<PAGE> 1
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 sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
PEOPLES HERITAGE FINANCIAL GROUP, INC.
(Name of Registrant as Specified In Its Charter)
PEOPLES HERITAGE FINANCIAL GROUP, INC.
(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 transaction 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 identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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<PAGE> 2
[LOGO]
March 22, 1999
Dear Stockholder:
On behalf of the Board of Directors I cordially invite you to attend the
Annual Meeting of Stockholders of Peoples Heritage Financial Group, Inc., which
will be held at the Portland Marriott Hotel, 200 Sable Oaks Drive, South
Portland, Maine 04106, on Tuesday, April 27, 1999 at 10:30 a.m., Eastern Time.
The matters to be considered by stockholders at the Annual Meeting are described
in detail in the accompanying materials.
It is very important that you be represented at the Annual Meeting
regardless of the number of shares you own or whether you are able to attend the
meeting in person. Let me urge you to mark, sign and date your proxy card today
and return it in the envelope provided, even if you plan to attend the Annual
Meeting. This will not prevent you from voting in person, but will ensure that
your vote is counted if you are unable to attend.
Your continued support of and interest in Peoples Heritage Financial Group,
Inc. are sincerely appreciated.
Sincerely yours,
/s/ William J. Ryan
William J. Ryan
Chairman, President and
Chief Executive Officer
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YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU OWN. EVEN IF YOU
PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU ATTEND THE ANNUAL
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY PROXY. ANY PROXY GIVEN MAY BE
REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO THE EXERCISE
THEREOF.
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<PAGE> 3
PEOPLES HERITAGE FINANCIAL GROUP, INC.
P.O. BOX 9540
ONE PORTLAND SQUARE
PORTLAND, MAINE 04112-9540
(207)761-8500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Peoples
Heritage Financial Group, Inc. (the "Company") will be held at the Portland
Marriott Hotel, 200 Sable Oaks Drive, South Portland, Maine 04106, on Tuesday,
April 27, 1999 at 10:30 a.m., Eastern Time, for the following purposes, all of
which are more completely set forth in the accompanying Proxy Statement:
1. To elect five Directors for a three-year term, two directors for a
two-year term and one director for a one-year term, and in each case until
their successors are elected and qualified;
2. To ratify the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for 1999; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof. Management is not aware of any other
such business.
The Board of Directors has fixed March 19, 1999 as the voting record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournment thereof. Only those stockholders of record
as of the close of business on that date will be entitled to vote at the Annual
Meeting or at any such adjournment.
By Order of the Board of Directors
/s/ Carol L. Mitchell
Carol L. Mitchell, Esq.
Executive Vice President, General
Counsel,
Secretary and Clerk
Portland, Maine
March 22, 1999
<PAGE> 4
PEOPLES HERITAGE FINANCIAL GROUP, INC.
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished to stockholders of Peoples Heritage
Financial Group, Inc. (the "Company") in connection with the solicitation of
proxies on behalf of the Board of Directors to be used at the Annual Meeting of
Stockholders of the Company to be held at the Portland Marriott Hotel, 200 Sable
Oaks Drive, South Portland, Maine 04106, on Tuesday, April 27, 1999 at 10:30
a.m., Eastern Time, and at any adjournment thereof for the purposes set forth in
the Notice of Annual Meeting of Stockholders (the "Annual Meeting"). This Proxy
Statement is first being mailed to stockholders on or about March 22, 1999.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted "For" the nominees for Director described herein,
"For" ratification of KPMG Peat Marwick LLP ("KPMG Peat Marwick") as the
Company's independent auditors for 1999 and, upon the transaction of such other
business as may properly come before the Annual Meeting, in accordance with the
judgment of the persons appointed as proxies. Any stockholder giving a proxy has
the power to revoke it at any time before it is exercised by (i) filing with the
Clerk of the Company written notice thereof (Carol L. Mitchell, Esq., Executive
Vice President, General Counsel, Secretary and Clerk; Peoples Heritage Financial
Group, Inc., P.O. Box 9540, One Portland Square, Portland, Maine 04112-9540);
(ii) submitting a duly executed proxy bearing a later date; or (iii) appearing
at the Annual Meeting and giving the Clerk notice of his or her intention to
vote in person. Proxies solicited hereby may be exercised only at the Annual
Meeting and any adjournment thereof and will not be used for any other meeting.
VOTING
Only stockholders of record at the close of business on March 19, 1999 (the
"Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 104,070,044 shares of common stock of the
Company, par value $.01 per share (the "Common Stock"), issued and outstanding,
and the Company had no other class of equity securities outstanding. Each share
of Common Stock is entitled to one vote at the Annual Meeting on all matters
properly presented thereat.
The persons receiving the greatest number of votes of the Common Stock in
each class, up to the number of Directors to be elected in such class, shall be
elected as Directors of the Company. The affirmative vote of a majority of the
votes cast on the matter at the Annual Meeting is required to ratify the
appointment of KPMG Peat Marwick as the Company's independent auditors for 1999
and to approve any other matter properly submitted to the stockholders for their
consideration at the Annual Meeting.
With regard to the election of Directors, stockholders may vote in favor of
or withhold authority to vote for one or more nominees for Director. Votes that
are withheld in connection with the election of one or more nominees for
Director will not be counted as votes cast for such individuals and accordingly
will have no effect. Abstentions may be specified on all other proposals and
will have no effect on the voting on such proposals.
All of the proposals of the Company described herein are considered
"discretionary" items upon which brokerage firms may vote in their discretion on
behalf of their clients if such clients have not furnished voting instructions
within ten days of the Annual Meeting. Thus, there will be no broker "non-votes"
in connection with the Annual Meeting.
<PAGE> 5
ELECTION OF DIRECTORS
(PROPOSAL ONE)
The Articles of Incorporation of the Company provide that the Board of
Directors shall be divided into three classes as nearly equal in number as
possible and that the members of each class are to be elected for a term of
three years and until their successors are elected and qualified. One class of
Directors is to be elected annually. A resolution of the Board of Directors
adopted pursuant to the Company's Articles of Incorporation has established the
number of Directors at 15.
Each of the eight Directors up for election at the Annual Meeting currently
is a Director of the Company. There are no arrangements or understandings
between the persons named and any other person pursuant to which such person was
selected as a nominee for election as a Director at the Annual Meeting, and no
Director is related to any other Director or executive officer of the Company or
of any of its subsidiaries by blood, marriage or adoption.
If any person named as nominee should be unable or unwilling to stand for
election at the time of the Annual Meeting, the proxies will nominate and vote
for a replacement nominee or nominees recommended by the Board of Directors. At
this time, the Board of Directors knows of no reason why any of the nominees
listed below may not be able to serve as Director if elected.
The following table presents information concerning the nominees for
Director and the Directors whose terms continue, including each such person's
tenure as a Director of the Company or its subsidiaries. Where applicable,
service as a Director includes service as a Director of the Company's banking
subsidiaries -- Peoples Heritage Bank, Bank of New Hampshire and Family Bank,
FSB ("Family Bank") -- and their respective predecessors.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2002
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
P. Kevin Condron 53 Director of the Company; Director of Family Bank; 1998
former Chairman of Safety Fund National Bank;
President and Chief Executive Officer of The
Granite Group LLC; Chairman of the Board,
Worcester Business Development Corp.; former
Chairman, Worcester Redevelopment Authority;
former Chairman, Worcester Area Chamber of
Commerce; Clerk of Greater Worcester Community
Foundation; Trustee, Allmerica Investment Trust
and Allmerica Securities Trust; and Trustee,
College of the Holy Cross.
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
Douglas S. Hatfield 63 Director of the Company and Director of CFX 1998
Corporation from 1988 until its merger into the
Company in 1998; President and Treasurer of
Hatfield, Moran & Barry, P.A.; Justice of the
Hillsborough District Court since 1969; member of
the New Hampshire Bar and former Governor at Large
of the Board of Governors of the same; member,
past Director and past President of New Hampshire
Estate Planning Council; past Chairman of New
Hampshire Bar Committees on Unauthorized Practice
of Law and Economics of the Practice of Law;
lecturer at various New Hampshire Bar Association
continuing legal education programs; member of
National Association of School Councils; President
of New Hampshire Council of School Attorneys;
member of Board of Governors and past President of
New Hampshire Judges Association; Trustee and past
President and Chairman of New Hampshire Conference
of the United Church of Christ and elected
Executive Council of General Synod; past President
of Hillsborough Chamber of Commerce; past Master
of Harmony Lodge F. & A.M.; and past Chairman of
Hillsborough Planning Board.
Philip A. Mason 56 Director of the Company and Director of CFX 1998
Corporation from 1982 until its merger into the
Company in 1998; co-founder and partner of the law
firm of Mason & Martin, L.L.P; member of the
Massachusetts, District of Columbia and Supreme
Court Bars; Member, Administrative Board, PNC Bank
Fund for Charitable Living; Director of Bournewood
Hospital; Member of the Board of Trustees of
Northfield Mount Hermon School; Chairman of the
Board of the Willow Hill School; former Corporator
of Children's Museum of Boston; former Overseer of
the University of the Virgin Islands; former
member of the Board of National Grange Mutual
Insurance Company; former member of the Board of
Jacor Communications Inc. and former member of the
Committee on Professional Ethics of the
Massachusetts Bar Association.
