percentage change in the Company's cumulative total
shareholder return on its common stock for each of the
last five years. Total shareholder return is computed
by taking the difference between the ending price of
the common stock at the end of the previous year and
the current year, plus any dividends paid divided by
the ending price of the common stock at the end of the
previous year. For purposes of comparison, the graph
also illustrates comparable shareholder return of
American Stock Exchange (AMEX) banks as a group as
measured by the AMEX Market Index and the peer group
index as defined by AMEX. The graph assumes a $100
investment on December 31, 1994 in the common stock of
each of the Company, the AMEX peer group banks and the
AMEX Market Index as a group and measures the amount by
which the market value of each, assuming reinvestment
of dividends, has increased as of December 31 of each
calendar year since the base measurement point of
December 31, 1994.
Market values for 1997, 1998 and 1999 are based on
information obtained from the American Stock Exchange.
Prior to 1997, the Company's stock was not listed on
any exchange. Determinations of the market value of the
Company's stock prior to its listing on the American
Stock Exchange are based on anecdotal information
available to the Company as to the value at which its
common stock traded in isolated transactions during
those periods. While the graph represents a good faith
estimate of shareholder return for the periods
indicated, the valuations utilized for periods prior to
1997 are, of necessity, estimates and may not
accurately reflect the actual value at which its common
stock traded during those periods.
The following information is presented in a line graph
in the printed Form 10-K:
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
Bar Harbor
Banking
and Trust 100.0 195. 367. 411. 365.3 284.
Company 0 00 18 39 1 10
Peer Group
Index 100.0 132. 151. 247. 250.1 214.
0 35 54 13 1 50
AMEX Broad
Market 100.0 128. 136. 163. 161.4 201.
Index 0 90 01 66 4 27
</TABLE>
APPROVAL OF INCENTIVE STOCK OPTION PLAN
General
During 2000, the Company's Board of Directors approved,
subject to shareholder approval, the Bar Harbor
Bankshares, Inc. and its subsidiaries Incentive Stock
Option Plan of 2000 (the "Incentive Option Plan") which
provides for the grant of incentive stock options
("Incentive Options") for the purchase of up to four
hundred fifty thousand (450,000) shares of Bar Harbor
Bankshares' common stock as incentive awards to
employees of Bar Harbor Bankshares, and its
subsidiaries (the "Employees"). Executive officers are
eligible for awards. Directors who are not full-time
employees of the Company or one of its subsidiaries are
not eligible. The Company and its subsidiaries
presently have approximately 180 employees. The purpose
of the Incentive Option Plan generally is to assist Bar
Harbor Bankshares, and its subsidiaries in attracting
and retaining employees, to align their interests with
those of shareholders, and to encourage and motivate
Employees to perform at levels that will contribute to
both Bar Harbor Bankshares' financial performance and
to the growth of the market value of Bar Harbor
Bankshares' common stock, thereby enhancing shareholder
value. The Incentive Option Plan expires ten (10) years
after its inception and no options may be granted
thereafter. A proposal to approve the Incentive Option
Plan will be presented for action by shareholders at
the annual meeting. The description of the Incentive
Option Plan set forth below is only a summary and is
qualified in its entirety by reference to the full text
of the Incentive Option Plan, a copy of which is
available upon request from the Company.
Plan Administration
The Incentive Option Plan will be administered by Bar
Harbor Bankshares' Board of Directors. If a director is
eligible as an Employee for the grant of an Incentive
Option, that director will recuse himself or herself
and not participate in the discussion, nor vote on the
award of the Incentive Option to him or her. Bar Harbor
Bankshares' Board of Directors is authorized
to make all determinations about the persons to whom
and numbers of shares and amounts for which stock
options will be granted under the Incentive Option
Plan,
to specify the terms and vesting schedule of all awards
or grants under the Plan,
to interpret and make all other determinations under
the Plan,
to prescribe, amend and rescind rules and regulations
with respect to the operation of the Plan, and
to take other actions relating to and reasonable or
advisable in administering the Plan.
