<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NBT BANCORP INC.
----------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
KATHIE J. DEIERLIEN
----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box)
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and indentify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
NBT BANCORP INC.
----------------
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
--------------------------------------
March 17, 1999
TO THE HOLDERS OF SHARES OF COMMON STOCK:
NOTICE IS HEREBY GIVEN that pursuant to call of its Directors, the regular
annual meeting of stockholders of NBT BANCORP INC. will be held at the Norwich
Senior High School auditorium located at Midland Drive, Norwich, New York, on
Saturday, April 17, 1999 at 11:00 a.m., for the purpose of considering and
voting upon the following matters:
1. Election of Directors. To fix the number of directors at nine and elect
the candidates listed in the Proxy Statement dated March 17, 1999.
2. Ratification of the Board of Directors' action of the selection of indepen-
dent public accountants for the year 1999.
3. Transaction of such other business as may properly come before the Meeting
or any adjournment thereof.
By order of the Board of Directors
/S/ DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
/S/ JOE C. MINOR
Joe C. Minor
Chief Financial Officer and Treasurer
WE URGE YOU TO MARK, SIGN, AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS
POSSIBLE--WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. IF YOU DO
ATTEND THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY. ALSO, YOU MAY REVOKE YOUR
PROXY AT ANY TIME PRIOR TO THE MEETING OR IN OPEN MEETING UPON WRITTEN
NOTIFICATION TO THE CHIEF EXECUTIVE OFFICER.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROXY STATEMENT
NBT BANCORP INC.
52 SOUTH BROAD STREET
NORWICH, NEW YORK 13815
This Proxy Statement is being furnished by NBT Bancorp Inc.(the "Company"),
a Delaware corporation, to its stockholders, in connection with the solicitation
by the Board of Directors of proxies to be voted at the Annual Meeting of
Stockholders to be held at 11:00 a.m., on Saturday, April 17, 1999 (the
"Meeting"), at the Norwich Senior High School auditorium located at Midland
Drive, Norwich, New York 13815, and at any adjournments thereof.
In the course of discussions in this Proxy Statement of recommendations and
solicitations of votes, the term "Management" refers to the Board of Directors
of NBT Bancorp Inc., unless otherwise required by the context.
The approximate date on which this Proxy Statement is first being sent or
given to stockholders is March 17, 1999.
A copy of Form 10-K (Annual Report) for December 31, 1998, is being
furnished to the stockholders together with a copy of this Proxy Statement.
Copies of exhibits listed in the Form 10-K can be acquired BY WRITTEN REQUEST TO
JOE C. MINOR, CHIEF FINANCIAL OFFICER AND TREASURER, NBT BANCORP INC., 52 SOUTH
BROAD STREET, NORWICH, NEW YORK 13815.
VOTING, PROXY SOLICITATION AND REVOCATION
Your proxy is solicited by the Board of Directors for use at the Meeting.
If the enclosed form of proxy is properly executed and returned prior to or
at the Meeting, and if not revoked prior to or at the Meeting, all shares
represented thereby will be voted at the Meeting as specified in the proxy by
the persons designated therein. Shares represented by such returned, unrevoked
proxies which are not marked "AGAINST," "ABSTAIN" or "WITHHELD" will be voted to
fix the number of directors at nine and "FOR" the election of the nominees, and
"FOR" ratification of the auditor. Abstentions and broker non-votes are counted
only for purposes of determining whether a quorum is present at the Meeting, but
will not be counted as voting with respect to any matter as to which the
abstention or non-vote is indicated. The solicitation of proxies will be by
mail, but proxies may also be solicited by telephone, telegraph or in person by
officers and other employees of the Company. The entire cost of this
solicitation will be borne by the Company. Should the Company, in order to
solicit proxies, request the assistance of other banks, brokerage houses and
other custodians, nominees or fiduciaries, the Company will reimburse such
persons for their reasonable expenses in forwarding the proxies and proxy
material to the beneficial owners of such shares. A stockholder may revoke his
or her proxy by a later proxy or by delivery of notice of revocation to the
Chief Executive Officer, in writing, at any time prior to the date and time of
meeting or in open meeting. Attendance at the Meeting will not in and of itself
revoke a proxy.
I-1
<PAGE>
SHARES ENTITLED TO VOTE
The Board of Directors has fixed the close of business on March 1, 1999, as
the record date for the determination of stockholders entitled to notice of, and
to vote at, the Meeting. At the close of business on such date, there were
outstanding and entitled to vote at the Meeting 12,396,134 shares of Common
Stock, no par value, stated value $1.00 per share. There were 3,720 stockholders
of record on that date. Each of the outstanding shares is entitled to one vote
at the Meeting for all items set forth in the Notice. Shares held by the Trust
Division of NBT Bank, National Association ("the Bank" or "NBT Bank, N.A.") as
Sole Trustee may not be voted in the election of directors, but may be voted on
other matters.
PRINCIPAL BENEFICIAL OWNERS OF COMMON STOCK
No individual or group of individuals owns of record, or is known to the
Company to own beneficially, more than 5% of the Common Stock. However, Cede &
Co., a nominee of the Depository Trust Company, held record ownership on behalf
of various of its customers on December 31, 1998, of 6,227,402 shares, or 50.2%,
of the outstanding shares. The names of the beneficial owners of the shares held
by those stockholders are unknown to management. At December 31, 1998, the
Company's Employee Stock Ownership Plan owned of record 790,400 of the Company's
common stock, 6.36% of the Company's common stock outstanding.
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that the number of Directors authorized
to serve until the next annual meeting of stockholders shall be the number
designated at the Annual Meeting and prior to the election of directors by the
stockholders entitled to vote for the election of directors at that meeting. The
Board has proposed and is requesting the stockholders to approve its proposal
that the number of directors of the Company be set at nine. Five persons have
been designated by the Board as nominees for election at this Meeting and are
being presented to the stockholders for election. The directors to be elected at
the Meeting shall be determined by a plurality vote of the shares represented in
person or by proxy, entitled to vote at the Meeting.
Nominations of candidates for election as directors of the Company must be
made in writing and delivered to or received by the President of the Company
within ten days after notice of any Stockholders' meeting called for the
election of directors. Such notification shall contain the name and address of
the proposed nominee, the principal occupation of the proposed nominee, the
number of shares of Common Stock that will be voted for the proposed nominee by
the notifying stockholder, including shares to be voted by proxy, the name and
residence of the notifying stockholder and the number of shares of Common Stock
beneficially owned by the notifying stockholder.
No person shall be eligible for election or elected as a director who shall
have attained the age of 72 years, except for Mr. Everett Gilmour who was
granted an exception to age 78 by resolution of the Board of Directors amending
the By-laws.
Nominations not made in accordance herewith may be disregarded by the
Chairman of the meeting.
The By-Laws of the Company permit the Board of Directors by a majority
vote, between annual meetings of the stockholders, to increase the number of
directors by not more than three members and to appoint qualified persons to
fill the vacancies created thereby.
The By-Laws of the Company provide for a classified Board of Directors. The
Board is divided into three equal classes. Each class holds office for a term of
three years, but only one class comes up for election each year (except in those
cases where vacancies occur in other classes). The persons named below are being
proposed as nominees for election as directors as follows: three for the
three-year term expiring at the annual meeting to be held in 2002; one for a
two-year term expiring in 2001; and one for a one-year term expiring in 2000,
and until their successors are elected and qualify. The persons named in the
enclosed proxy intend to vote for such nominees for election as directors, but
if the nominees should be unable to serve, proxies will be voted for such
substitute nominees as shall be designated by the Board of Directors to replace
such nominees.