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
William J. Ryan 55 Chairman, President and Chief Executive Officer of 1989
the Company; Director and former President and
Chief Executive Officer of Peoples Heritage Bank;
prior to joining the Company and Peoples Heritage
Bank in July 1989, held various positions with
banking subsidiaries of Bank of New England
Corporation, including President and Chief
Executive Officer of Bank of New England North,
Lowell, Massachusetts from January 1989 to July
1989 and an Executive Vice President of Bank of
New England, Boston, Massachusetts from July 1986
to January 1989 and President and Chief Executive
Officer of Bank of New England Bay State,
Lawrence, Massachusetts from January 1985 to June
1986; Director of New England Student Loan
Association; Director, Blue Cross/Blue Shield of
Maine and member of its Finance Committee;
Director of Central Maine Power Company; and
member, Trustee, New England Banking Institute.
Curtis M. Scribner 61 Director of the Company; Director of Peoples 1977
Heritage Bank; Director of MPN Holdings, the
holding company for the Company's insurance
brokerage subsidiary; Principal of C.M. Scribner &
Co., a real estate holding company; past president
of J.B. Brown & Son, a real estate management and
development company; past Chairman and current
Trustee of Hurricane Island Outward Bound; Trustee
of Maine Life Care Retirement Community, Inc.;
Director of the Rufus Deering Co.; member of the
Maine Committee of Newcomen Society; Corporator,
Maine Medical Center; and Honorary Trustee of the
North Yarmouth Academy.
</TABLE>
NOMINEES FOR DIRECTOR FOR TWO-YEAR TERM EXPIRING IN 2001
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
John M. Naughton 62 Director of the Company; former Chairman of the 1999
Board and Director of SIS Bancorp, Inc. from 1990
to its acquisition by the Company in 1999; retired
Executive Vice President of Massachusetts Mutual
Life Insurance Company; Trustee of the University
of Massachusetts; Trustee of American
International College; member of Finance Committee
of Bay State Health Systems; former Vice Chairman
of Bay State Medical Center; former Director of
Oppenheimer Management Corp.; former Director of
David L. Babson, Inc.; former Director of
Automatic Business Centers; and former Chairman of
U.S. Department of Labor ERISA Advisory Council.
Seth A. Resnicoff 62 Director of the Company; former Director of CFX 1998
Corporation and Concord Savings Bank; President,
Concord Surgical Associates, P.A. and surgeon from
1974 to present; Chairman of the Board and
President of Strategic Healthcare; Adjutant
Assistant Professor of Surgery, Dartmouth Medical
School; and Trustee of both Derryfield School and
Camp Mayhew.
</TABLE>
4
<PAGE> 8
NOMINEE FOR DIRECTOR FOR ONE-YEAR TERM EXPIRING IN 2000
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
David D. Hindle 59 Director of the Company; Chairman of the Board of 1999
Family Bank from 1995 to 1999 and former President
and Chief Executive Officer of Family Bank; Member
of the Resource Development Committee of the
United Way of Merrimac Valley; Director of The
Lowell Plan and the George C. Wadleigh Charitable
Foundation; member of the Business Executive
Advisory Board of the University of Massachusetts
Lowell College of Management; member of the
Advisory Board of the Whittier Regional Vocational
Technical High School; and Trustee of the
Pentucket Regional High School Scholarship
Foundation.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS OF THE COMPANY VOTE "FOR"
APPROVAL OF THE NOMINEES FOR DIRECTOR
MEMBERS OF THE BOARD CONTINUING IN OFFICE
DIRECTORS WITH TERMS EXPIRING IN 2001
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
Katherine M. Greenleaf 50 Director of the Company; Director of Peoples 1991
Heritage Bank from 1981 to 1991; President,
GreenLeaf Consulting Group, 1998 to present;
Senior Director, Ben & Jerry's Ice Cream, from
1996 to 1997; Vice President of The Limited Stores
from 1993 to 1995; Senior Vice President of
Hannaford Bros., Inc from 1985 to 1993; former
Vice President of UNUM, from 1973 to 1985;
admitted to practice law before the Maine and
Massachusetts Bars; Director, Martin's Point
Healthcare; and Director, Gulf of Maine Aquarium
Development Corporation.
Dana S. Levenson 45 Director of the Company; Director of Bank of New 1995
Hampshire or its predecessor since 1993; President
of Ann Ellen Enterprises, Inc., a 35-store
specialty retail operation from 1981 to 1996;
President of Quatro Realty Corporation; member of
Portsmouth Rotary Club since 1977; Treasurer,
Dartmouth Club of the Seacoast; and member,
Portsmouth Children's Museum Advisory Board.
Pamela P. Plumb 55 Director of the Company; Vice Chairman of the 1979
Company since 1990; former Vice Chairman and
Director of Peoples Heritage Bank; President,
Pamela Plumb & Associates from April 1991 to
present; President of the Board of the Children's
Museum of Maine; member of Advisory Board of
Greater Portland Landmarks, Inc.; Co-Chair,
Campaign for Greater Portland Cares; former Mayor
and member of the City Council of the City of
Portland, Maine; and former Board member and past-
President of the National League of Cities.
</TABLE>
5
<PAGE> 9
DIRECTORS WITH TERMS EXPIRING IN 2001
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
Andrew W. Greene 55 Director of the Company; Chief Executive Officer, 1992
Legacy Co. Services, Inc. 1998 to present;
President, Chief Executive Officer and Director of
Blue Cross/Blue Shield of Maine; President, Chief
Executive Officer and Director of Blue Alliance
Mutual Insurance Company from 1991 to 1998;
Chairman of the Board and Chief Executive Officer
of Machigonne Agency, Inc. from 1991 to 1998;
Director, National Blue Cross and Blue Shield
Association; member of the President's Council of
Visitors, University of Southern Maine; member of
the Board of Corporators, Maine Medical Center
Foundation; member of the Board of Trustees, New
Hampshire College; member of the Board of
Directors of the Gulf of Maine Aquarium
Development Corporation; member of the Board of
Directors of the Maine Coalition for Excellence in
Education; and Director of Maine & Company.
Malcolm W. Philbrook, Jr. 65 Director of the Company; Director of Peoples 1976
Heritage Bank since 1976 and Vice Chairman of the
Board of Directors of Peoples Heritage Bank;
attorney and President of the law firm of
Crockett, Philbrook & Crouch, P.A., Auburn, Maine;
Director of the Lewiston/Auburn YMCA; Director,
Patrons Mutual Insurance Co.; President and
Trustee, Winter Foundation.
Paul R. Shea 66 Director of the Company; Director of Bank of New 1996
Hampshire; Chief Executive Officer and President
of Bank of New Hampshire from 1991 until its
acquisition by the Company in 1996; Director of
New Hampshire Bankers Association; Director of the
New Hampshire Business and Industry Association;
Director of the New Hampshire Business Committee
for the Arts; Director of New Hampshire Health
Foundation; Chairman of Manchester Intown
Management, Inc.; and member of the Governmental
Relations Council of the American Bankers
Association.
John E. Veasey 69 Director of the Company; Director of Family Bank; 1997
Owner and President of Cedardale Athletic Club, a
fitness and racquet sport facility in Haverhill,
Massachusetts; Trustee of Haverhill Public
Library; Director of Greater Haverhill Chamber of
Commerce; member, Haverhill Rotary and Haverhill
Monday Evening Club; and member, International
Health-Racquet Association.
</TABLE>
STOCKHOLDER NOMINATIONS
Article III, Section 4 of the Company's Bylaws governs nominations for
election to the Board of Directors and requires all nominations for election to
the Board of Directors, other than those made by the Board, to be made at a
meeting of stockholders called for the election of Directors, and only by a
stockholder who has complied with the notice provisions in that section. Written
notice of a stockholder nomination must be given either by personal delivery or
by United States mail, postage prepaid, to the Clerk of the Company not later
than (i) 90 days prior to the anniversary date of the immediately preceding
annual meeting of stockholders and (ii) with respect to an election to be held
at a special meeting of stockholders for the election
6
<PAGE> 10
of Directors, the close of business on the tenth day following the date on which
notice of such meeting is first given to stockholders. Each written notice of a
stockholder nomination shall set forth: (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder of record of
stock of the Company entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to nominate the person or persons specified in
the notice; (c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; (d) such other information regarding each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission (the
"Commission"); and (e) the consent of each nominee to serve as a Director of the
Company if so elected. The presiding officer of the meeting may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedures. The Company did not receive any stockholder nominations
for Director in connection with the Annual Meeting.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
Regular meetings of the Board of Directors of the Company are held six
times per year. The Board of Directors of the Company held a total of seven
regular and special meetings during 1998. In addition, there were meetings
during 1998 of the Executive, Governance and Nominating, and Audit Committees of
the Board of Directors. No Director of the Company attended fewer than 75% of
the aggregate total number of meetings of the Board of Directors held while he
or she was a member of the Board during 1998 and the total number of meetings
held by all committees thereof during the period which he or she served on such
committees during 1998.
The Board of Directors of the Company has established various committees,
including Executive, Asset Review, Audit, Human Resources, Liquidity and Funds
Management, and Governance and Nominating Committees. The Asset Review Committee
has been established to provide direct involvement of the Board of Directors in
asset quality issues of the Company. The Liquidity and Funds Management
Committee has been established to provide direct involvement of the Board of
Directors in asset and liability management. A brief description of the Audit,
Human Resources and Governance and Nominating Committees is set forth below.
The Audit Committee receives and reviews internal and independent auditors'
reports and monitors the Company's adherence in accounting and financial
reporting to generally accepted accounting principles. Currently, the members of
this committee are Directors Veasey (Chairman), Mason, Philbrook and Scribner.
The Audit Committee met four times in 1998.
The Human Resources Committee has been delegated authority to handle all
personnel and compensation matters for the Company. Currently, the members of
this committee are Directors Levenson (Chairman), Gray, Greene, Hatfield, Plumb
and Shea. The Human Resources Committee met six times in 1998.