Incentive Stock Options
An Incentive Stock Option is a right that may be
granted by the Board of Directors to an Employee under
the Incentive Option Plan to purchase from Bar Harbor
Bankshares a number of shares of common stock during a
specified period of time and at an agreed upon purchase
price (the "Exercise Price"). Incentive Stock Options
granted under the Incentive Option Plan are incentive
stock options (ISO's") under Section 422A of the
Internal Revenue Code of 1986 (the "Code"). The
exercise price of common stock covered by each
Incentive Stock Option granted will be set by the Board
of Directors at the time the Option is granted, but may
not be less than 100% of the fair market value (as
determined by the Board of Directors in such manner as
it, in its sole discretion, deems to be reasonable and
appropriate) of a share of common stock at the time the
Incentive Option is granted (or 110% of the fair market
value in the case of an ISO granted to an Optioned who
owns more than 10% of the voting power of the
outstanding common stock).
Each Incentive Stock Option will become exercisable as
specified by the Board of Directors under a vesting
schedule, and, to the extent not previously exercised,
will expire and may not thereafter be exercised after
the earlier of:
the expiration date set by the Board of Directors at
the time of grant (which may be no more than 10 years
after the date of grant, or 5 years in the case of an
ISO granted to an Employee who owns more than 10% of
the voting power of the common stock),
90 days after the date of termination of the Employee's
employment with a Bar Harbor Bankshares or subsidiary
other than by reason of his or her death, disability,
or termination for Cause (as defined in the Incentive
Option Plan);
12 months following the termination of the Employee's
employment as a result of his or her death or
disability; or
immediate termination if the Employee's employment is
terminated for Cause, or if the Employee competes with
Bar Harbor Bankshares or subsidiary (as defined in the
Incentive Option Plan).
The aggregate fair market value (determined as of the
date of grant) of common stock for which all such
Incentive Stock options granted to any Employee may
become exercisable for the first time in any calendar
year may not exceed $100,000; and, in connection with
any Incentive Stock Option granted, the Board may
impose other restrictions or conditions as it may deem
appropriate.
At the time an Incentive Stock Option is exercised, the
Employee exercising the Option (the "Optionee") must
make full payment in cash of the aggregate Exercise
Price for shares being purchased. Optionees will have
no rights as stockholders of Bar Harbor Bankshares with
respect to any shares covered by Incentive Stock
Options granted to them until those Incentive Stock
Options have been exercised and the Exercise Price of
those shares has been paid.
ISOs granted under the Incentive Option Plan are
intended to qualify for certain favorable income tax
treatment. Under the code, an Optionee is not taxed in
the year in which an ISO is exercised, unless the rules
under the alternative minimum tax apply. If an Optionee
holds common stock purchased upon the exercise of an
ISO for a period of at least two years following the
date of grant and at least one year from the date the
ISO is exercised (or dies while owning the stock),
then, upon disposition of the common stock (or upon
death while owning the stock), he or she (or his or her
estate, as applicable) will realize capital gain equal
to the excess of the sale price of the common stock
over its Exercise Price. Bar Harbor Bankshares will
not be permitted to take a tax deduction at any time in
connection with ISOs, unless stock purchased upon
exercise is disposed of prior to expiration of the two
holding periods. If the Optionee exercises the ISO
prior to the expiration of the two holding periods, the
Optionee will realize ordinary income equal to the
lesser of:
the difference between and fair market value of the
shares on the date of exercise and the exercise price,
or
the difference between the exercise price and sales
price,
Bar Harbor Bankshares is allowed to take a deduction
for the same amount. At its discretion, Bar Harbor
Bankshares or its subsidiaries may withhold from an
Optionee's salary, or any other amount due to that
Optionee (or from shares being purchased from the
exercise of an Incentive Stock Option), the amount of
any required tax withholdings for which it is
responsible.
Adjustments of Rights in Certain Events
In the event of increases, decreases or changes in Bar
Harbor Bankshares' outstanding common stock resulting
from a merger, consolidation, stock dividend, split-up,
combination, exchange of shares, recapitalization or
change in capitalization, the total number of shares
authorized under the Plan and the purchase price per
share shall be proportionately and appropriately
adjusted.