I-2
<PAGE>
It is believed that each nominee is available for election. The names of
the nominees for election for the term as shown and certain information as to
each of them are as follows:
<TABLE>
<CAPTION>
Number of
Principal Occupation During Common Shares Percent
Date Past Five Years and Other Director Beneficially Owned of Shares
Name of Birth Directorships(a) Since on 12/31/98(b) Outstanding
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nominees with terms expiring in 2002:
J. Peter Chaplin 10/27/29 Senior Vice President (Retired) 16,727(1) 0.13%
Sheffield Products/Quest Intl. 3,368(2)(b) *
Directorships:
Director of NBT Bank, N.A.
since 1995
Peter B. Gregory 05/07/35 Partner, Gatehouse Antiques 1987 75,398(1) 0.61%
Director of NBT Bank, N.A. 7,579(1)(b) *
since 1978 24,560(2)(b) 0.20%
43,374(d) 0.35%
Paul O. Stillman 01/15/33 Chairman of Preferred 1986 25,454(1) 0.21%
Mutual Ins. Co. (c) 665(2)(b) *
Directorships:
Excess Reinsurance Co.;
Preferred Mutual Ins. Co. (c);
Leatherstocking Cooperative
Ins. Co;
NBT Bank, N.A. since 1977
Nominee with term expiring in 2001:
William L. Owens 01/20/49 Managing Partner, Stafford, 1,384(1) *
Trombley, Owens & Curtin, P.C.,
attorneys
Directorships:
Champlain Enterprises, Inc.
Prim Hall Enterprises
Mediquest, Inc.
NBT Bank, N.A. since 1995
Nominee with term expiring in 2000:
Dan B. Marshman 05/08/46 Partner, Marshman Farms, Inc. 11,569(1) *
Directorships: 1,249(1)(b) *
North Country Insurance 3,813(2) *
NBT Bank, N.A. since 1995 1,106(2)(b) *
20,879(g) 0.17%
13,894(h) 0.11%
Directors with terms expiring in 2001:
Daryl R. Forsythe 08/02/43 President & CEO of NBT 1992 19,773(1) 0.16%
Bancorp Inc. & the Bank 1,124(1)(b) *
since January 1995 6,754(2) *
Vice President & General 1,440(2)(b) *
Manager of Simmonds Precision 126,794(3) 1.02%
Engine Systems, a subsidiary of
BF Goodrich Aerospace for more
than 7 years previous thereto
Directorships:
Security Mutual Life Ins. Co. of NY;
NBT Bank, N.A. since 1988
Everett A. Gilmour 05/22/21 Chairman of NBT Bancorp Inc., 1986 86,935(1) 0.70%
and the Bank since January 1995 4,611(2) *
Retired Chairman of NBT 2,805(2)(b) *
Bancorp Inc. for more than
5 years previous thereto
Directorships:
Preferred Mutual Ins. Co.(c);
NYS Electric & Gas Co.;
Norwich Aero Products, Inc.;
NBT Bank, N.A. since 1962
I-3
<PAGE>
Directors with terms expiring in 2000:
Andrew S. Kowalczyk, Jr. 09/27/35 Partner - Kowalczyk, Tolles, 1994 3,220(1) *
Deery & Johnston, attorneys
Director of NBT Bank, N.A.
since 1994
John C. Mitchell 05/07/50 President & CEO of 1994 9,597(1) *
I.L. Richer Co. 16,351(k) 0.13%
(agri. business)
Directorships:
Preferred Mutual Ins. Co.(c);
NBT Bank, N.A. since 1993
</TABLE>
<TABLE>
<CAPTION>
Executive Officers of NBT Bancorp Inc.
other than Directors who are Officers
Number of
Present Position Common Shares Percent
Date of and Principal Beneficially Owned of Shares
Name Date of Birth Employment Position Last Five Years on 12/31/98(b) Outstanding
<S> <C> <C> <C> <C> <C>
John R. Bradley 9/28/43 4/19/93 Senior Vice President - 3,065(1) *
Commercial Banking since May 1993 1,594(1)(b) *
Senior Vice President and 34,065(3) 0.27%
Senior Regional Lender -
Fleet Bank 1965 to 1993
Martin A. Dietrich 4/3/55 3/1/81 Executive Vice President - Retail Banking 5,961(1) *
since April 1996 5,157(1)(b) *
Senior Vice President - 2,896(2) *
Chief Credit Officer 1995 - 1996 808(2)(b) *
Regional Manager 1993 - 1995 29,863(3) 0.24%
Director of Marketing 1991 - 1993 6,667(e) *
Joe C. Minor 10/7/42 3/1/93 Chief Financial Officer 4,017(1) *
& Treasurer of NBT 2,047(1)(b) *
Bancorp Inc. since September 1995 41,384(3) 0.33%
Executive Vice President, Chief Financial
Officer, Treasurer and Cashier of the
Bank since September 1995 Senior Vice
President and Controller of the Bank,
1993-1995
Owner, Public Accounting/Bank Consulting
Firm Charlotte, NC 1983-1993
John D. Roberts 2/16/40 2/15/65 Vice President & Secretary of 18,246(1) 0.15%
NBT Bancorp Inc. since September 1995 1,376(1)(b) 0.01%
Executive Vice President and 281(2)(b) 0.00%
Chief Trust Officer of the Bank 34,065(3) 0.27%
since February 1995
Executive Vice President
Chenango Mutual Insurance Co.
1989 to 1995
<FN>
All directors and executive officers as a group beneficially owned 620,750
shares as of December 31, 1998, which represented 5.00% of total shares
outstanding, including shares owned by spouses and minor children, as to which
beneficial ownership is disclaimed, and options exercisable within sixty days.
NOTES:
(a) The business experience of each director during the past
five years was that typical to a person engaged in the
principal occupation listed for each.
(b) The information under this caption regarding ownership of
securities is based upon statements by the individual
nominees, directors, and officers and includes shares held
in the names of spouses and minor children as to which
beneficial ownership is disclaimed. These indirectly held
shares total in number 54,800 for the spouses and for
minor children. In the case of officers and officer
directors, shares of the Company's stock held in NBT Bank,
National Association Employee Stock Ownership Plan as of
December 31, 1998, are included.
(c) Preferred Mutual Insurance Company, of which Paul O.
Stillman is Chairman and Director, and Everett A. Gilmour
and John C. Mitchell, are Directors, owns 121,944 shares;
Messrs. Stillman, Gilmour, and Mitchell disclaim any
beneficial ownership of any such shares.
(d) Dr. Gregory is executor for Virginia Gregory Est., but
disclaims any beneficial ownership of any such shares.
(e) Mr. Dietrich has power of attorney for Veronica Ulrichs
but disclaims any beneficial ownership of any such shares.
(f) The Everett & Pearl Gilmour Foundation, of which Everett
Gilmour is a Director, owns 9,799 shares, Mr. Gilmour
disclaims any beneficial ownership of any such shares.
(g) Mr. Marshman is Trustee for Baumas Marshman T/U/W for
Mildred Marshman, but disclaims any beneficial ownership
of any such shares.
(h) Mr. Marshman is executor for Mildred Marshman Est.,
his mother, but disclaims any beneficial ownership of
any such shares.
I-4
<PAGE>
(i) The Daryl R. & Phyllis Forsythe Foundation, of which Daryl
R. Forsythe is a Director, owns 7,839 shares. Mr. Forsythe
disclaims any beneficial ownership of any such shares.
(j) The North Country Insurance Company of which Mr. Marshman
is a director owns 17,635 shares. Mr. Marshman disclaims
any beneficial ownership of any such shares.
(k) Mr. Mitchell is co-trustee for the tr u/w of I Richer
Mitchell. Mr. Mitchell disclaims any beneficial ownership
of any such shares.
(1) Sole voting and investment authority
(2) Shared voting and investment authority
(3) Shares under option from NBT Bancorp Inc. Stock Option
Plan which are exercisable within sixty days of December
31, 1998.