The Governance and Nominating Committee evaluates and makes recommendations
to the Board of Directors for the election of Directors. Currently, the members
of this committee are Directors Greenleaf (Chairman), Marden, Mason, Plumb and
Ryan. The Governance and Nominating Committee met one time during 1998.
COMPENSATION OF DIRECTORS
Fees. Directors of the Company, other than those Directors who are
employed by the Company or its subsidiaries, are paid an annual retainer of
$17,250, $4,000 of which is in the form of restricted stock under the Company's
Restricted Stock Plan for Non-Employee Directors ("Restricted Stock Plan"),
described below. In addition, Directors, other than those who are employed by
the Company or its subsidiaries, annually receive an option to purchase 1,000
shares of Common Stock under the Company's 1995 Stock Option Plan for Non-
Employee Directors (the "Directors' Stock Option Plan"), described below. All
non-employee Directors also receive $650 for attendance at each meeting of the
Board of Directors of the Company or any of its committees and reimbursement for
travel time in excess of one hour at a rate of $25 per hour per meeting, up to a
maximum of six hours.
7
<PAGE> 11
Restricted Stock Plan for Non-Employee Directors. In 1990, the Board of
Directors and stockholders of the Company adopted the Restricted Stock Plan,
pursuant to which a portion of the compensation of the non-employee Directors of
the Company is paid in shares of Common Stock. Pursuant to the Restricted Stock
Plan, $4,000 of the amount of the annual fee payable to each non-employee
Director for service on the Board of Directors of the Company is payable solely
in shares of Common Stock. Such fees are payable in one annual installment on
the first day of July in each calendar year for service on the Board of
Directors of the Company and any committee thereof in the first six months of
such calendar year. The number of shares of Common Stock to be issued to each
non-employee Director on each payment date is determined by dividing such annual
installment by the fair market value of such shares, which is defined in the
Restricted Stock Plan to mean the closing price of the Common Stock on the last
trading day preceding the relevant payment date, as reported in The Wall Street
Journal.
During any calendar year, the Board of Directors of the Company may elect
to decrease the amount of the annual fee payable pursuant to the Restricted
Stock Plan in the form of shares of Common Stock to each non-employee Director
for service on the Board of Directors of the Company and/or any committee
thereof during the succeeding calendar year or to increase the amount of such
annual fee payable in the form of shares of Common Stock to a dollar amount
which does not exceed $10,000.
The holders of shares of Common Stock acquired pursuant to the Restricted
Stock Plan are entitled to all distributions made with respect thereto and all
voting rights associated therewith. The shares of Common Stock issued under the
Restricted Stock Plan may not be sold, hypothecated or transferred (including,
without limitation, transfer by gift or donation), however, except that such
restrictions shall lapse upon (a) death of the non-employee Director; (b)
disability of the non-employee Director preventing continued service on the
Board of Directors of the Company; (c) retirement of the non-employee Director
from service as a Director of the Company in accordance with the Company's
policy on retirement of non-employee Directors then in effect; (d) termination
of service as a Director with the consent of a majority of the members of the
Board of Directors of the Company, other than the non-employee Director; or (e)
a Change in Control, as defined in the Restricted Stock Plan. If a non-employee
Director ceases to be a Director of the Company for any other reason, the shares
of Common Stock issued to such Director pursuant to the Restricted Stock Plan
shall be forfeited and revert to the Company. Certificates evidencing the shares
of Common Stock issued to non-employee Directors pursuant to the Restricted
Stock Plan contain a restrictive legend which notes the foregoing restrictions
on transfer.
In 1998, 169 shares of Common Stock were issued pursuant to the Restricted
Stock Plan to each non-employee Director of the Company.
Directors' Stock Option Plan. In 1995 and 1997, the Board of Directors and
the stockholders of the Company adopted and amended the Directors' Stock Option
Plan, respectively. The Directors' Stock Option Plan authorizes the grant of
stock options to non-employee Directors of the Company at such times and in such
amounts as may be determined by the Board of Directors of the Company or a
committee thereof. The exercise price per share for each option granted under
the Director's Stock Option Plan shall be the fair market value per share of the
Common Stock on the day the option is granted.
In 1998, options to purchase 1,500 shares of Common Stock were granted
pursuant to the Directors' Stock Option Plan to each non-employee Director of
the Company at the time of grant.
Directors' Deferred Compensation Plan. The Company maintains a Directors'
Deferred Compensation Plan which allows Directors of the Company and its
subsidiaries to defer all or any portion of the fees received from the Company
or its subsidiaries. Benefits are payable upon the date elected by the Directors
for the distribution in a lump sum or in equal annual installments over a period
not to exceed ten years, and a Director may elect annually to have the amounts
deferred treated as if they were invested in a money market account, a mutual
fund selected by the administering committee or in Common Stock. During 1998,
Directors Greene and Levenson elected to defer certain of their compensation
pursuant to the Directors' Deferred Compensation Plan.
8
<PAGE> 12
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is provided with respect to each person who
currently serves as an executive officer of the Company but does not serve on
the Company's Board of Directors. Except as set forth below, there are no
arrangements or understandings between the Company and any such person pursuant
to which such person has been elected an officer, and no such officer is related
to any Director or other officer of the Company by blood, marriage or adoption.
Peter J. Verrill, 50, is Chief Operating Officer and Chief Financial
Officer of the Company and was initially elected as Chief Operating Officer in
January 1996. From 1988 through December 1995, Mr. Verrill served as Executive
Vice President and Treasurer of the Company and as its Chief Financial Officer.
Previously, Mr. Verrill served as Senior Vice President and Treasurer of Peoples
Heritage Bank from February 1985 through January 1988, and as Executive Vice
President, Chief Financial Officer and Treasurer of Peoples Heritage Bank from
February 1988 through December 1995. Mr. Verrill, who is a certified public
accountant, was Senior Vice President, Finance of a predecessor of Peoples
Heritage Bank from 1982 to 1985. Mr. Verrill also is a Director of United Way of
Greater Portland, as well as a member of its Executive Committee and Chairman of
its Finance Committee. Mr. Verrill is a director of Associated Grocers of Maine,
Inc. and a director of TrainRiders Northeast. Mr. Verrill is a member of the
American Institute of Certified Public Accountants and the Maine Society of
Public Accountants.
F. William Marshall, Jr. 54, was elected Executive Vice President of the
Company, Vice Chairman of its Management Committee and Chairman of the Board of
Family Bank in connection with the Company's acquisition of SIS Bancorp, Inc.
("SIS Bancorp") in January 1999. Prior to joining the Company, Mr. Marshall
served as President and Chief Executive Officer of SIS Bancorp and SIS Bank from
May 1993 until its acquisition by the Company. Mr. Marshall's banking career has
spanned 35 years. Prior to his tenure at SIS Bancorp, Mr. Marshall served as
Chairman and Chief Executive Officer of the Bank of Ireland First Holdings,
Inc., as an Executive Vice President of Shawmut National Bank and as President
and Chief Executive Officer of Shawmut Worcester County Bank in Worcester
Massachusetts. Mr. Marshall currently serves as a director of Mass Mutual
Institutional Funds, MML Services Investment Funds, SpringBoard Technology, Inc,
Worcester Polytechnic Institute, Massachusetts Business Development Corp, Public
Broadcast Station WGBY -- 57, the Springfield Symphony Orchestra, the
Springfield Library and Museums, the Community Music Schools and Business
Friends of the Arts. He was the 1997 Chairman of the Community United Way of
Pioneer Valley Campaign and currently is the Capital Campaign Chair for the
Community Music School of Springfield and Corporate Division of the Springfield
Library and Museums.
R. Scott Bacon, 45, was elected Executive Vice President of the Company
effective January 1, 1997. From July 1, 1997 to the present, Mr. Bacon has
served as President and Chief Executive Officer of Bank of New Hampshire.
Previously, Mr. Bacon served as President and Chief Executive Officer of Bank of
New Hampshire from April 1987 through September 1991, and as Executive Vice
President and Senior Loan Officer of Bank of New Hampshire from October 1991
through June 1996, and as Executive Vice President and Chief Operating Officer
of Bank of New Hampshire from July 1996 to March 1997. Mr. Bacon is a Director
of the Manchester United Way, a Director of the New Hampshire Bankers
Association, a Director of the Business & Industry Association of New Hampshire
and a Director of the New Hampshire Humanities council, and serves on the Board
of Governors of New Hampshire Public Television. Mr. Bacon also is a member of
Robert Morris Associates, a professional association of lending and credit risk
professionals.
Christopher W. Bramley, 57, was elected President and Chief Executive
Officer of Family Bank and Executive Vice President of the Company in January
1999. From May through December 1998, Mr. Bramley served as President and Chief
Operating Officer of Family Bank. Previously, he was President and Chief
Executive Officer of Safety Fund National Bank from February 1994 through April
1998. Prior to his tenure at Safety Fund National Bank, Mr. Bramley's banking
career included over 29 years of service in various capacities at Worcester
County National Bank/Shawmut Bank. Mr. Bramley is Area Vice President of Boy
Scouts of America, a Director of Fitchburg By Design, Inc., Director of Greater
Worcester Community Foundation, Inc., Director of Massachusetts Bankers
Association, on the Board of Trustees of Mechanics Hall of Worcester, Director
of North Central Massachusetts Chamber of Commerce, Director of New England
9
<PAGE> 13
College of Finance, on the Executive Committee of Worcester Foundation for
Biomedical Research and on the Executive Committee of Worcester Municipal
Research Bureau. Mr. Bramley is a member of Robert Morris Associates, a
professional association of lending and credit risk professionals.