Change in Control Transactions
Immediately prior to a Change in Control Transaction,
each outstanding Incentive Stock Option will become
immediately vested and may be exercised in full under
the terms of the Plan. "Change in Control Transactions"
include
the acquisition of more than fifty percent (50%) of the
stock of Bar Harbor Bankshares,
the merger or consolidation of Bar Harbor Bankshares
into or with another corporation,
the sale of all or substantially all of the assets of
Bar Harbor Bankshares
the merger or consolidation of one or more of the Bar
Harbor Bankshares subsidiaries in which fifty percent
(50%) of the stock is not owned by Bar Harbor
Bankshares,
the subsidiary has a change of control in which 51% or
more of its stock is acquired by another entity other
than Bar Harbor Bankshares.
Amendments
The Board of Directors may, from time to time, amend,
suspend, or terminate the Incentive Stock Option Plan.
However, no such action will adversely affect any
Optionee's rights under any then outstanding Incentive
Stock option, and the Board shall not, without
shareholder approval,
increase the maximum number of shares of common stock
authorized for issuance under the Plan;
change the eligible employees who may receive Options;
reduce the basis upon which the minimum Option Price is
determined,
extend the period within which Options under the Plan
may be granted; or
provide for an Option that is exercisable during a
period of more than ten (10) years from the date on
which it is granted.
Under current Maine law, any increase in the aggregate
number of shares issuable under the Incentive Stock
Option Plan would require approval by the Company's
shareholders.
As a condition to the distribution of shares of common
stock upon the exercise of Options under the Incentive
Option Plan, the Employee may be required to pay to the
Company, or the Company may withhold the amount of any
federal or state income or other taxes applicable to
income that the Employee is considered to realize from
such delivery and that the Board of Directors believes
the Company or any of its subsidiaries is required by
law to withhold.
Regulatory Approval
No regulatory approval of the Incentive Option Plan is
required.
The Board of Directors recommends that shareholders
vote their shares "FOR" approval of the proposed
Incentive Option Plan. The favorable vote of a majority
of the outstanding shares of Bar Harbor Bankshares is
required for approval of Proposal 5.
APPROVAL OF NON-QUALIFIED STOCK OPTION PLAN
During 2000, the Bank's Board of Directors approved,
subject to shareholder approval, the Bar Harbor
Bankshares, Non-Qualified Directors' Stock Option Plan
of 2000 (the "Non-Qualified Option Plan") which
provides for the grant of stock options)"Non-Qualified
Options") for the purchase of up to fifty thousand
(50,000) shares of Bar Harbor Bankshares' common stock
as incentive awards to directors of Bar Harbor
Bankshares and each of its subsidiaries (the
"Directors"). The purpose of the Non-Qualified Option
Plan generally is to assist Bar Harbor Bankshares and
its subsidiary boards in attracting and retaining
Directors, to align their interests with those of
shareholders, and to encourage and motivate Directors
to perform at levels that will contribute to both Bar
Harbor Bankshares' financial performance and to the
growth of the market value of Bar Harbor Bankshares'
common stock, thereby enhancing shareholder value. The
Non-Qualified Option Plan expires ten (10) years after
its inception and no options may be granted thereafter.
The description of the Non-qualified Option Plan set
forth below is only a summary and is qualified in its
entirety by reference to the full text of the Non-
Qualified Option Plan, a copy of which is available
upon request from the Company.
Plan Administration
The Non-Qualified Option Plan will be administered by
Bar Harbor Bankshares' Board of Directors. Bar Harbor
Bankshares' Board of Directors is authorized
to make all determinations regarding the Directors to
whom and numbers of shares and amounts for which stock
options will be granted under the Non-Qualified Option
Plan,
to specify the terms and vesting schedule of all awards
or grants under the Plan,
to interpret and make all other determinations under
the Plan,
to prescribe, amend and rescind rules and regulations
with respect to the operation of the Plan, and
to take other actions relating to and reasonable or
advisable in administering the Plan.