* Less than .1%
</FN>
</TABLE>
I-5
<PAGE>
BOARD MEETINGS AND COMMITTEES OF THE BOARD
During 1998, there were five meetings of the Board of Directors. Each
member attended at least 75% of the meetings of the Board and those committees
on which he served. The full Board performed the duties of the Executive
Committee. The following committees perform a dual role for the Company and the
Bank.
NOMINATING AND ORGANIZATION COMMITTEE:
Chairman: Andrew S. Kowalczyk, Jr.
Members: Daryl R. Forsythe
Dr. Peter B. Gregory
Everett A. Gilmour
J. Peter Chaplin
Paul O. Stillman
This committee, which met one time during 1998, nominates directors for
election for the Company and the Bank. The committee also functions to insure a
successful evolution of management at the senior level.
COMPENSATION AND BENEFITS COMMITTEE:
Chairman: Paul O. Stillman
Members: Everett A. Gilmour
Dr. Peter B. Gregory
Andrew S. Kowalczyk, Jr.
John C. Mitchell
Richard F. Monroe
This committee has the responsibility of reviewing the salaries and other
forms of compensation of the key executive personnel of the Company and the
Bank. The committee met three times in 1998. The committee administers the
Company's stock option plan.
AUDIT, COMPLIANCE AND LOAN REVIEW COMMITTEE:
Chairman: John C. Mitchell
Members: J. Peter Chaplin
Everett A. Gilmour
Janet H. Ingraham
Dan B. Marshman
Richard F. Monroe
Plus 2 rotating members each quarter
The Audit, Compliance and Loan Review Committee represents the Board of
Directors in fulfilling its statutory and fiduciary responsibilities for
independent examinations of the Company including monitoring accounting and
financial reporting practices and financial information distributed to
stockholders and the general public. Further, the committee determines that the
Company operates within prescribed procedures in accordance with adequate
administrative, operating and internal accounting controls. It also makes
recommendations to the Board with respect to the appointment of independent
auditors for the following year. This committee met four times in 1998.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and Executive Officers must, under Section 16(a) of the
Securities Exchange Act of 1934, file certain reports of changes in beneficial
ownership of Company securities. The Bank endeavors to assist Directors
I-6
<PAGE>
and Executive Officers in filing the required reports. To the Company's
knowledge all filing requirements under the Securities Exchange Act were
satisfied.
COMPENSATION OF DIRECTORS AND OFFICERS
BOARD OF DIRECTORS FEES
For 1998, members of the Board of Directors received a $3,000 annual
retainer in the form of restricted stock and $600 per Board meeting attended.
Board members also received $600 for each committee meeting attended. Chairmen
of the committees received $900 for each committee meeting attended. Officers of
the Company, who are also Directors, do not receive any fees. For 1999, members
of the Board of Directors will continue to receive an annual retainer in the
amount of $3,000 which will be payable in the form of restricted stock which
will vest over a three year period.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the chief executive
officer of the Company and the four most highly compensated executive officers,
other than the chief executive officer, of the Company or the Bank who were
serving as executive officers at the end of 1998 and whose total annual salary
and bonus exceeded $100,000 in 1998.
I-7
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Securities
Name and Other Annual LTIP Underlying All Other
Principal Position Year Salary Bonus(1) Compensation(2) Payouts Options(3) Compensation(4)
<S> <C> <C> <C> <C> <C> <C>
Daryl R. Forsythe, 1998 $311,539 $195,000 $-0- 39,340 $28,337
President and Chief 1997 $280,000 $168,000 $-0- 45,863 $31,798
Executive Officer of 1996 $240,000 $120,000 $-0- 45,070 $24,788
the Company and the Bank
Joe C. Minor, 1998 $168,461 $ 68,000 $-0- 13,720 $14,400
Executive Vice President 1997 $125,000 $ 55,400 $-0- 12,789 $14,400
Chief Financial Officer and 1996 $115,000 $ 38,352 $-0- 10,804 $11,446
Treasurer of the
Company and the Bank
Martin A. Dietrich, 1998 $137,693 $ 63,744 $-0- 12,040 $14,400
Executive Vice President - 1997 $110,000 $ 49,000 $-0- 11,318 $12,992
Retail Banking Division 1996 $100,000 $ 33,349 $-0- 9,415 $10,028
of the Bank
John D. Roberts, 1998 $128,846 $ 59,400 $-0- 11,340 $14,400
Executive Vice President 1997 $103,000 $ 45,000 $-0- 10,584 $12,164
Chief Trust Officer of 1996 $ 95,670 $ 32,015 $-0- 8,489 $ 8,779
the Bank and Vice
President and Secretary
of the Company
John R. Bradley, 1998 $110,075 $ 45,600 $-0- 10,360 $14,223
Senior Vice President 1997 $ 95,000 $ 42,000 $-0- 9,702 $11,832
and Senior Commercial 1996 $ 91,315 $ 29,981 $-0- 8,334 $ 9,320
Lender of the Bank
<FN>
NOTES:
(1) Represents bonuses under the Company's Executive Incentive
Compensation Plan earned in the specified year and paid in
January of the following year.
(2) Individual amounts, and in the aggregate, are immaterial.
(3) Number of Common stock option grants adjusted for the 5% stock
dividends in December 1996, 1997, 1998, and the 33 1/3% stock
dividend in 1998.
(4) In 1998, 1997 and 1996 the Bank contributed $478,473; $424,302
and $607,557, respectively, to the Bank's Employees' Stock
Ownership Plan ("ESOP"). With the 1998 contribution, the Bank
as trustee of the ESOP will purchase shares of Common Stock of
the Company at the fair market value on the dates of purchase
and will allocate these shares to the accounts of the
participants. The amount shown includes the amount allocated
to the named executive. An individual's maximum compensation
eligible for the ESOP contribution is $160,000. Includes
payments by the Company with respect to the death benefits
agreement ($822 for Mr. Forsythe), disability agreement
($7,734 for Mr. Forsythe), and matching contributions by the
Company or the Bank pursuant to the Company's and Bank's
Section 401(k) retirement plan in the amount of $8,000, ESOP
contribution of $6,400, and the value of personal share of the
auto of $5,381 for Mr. Forsythe. ESOP contributions of $6,400,
$6,400, $6,321 and $6,400 and 401(k) matching contributions of
$8,000, $8,000, $7,902 and $8,000 were made for Mr. Minor, Mr.
Dietrich, Mr. Bradley and Mr. Roberts respectively.
</FN>
</TABLE>
OPTION GRANTS INFORMATION
The following table presents information concerning grants of stock options
made during 1998 to each of the executive officers named in the Summary
Compensation Table above. All information has been adjusted for the December
1998 stock dividend and the 4 for 3 split distributed in the form of a 33 1/3%
stock dividend. No gain to the optionees is possible without an increase in
stock price which will benefit all shareholders proportionately. These potential
realizable values are based solely on arbitrarily assumed rates of appreciation
required by applicable SEC regulations. Actual gains, if any, on option
exercises and common stockholdings are dependent on the future performance of
NBT Bancorp Inc. Common Stock. There can be no assurance that the potential
realizable values shown in this table will be achieved.
I-8
<PAGE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (2)
----------------- -------------------
# of
Securities % of Total
Underlying Options Granted Exercise
Options to Employees Price
Name Granted(1) in Fiscal Year ($/Sh) Expiration Date 5% 10%
- ---- ---------- -------------- ------ --------------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Daryl R. Forsythe 39,340 23.0% 19.07 January 2008 $471,840 $1,195,735
Joe C. Minor 13,720 8.0% 19.07 January 2008 $164,556 $ 417,018
John R. Bradley 10,360 6.1% 19.07 January 2008 $124,257 $ 314,891
John D. Roberts 11,340 6.6% 19.07 January 2008 $136,011 $ 344,678
Martin A. Dietrich 12,040 7.0% 19.07 January 2008 $144,407 $ 365,955
<FN>
NOTES:
(1) Non-qualified options have been granted at fair market value at the
date of grant. At the time of grant, options are 40% vested after one
year from grant date; an additional 20% vests each year thereafter.