John W. Fridlington, 54, was elected Executive Vice President of the
Company and Executive Vice President of Commercial Lending of Peoples Heritage
Bank in January 1992. Mr. Fridlington was formerly Executive Vice President,
Commercial Lending, at Heritage Bank for Savings in Holyoke, Massachusetts from
1988 to 1992. Prior to his tenure at Heritage Bank for Savings, Mr.
Fridlington's banking career included over 20 years of service in various
capacities at Community Savings Bank, BayBank Valley Trust Co., Mechanics Bank
and New England Merchants Bank, all of which are located in Massachusetts. Mr.
Fridlington serves as a Director of the Park Danforth Corporation, a private
non-profit housing corporation, the Susan Curtis Foundation, the Maine
Children's Cancer Program, Coastal Enterprises, Inc. and OpSail Maine 2000. Mr.
Fridlington also serves on the campaign cabinet of the United Way of Greater
Portland.
Carol L. Mitchell, 43, was elected Executive Vice President of the Company
and Peoples Heritage Bank effective January 1997. Ms. Mitchell joined the
Company in August 1990 and was elected Senior Vice President, General Counsel
and Clerk in 1992. Ms. Mitchell currently oversees the Legal Affairs, Human
Resources and Training Departments of the Company. Prior to joining the Company,
Ms. Mitchell's banking career included service in various capacities at Maine
Savings Bank and the Bank of Boston. She is an attorney, admitted to practice
law in Maine, and is a member of the American Bar Association, the Maine Bar
Association and the Cumberland Bar Association. Ms. Mitchell is a Director of
the Maine Coalition for Excellence in Education; a member of the Corporate
Partners of the University of Southern Maine; a mentor for the Judge Baker Child
Advocacy Programs; and a member of the Board of Visitors of the University of
Maine School of Law.
David J. Ott, 47, was elected President and Chief Executive Officer of
Peoples Heritage Bank and an Executive Vice President of the Company effective
March 8, 1999. Prior to joining the Company, Mr. Ott most recently served as
Chairman, President and Chief Executive Officer of Fleet Bank of Maine. Mr.
Ott's banking career has spanned 20 years and included service in various
positions in the Commercial Lending Area of Fleet Financial Group and Fleet Bank
of Maine, including Executive Vice President and Chief Credit Officer of Fleet
Bank of Maine. From July 1995 through June 1997, Mr. Ott served as President of
Maine Rubber International. Mr. Ott serves on the Boards of Directors of the
Finance Authority of Maine, the Susan Curtis Foundation, the Maine Chamber of
Commerce, the Portland Museum of Art and the United Way of Greater Portland. He
is the 1999 Chairman of the annual fundraising campaign for Maine Medical
Center.
Wendy Suehrstedt, 40, was elected Executive Vice President, Retail Delivery
of the Company effective January 1997. Previously, Ms. Suehrstedt served as
Senior Vice President of Retail and Small Business Banking at Peoples Heritage
Bank from 1991 to 1997 and Senior Vice President of the Company in charge of
Commercial Credit Policy and Administration from 1991 to 1994. She joined
Peoples Heritage Bank as Vice President of Commercial Loan Review in 1990. Ms.
Suehrstedt is Chairman of the Mental Health and Substance Abuse Allocation panel
of the United Way of Greater Portland and a member of the Board of Directors of
the Children's Museum of Maine. Ms. Suehrstedt is a past Chairman of the Maine
Group of Robert Morris Associates, a professional association of lending and
credit risk professionals.
10
<PAGE> 14
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth information as to the Common Stock
beneficially owned as of the indicated date by (i) each Director of the Company
and each executive officer of the Company named in the Summary Compensation
Table below who are continuing in office and (ii) all Directors and executive
officers of the Company as a group. As of the date of this Proxy Statement,
there was no person or entity, including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), who or which were known by the Company to be the beneficial
owner of 5% or more of the outstanding Common Stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
AS OF DECEMBER 31,
1998(1)
-------------------------
NAME OF BENEFICIAL OWNER AMOUNT PERCENT
------------------------ ---------- --------
<S> <C> <C>
Directors:
P. Kevin Condron.......................................... 53,087(4)
Andrew W. Greene.......................................... 18,578(3) --
Katherine M. Greenleaf.................................... 21,517(2) --
Douglas S. Hatfield....................................... 71,609(4)
David D. Hindle........................................... 70,590(7)
Dana S. Levenson.......................................... 21,598(2) --
Philip A. Mason........................................... 29,797(4)
John M. Naughton.......................................... 65,250(5) --
Malcolm W. Philbrook, Jr.................................. 89,055(2)(6) --
Pamela P. Plumb........................................... 25,833(2) --
Seth A. Resnicoff......................................... 43,475(4)
William J. Ryan........................................... 490,196(7) --
Curtis M. Scribner........................................ 23,877(2) --
Paul R. Shea.............................................. 53,881(3) --
John E. Veasey............................................ 321,043(3) --
Executive officers continuing in office who are not
Directors and who are named in the Summary Compensation
Table below:
Peter J. Verrill.......................................... 115,248(7) --
R. Scott Bacon............................................ 29,389(7) --
All directors and executive officers of the Company as a
group (23 persons)..................................... 2,124,063(8) 2.4%
</TABLE>
- ---------------
(1) The number of shares beneficially owned by the persons set forth above is
determined under rules under Section 13 of the Exchange Act, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, an individual is considered to beneficially
own any shares of Common Stock if he or she directly or indirectly has or
shares: (i) voting power, which includes the power to vote or to direct the
voting of the shares, or (ii) investment power, which includes the power to
dispose or direct the disposition of the shares. Unless otherwise indicated,
an individual has sole voting power and sole investment power with respect
to the indicated shares and all individual holdings amount to less than 1%
of the issued and outstanding Common Stock.
(2) In the case of Directors Greenleaf, Levenson, Philbrook, Plumb and Scribner
includes options to purchase 8,500 shares of Common Stock granted pursuant
to the Directors Stock Option Plan.
(continued on following page)
11
<PAGE> 15
(3) In the case of Directors Greene, Shea and Veasey includes options to
purchase 6,500, 4,500 and 4,500 shares of Common Stock, respectively,
granted pursuant to the Directors' Stock Option Plan.
(4) In the case of Directors Condron, Mason, Hatfield and Resnicoff includes
options to purchase 2,500 shares of Common Stock granted pursuant to the
Directors' Stock Option Plan and options to purchase 10,672, 26,524, 26,524
and 8,064 of Common Stock, respectively, granted by CFX Corporation ("CFX")
and converted into options to acquire Common Stock in connection with its
merger into the Company.
(5) Includes options to purchase 27,000 shares of Common Stock granted by SIS
Bancorp and converted into options to acquire Common Stock in connection
with the acquisition of SIS Bancorp by the Company.
(6) Includes 3,340 shares held by one entity for which Mr. Philbrook serves as
Director; beneficial ownership of such shares is shared with the other
members of the investment committee. Also includes 28,832 shares held in
various trusts for which Mr. Philbrook serves as sole trustee or in one case
as co-trustee; beneficial ownership of 5,010 of such shares is shared with a
co-trustee.
(7) Includes shares over which an officer has voting power pursuant to the
Company's Thrift Incentive Plan and Profit Sharing Employee Stock Ownership
Plan and options to purchase shares of Common Stock granted pursuant to the
Company's stock option plans which are exercisable within 60 days of
December 31, 1998, as follows:
<TABLE>
<CAPTION>
PROFIT SHARING CURRENTLY
THRIFT INCENTIVE EMPLOYEE STOCK EXERCISABLE
PLAN OWNERSHIP PLAN OPTIONS
---------------- -------------- -----------
<S> <C> <C> <C>
William J. Ryan............................ 50,265 6,876 403,836
Peter J. Verrill........................... 37,472 6,875 57,886
R. Scott Bacon............................. 4,022 423 21,300
David D. Hindle............................ 0 7,874 26,000
</TABLE>
(8) Includes an aggregate of 148,710 shares of Common Stock which are held by
the trusts established pursuant to the Company's Thrift Incentive Plan
(114,597 shares) and the Company's Profit Sharing Employee Stock Ownership
Plan (34,113 shares) on behalf of executive officers of the Company as a
group. Also includes 1,075,389 shares which may be acquired by directors and
executive officers as a group upon the exercise of outstanding stock options
which are exercisable within 60 days of December 31, 1998; shares subject to
the foregoing stock options are deemed to be outstanding for the purpose of
computing the percentage of Common Stock beneficially owned by Directors and
executive officers of the Company as a group.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, the Company's Directors, officers
and any persons holding more than 10% of the Common Stock are required to report
their ownership of the Common Stock and any changes in that ownership to the
Commission and the National Association of Securities Dealers, Inc. ("NASD") by
specific dates. Based on representations of its Directors and officers and
copies of the reports that they have filed with the Commission and the NASD, the
Company believes that all of these filing requirements were satisfied by the
Company's Directors and officers in 1998.