Non-Qualified Stock Options
A Non-Qualified Option is a right that may be granted
by the Board of Directors to a director under the Non-
Qualified Option Plan to purchase from Bar Harbor
Bankshares a number of shares of common stock during a
specified period of time and at an agreed upon purchase
price (the "Exercise Price"). Non-Qualified Stock
Options granted under the Non-Qualified Option Plan are
Non-Qualified Options and are not issued pursuant to
Section 422A of the Internal Revenue Code of 1986 (the
"Code"). The exercise price of common stock covered by
each Incentive Stock Option granted will be set by the
Board of Directors at the time the Option is granted,
but may not be less than 100% of the fair market value
(as determined by the Board of Directors in such manner
as it, in its sole discretion, deems to be reasonable
and appropriate) of a share of common stock at the time
the Non-Qualified Option is granted.
Each Non-Qualified Option will become exercisable as
specified by the Board of Directors under a vesting
schedule, and to the extent not previously exercised,
will expire and may not thereafter be exercised after
the earlier of:
the expiration date set by the Board of Directors at
the time of grant (which may be no more than 10 years
after the date of grant),
90-days after the date of termination of the Director's
term of service as a Director of Bar Harbor Bankshares,
or subsidiary board, other than by reason of his or her
death, disability, or termination for Cause (as defined
in the Non-Qualified Option Plan);
12-months following the termination of the Director's
term of service as a Director of Bar Harbor Bankshares,
or subsidiary board, as a result of his or her death or
disability; or
immediate termination if the Director's term of service
as a Director of Bar Harbor Bankshares, or subsidiary
board, is terminated for Cause, or if the Director
competes with the Bar Harbor Bankshares or subsidiary
(as defined in the Non-Qualified Option Plan).
In connection with any Non-Qualified Option granted,
the Board may impose other restrictions or conditions,
as it may deem appropriate.
At the time a Non-Qualified Option is exercised, the
Director exercising the Option (the "Option") must make
full payment in cash of the aggregate Exercise Price
for shares being purchased. Optionees will have no
rights as stockholders of Bar Harbor Bankshares with
respect to any shares covered by Non-Qualified Options
granted to them until those Non-Qualified Options have
been exercised and the Exercise Price of such shares
has been paid to Bar Harbor Bankshares.
Non-Qualified Options granted under the Non-Qualified
Option Plan will not qualify for the same favorable
income tax treatment as is applicable to Incentive
Stock Options. An Optionee will be taxed in the year in
which a Non-Qualified Option is exercised. For the tax
year in which the Optionee exercises the Option, the
Optionee will recognize as taxable income the
difference in the fair market value of the common stock
on the date of exercise and the Exercise Price. If an
Optionee holds common stock purchased upon the exercise
of a Non-Qualified Option for a period of at least one
year from the date the Non-Qualified Option was
exercised, then, upon disposition of the common stock,
he or she will realize capital gain equal to the excess
of the sale price of the common stock over the amount
recognized as income for tax purposes when the option
is exercised. Bar Harbor Bankshares will be permitted
to take a tax deduction when an Optionee exercises a
Non-Qualified Option in the same amount that the
Optionee recognizes as income.
Adjustments of Rights in Certain Events
In the event of increases, decreases or changes in Bar
Harbor Bankshares' outstanding common stock resulting
from a merger, consolidation, stock dividend, split-up,
combination, exchange of shares, recapitalization, or
change in capitalization, the total number of shares
authorized under Plan and the purchase price per share
shall be proportionately and appropriated adjusted.
Change in Control Transactions
Immediately prior to a Change in Control Transaction,
each outstanding Non-Qualified Option will become
immediately vested and may be exercised in full under
the terms of the Plan. "Change in Control Transactions"
include
the acquisition of more than fifty percent (50%) of the
stock of Bar Harbor Bankshares,
the merger or consolidation of Bar Harbor Bankshares
into or with another corporation,
the sale of all or substantially all of the assets of
Bar Harbor Bankshares
the merger or consolidation of one or more of the Bar
Harbor Bankshares subsidiaries in which fifty percent
(50%) of the stock is not owned by Bar Harbor
Bankshares,
the subsidiary has a change of control in which 51% or
more of its stock is acquired by another entity other
than Bar Harbor Bankshares.