(2) The potential realizable value of each grant of options, assuming that
the market price of the underlying security appreciates in value from
the date of grant to the end of the option term, at the specified
annualized rates. The assumed growth rates in price in the Company's
stock are not necessarily indicative of actual performance that may be
expected. The amounts exclude the cost by the executive to exercise
such options.
</FN>
</TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table presents information concerning the exercise of stock
options during 1998 by each of the executive officers named in the Summary
Compensation Table above, and the value at December 31, 1998, of unexercised
options that are exercisable within sixty days of December 31, 1998. These
values, unlike the amounts set forth in the column headed "Value Realized," have
not been, and may never be realized. The underlying options have not been, and
may never be, exercised; and actual gains, if any, on exercise will depend on
the value of NBT Bancorp Inc. Common Stock on the date of exercise. There can be
no assurance that these values will be realized.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End(2) at FY-End(2)
-------------------- ------------
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized(1) Unexercisable Unexercisable
- ---- ----------- ----------------- ------------- -------------
<S> <C> <C> <C> <C>
Daryl R. Forsythe -0- $-0- 126,794/50,963 $1,463,293/420,969
Joe C. Minor -0- $-0- 41,384/15,508 488,944/120,009
John R. Bradley -0- $-0- 34,065/11,763 401,149/ 91,267
John D. Roberts -0- $-0- 25,619/12,735 282,104/ 98,133
Martin A. Dietrich -0- $-0- 29,863/13,634 337,797/105,574
<FN>
NOTES:
(1) Represents difference between the fair market value of the
securities underlying the options and the exercise price of the
options on the date of exercise.
(2) Represents difference between the fair market value of the
securities underlying the options and the exercise price of the
options at December 31, 1998.
</FN>
</TABLE>
I-9
<PAGE>
RETIREMENT PLAN
The following table presents information with respect to the pension plan
of the Company and the Bank. The table shows the estimated annual benefits
payable upon retirement in specified compensation and years of service
classifications for participants retiring on December 31, 1998.
<TABLE>
<CAPTION>
Years of Participation
----------------------
Final Average
Earnings 10 Years 20 Years 30 Years 40 Years
- ------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$15,000 N $ 2,094.86 $ 3,282.45 $ 5,333.98 $ 7,385.51
Q 1,948.93 3,053.79 4,962.41 6,871.03
$25,000 N 3,506.14 5,587.95 8,889.96 12,309.18
Q 3,261.90 5,198.69 8,270.69 11,451.72
$40,000 N 6,122.38 9,722.11 14,816.82 20,492.80
Q 5,695.90 9,044.87 13,784.68 19,065.27
$70,000 N 12,070.63 19,180.31 29,818.64 41,097.85
Q 11,229.79 17,844.21 27,741.47 38,234.98
$100,000 N 18,032.27 28,830.54 44,820.45 61,702.91
Q 16,776.14 26,822.20 41,698.26 57,404.68
$200,000 N 29,187.42 52,280.95 82,564.40 113,544.39
Q 27,154.22 48,639.06 76,812.97 105,634.89
$300,000 N 29,968.13 63,471.13 96,974.13 119,828.20
Q 27,880.55 59,049.73 90,218.91 111,480.97
$400,000 N 29,968.13 63,471.13 96,974.13 119,828.20
Q 27,880.55 59,049.73 90,218.91 111,480.97
$500,000 N 29,968.13 63.471.13 96,974.13 119,828.20
Q 27,880.55 59,049.73 90,218.91 111,480.97
<FN>
N=Normal Form of Benefit for a Single Participant-5 Years Certain and
Continuous.
Q=Normal Form of Benefit for a Married Participant-Qualified Joint and Survivor
(50% of benefit payable to spouse at death of Participant). Spouse's age assumed
to be equal to Participant's age for above calculations. Salaries are assumed to
increase at a rate of 4% per year from date of hire through date of retirement
for above calculations.
</FN>
</TABLE>
The Company has in effect a non-contributory pension plan for all eligible
employees which is self-administered. Eligible employees are those who work in
excess of 1,000 hours per year, have completed one year of service and have
attained age 21. The plan is qualified under Section 401(a) of the Internal
Revenue Code. Employer contributions to the plan are computed on an actuarial
basis using the projected unit credit cost method including amortization of any
past service costs over a thirty-year period. Pension costs are funded as
accrued. The minimum required and maximum deductible contributions for the plan
year ending December 31, 1998, were $179,243.00 and $704,616.00, respectively.
The plan provides for 100% vesting after five years of qualified service.
Earnable compensation for the plan is defined as fixed basic annual
compensation, including bonuses, overtime and other taxable compensation, but
excluding the Company's cost for any public or private employee benefit plan,
including this retirement plan. Benefit computations are based on an average
final compensation amount which is the average annual earnable compensation
during the five consecutive year period in an employee's last ten years of
qualified service which produces the highest such average.
I-10
<PAGE>
The annual normal retirement benefit of a participant who becomes eligible
for benefits shall equal the greater of the amounts described in A and B below,
with that sum then reduced by the amount described in C below.
A. The sum of (i), (ii), and (iii) below:
i. The participant's accrued benefit
under the predecessor plan as of
September 30, 1989.
ii. For years of benefit service earned
after September 30, 1989 and before
January 1, 1995, the sum of 1.60
percent of the participant's final
average earnings for each year of
benefit service plus .60 percent of
the participant's final average
earnings that is in excess of
covered compensation for such year
of benefit service.
iii. For years of benefit service earned
after December 31, 1994, the sum of
1.25 percent of the participant's
final average earnings for each such
year of benefit service, plus .60
percent of the participant's final
average earnings that is in excess
of covered compensation for each
such year of benefit service.
B. The sum of 1.60 percent of the participant's
final average earnings for each year of
benefit service through December 31, 1994,
plus .65% of the participant's final average
earnings that is in excess of covered
compensation for each year of benefit
service through December 31, 1994.
C. The annual normal retirement benefit payable
to the participant from the Retirement Plan
of Irving Bank Corporation and Affiliated
Companies.
The number of years of benefit service taken
into account under the plan shall be limited
to the greater of 30, or the number of years
of benefit service completed by the
participant as of December 31, 1994 (up to a
maximum of 40 for the basic benefit and a
maximum of 35 for the excess portion of the
benefit).
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
There are no employment contracts between the Company or the Bank and the
named executive officers.
CHANGE IN CONTROL CONTRACTS
The Company has entered into a change in control contract with each of Messrs.
Forsythe, Minor, Dietrich, Bradley and Roberts. The contract provides in general
that, in the event that the Company or the Bank is acquired by another company
or any of certain other changes in control of the Company or the Bank should
occur and further if within 24 months from the date of such acquisition or
change in control Messrs. Forsythe, Minor, Dietrich, Bradley or Roberts
respective employment with the Company or the Bank is terminated without cause
or their salary is reduced or their duties or responsibilities are changed
(except in a promotion) Messrs. Forsythe, Minor, Dietrich, and Roberts will be
entitled to receive 2.99 times a base amount and Mr. Bradley will be entitled to
receive 2.0 times a base amount. An executive's base amount for these purposes
is his average annual compensation includible in his gross taxable income for
the five years preceding the year in which the change in control occurs (or, if
he has been employed by the Company for less than those five years, for the
number of those years during which he has been employed by the Company, with any
partial year annualized), including base salary, non-deferred amounts under
annual incentive, long-term performance, and profit-sharing plans, distributions
of previously deferred amounts under such plans, and ordinary income recognized
with respect to stock options. The agreement is effective until December 31,
1999, and is automatically renewed for one additional year commencing at
December 31, 1999 and each December 31 thereafter.