12
<PAGE> 16
COMPENSATION OF EXECUTIVE OFFICERS AND
TRANSACTIONS WITH MANAGEMENT
The following table discloses compensation received by the Company's chief
executive officer and the four other most highly-compensated executive officers
of the Company for the three years ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- -------------------------- ----------
OTHER ANNUAL RESTRICTED OPTIONS/ LTIP
EXECUTIVE OFFICER YEAR SALARY($) BONUS($) COMPENSATION($) STOCK AWARDS($) SARS(#) PAYOUTS($)
----------------- ---- --------- -------- --------------- --------------- -------- ----------
(1) (2) (3) (4)
<S> <C> <C> <C> <C> <C> <C> <C>
William J. Ryan.......... 1998 $526,360 $231,525 $5,053 $0 135,000 0
Chairman, President and 1997 434,476 327,600 7,974 0 70,000 0
Chief Executive Officer 1996 384,378 251,550 4,720 0 130,000 0
Peter J. Verrill......... 1998 314,106 130,985 2,784 0 75,000 0
Executive Vice President, 1997 280,810 224,450 2,850 0 23,400 0
Chief Operating 1996 210,700 145,775 2,719 0 53,400 0
Officer and Chief
Financial Officer
R. Scott Bacon........... 1998 209,569 114,981 738 0 40,500 0
Executive Vice President 1997 182,524 126,175 738 0 14,200 0
of the Company and
President and Chief
Executive Officer of
Bank of New
Hampshire(6)
David D. Hindle.......... 1998 261,320 132,507 4,180 0 40,500 0
Executive Vice President 1997 242,013 107,950 0 0 14,200 0
of the Company and
Chief Executive Officer
of Family Bank(6)
Peter J. Baxter(7)....... 1998 331,516 130,985 1,750 0 75,000 0
Executive Vice President
and Chief Operating
Officer
<CAPTION>
ALL OTHER
EXECUTIVE OFFICER COMPENSATION($)
----------------- ---------------
(5)
<S> <C>
William J. Ryan.......... $ 9,600
Chairman, President and 9,550
Chief Executive Officer 10,750
Peter J. Verrill......... 9,600
Executive Vice President, 9,550
Chief Operating 10,750
Officer and Chief
Financial Officer
R. Scott Bacon........... 9,600
Executive Vice President 9,550
of the Company and
President and Chief
Executive Officer of
Bank of New
Hampshire(6)
David D. Hindle.......... 9,600
Executive Vice President 9,550
of the Company and
Chief Executive Officer
of Family Bank(6)
Peter J. Baxter(7)....... 14,576
Executive Vice President
and Chief Operating
Officer
</TABLE>
- ---------------
(1) In addition to the base salaries, amounts disclosed in this column include
(i) amounts deferred pursuant to the Company's Senior Officer's Deferred
Compensation Plan, which generally allows eligible officers to defer up to
35% of their salaries, and (ii) amounts deferred pursuant to the Company's
Thrift Incentive Plan, which generally allows employees of the Company and
participating subsidiaries to defer up to 15% of their compensation, subject
to applicable limitations in Section 401(k) of the Internal Revenue Code of
1986, as amended (the "Code"). Executive officers are considered for base
salary adjustments each April 1.
(2) Bonuses were earned under the Company's Annual Incentive Compensation
Program in the year indicated and paid early in the following year.
(3) Includes the value of a Company-owned automobile for Messrs. Ryan, Verrill,
Bacon, Hindle and Baxter, and club memberships for Messrs. Ryan, Verrill and
Bacon, which in each case amounts to substantially less than the lesser of
either $50,000 or 10% of the total of annual salary and bonus for the
respective named executive officers.
(4) Consists of awards granted pursuant to the Company's stock option plans.
(5) Includes matching contributions by the Company pursuant to the Company's
Thrift Incentive Plan and contributions to the Company's Profit Sharing and
Employee Stock Ownership Plan.
(6) Messrs. Bacon and Hindle became executive officers of the Company effective
January 1, 1997. Upon becoming a director of the Company in 1999, Mr. Hindle
resigned as an executive officer of the Company and Family Bank.
(7) Mr. Baxter, who resigned from the Company on March 5, 1999, became an
executive officer of the Company as a result of its acquisition of CFX in
April 1998. The compensation reported above includes amounts paid to Mr.
Baxter by CFX prior to such acquisition. Upon Mr. Baxter's resignation, Mr.
Verrill was reappointed Chief Operating Officer of the Company.
13
<PAGE> 17
OPTIONS/SAR GRANTS IN 1998
The following table provides information relating to option grants pursuant
to the Company's stock option plans during 1998 to the named executive officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- RATES OF STOCK PRICE
PERCENT OF TOTAL APPRECIATION FOR
OPTIONS OPTIONS GRANTED OPTION TERM(4)
GRANTED TO EMPLOYEES IN EXERCISE EXPIRATION ---------------------
EXECUTIVE OFFICER (#)(1) 1998(2) PRICE(3) DATE 5% 10%
----------------- ------- ---------------- -------- ---------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan......... 90,000 8.18% $17.3125 October 27, 2008 $979,890 $2,483,246
45,000 4.09 22.6250 July 31, 2008 640,289 1,622,626
Peter J. Verrill........ 54,000 4.91 17.3125 October 27, 2008 587,934 1,489,947
21,000 1.91 22.6250 July 31, 2008 298,801 757,225
David D. Hindle......... 27,000 2.45 17.3125 October 27, 2008 293,967 744,973
13,500 1.23 22.6250 July 31, 2008 192,086 486,787
R. Scott Bacon.......... 27,000 2.54 17.3125 October 27, 2008 293,967 744,973
13,500 1.23 22.6250 July 31, 2008 192,086 486,787
Peter J. Baxter......... 54,000 4.91 17.3125 October 27, 2008 587,934 1,489,947
21,000 1.91 22.6250 July 31, 2008 298,801 757,225
</TABLE>
- ---------------
(1) Options vest and become exercisable 50% per year commencing on the first
anniversary of the date of grant. None of the indicated awards were
accompanied by stock appreciation rights.
(2) Percentage of options to purchase an aggregate of 989,875 shares of Common
Stock granted to all employees during 1998.
(3) The exercise price was based on the market price of the Common Stock on the
date of grant.
(4) Assumes future stock prices of $28.20 and $44.90 for options granted on
October 27, 1998 and $36.85 and $58.68 for options granted on July 31, 1998
at compounded rates of return of 5% and 10%, respectively. No discount has
been applied to determine a net present value of each award; however, a 7.0%
discount would yield real values of 51% of the values shown under the 5% and
10% columns, respectively.
AGGREGATED OPTION/SAR EXERCISES IN 1998 AND YEAR-END OPTION/SAR VALUES
The following table provides information relating to option/SAR exercises
in 1998 by the named executive officers and the value of such officers'
unexercised options/SARs at December 31, 1998.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT YEAR END(#) YEAR END($)(1)
SHARES ACQUIRED VALUE ---------------------------- ---------------------------
EXECUTIVE OFFICER ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan...... 30,000 $ 645,000 403,836 350,000 $4,778,716 $2,032,348
Peter J. Verrill..... 99,210 1,772,571 57,886 176,700 414,634 1,038,185
David D. Hindle...... 0 0 26,000 47,600 336,908 75,224
R. Scott Bacon....... 0 0 21,300 47,600 120,255 75,224
Peter J. Baxter...... 7,402 108,920 153,838(2) 75,000 1,557,109 145,125
</TABLE>
- ---------------
(1) Based on a per share market price of $20.00
(2) Represents options granted by CFX prior to the merger of CFX into the
Company.
14
<PAGE> 18
PENSION PLAN
The following table sets forth the estimated benefits payable under the
Company's qualified defined benefit retirement plan for all eligible employees.
This benefit and a supplemental benefit (for those executive officers covered
under a supplemental retirement plan, as described below) provide a competitive
total pension benefit plan. Covered compensation in the following table is
limited to the $160,000 ceiling as provided under the Omnibus Budget
Reconciliation Act of 1993.
<TABLE>
<CAPTION>
CAREER AVERAGE 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS
COMPENSATION OF SERVICE OF SERVICE OF SERVICE OF SERVICE OF SERVICE
-------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$125,000................................ $24,726 $37,089 $49,452 $61,815 $74,178
150,000................................ 30,101 45,152 60,202 75,253 90,303
160,000................................ 32,251 48,377 64502 80628 96,753
</TABLE>
- ---------------
(1) Benefit formula is 1.5% of career average earnings plus 0.65% of career
average earnings above covered compensation. For 1999 year of retirement
covered compensation equals $33,060.
(2) Career average salary limited to $160,000.
(3) Maximum allowable annual benefit for 1999 is $130,000.
The maximum annual compensation which may be taken into account under
qualified plans is indexed for inflation after 1994.
At December 31, 1998, Messrs. Ryan, Verrill, Bacon, Baxter and Hindle had
nine, twenty-one, two, one and two year(s) of credited service under the
Company's defined benefit pension plan, respectively.
The Company and each of Messrs. Ryan, Verrill and Hindle have entered into
supplemental retirement agreements which provide for a cumulative retirement
benefit (together with qualified plan benefits and other integrated benefits, as
set forth below) equal to 65% of each such executive's respective compensation
for the highest five consecutive of the last ten years of the executive's
employment. Compensation includes annual salary and bonuses, but excludes
amounts paid pursuant to any stock option, stock appreciation right or other
long-term compensation plans of the Company. The Company does not believe that
the covered compensation for this purpose differs substantially (by more than
10%) from that set forth in the Summary Compensation Table set forth above. The
benefits under the supplemental retirement agreements for covered executives
generally are integrated with, and thus reduced by, (i) 50% of the officer's
primary Social Security benefit estimated at the normal retirement age of 65;
(ii) the annual amount of benefits payable to the officer at age 65 on a life
annuity basis from the qualified defined benefit retirement plan maintained by
the Company; (iii) the annual amount of benefits payable on the same basis of
that portion of the account balances attributable to contributions by the
Company to any and all qualified defined contribution retirement plans
maintained by the Company; and (iv) the annual amounts of benefits payable on
the same basis attributable to contributions by the Company to any other
qualified or non-qualified retirement plans or agreements maintained or entered
into by the Company. Each of the supplemental retirement agreements provides for
a reduction in the benefit to be provided if the executive does not complete 25
years of service with the Company or any of its subsidiaries.
At December 31, 1998, the expected annual benefits under the supplemental
retirement agreements with Messrs. Ryan, Verrill and Hindle were $163,968, $625
and $0, respectively, assuming level future salaries and an 8% return on defined
contribution investment accounts. These figures are based on 10, 15 and 6 years
until retirement for Messrs. Ryan, Verrill and Hindle, respectively.