Amendments
The Board of Directors may, from time to time, amend,
suspend, or terminate the Non-Qualified Stock Option
Plan. However, no such action will adversely affect any
Optionee's rights under any then outstanding Non-
Qualified Stock Option, and the Board may not
increase the maximum number of shares of common stock
authorized for issuance under the Plan,
change the eligible persons who may receive Options to
other than members of the Board of Directors,
reduce the basis upon which the minimum Option Price is
determined,
extend the period within which Options under the Plan
may be granted, or
provide for an Option that is exercisable during a
period of more than ten (10) years from the date on
which it is granted.
Regulatory Approval
No regulatory approval of the Non-Qualified Option Plan
will be required.
The Board of Directors recommends that shareholders
vote their shares "FOR" approval of the proposed Non-
Qualified Option Plan. The favorable vote of a majority
of the outstanding shares of Bar Harbor Bankshares is
required for approval of Proposal 6.
SELECTION OF AUDITORS
Stockholder approval of the selection of auditors
is not required, but the Board is of the view that an
expression of opinion by the stockholders as to the
appropriateness of this selection is desirable. The
Board recommends that its selection of Berry, Dunn,
McNeil & Parker as the principal independent accountant
for the Company for the year 2000 be ratified. If the
Board selection is not ratified, the Board will take
action to appoint a different auditor for the Company
and for the Bank. It is not anticipated that a
representative of Berry, Dunn, McNeil & Parker will be
present at the Meeting to respond to appropriate
questions or to make a statement.
OTHER MATTERS
Management knows of no other matters to be
presented for action at the Meeting. If any other
matters properly come before the Meeting, the shares
represented by the proxies will be voted with respect
thereto in accordance with the judgment of the
person(s) voting the proxies.
FINANCIAL STATEMENTS
UPON WRITTEN REQUEST, THE COMPANY WILL FURNISH ANY
STOCKHOLDER WITH A COPY OF THE ANNUAL REPORT BY THE
COMPANY TO THE SECURITIES AND EXCHANGE COMMISSION ON
FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES FOR THE LAST FISCAL YEAR. IN
ACCORDANCE WITH FEDERAL DEPOSIT INSURANCE CORPORATION
REGULATIONS, UPON WRITTEN REQUEST, STOCKHOLDERS MAY
ALSO OBTAIN THE BANK'S MOST RECENT ANNUAL DISCLOSURE
STATEMENT THAT CONTAINS FINANCIAL INFORMATION COVERING
THE LAST TWO YEARS.
Any request for a copy of either the Form 10-K or
the Annual Disclosure Statement must contain a
representation that the person making the request was a
beneficial owner of Common Stock on August 18, 2000,
which is the record date for this proxy solicitation.
Requests should be addressed to: Marsha C. Sawyer,
Clerk, Bar Harbor Bankshares, 82 Main Street, Bar
Harbor, ME 04609.
Financial statements of the Company contained in
the Company's Annual Report to Stockholders for the
fiscal year 1999 are not to be considered a part of
this soliciting material.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals for
consideration at the 2001 Annual Meeting, which is
presently scheduled for October 2, 2001. In order to be
included in the Company's Proxy Statement and Form of
Proxy relating to that meeting, such proposals must be
received by the Company no later than May 1, 2001,
which is 120 days in advance of the proposed mailing
date of the 2001 proxy materials. Proposals should be
addressed to Marsha C. Sawyer, Clerk, Bar Harbor
Bankshares, 82 Main Street, Bar Harbor, ME 04609.
By Order of the Board of Directors
Marsha C. Sawyer, Clerk
ATTACHMENT A
BAR HARBOR BANKSHARES
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
PURPOSE
The Audit Committee (the "Committee") assists the Board
of Directors (the "Board") of Bar Harbor Bankshares
(the "Company") in their responsibilities to oversee
the independence of the independent auditor and
evaluate the Company's financial reporting practices,
accounting policies and internal control structure.
The Audit Committee fulfills these responsibilities by
carrying out the activities enumerated in Section VII
of the Charter.
COMPOSITION
The Committee will be comprised of three or more
directors as determined by the Board. The members of
the Committee will meet the independence and experience
requirements specified in Section 121.A of the Amex
Company Guide. The members of the Committee will be
elected annually at the organizational meeting of the
full Board held in October. The Board will select one
Committee member to the Committee Chair.