SUPPLEMENTAL RETIREMENTS BENEFITS
The Company agreed in January 1995 to provide Mr. Forsythe with supplemental
retirement benefits ("SERP"). The SERP will provide that annual supplemental
benefits at normal retirement will be equal to 50% of Mr. Forsythe's average
base salary and bonuses for the five salary years immediately preceding the date
of retirement, less the sum of annual amounts payable to the individual under
(a) the Company's pension plan, (b) the Company's ESOP, and (c) social security,
as the case may be. Reduced amounts will be payable under the SERP in the event
Mr. Forsythe takes early retirement. Except in the case of early retirement,
payment of benefits will commence upon Mr. Forsythe's attainment of age 65. The
SERP provides that it shall at all times be unfunded.
I-11
<PAGE>
A Supplemental Retirement Plan has also been provided to Mr. Roberts who was
employed by the Bank between February 15, 1965, through November 1, 1989 and
from February 6, 1995, to date. The purpose of the plan is to provide the
benefits Mr. Roberts would have earned under the Bank's Qualified Retirement
Plan had he been employed continuously by the Bank from February 15, 1965,
through his actual termination of employment at anytime after February 6, 1995.
The plan will provide supplemental retirement income in excess of the retirement
benefits otherwise provided to the Executive under the Bank's Qualified
Retirement Plan.
DARYL R. FORSYTHE EMPLOYMENT
Mr. Forsythe was hired effective January 1, 1995 as president and chief
executive officer of the Company and the Bank. Mr. Forsythe is employed at will
without an employment contract at an annual salary of $300,000 for 1998 and at
$300,000 for 1999. As an executive officer, Mr. Forsythe is eligible to
participate in the Company's and the Bank's various employee benefit plans,
including the Executive Incentive Compensation Plan, the Stock Option Plan, the
retirement plan, the ESOP, and the various health, disability, and life
insurance plans. The Company and Mr. Forsythe have entered into a wage
continuation plan which provides that during the first three months of
disability Mr. Forsythe will receive 100% of his regular wages reduced by any
benefits received under social security, workers' compensation, state disability
plan or any other government plan or other program, such as group coverage, paid
for by the Bank. Additionally, if the disability extends beyond three months,
Mr. Forsythe will receive payments of $7,000 per month under an insurance policy
with The New England. The annual cost of the policy is $7,734, which is
reflected in the Summary Compensation Table above. Mr. Forsythe and the Company
have entered into a death benefits agreement. The policy is a split-dollar life
insurance policy on Mr. Forsythe's behalf in the face amount of $800,000. The
Company is the owner of the policy. Upon Mr. Forsythe's death, his named
beneficiary will receive $600,000 from the policy's proceeds, while the Company
will receive the remainder of the policy's proceeds. Upon termination of the
death benefits agreement (e.g., upon termination of Mr. Forsythe's employment),
Mr. Forsythe is required to transfer all of his right, title, and interest in
the policy to the Company. The Company pays the premium on the policy, 75% of
the cost being attributable to Mr. Forsythe and is reflected in the Summary
Compensation Table above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ending December 31, 1998, Everett A. Gilmour,
Chairman of the Company and a member of the Compensation and Benefits Committee
served on the Board of Directors of Preferred Mutual Insurance Company whose
Chairman is Paul O. Stillman who is Chairman of the Company's and of NBT Bank's
Compensation and Benefits Committee. Mr. Gilmour was Chairman of the Company and
the Bank from 1972 to 1988 and January 1995 to present.
The law firm of Kowalczyk, Tolles, Deery and Johnston, of which Director
Andrew S. Kowalczyk, Jr. is a partner and a member of the Compensation and
Benefits Committee, provides legal services to the Company and the Bank from
time to time. Payments for services for 1998 totaled $70,755. These services
occur in the ordinary course of business and at the same terms and those
prevailing for comparable transactions with other law firms.
John D. Roberts, an executive officer of the Company, is a director of the
I.L. Richer Co. whose President and CEO, John C. Mitchell, serves on the
Compensation and Benefits Committee.
Richard Monroe, a member of the Compensation and Benefits Committee, is a
retiree of the Company and served as Senior Vice President - Manager of Newark
Valley Office from 1973 to 1985.
I-12
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The primary responsibility of the Compensation and Benefits Committee
("Committee") is to design, implement, and administer all facets of the
compensation and benefits programs of the Company for all employees. The
Committee is composed entirely of outside, non-employee directors. The Committee
approves participants who are eligible for the Executive Incentive Compensation
Plan, sets the Plan targets for each year and approves payouts thereon, awards
stock option grants, approves the annual contribution to the Employee Stock
Ownership Plan for all employees, approves executive compensation, annually
reviews the performance of the CEO and recommends the CEO compensation package
to the Board. Actions of the Committee are presented to the Board of Directors
for approval. The objective of the Company's executive compensation program is
to develop and maintain executive reward programs which contribute to the
enhancement of shareholder value, while attracting and retaining key executives
who are critical to the long-term success of the Company. It is expected that
total compensation will vary annually, based on Company and individual
performance.
The Compensation Committee retains the services of an executive salary and
benefits consultant, who is independent and unassociated with the Company, the
CEO, or any member of the Board or management, to assist in setting the total
compensation package of senior management. To assist the Committee in fulfilling
its responsibilities, the independent consultant provides advice and guidance
directed toward ensuring that the Board's practices are consistent within the
industry, consistent with and in support of the goals and objectives of the
Company and fairly applied throughout the Company.
The Committee believes it is critical to the ongoing success of the Company
that its executives continue to be among the most highly qualified and talented
available to lead the organization in the creation of shareholder value. In
support of this objective, the philosophy of the Committee in approving and
recommending executive compensation is based upon the following criteria:
o Design a total compensation package that includes a base
salary, an annual incentive plan that is linked to
shareholder interests, and a stock option plan that
encourages share ownership and is also linked with
shareholder interests.
o Set base salaries that are commensurate with each
individual's responsibility, experience, and contribution to
the Company.
o Ensure that salaries are competitive within the industry so
as to be able to attract and retain highly qualified
executives.
o Promote a pay for performance culture.
The Company's executive compensation program, discussed in detail below, is
made up of both fixed (base salary) and variable (incentive) compensation
elements. Variable compensation consists of annual cash incentives and stock
option grants. The Committee and the management of the Company believe that
variable compensation should be based both on short-term and long-term
measurements and be directly and visibly tied to Company performance, so that,
while introducing appropriate risk in the payout levels, such compensation will
promote a pay for performance culture within the executive team.
In reviewing executive compensation, the Committee considers a variety of
factors including past performance and the Board's expectations for improvement
in the future. The CEO and senior executive management review executive
compensation throughout the year. The CEO presents recommendations for
compensation for the Senior Management Team to the Committee each year prior to
year-end for their approval. The Committee annually reviews the CEO's
performance against pre-established goals and with respect to the performance of
the Company. Improvements in historical measures such as ROA, ROE, profit
improvement, non-performing assets to total assets and net non-interest expense
to total expense are considered in the Committee's assessment of performance.
During 1998, all of these measures showed improvement from 1997. ROA and ROE
rose from 1.20% and 12.97% to 1.48% and 14.93%, respectively, improvements of
23% for ROA and 15% for ROE. The Committee maintained safety and soundness and
once again received a "blue ribbon" and "five star" ratings by outside agencies.
The Company maintained its satisfactory ratings from regulatory examinations as
well.