The Company also has entered into supplemental retirement agreements with
Mr. Bacon and certain other executive officers of the Company. In addition, in
connection with the acquisition of CFX, the Company assumed the supplemental
retirement agreement in effect between CFX and Mr. Baxter. The agreements,
including Mr. Baxter's, provide that each executive shall receive a supplemental
pension benefit upon retirement equal to the amount necessary to provide the
executive with the normal benefits payable under the Company's defined benefit
pension plan without regard to the $160,000 plan compensation limitation under
Section 401 of the Code or the limitations contained in Section 415 of the Code.
With respect to Mr. Baxter,
15
<PAGE> 19
the amount payable is limited to the amount which would have been payable if the
Internal Revenue Service compensation limits had not been reduced as of January
1, 1994. At December 31, 1998, the expected annual benefits under the agreements
with Messrs. Baxter and Bacon were $48,883 and $40,135, respectively, assuming
level future salaries and an 8% return on defined contribution investment
accounts. This figure is based upon 18 and 20 years until retirement for Messrs.
Baxter and Bacon, respectively.
SEVERANCE AND EMPLOYMENT AGREEMENTS
The Company has entered into severance agreements with Messrs. Ryan,
Verrill, Bacon and Hindle and certain of the other executive officers of the
Company (other than Mr. Marshall, who entered into an employment agreement with
the Company in connection with the Company's acquisition of SIS Bancorp),
pursuant to which these officers would receive specified benefits in the event
that their employment was terminated by the Company other than for cause,
disability, retirement or death following a "change in control" of the Company,
as defined, or the officers terminated their employment under such circumstances
for "good reason," as defined. The benefits payable under such circumstances
include a lump sum payment equal to three times (in the case of Messrs. Ryan,
Verrill, Bacon and Hindle) and three or two times (in the case of other
executive officers) the sum of (i) the officer's annual salary at the rate in
effect at the specified time and (ii) the greatest of the bonuses paid to such
officer or accrued on his behalf in either the year in which the change in
control occurred or the immediately preceding year. In addition, each such
officer would be entitled under such circumstances to be covered at the expense
of the Company by the same or equivalent hospital, medical, dental, accident,
disability and life insurance coverage as in effect for the officer immediately
prior to termination of his or her employment until the earlier of three years
(in the case of Messrs. Ryan, Verrill, Bacon and Hindle) and three or two years
(in the case of other executive officers) following termination of employment or
the date the officer has commenced new employment which provides comparable
benefits. The agreements also provide that in the event that any of the payments
to be made thereunder or otherwise upon termination of employment are deemed to
constitute "excess parachute payments" within the meaning of Section 280G of the
Code, and payments will cause the executive officer to incur an excise tax under
the Code, the Company shall pay the executive officer an amount such that after
payment of all federal, state and local income tax and any additional excise
tax, the executive will be fully reimbursed for the amount of such excise tax.
Excess parachute payments generally are payments in excess of three times the
recipient's average annual compensation from the employer includable in the
recipient's gross income during the most recent five taxable years ending before
the date of a change in control of the employer ("base amount"). Recipients of
excess parachute payments are subject to a 20% excise tax on the amount by which
such payments exceed the base amount, in addition to regular income taxes, and
payments in excess of the base amount are not deductible by the employer as
compensation expense for federal income tax purposes.
Pursuant to an Employment Agreement entered into by CFX and Mr. Baxter,
upon Mr. Baxter's resignation in March 1999, (i) the Company was required to
make a lump sum cash payment to Mr. Baxter equal to 299% of his base annual
salary plus the amount of any bonus paid to him within the preceding 12 months
and provide to Mr. Baxter for a three-year period his then-existing coverage
under the Company's health, dental and life insurance plans (or provide
substantially similar coverage at its expense) and (ii) all options to acquire
Common Stock held by Mr. Baxter became immediately exercisable until the later
of their original term or one year after the date of termination of employment.
The Employment Agreement also required the Company to reimburse Mr. Baxter for
excise taxes attributable to the payment of "excess parachute payments" pursuant
to Section 280G of the Code. Exclusive of the gross-up payment for such excise
taxes, the lump sum payment to Mr. Baxter, which was in satisfaction of all
obligations of the Company under the Employment Agreement (other than those
relating to outstanding stock options), amounted to approximately $1.4 million.
REPORT OF THE HUMAN RESOURCES COMMITTEE
The Human Resources Committee of the Board of Directors of the Company
makes this report on executive compensation for the year ended December 31,
1998.
16
<PAGE> 20
During 1998, the members of the Human Resources Committee were Dana S.
Levenson (Chairman), Everett W. Gray, Andrew W. Greene, Douglas S. Hatfield,
Pamela P. Plumb and Paul R. Shea. In April 1998, Mrs. Greenleaf resigned from
the Committee in order to act as Chairman of the Governance and Nominating
Committee. Director Hatfield became a member of the Committee in September 1998.
One of the responsibilities of the Human Resources Committee is to
determine the compensation of the executive officers of the Company. The
components of compensation include salary, bonuses under an annual incentive
program, stock options under the Company's stock option plans and contributions
by the Company under its defined benefit Pension Plan, Thrift Incentive Plan and
Profit Sharing Employee Stock Ownership Plan. The bases for determining
contributions to the Company's Pension Plan, Thrift Incentive Plan and Profit
Sharing Employee Stock Ownership Plan are the same for all participants in those
plans, including executive officers.
It is the philosophy of the Human Resources Committee to align executive
compensation with the interests of the Company's stockholders and to determine
the components of executive compensation to accomplish the following objectives:
A. To reward executives for enhancement of shareholder value as
reflected in the Company's annual earnings performance and the market price
of the Common Stock;
B. To balance rewards for accomplishments of short and long-term
performance goals;
C. To sponsor a pay-for-performance structure which awards executives
with above-market levels of compensation when the Company outperforms its
forecasted earnings per share targets and below-market compensation when
financial performance trails its earnings per share targets.
D. To have greater portions of total compensation at risk for
performance as the management level increases;
E. To encourage ownership of Common Stock through annual grants of
stock options, not only to highly compensated executives of the Company,
but also to management personnel throughout the Company; and
F. To attract and retain highly-qualified executives critical to the
Company's long-term success.
The Company's compensation strategy is to provide its executives, including
the President and Chief Executive Officer, with conservatively competitive base
salaries along with performance-based annual and long-term incentives which
provide an appropriate balance and focus between near-term and long-term
objectives of the Company. The compensation model for executives of the Company
targets total compensation to be competitive (at least the 50th percentile) when
measured against a range of selected comparable companies, including bank
holding companies and banks in the Company's size range. Comparability is
established based on several criteria, including size and scope of business.
This comparative analysis was carried out in 1998 with the assistance of Towers
Perrin, a nationally-recognized independent consulting firm. The Committee also
retained Frederic W. Cook & Co., Inc. ("Cook"), a nationally-recognized
executive compensation consulting firm, as independent consultant to the
Committee to review survey data and recommendations with respect to the salary
of the President and Chief Executive Officer. The comparison group is broader
than the regional bank holding company and bank group utilized in the
performance graph below, and contains some but not all of the bank holding
companies and banks in that group. The Committee believes that the broader group
provides a sounder and more appropriate basis for comparison in setting
compensation levels because of similarities in size and scope of business with
the Company. The Committee also seeks to ensure that compensation reflects
annual evaluations of corporate and individual performance. Except as otherwise
described below, the Committee adjusted salaries in 1998 based on this
methodology and with the assistance of Towers Perrin.
Mr. Ryan's salary was increased from $455,000 to $525,000 during 1998,
which was at the mid-range of the selected comparison group. Mr. Ryan's salary,
after adjustment in 1997, was at the mid-point for that year, consistent with
the policy described above. The mid-point for comparable companies increased in
1998, and due to the continued excellent results achieved by the Company in
1997, particularly as regards return on
17
<PAGE> 21
assets and market price of the Common Stock, the Committee determined that an
increase in salary to the new market median was appropriate.
The annual bonus plan provided for payouts at specific targets of 45% and
40% of base salary range mid-point for the President and Chief Executive Officer
and certain Executive Vice President levels, respectively, upon achieving
earnings per share results, with a maximum payout of 75% and 70%, respectively.
As a result of the Company's earnings for 1998, bonuses for Messrs. Ryan,
Verrill, Bacon, Hindle and Baxter were $231,525, $130,985, $114,981, $132,507
and $130,985, respectively.
The Committee awards stock options annually at market exercise prices. In
1994, Cook evaluated long-term compensation and determined that it was
appropriate for the Committee to establish share guidelines for the annual grant
of stock options to ensure comparability with the grants of stock options to
executives at comparable companies. In accordance with recommendations made by
Towers Perrin, the Committee updated share guidelines for the grant of stock
options in 1998, which are intended to be competitive with grants of stock
options to executives of comparable companies. The Committee also retained Cook
as an independent consultant to the Committee to review share guidelines with
respect to option grants to the President and Chief Executive Officer. As a
result of this market based model, on October 27, 1998, options to purchase
90,000 shares, 54,000 shares, 54,000 shares, 27,000 shares and 27,000 shares
were granted to Messrs. Ryan, Verrill, Baxter, Bacon and Hindle, respectively.
In recognition of the significant effort required in closing and
integrating the acquisition of CFX, the Committee granted stock options to
certain members of management. Options to purchase 45,000 shares, 21,000 shares,
21,000 shares, 13,500 and 13,500 shares were granted on July 31,1998 to Messrs.
