<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:
- --------------------------------------------------------------------------------
<PAGE> 2
[PEOPLES HERITAGE FINANCIAL GROUP, INC. LOGO]
March 22, 2000
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 25, 2000 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.
I also wish to remind you that upon the planned merger of Banknorth Group,
Inc. with and into Peoples Heritage Financial Group, Inc. that our name will be
changed to "Banknorth Group, Inc." In addition, our trading symbol on the Nasdaq
Stock Market will be changed from "PHBK" to "BKNG".
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
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.
<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 25, 2000
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 25, 2000 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 and in each case
until their successors are elected and qualified;
2. To amend the Articles of Incorporation of the Company to increase
the number of authorized shares of Common Stock of the Company from
200,000,000 to 400,000,000;
3. To amend the Amended and Restated 1995 Stock Option Plan for
Non-employee Directors to authorize the issuance of up to an additional
530,000 shares of Common Stock thereunder;
4. To ratify the appointment of KPMG LLP as the Company's independent
auditors for 2000; and
5. 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 20, 2000 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, Esq.
Carol L. Mitchell, Esq.
Executive Vice President, General
Counsel,
Secretary and Clerk
Portland, Maine
March 22, 2000
<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 25, 2000 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, 2000.
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" each of the other proposals described herein 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 20, 2000 (the
"Voting Record Date") will be entitled to vote at the Annual Meeting. On the
Voting Record Date, there were 101,333,614 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 up
to the number of Directors to be elected, shall be elected as Directors of the
Company. The affirmative vote of the holders of a majority of all outstanding
shares of Common Stock is required for approval of the proposal to (i) amend the
Restated Articles of Incorporation of the Company (the "Articles of
Incorporation") to increase the number of shares of authorized Common Stock from
200,000,000 to 400,000,000 and (ii) amend the Amended and Restated 1995 Stock
Option Plan for Non-employee Directors (the "1995 Plan") to authorize the
issuance of up to an additional 530,000 shares of Common Stock thereunder. 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 LLP ("KPMG") as the
Company's independent auditors for 2000 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.
Because the proposals to amend the Articles of Incorporation and the 1995 Plan
require the approval of the holders of a majority of all outstanding shares of
Common Stock, an abstention on either proposal will have the same effect as a
vote against such proposal. Abstentions will not be counted in determining the
votes cast in connection with the proposal to ratify the Company's auditors and
thus will have no effect on such proposal. All of the proposals of the Company
described herein are considered "discretionary" items upon which brokerage firms
may vote in their discretion
<PAGE> 5
on behalf of their clients if such clients have not furnished voting
instructions within ten days of the Annual Meeting. Accordingly, no proposal
will be subject to broker "non-votes".
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 five 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, Family Bank, FSB
and Glastonbury Bank and Trust -- and their respective predecessors.
NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2003
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY AND PRINCIPAL
NAME AGE OCCUPATION DURING THE PAST FIVE YEARS DIRECTOR SINCE
- ---- --- -------------------------------------------------- --------------
<S> <C> <C> <C>
Gary G. Bahre 36 Director of the Company since 1999; President and 1999
CEO of Loudon International Speedway; Owner of
numerous shopping centers and apartment buildings
throughout New England.
David D. Hindle 60 Director of the Company; Chairman of the Board of 1999
Family Bank since 1995 and former President and
Chief Executive Officer of Family Bank; Director
of the George C. Wadleigh Charitable Foundation;
Chairman of Fundraising for Rebuilding Lives
Campaign, Emmaus, Inc.; President, Northeast
Friends, Polycystic Kidney Research Foundation.
Malcolm W. Philbrook, Jr. 66 Director of the Company; Director of Peoples 1976
Heritage Bank since 1976 and 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.
</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>
Paul R. Shea 68 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, Governmental
Relations Council of the American Bankers
Association.
John E. Veasey 70 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, 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>
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 51 Director of the Company; Director of Peoples 1991
Heritage Bank from 1981 to 1991; Senior Vice
President, Wright Express from 1999 to present;
President, Greenleaf Consulting Group, 1997 to
1999; 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
Corporation.
Dana S. Levenson 46 Director of the Company; Director of Bank of New 1995
Hampshire or its predecessor since 1993;
Principal, The Levenson Group from 1997 to
present; 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.
</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>
John M. Naughton 63 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, University of
Massachusetts; Trustee, American International
College; Member, 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.
Pamela P. Plumb 56 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 Childrens'
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.