BASE SALARY. Although not specifically weighted, the performance of each
executive, the level of responsibility, and current inflationary indices were
considered in establishing base salaries for executive officers. Salary ranges
have been established with the assistance of the salary and benefits consultant
and are based upon responsibility, experience, and individual performance. Mr.
Forsythe receives an annual salary of $300,000 for 1999. No written employment
agreement has been entered into between the Company or the Bank and Mr.
Forsythe. In determining Mr. Forsythe's salary, the Committee took into
consideration the salaries of CEOs of similar-sized banks, the performance of
the Bank, and the recommendations of the salary consultant.
I-13
<PAGE>
EXECUTIVE INCENTIVE COMPENSATION PLAN. The Committee, working with an outside
salary and benefits consultant designed the current incentive plan that would
link the payout with shareholder interests. The Plan is reviewed annually by the
Committee. The Plan, as it now exists has three components which determine the
potential award within the Plan: Return on Assets, Return on Equity, and the
dollar increase in net income over the prior year. The Plan has a minimum net
income requirement before any payout is possible. There are participative levels
within the Plan which range from the maximum payout being 40% of salary for
Level I and 30% for Level II. Each level has a corporate performance component
and an individual performance component. At Level I the corporate component is
80% and the personal component is 20%. The Committee sets "stretch" targets in
order to achieve the maximum payout.
As part of the executive incentive compensation plan a separate level was
established for the CEO. The Plan provided for a maximum payout of 75% of salary
with the range of the bonus awarded being based on corporate performance. Mr.
Forsythe's bonus earned in 1998 was $195,000 (65%). The bonus was paid in 1999.
Other executives receiving bonuses were evaluated based on comparisons to
predetermined corporate and personal goals. Each officer achieved a majority of
their goals and were comparably rewarded.
STOCK OPTION PLAN. In order to provide long-term incentives to key employees,
including executive officers, to encourage share ownership by key officers, and
to retain and motivate key officers to further shareholder returns, the Company
has a Stock Option Plan. The Committee believes that stock options, which
provide value to participants only when the Company's shareholders benefit from
stock price appreciation, are an important component of the Company's executive
compensation program. The number of options currently held by an officer is not
a factor in determining individual grants. The value of stock options granted in
1998 ranged from 250% of base compensation at the CEO level down to 1,000 shares
for selected individuals. "Value" is determined by multiplying the number of
options granted by the fair market value of the Company's Common Stock which
underlies such options on the date of the grant. With respect to the options
granted in 1998 to the CEO and to all other executive officers, the Committee in
making the awards considered the various factors referred to above, especially
the positive growth of the Company, its financial condition, and profitability.
The Committee did not apply any specific weighting to the factors considered.
The number of options which the Committee granted to the officers was based upon
individual performance and level of responsibility, subject to Committee-imposed
restrictions. The Committee determined that the award level must be sufficient
in size to provide a strong incentive for participants to work for long-term
business interests of the Company, thereby creating additional shareholder value
resulting from the appreciation of the Company's stock, and to become
significant owners of the Company. Options are granted at the fair market value
of the Company's stock at the time of grant. Under the 1993 Plan, options vest
at the rate of 40% after one year of date of grant and an additional 20% each
year thereafter. Since an option gives the officer only the right to buy these
shares at a fixed price over a future period, the compensation value is derived
by the incentive to increase shareholder value in the future; hence, the
motivation to improve the Company's performance.
MEMBERS OF THE COMPENSATION AND BENEFITS COMMITTEE
Paul O. Stillman - Chairman
Everett A. Gilmour
Dr. Peter B. Gregory
Andrew S. Kowalczyk, Jr.
John C. Mitchell
Richard F. Monroe
I-14
<PAGE>
401(K) AND EMPLOYEE STOCK OWNERSHIP PLAN
NBT Bancorp Inc. amended the Employee Stock Ownership Plan and 401(k) Plan,
merging the two Plans together effective January 1, 1997. This merged and
amended 401(k) and Employee Stock Ownership Plan is for the exclusive benefit of
eligible employees and their beneficiaries. The Plan is administered by the
Bank. Discretionary and matching contributions are primarily in the Company's
common stock. The stock is voted by the Plan's Trustees only as participants
direct the Trustees to vote by properly executing a proxy. At December 31, 1998,
the Plan owned 790,400 shares of the Company's common stock, 6.36% of total
shares outstanding.
All employees of the Company and the Bank are eligible to participate in
the plan after one year's service, are at least 21 years of age and complete
1,000 hours of service during the year. The Plan provides for partial vesting of
an employee's interest in the Plan and approximately 20% per year with 100%
vesting being achieved after five years of qualified service.
However, participants are eligible to make salary reduction contributions
after the date of hire if they are scheduled to work 1,000 hours in a
twelve-month period. The plan provides that eligible employees may elect to
defer up to 15% of his or her salary for retirement (subject to a maximum
limitation of $10,000) and that the company or the bank will provide a matching
contribution of 100% of the first 5% of the employee's deferred amount. In 1998,
the company or the bank provided matching contribution to Mr. Forsythe of
$8,000, Mr. Minor of $8,000, Mr. Dietrich of $8,000, Mr. Bradley of $7,902 and
Mr. Roberts of $8,000. These payments are reflected in the Summary Compensation
Table.
Discretionary contributions, as determined annually by the Board of
Directors, are made by the company to a separate trust for the benefit of the
eligible employees and their beneficiaries. Annual contributions may not exceed
amounts deductible for Federal income tax purposes. Employer contributions are
allocated among all participants in proportion that each participant's
compensation for the plan year bears to the total compensation of all
participants for the plan year (compensation for the plan is defined as total
compensation during a Plan Year that is subject to income tax and reflected on
the W-2 Form, but including a salary reduction contribution to any plan or
arrangement maintained by the company, and excluding distributions from
non-qualified plans, income from the exercise of stock options, and severance
payments). The Board of Directors may amend the plan at any time.
The value of a participant's account is the total of allocated employer
contribution, employee salary deferrals, plus the earnings on those
contributions and deferrals, plus or minus any gain or loss on the investment of
the contributions and deferrals.
Normal retirement age under the plan is 65. The plan also provides for
early retirement at age 55 and disability retirement at any age. In the event a
participant dies before retiring under the plan, the value of his account in the
plan will be paid to his or her beneficiary.
A participant's retirement benefit under the plan is the value of his or
her account at the date of retirement. Effective January 1, 1985, the normal
form of retirement benefit for a married employee is a joint and survivor
annuity; for an employee who is not married, a lump sum distribution of cash.
Other available retirement options are: 1) installment payments of cash and 2)
distributions of the account value in employer securities, both subject to
obtaining spousal waivers.
As a qualified plan (under current law) employer contributions and employee
salary deferrals are not currently taxed to employees; and retirement benefits
will be taxable to employees when received from the plan.
In 1998, the Company made a discretionary contribution of $478,473 to the
plan. The Summary Compensation Table reflects payments made to the Company's
named executive officers under the plan.
I-15
<PAGE>
STOCK OPTION PLAN
The Board of Directors adopted Stock Option Plans in 1986 and in 1993,
which were subsequently approved by the Company's stockholders at the 1987 and
1993 Annual Meetings, respectively, and amended the 1993 plan which was approved
by the stockholders at the 1998 Annual Meeting. The purposes of the plans are to
encourage ownership of capital stock of the Company by officers and other key
employees of the Company and its subsidiaries in order to help the Company
attract and retain in its service persons of exceptional competence, to furnish
added incentives for them to increase their efforts on behalf of the Company,
and to gain for the Company the advantages inherent in key employees having an
ownership interest in the Company. Pursuant to the approval of the 1993 Stock
Option Plan, the 1986 plan was "frozen" and no new options or stock appreciation
rights may be granted under that plan.