Ryan, Verrill, Baxter, Bacon and Hindle, respectively.
In 1997, the Company established guidelines for executive management
investment in Common Stock. An executive will be expected to hold shares having
a value determined as a multiple of base salary. Both direct and indirect
ownership (i.e. through certain family trusts), and ownership through employee
benefit plans will be taken into account. For Messrs. Ryan and Verrill, the
level of investment in Common Stock is four and three times base salary,
respectively, and for the other named executives the level is two times base
salary. Executive officers have five years to achieve the desired level of
investment.
In 1998, recommended guidelines also were developed for Director investment
in Common Stock. A Director will be expected to hold shares having a value equal
to five times the annual retainer. Both direct and indirect ownership (i.e.
through certain family trusts) will be taken into account. Directors will have
five years to achieve the desired level of investment.
The Committee has considered changes in the Code pursuant to which
publicly-held companies will be subject to a maximum income tax deduction of $1
million with respect to annual compensation paid to any one of the Chief
Executive Officer or the other officers appearing in the Summary Compensation
Table above (with certain exceptions for performance-based compensation).
Compensation resulting from the exercise of stock options is not taken into
consideration in applying this limit if certain requirements are met; the stock
options granted pursuant to the Company's 1996 Equity Plan have been structured
with the intent of meeting such requirements. The Committee believes that the
likelihood of any impact on the Company from this change in the tax law is not
substantial at this time.
Respectfully submitted,
Dana S. Levenson, Chairman
Everett W. Gray
Andrew W. Greene
Douglas S. Hatfield
Pamela P. Plumb
Paul R. Shea
18
<PAGE> 22
PERFORMANCE GRAPH
The following graph compares the yearly cumulative total return on the
Common Stock over a five-year measurement period with (i) the yearly cumulative
total return on the stocks included in the Standard & Poor's 500 Stock Index and
(ii) the yearly cumulative total return on the stocks included in the Keefe
Bruyette & Woods, Inc. ("KBW") New England Bank Index. All of these cumulative
returns are computed assuming the reinvestment of dividends at the frequency
with which dividends were paid during the applicable years.
[STOCK PERFORMANCE CHART]
<TABLE>
<CAPTION>
KBW NEW ENGLAND BANK PEOPLES HERITAGE FINANCIAL
S&P 500 INDEX INDEX GROUP (PHBK)
------------- -------------------- --------------------------
<S> <C> <C> <C>
12/31/93 100.00 100.00 100.00
3/31/94 96.24 105.19 86.46
6/30/94 96.65 123.93 110.92
9/30/94 101.38 118.33 124.14
12/31/94 101.36 100.67 101.84
3/31/95 111.19 113.03 108.08
6/30/95 121.77 128.41 129.52
9/30/95 131.42 146.93 158.71
12/31/95 139.31 157.13 199.14
3/31/96 146.78 157.45 191.79
6/30/96 153.35 167.00 181.17
9/30/96 158.05 187.66 209.35
12/31/96 171.21 217.03 252.30
3/31/97 175.83 225.37 278.70
6/30/97 206.46 270.80 344.91
9/30/97 221.91 319.57 387.05
12/31/97 228.26 373.11 422.70
3/31/98 260.03 395.82 445.39
6/30/98 268.59 386.00 438.19
9/30/98 241.92 302.58 334.74
12/31/98 293.36 344.79 375.29
</TABLE>
INDEBTEDNESS OF MANAGEMENT
Directors, officers and employees of the Company and its subsidiaries are
permitted to borrow from the Company's banking subsidiaries in accordance with
the requirements of federal and state law. All loans made by the Company's
banking subsidiaries to Directors and executive officers or their related
interests have been made in the ordinary course of business and on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons. It is the belief of
management of the Company that at the time of origination these loans neither
involved more than the normal risk of collectibility nor presented any other
unfavorable features. As of December 31, 1998, the Company's banking
subsidiaries had $22.1 million of loans outstanding to Directors and executive
officers of the Company and its subsidiaries and their related interests.
CERTAIN TRANSACTIONS
The law firm of Crocker, Philbrook & Crouch, P.A., of which Malcolm
Philbrook is a partner, provides legal services to Peoples Heritage Bank from
time to time in the ordinary course of business. The law firm of Mason & Martin,
L.L.P., of which Philip Mason is a partner, provides legal services to Family
Bank from time to time in the ordinary course of business. Strategic HealthCare,
a physician practice of which Seth Resnicoff is Chairman of the Board, purchases
its malpractice insurance through the Company's insurance brokerage agency
subsidiary.
19
<PAGE> 23
The Company believes that the foregoing transactions are fair to and in the
best interests of the Company and its stockholders.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL TWO)
The Board of Directors of the Company has appointed KPMG Peat Marwick,
independent certified public accountants, to perform the audit of the Company's
financial statements for the year ending December 31, 1999, and has further
directed that selection of auditors be submitted for ratification by the
stockholders at the Annual Meeting.
Representatives from KPMG Peat Marwick will be present at the Annual
Meeting and will be given the opportunity to make a statement, if they so
desire, and will be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE
COMPANY VOTE "FOR" RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK AS
INDEPENDENT AUDITORS FOR 1999.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder wishes to have included in the proxy
materials of the Company relating to the next annual meeting of stockholders,
which is scheduled to be held in April 2000, must be received at the principal
executive offices of the Company, One Portland Square, P.O. Box 9540, Portland,
Maine 04112-9540, Attention: Carol L. Mitchell, Esq., Executive Vice President,
General Counsel, Secretary and Clerk, no later than November 22, 1999. If such
proposal is in compliance with all of the requirements of Rule 14a-8 under the
Exchange Act, it will be included in the Proxy Statement and set forth on the
form of proxy issued for the next annual meeting of stockholders. It is urged
that any stockholder proposals be sent certified mail, return-receipt requested.
Stockholder proposals which are not presented to the Company for inclusion
in its proxy solicitation materials in compliance with Rule 14a-8 under the
Exchange Act must comply with the Company's Bylaws with respect to any proposal
to be presented at the Company's next annual meeting of stockholders. To be
properly brought before an annual meeting of stockholders pursuant to the
Company's Bylaws, a stockholder's notice must be delivered to or mailed and
received at the principal executive offices of the Company not less than 90 days
prior to the anniversary date of the immediately preceding annual meeting.
Stockholder proposals for the annual meeting of stockholders of the Company in
2000 which are not intended to be included in the Company's proxy materials for
such meeting must be received at the executive offices of the Company by January
26, 2000. A stockholder's notice should be sent to Carol L. Mitchell, Esq.,
Executive Vice President, General Counsel, Secretary and Clerk, Peoples Heritage
Financial Group, Inc., One Portland Square, P.O. Box 9540, Portland, Maine
04112-9540, and must set forth as to each matter the stockholder proposes to
bring before an annual meeting (a) a brief description of the business desired
to be brought before the annual meeting, (b) the name and address as they appear
on the books of the Company of the stockholder proposing such business, (c) the
class and number of shares of the Company which are beneficially owned by the
stockholder and (d) any material interest of the stockholder in such business.
ANNUAL REPORTS
A copy of the Company's Annual Report to Stockholders for the year ended
December 31, 1998 accompanies this Proxy Statement. Such report is not part of
the proxy solicitation materials.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
STOCKHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
REQUIRED TO BE FILED WITH THE COMMISSION UNDER THE EXCHANGE ACT. UPON WRITTEN
REQUEST AND A PAYMENT OF A COPYING CHARGE OF TEN CENTS PER PAGE, THE COMPANY
ALSO WILL FURNISH TO ANY STOCKHOLDER A COPY OF THE EXHIBITS TO THE ANNUAL REPORT
ON FORM 10-K. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO CAROL L. MITCHELL,
ESQ., EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL, SECRETARY AND
20
<PAGE> 24
CLERK, PEOPLES HERITAGE FINANCIAL GROUP, INC., ONE PORTLAND SQUARE, P.O. BOX
9540, PORTLAND, MAINE 04112-9540. SUCH REPORT IS NOT PART OF THE PROXY
SOLICITATION MATERIALS.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described above in this Proxy Statement. However, if
any other matters should properly come before the Annual Meeting, it is intended
that the proxies solicited hereby will be voted with respect to those other
matters in accordance with the judgment of the persons voting the proxies.
The cost of the solicitation of proxies will be borne by the Company. The
Company has retained Morrow & Co., a professional proxy solicitation firm, to
assist in the solicitation of proxies. The fee arrangement with such firm is
$5,000 plus reimbursement for out-of-pocket expenses. The Company will reimburse
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred by them in sending the proxy materials to the beneficial
owners of the Common Stock. In addition to solicitations by mail, Directors,
officers and employees of the Company may solicit proxies personally or by
telephone without additional compensation.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1993, as amended, or the Exchange
Act, that might incorporate future filings, including this Proxy Statement, in
whole or in part, the Report of the Human Resources Committee and Performance
Graph contained herein shall not be incorporated by reference into any such
filings.
21
<PAGE> 25
PEOPLES HERITAGE FINANCIAL GROUP, INC.
REVOCABLE PROXY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, as a holder of Common Stock of Peoples Heritage
Financial Group, Inc. (the "Company"), hereby appoints each of Roger B. Percival
and O. William Robertson as Proxies, with the full power of substitution, to
represent and to vote as designated on the reverse of this card all of the
shares of Common Stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders to be held at the Portland Marriott Hotel,
200 Sable Oaks Drive, South Portland, Maine 04106, on Tuesday, April 27, 1999,
at 10:30 a.m., Eastern Time, or any adjournment thereof.