RESPONSIBILITY
The Committee is a part of the Board. It's primary
function is to assist the Board in fulfilling its
oversight responsibilities with respect to (i) the
annual financial information to be provided to
shareholders and the Securities and Exchange Commission
(SEC); (ii) the review of quarterly financial
statements; (iii) the system of internal controls that
management has established; and (iv) the internal
audit, external audit and loan review processes. In
addition, the Committee provides an avenue for
communication between the internal auditor, the
independent auditor, financial management and the
Board. The Committee should have a clear understanding
with the independent auditor that they must maintain an
open relationship with the Committee, and that the
ultimate accountability of the independent auditor is
to the Board and the Committee. The Committee will
make regular reports to the Board concerning its
activities.
While the Audit Committee has the responsibilities and
powers set forth in this Charter, it is not the duty of
the Audit Committee to plan or conduct audits or to
determine that the Company's financial statements are
complete and accurate and are in accordance with
generally accepted accounting principles. This is the
responsibility of management and the independent
auditor. Nor is it the duty of the Audit Committee to
conduct investigations, to resolve disagreements, if
any, between management and the independent auditor or
to assure compliance with laws and regulations and the
Company's business conduct guidelines.
AUTHORITY
Subject to prior approval of the Board, the Committee
is granted authority to investigate any matter or
activity involving financial accounting and financial
reporting, as well as the internal controls of the
Company. In that regard, the Committee will have the
authority to approve the retention of external
professionals to render advice and counsel in such
matters. All employees will be directed to cooperate
with respect thereto as requested by members of the
Committee.
MEETINGS
The Committee will meet at least four times annually,
or more frequently as circumstances dictate. The
Committee may, at its discretion, meet in separate
executive sessions with the chief financial officer,
independent auditor and internal auditor.
ATTENDANCE
Committee members will strive to be present at all
meetings. As necessary or desirable, the Committee
Chair may request that members of management and
representatives of the independent auditor and internal
auditor be present at Committee meetings.
SPECIFIC DUTIES
To fulfill its responsibilities and duties the Audit
Committee shall:
Review and reassess the adequacy of this charter
annually and recommend any proposed changes to the
Board for approval. This should be done in
compliance with applicable Amex Audit Committee
requirements. The charter is to be published as an
appendix to the proxy statement every three years.
Evaluate, select, and where appropriate, replace an
independent auditor who is ultimately accountable to
the Audit Committee and Board of Directors as
representatives of the Company's shareholders.
Review the scope and general extent of the
independent auditor's annual audit. The Committee's
review should include an explanation from the
independent auditor of the factors considered by the
auditor in determining the audit scope, including
the major risk factors. The independent auditor
should confirm to the Committee that no limitations
have been placed on the scope or nature of their
audit procedures. The Committee will review annually
with management the fee arrangement with the
independent auditor.
Review with management, the internal auditor and
independent auditor, the Company's accounting and
financial reporting controls.
Review with management, the internal auditor and the
independent auditor significant accounting and
reporting principles, practices and procedures
applied by the company in preparing its financial
statements. Discuss with the independent auditor
their judgments about the quality, not just the
acceptability of the Company's accounting principles
used in financial reporting. Review legal and
regulatory matters that may significantly impact the
financial affairs or operations of the Company.
Inquire as to the independence of the independent
auditor and obtain from the independent auditor, at
least annually, a formal written statement
delineating all relationships between the
independent auditor and the Company as contemplated
by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees.
Review with financial management and the independent
auditor the quarterly financial statements
preferably prior to the release of earnings but no
later than the filing of the Form 10-Q. The review
will focus on the impact of significant events,
transactions and changes in accounting estimates
considered by the independent auditor in performing
their review of the Company's interim financial
statements. The Chair of the Committee may represent
the entire committee for purpose of this review.
At the completion of the annual audit, review with
management, internal audit and the independent
auditor the following:
The annual financial statements and related footnotes
and financial information to be included in the
Company's annual report to shareholders and on Form 10-
K.