The 1993 Plan is intended to promote the interests of the Company and its
stockholders by ensuring continuity of management and increased incentive on the
part of officers and other key management employees of the Company and its
subsidiaries responsible for major contributions to effective management,
through facilitating their acquisition of equity interests in the Company.
The 1993 Plan authorizes the granting of options ("Options") to purchase
shares of the Company's Common Stock to officers and key management employees of
the Company and its subsidiaries. Common Stock issued pursuant to the 1993 Plan
may be authorized but unissued Common Stock or reacquired Common Stock, or both.
The 1993 Plan is administered by the Board of Directors, the Compensation and
Benefits Committee, or a subcommittee thereof (the "Committee"), consisting of
at least three Directors of the Company who are disinterested directors as
defined by Rule 16b-3 promulgated under the Securities Exchange Act of 1934.
The Committee (or subcommittee, as the case may be) is authorized to
determine the employees to whom grants of Options may be made under the 1993
Plan, the number and terms of Options to be granted to each employee selected,
the time or times when Options will be granted, the period during which Options
will be exercisable, and the exercise price per share of Common Stock. The
exercise price may not be less than the fair market value of a share of Common
Stock at the date the Option is granted.
Options granted to an employee under the 1993 Plan may not be transferred
by the recipient otherwise than by will or by the law of descent and
distribution, and such Option may be exercisable during such person's life only
by him. No Option may be exercisable after the expiration of ten years from the
date such Option is granted. The terms of an Option must provide that it is
exercisable only in specified installments during the Option period: to the
extent of forty percent of the number of shares originally covered thereby with
respect to each particular grant of options, at any time after the expiration of
one year from the date of grant, and to the extent of an additional twenty
percent of such number of shares upon the expiration of each succeeding year, so
that upon the expiration of four years from the date of grant one hundred
percent of such number of shares will be eligible for exercise by the recipient.
Such installments are cumulative. Upon termination of his employment, any such
Option will be exercisable to the extent that he was entitled to exercise the
Option at the date of such termination; upon the employee's death, the Option
will become exercisable in full on the date of death.
The 1993 Plan provides that it will expire on April 18, 2008. The 1993 Plan
provides that for each share of common stock purchased by an optionee upon the
exercise of a stock option, the optionee will receive a reload option to
purchase another common share. Granting of a reload option is subject to the
express approval of the Board of Directors or Committee. The 1993 Plan provides
that immediately upon the occurrence of a change in control of the Company, all
outstanding options will immediately vest and become exercisable in full. If an
optionee's employment with the Company or its subsidiaries is terminated for
cause, such optionee's options will be cancelled and rendered null and void on
the date such employment is terminated.
The 1993 Plan provides that, if there occurs a change in the number of
outstanding shares of Common Stock by reason of a stock split, stock dividend,
recapitalization, reclassification, merger, consolidation, combination or
exchange of shares or other similar event, the Committee may, in its discretion,
make such adjustments as may be equitably required in the number of shares that
may be issued under the 1993 Plan, in the number of shares which are subject to
outstanding Options, and in the purchase price per share relating thereto.
The Board may amend the 1993 Plan at any time without the approval of the
stockholders of the Company, but no amendment which (a) increases the aggregate
number of shares as to which Options may be granted under the 1993 Plan (other
than equitable adjustments referred to in the immediately preceding paragraph
which will not constitute amendments), (b) changes the class of persons eligible
to receive options, (c) changes the provisions of the 1993 Plan regarding the
option price, (d) extends the period during which options may be granted, (e)
extends the maximum period after the date of grant during which options may be
exercised, or (f) changes the provision in the 1993 Plan as to qualification for
membership on the Committee will be effective unless and until the amendment is
approved by the stockholders of the Company. In the event of a dissolution or
liquidation of the Company or a merger or consolidation in which the Company is
not to be the surviving corporation or a sale of substantially all the assets of
the Company to another corporation, every option outstanding under the 1993 Plan
will terminate, except that the optionee will have the right to exercise, prior
to or simultaneously with such event, his Option to purchase any or all shares
then subject to the Option, including those, if any, which have not theretofore
become available for purchase under other provisions of the 1993 Plan.
I-16
<PAGE>
As of December 31, 1998, 1,658,334 shares of the Company's Common Stock
have been reserved for issuance under the Plans. In 1998, non-qualified options,
which expire in 2008, for 171,079 shares were granted to 39 key employees, at an
option price of $19.07. Options for 637,870 shares were outstanding at December
31, 1998 with option prices ranging from $6.13 to $19.75 per share for all
officers as a group. All options were at 100% of fair market value as of date of
the grant. Options and option prices have been adjusted for all stock dividends
to date.
FEDERAL INCOME TAX CONSEQUENCES
Under the present provisions of the Internal Revenue Code of 1986, as
amended, the Federal income tax consequences of the 1993 Plan are as follows:
The granting of a non-qualified option to an employee will not result in taxable
income to the recipient or a deduction in computing the income tax of the
Company or any subsidiary. Upon exercise of a non-qualified option, the excess
of the fair market value of the shares acquired over the Option price is (a)
taxable to the optionee as ordinary income and (b) deductible in computing the
Company's income tax, subject to satisfying applicable withholding requirements
and general rules relating to reasonableness of compensation.
EXECUTIVE INCENTIVE COMPENSATION PLAN
The Company adopted, effective January 1, 1992, an Executive Incentive
Compensation Plan (hereinafter, the "Plan") to promote individual motivation for
the achievement of the Company's financial and operating objectives and to aid
in attracting and retaining highly qualified personnel. Pursuant to the Plan,
officers of the Bank are eligible to receive cash in the event certain
performance criteria are satisfied. The operation of the Plan is predicated on
the Bank's attaining and exceeding management performance goals. The goals
consist of return on average assets, return on stockholders' equity, and profit
improvement. Unless a participant elects to have all or a portion of his award
deferred, distribution of awards will be made in cash during the first quarter
after year-end. All distributions must be approved by the Compensation and
Benefits Committee. This Committee has broad discretion in determining who will
be eligible to receive incentive compensation awards and has full power and
authority to interpret, manage, and administer the Plan. The Plan provides that
the President and Chief Executive Officer of the Company will recommend to the
Committee the amounts to be awarded to individual participants. The President
and Chief Executive Officer may also recommend a change beyond the formula to a
bonus award to a participant. The Committee has the authority to amend such
recommendation.
Bonus awards are made pursuant to an established formula. An employee will
be placed into a particular level, according to the participant's office and
responsibility. Depending upon the particular level, the 1999 award will range
from 0% to 30% of the participant's regular salary at the lowest level to 0% to
75% of the salary at the CEO level. The formula provides that the financial
criteria necessary for plan operation consist of return on average assets,
return on equity, and profit improvement. Incentive distributions will be based
upon attainment of corporate performance goals to establish the total awards.
The total awards, in turn, will be determined by reference to both corporate and
individual components. The corporate component will be determined by attainment
of corporate goals (as established by the Committee) and the individual
component will be determined by attainment of individual goals (objectives
mutually agreed upon between participants and the division head and approved by
the Chief Executive Officer). The corporate component will range from 100% for
the highest level (the President and Chief Executive Officer) to 60% for the
lowest level, whereas the individual component will range from 0% for the
highest level to 40% for the lowest level.
The Plan also provides that the Chief Executive Officer will own such
number of shares of Company Common Stock as will equal at the end of the five
years twice his current base salary.
The amount of incentive compensation awards to the individuals named in the
Summary Compensation Table is included in the "Bonus" column of that table.
Payments of bonuses for 1998 pursuant to the Plan were made January 1999.
I-17
<PAGE>
PERSONAL BENEFITS
During the past fiscal year, no director, officer or principal stockholder
or members of their respective families received any banking services or other
benefits, including use of any staff, facilities or properties of the Company,
not directly related to job performance and not generally available to all
employees of the Company. Health insurance and group life insurance are
routinely provided all staff members.