THIS PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
SHARES OF COMMON STOCK OF THE COMPANY WILL BE VOTED AS SPECIFIED.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF DIRECTORS AND "FOR" THE
RATIFICATION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
1999. IF ANY OTHER MATTER IS PROPERLY PRESENTED AT THE ANNUAL MEETING OF
STOCKHOLDERS, THE PROXY WILL BE VOTED IN ACCORDANCE WITH THE JUDGMENT OF THE
PERSONS APPOINTED AS PROXIES.
IMPORTANT: PLEASE DATE AND SIGN THE PROXY ON REVERSE SIDE.
<PAGE> 26
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
--------------------
I plan to attend the
meeting
[ ]
--------------------
1. Election of Directors:
Nominees for Three-Year Term Expiring in 2002:
P. Kevin Condron
Douglas S. Hatfield
Philip A. Mason
William J. Ryan
Curtis M. Scribner
Nominees for Two-Year Term Expiring in 2001:
John M. Naughton
Seth A. Resnicoff
Nominee for One-Year Term Expiring in 2000:
David D. Hindle
FOR all listed nominees (except as WITHHOLD
marked to the contrary herein) AUTHORITY
to vote for
all listed nominees
[ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominees's name in the line provided below.
- --------------------------------------------------------------------------------
2. Ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the year ending December 31, 1999.
FOR AGAINST ABSTAIN
<PAGE> 27
[ ] [ ] [ ]
3. In their discretion, upon any other matter that may properly come
before the Annual Meeting of Stockholders or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" EACH OF
THE NOMINEES FOR DIRECTOR AND "FOR" THE OTHER PROPOSAL. SUCH VOTES ARE HEREBY
SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _______________________, 1999
Signature ___________________________________
Signature ___________________________________
(print name)
IMPORTANT: Please sign your name exactly as it appears hereon.
When shares are held as joint tenants, either may sign. When
signing as an attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one proxy card, please date and
sign each card and return all proxy cards in the enclosed
envelope.
<PAGE> 28
March 22, 1999
To: Participants in the Thrift Incentive Plan of Peoples Heritage
Financial Group, Inc. and/or the Profit Sharing Employee Stock
Ownership Plan of Peoples Heritage Financial Group, Inc.
As described in the enclosed materials, your proxy as a stockholder of
Peoples Heritage Financial Group, Inc. (the "Company") is being solicited in
connection with the proposals to be considered at the Company's Annual Meeting
of Stockholders. I hope you will take advantage of the opportunity to direct, on
a confidential basis, the manner in which shares of Common Stock of the Company
allocated to your accounts under the Company's Thrift Incentive Plan (the "TIP")
and/or the Company's Profit Sharing Employee Stock Ownership Plan (the "ESOP,"
and together with the TIP, the "Plans") will be voted.
Enclosed with this letter is the Proxy Statement, which describes the
matters to be voted upon, a voting instruction ballot for each Plan in which you
are a participant, which will permit you to vote the shares allocated to your
account under each such Plan, and a stamped, pre-addressed return envelope.
After you have reviewed the Proxy Statement, I urge you to vote your shares in
the Plans by marking, dating, signing and returning the enclosed voting
instruction ballots in the envelope provided to American Stock Transfer & Trust
Company, the Company's transfer agent. Your voting instructions will remain
completely confidential. Only the Company's transfer agent will have access to
your ballots in order to certify the totals for the Plans to Peoples Heritage
Bank, which acts as Trustee for the Plans, for the purpose of having those
shares voted. No person associated with the Company or Peoples Heritage Bank
will see the individual voting instructions.
I urge each of you to vote, as a means of participating in the
governance of the affairs of the Company. If your voting instructions are not
received, the shares allocated to your accounts in the Plans will be voted by
the Trustee in its discretion in accordance with the exercise of its fiduciary
duties. While I hope that you will vote in the manner recommended by the Board
of Directors, the most important thing is that you vote in whatever manner you
deem appropriate. Please take a moment to do so.
Sincerely yours,
William J. Ryan
Chairman, President and
Chief Executive Officer
<PAGE> 29
PEOPLES HERITAGE FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1999
THIS BALLOT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, as a holder of Common Stock of Peoples Heritage
Financial Group, Inc. (the "Company") pursuant to the Company's Profit Sharing
Employee Stock Ownership Plan (the "ESOP"), hereby instructs Peoples Heritage
Bank, as Trustee for the ESOP, to vote as designated on the reverse of this card
all of the shares of Common Stock of the Company which the undersigned holds
pursuant to the ESOP at the Annual Meeting of Stockholders to be held at the
Portland Marriott Hotel, 200 Sable Oaks Drive, South Portland, Maine 04106, on
Tuesday, April 27, 1999, at 10:30 a.m., Eastern Time, or any adjournment
thereof.
SHARES OF COMMON STOCK OF THE COMPANY WILL BE VOTED AS SPECIFIED. IF
YOU RETURN THIS BALLOT PROPERLY SIGNED BUT DO NOT OTHERWISE SPECIFY, SHARES WILL
BE VOTED "FOR" THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF
DIRECTORS AND "FOR" THE OTHER PROPOSAL SET FORTH ON THE REVERSE SIDE. IF YOU DO
NOT RETURN THIS BALLOT, SHARES HELD BY YOU PURSUANT TO THE ESOP WILL BE VOTED BY
THE TRUSTEE IN ITS DISCRETION IN ACCORDANCE WITH THE EXERCISE OF ITS FIDUCIARY
DUTIES.
IMPORTANT: PLEASE DATE AND SIGN THE BALLOT ON REVERSE SIDE.
<PAGE> 30
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
--------------------
I plan to attend the
meeting
[ ]
--------------------
1. Election of Directors:
Nominees for Three-Year Term Expiring in 2002:
P. Kevin Condron
Douglas S. Hatfield
Philip A. Mason
William J. Ryan
Curtis M. Scribner
Nominees for Two-Year Term Expiring in 2001:
John M. Naughton
Seth A. Resnicoff
Nominee for One-Year Term Expiring in 2000:
David D. Hindle
FOR all listed nominees (except as WITHHOLD
marked to the contrary herein) AUTHORITY
to vote for
all listed nominees
[ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominees's name in the line provided below.
- --------------------------------------------------------------------------------
2. Ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the year ending December 31, 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 31
3. In their discretion, upon any other matter that may properly come
before the Annual Meeting of Stockholders or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" EACH OF
THE NOMINEES FOR DIRECTOR AND "FOR" THE OTHER PROPOSAL. SUCH VOTES ARE HEREBY
SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _______________________, 1999
Signature ___________________________________
Signature ___________________________________
(print name)
IMPORTANT: Please sign your name exactly as it appears hereon.
When shares are held as joint tenants, either may sign. When
signing as an attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one card, please date and sign
each card and return all cards in the enclosed envelope.
<PAGE> 32
PEOPLES HERITAGE FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 1999
THIS BALLOT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned, as a holder of Common Stock of Peoples Heritage
Financial Group, Inc. (the "Company") pursuant to the Company's Thrift Incentive
Plan (the "TIP"), hereby instructs Peoples Heritage Bank, as Trustee for the
TIP, to vote as designated on the reverse of this card all of the shares of
Common Stock of the Company which the undersigned holds pursuant to the TIP at
the Annual Meeting of Stockholders to be held at the Portland Marriott Hotel,
200 Sable Oaks Drive, South Portland, Maine 04106, on Tuesday, April 27, 1999,
at 10:30 a.m., Eastern Time, or any adjournment thereof.
SHARES OF COMMON STOCK OF THE COMPANY WILL BE VOTED AS SPECIFIED. IF
YOU RETURN THIS BALLOT PROPERLY SIGNED BUT DO NOT OTHERWISE SPECIFY, SHARES WILL
BE VOTED "FOR" THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES TO THE BOARD OF
DIRECTORS AND "FOR" THE OTHER PROPOSAL SET FORTH ON THE REVERSE SIDE. IF YOU DO
NOT RETURN THIS BALLOT, SHARES HELD BY YOU PURSUANT TO THE TIP WILL BE VOTED BY
THE TRUSTEE IN ITS DISCRETION IN ACCORDANCE WITH THE EXERCISE OF ITS FIDUCIARY
DUTIES.
IMPORTANT: PLEASE DATE AND SIGN THE BALLOT ON REVERSE SIDE.
<PAGE> 33
PLEASE MARK YOUR CHOICE LIKE THIS [X] IN BLUE OR BLACK INK
--------------------
I plan to attend the
meeting
[ ]
--------------------
1. Election of Directors:
Nominees for Three-Year Term Expiring in 2002:
P. Kevin Condron
Douglas S. Hatfield
Philip A. Mason
William J. Ryan
Curtis M. Scribner
Nominees for Two-Year Term Expiring in 2001:
John M. Naughton
Seth A. Resnicoff
Nominee for One-Year Term Expiring in 2000:
David D. Hindle
FOR all listed nominees (except as WITHHOLD
marked to the contrary herein) AUTHORITY
to vote for
all listed nominees
[ ] [ ]
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominees's name in the line provided below.
- --------------------------------------------------------------------------------
2. Ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the year ending December 31, 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 34
3. In their discretion, upon any other matter that may properly come
before the Annual Meeting of Stockholders or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" EACH OF
THE NOMINEES FOR DIRECTOR AND "FOR" THE OTHER PROPOSAL. SUCH VOTES ARE HEREBY
SOLICITED BY THE BOARD OF DIRECTORS.
Dated: _______________________, 1999
Signature ___________________________________
Signature ___________________________________
(print name)
IMPORTANT: Please sign your name exactly as it appears hereon.
When shares are held as joint tenants, either may sign. When
signing as an attorney, executor, administrator, trustee or
guardian, add such title to your signature.
NOTE: If you receive more than one card, please date and sign
each card and return all cards in the enclosed envelope.