Results of the audit of the financial statements and
the related report thereon and, if applicable, a report
on changes during the year in accounting principles and
their application.
Any significant changes to the audit plan and any
serious disputes or difficulties with management
encountered during the audit. Inquire about the
cooperation received by the independent auditor during
the audit, including access to all requested records,
data and information. Inquire of the independent
auditor whether there have been any disagreements with
management, which, if not satisfactorily resolved,
would have caused them to issue a nonstandard report on
the Company's financial statements.
Other communications as required to be communicated by
the independent auditor by Statement of Auditing
Standards (SAS) 61 as amended by SAS 90 relating to the
conduct of the audit. Such communication should include
a discussion of the independent auditor's judgment
about the quality of the Company's accounting
principles.
If deemed appropriate after such review and discussion,
recommend to the Board that the financial statements be
included in the company's annual report on Form 10-K.
Meet with management, the internal auditor and the
independent auditor to discuss any relevant
significant recommendations that the independent
auditor may have, particularly those characterized
as "reportable conditions". The Committee should
review responses of management to the reportable
conditions from the independent auditor and receive
follow-up reports on action taken concerning the
aforementioned recommendations.
Review the appointment, replacement and compensation
of both the internal auditor and loan review
officer. The internal auditor and loan review
officer will report directly to the audit committee
chairman and administratively to a designated senior
officer.
Review the scope of the annual internal audit and
loan review plans. Evaluate the internal auditor's
risk assessment of the company's activities used in
developing the annual audit plan.
Receive reports of major findings from the internal
auditor and the loan review officer and evaluate
management's response in addressing the reported
conditions.
Evaluate the performance of and, where appropriate,
replace the internal auditor and loan review
officer.
The Committee shall have the power to conduct or
authorize investigations into any matters within the
Committee's scope of responsibilities. The Committee
shall be empowered to retain independent counsel,
accountants, or others to assist it in the conduct
of any investigation.
BAR HARBOR BANKSHARES
82 Main Street
Bar Harbor, ME 04609
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF
DIRECTORS
The undersigned hereby appoints Lynda Z. Tyson,
Bernard K. Cough, and H. Lee Judd, as Proxies, each
with power to appoint a substitute, and hereby
authorizes them to represent and to vote, as
designated on the reverse side, all of the shares of
Common Stock of the Company held of record by the
undersigned as of close of business on August 18.
2000 the Annual Meeting of Stockholders to be held
on October 3, 2000 or at any adjournment thereof.
(To be signed on the Reverse Side)
X PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
ELECTION OF DIRECTORS
5. To elect four persons to serve as Directors for a
term of one year:
Paul G. Ahern
Bernard K. Cough
Ruth S. Foster
John P. Reeves
5. To elect three persons to serve as Directors for a
term of two years:
Thomas A. Colwell
Dwight L. Eaton
H. Lee Judd
3.To elect three persons to serve as Directors for a
term of three year
Warren S. Cook
Dean S. Read
Lynda Z. Tyson
OTHER BUSINESS:
4.To set the number of Directors for the ensuing
year at 10.
5. To approve the Bar Harbor Bankshares Incentive
Stock Option Plan
6. To approve the Bar Harbor Bankshares Non-Qualified
Directors Stock Option Plan
7. To ratify the Board of Directors' selection of
Berry, Dunn, McNeil & Parker as independent auditors of
the Company and of the Bank for the ensuing year.
8.To transact such other business as may properly
come before the meeting or any adjournment
thereof.
This proxy, when properly executed, will be voted on
behalf of the undersigned stockholder in the manner
directed herein. If no direction is given, this proxy
will be voted in favor of Items, 4, 5, 6, and 7, for
the nominees listed in Items 1, 2 and 3, and in the
discretion of management with respect to any other
matters, which may come before the Meeting.
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD
PROMPTLY USING THE ENVELOPE PROVIDED.
SIGNATURE __________________ DATE _____________
SIGNATURE __________________ DATE _____________
NOTE: Please sign exactly as name appears above. Only
one joint tenant needs sign. When signing as
attorney, executor, administrator, trustee, or
guardian, or in any representative capacity,
please give full title.