RELATED PARTY TRANSACTIONS
The Bank has had, and expects in the future to have, transactions in the
ordinary course of business with directors and officers of the Company and the
Bank on the same terms as those prevailing at the time for comparable
transactions with others. The Bank has extended credit to its directors and
officers and their business interests. The total of these loans was $4,238,002,
$3,563,357 and $4,441,730 at December 31, 1996, 1997, and 1998 respectively,
representing 4.0%, 2.9% and 3.4% of equity capital at those dates. The highest
aggregate amounts outstanding on such loans during 1996, 1997, and 1998 were
$4,238,002, $5,008,597, and $5,313,091, respectively, which represented 4.3%,
4.0% and 4.1% of equity capital at those interim dates.
All outstanding loans made by the Bank to such persons were made in the
ordinary course of business on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other persons, and, in the opinion of management, do not
present more than normal risk of collectability or present other unfavorable
features. Based upon the information available to it, the Bank does not consider
that any of the officers or directors of the Bank or the Company had a material
interest in any transactions during the last year, except as stated above, or
have such an interest in any proposed transactions.
I-18
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return (i.e.,
price change, reinvestment of cash dividends and stock dividends received) on
the Company's Common Stock against the cumulative total return of the NASDAQ
Stock Market (US Companies) Index and the Index for NASDAQ Financial Stocks. The
stock performance graph assumes that $100 was invested on December 31, 1993. The
graph further assumes the reinvestment of dividends into additional shares of
the same class of equity securities at the frequency with which dividends are
paid on such securities during the relevant fiscal year. The yearly points
marked on the horizontal axis correspond to December 31 of that year. Each of
the referenced indices is calculated in the same manner. All are
market-capitalization-weighted indices, so companies judged by the market to be
more important (i.e., more valuable) count for more in all indices.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG NBT BANCORP INC., THE
INDEX FOR NASDAQ FINANCIAL STOCKS, AND THE NASDAQ STOCK MARKET (US COMPANIES)
INDEX.
{FOLLOWING IS A TABULAR PRESENTATION OF DATA POINTS FOR THE GRAPH WHICH APPEARS
HERE IN THE PAPER COPY}
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Measurement NBT NASDAQ NASDAQ
Period (Fiscal BANCORP Financial Composite Index
Year Covered) INC. Stock Index (US Companies)
- ------------- ---- ------------ --------------
4Q93 $100.00 $100.00 $100.00
1Q94 $ 96.52 $ 97.26 $ 95.71
2Q94 & 91.64 $102.69 $ 90.87
3Q94 $ 89.50 $103.31 $ 98.40
4Q94 $ 97.62 $ 95.53 $ 96.80
1Q95 $ 95.37 $105.75 $105.20
2Q95 $ 97.57 $114.06 $120.16
3Q95 $ 99.80 $128.63 $134.33
4Q95 $111.92 $138.66 $135.44
1Q96 $109.56 $142.99 $141.78
2Q96 $106.37 $144.83 $152.55
3Q96 $110.46 $158.31 $157.94
4Q96 $124.70 $177.33 $166.19
1Q97 $136.13 $184.32 $157.27
2Q97 $188.66 $214.98 $185.64
3Q97 $186.34 $250.81 $217.00
4Q97 $201.50 $277.87 $202.15
1Q98 $210.23 $290.65 $236.31
2Q98 $255.73 $280.28 $243.91
3Q98 $233.50 $231.25 $218.05
4Q98 $250.99 $270.17 $282.26
</TABLE>
I-19
<PAGE>
PROPOSAL NUMBER 2
PROPOSAL TO RATIFY THE BOARD OF DIRECTORS ACTION IN SELECTION OF
KPMG LLP AS INDEPENDENT PUBLIC AUDITORS FOR THE COMPANY
The Board of Directors upon the recommendation of the Audit, Compliance and
Loan Review Committee has appointed KPMG LLP as independent auditors of the
Company to examine the financial statements for the fiscal year ending December
31, 1999. KPMG LLP has served as the Company's independent auditors since
January 1987. Ratification of such employment will require the affirmative vote
of the holders of a majority of the shares represented at the Meeting in person
or by proxy and entitled to vote. The Board of Directors recommends a vote FOR
Proposal Number 2. In the event the stockholders fail to ratify this employment,
it will be considered as a directive to the Board of Directors to select other
auditors for the current year.
Representatives of KPMG LLP are expected to be present at the Meeting and
will have an opportunity to make a statement if they desire to do so. They will
also be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Management anticipates mailing the proxy materials for the 2000 Annual
Meeting on or about March 17, 2000. If any security holder wishes a proposal to
be considered for inclusion in the 2000 Proxy Statement, this material must be
received by the Chief Executive Officer no later than November 15, 1999.
OTHER MATTERS
Management does not know of any other matters which may come before the
Meeting. However, if any matters properly come before the Meeting, it is the
intention of the persons named in the enclosed proxy to vote such proxy in
accordance with the recommendations of the Board of Directors. It is important
that proxies be returned promptly. Therefore, the stockholders who do not expect
to attend in person are urged to mark, date, sign and return the enclosed proxy
in the accompanying postage paid envelope.
By Order of the Board of Directors
/s/ DARYL R. FORSYTHE
Daryl R. Forsythe
President and Chief Executive Officer
/s/ JOE C. MINOR
Joe C. Minor
Chief Financial Officer and Treasurer
Dated: March 17, 1999
I-20
<PAGE>
PROXY FOR 1999 ANNUAL MEETING OF NBT BANCORP INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
KNOWN ALL MEN BY THESE PRESENTS that I (we), the undersigned Stockholder(s) of
NBT Bancorp Inc. (the "Company"), do hereby nominate, constitute and appoint
James I. Dunne and James A. Hoy or any one of them (with full power to act
alone), my true and lawful attorney(s) with full power of substitution, for me
and in my name, place and stead to vote all the Common Stock of said Company,
standing in my name on its books March 1, 1999, at the Annual Meeting of its
Stockholders to be held at Norwich Senior High School, Midland Drive, Norwich,
New York 13815 on April 17, 1999, at 11:00 a.m., or at any adjournments thereof,
with all the powers the undersigned would possess if personally present.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE NOTED AS DIRECTED BELOW. IN THE
ABSENCE OF ANY DIRECTION, THE SHARES REPRESENTED HEREBY SHALL BE NOTED TO FIX
THE NUMBER OF DIRECTORS AT NINE, FOR THE ELECTION OF THE NOMINEES LISTED AND FOR
RATIFICATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS.
Comments/Address Changes: ___________________________________________
[ X ] Please mark your votes as in this example.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
FOR ALL WITHHOLD FROM
NOMINEES ALL NOMINEES
1) Election of Directors. [ ] [ ]
Fix the number of Directors
at nine and the election of
nominees listed below:
</TABLE>
For Term Ending 2002:
Peter B. Gregory
Paul O. Stillman
J. Peter Chaplin
For Term Ending 2001:
William L. Owens
For Term Ending 2000:
Dan B. Marshman
The Board of Directors
recommends a vote FOR
the Nominees.
IF YOU DO NOT WISH YOUR SHARES
VOTED "FOR" A PARTICULAR NOMINEE,
DRAW A LINE THROUGH THAT PERSON'S
NAME.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
2) Approval of the appointment [ ] [ ] [ ]
of KPMG LLP as
Independent Public
Accountants For the Company
for 1999.
The Board of Directors
Recommends a vote FOR approval.
</TABLE>
<PAGE>
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before such meeting or any adjournment or
postponed thereof.
Mark box at right if comments or address change have been noted on the [ ]
reverse side of this card.
SIGNATURE(S)__________________________DATE_________
NOTE: Please sign exactly as name appears hereon. Joint
owners should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such.