Seth A. Resnicoff 63 Director of the Company; former Director of CFX 1998
Corporation until its merger into the Company in
1998; former Director of 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>
DIRECTORS WITH TERMS 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 54 Director of the Company; Director of Family Bank; 1998
former Chairman of Safety Fund National Bank and
former Director of CFX Corporation until their
acquisition by the Company in 1998; 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>
4
<PAGE> 8
<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 64 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,
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,
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 57 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,
Massachusetts, District of Columbia and Supreme
Court Bars; Member, Administrative Board, Fund for
Charitable Giving, PNC Bank; Director, Bournewood
Hospital; Member, Board of Trustees of Nantucket
Antheneum; Chairman of the Board, Willow Hill
School; former Member, Board of Trustees of
Northfield Mount Hermon School; former Corporator,
Children's Museum of Boston; former Overseer of
the University of the Virgin Islands; former
Member, Board of Directors of National Grange
Mutual Insurance Company; former Member, Board of
Directors of Jacor Communications Inc.; and former
Member, Committee on Professional Ethics of the
Massachusetts Bar Association.
</TABLE>
5
<PAGE> 9
<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 56 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, New England Student Loan
Association; Director, Blue Cross/Blue Shield of
Maine and member of its Finance Committee;
Director, Central Maine Power Company; and Member,
Board of Trustees, New England Banking Institute.
Curtis M. Scribner 62 Director of the Company; Director of Peoples 1977
Heritage Bank; Director of Morse Payson & Noyes,
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 Corporator of
Hurricane Island Outward Bound; Director, Maine
Community Foundation; Trustee, Maine Life Care
Retirement Community, Inc.; Director of the Rufus
Deering Co.; Member, Maine Committee of Newcomen
Society; Corporator, Maine Medical Center; and
Honorary Trustee, North Yarmouth Academy.
</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 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.
6
<PAGE> 10
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 sixteen
regular and special meetings during 1999. In addition, there were meetings
during 1999 of the Executive, Governance and Nominating, Human Resources, Asset
Review 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 1999
and the total number of meetings held by all committees thereof during the
period which he or she served on such committees during 1999, except for Pamela
Plumb, who attended 70% of all such meetings.
The Board of Directors of the Company has established various committees,
including Executive, Asset Review, Audit, Human Resources, Risk 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 and credit risk management issues of the Company. The Risk Management
Committee has been established to provide direct involvement of the Board of
Directors in asset and liability management, interest rate and investment risk
and other identified risks facing the Company. 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), Greenleaf, Mason, Philbrook and
Scribner. The Audit Committee met four times in 1999.
The Human Resources Committee has been delegated authority to handle
certain personnel and compensation matters for the Company. Currently, the
members of this committee are Directors Levenson (Chairman), Hatfield, Naughton,
Philbrook, Plumb and Shea. The Human Resources Committee met five times in 1999.
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), Hindle, Mason, Plumb,
Scribner, Shea and Ryan. The Governance and Nominating Committee met three times
during 1999.
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 2,000
shares of Common Stock under the 1995 Plan described below. All non-employee
Directors also receive $750 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. Directors who serve as Chairs of the various Board
Committees are paid an additional annual retainer of $2,000.
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.
7
<PAGE> 11
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 1999, 212 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 1995 Plan, respectively.
The 1995 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 1995 Plan shall be the fair market value per
share of the Common Stock on the day the option is granted.
In 1999, options to purchase 2,000 shares of Common Stock were granted
pursuant to the 1995 Plan to each non-employee Director of the Company.
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 1999,
Director Levenson elected to defer certain of his 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, 51, 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.
R. Scott Bacon, 46, 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-Portsmouth 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, 58, 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, Director, Fitchburg By Design, Inc., Director, Greater
Worcester Community Foundation, Inc., Director, Massachusetts Bankers
Association, Member, Board of Trustees of Mechanics Hall of Worcester, Director,
North Central Massachusetts Chamber of Commerce, Director, New England 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, 55, 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.
9
<PAGE> 13
Andrew Greene, 56, was elected Executive Vice President of the Company
effective May 1999. Mr. Greene currently oversees the activities of Morse,
Payson & Noyes Insurance and Heritage Investment Planning, the Company's
insurance brokerage and financial planning subsidiaries. Mr. Greene was a
Director of the Company from 1991 to 1999; Chief Executive Officer of Legacy Co.
Services, Inc. from 1998 to 1999; 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, President's Council of Visitors, University of Southern Maine; Member,
Board of Corporators, Maine Medical Center Foundation; Member, Board of
Trustees, New Hampshire College; and Member of the Board of Directors of the
Gulf of Maine Aquarium Development Corporation.
Carol L. Mitchell, 44, 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 Corporate Education 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, Corporate Partners of the University of Southern Maine; and Member,
Board of Visitors of the University of Maine School of Law.
David J. Ott, 48, 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, the Mitchell Scholarship Fund and the
United Way of Greater Portland. He is the 1999 Chairman of the annual
fundraising campaign for Maine Medical Center.
Wendy Suehrstedt, 41, 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 1994 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 Vice Chairman of the Community Investment Division of the United
Way of Greater Portland and a member of the Board of Directors of the Childrens'
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 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
to the Company to be the beneficial owner of 5% or more of the outstanding
Common Stock, (ii) 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 (iii) all Directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
AS OF DECEMBER 31,
1999(1)
-------------------------
NAME OF BENEFICIAL OWNER AMOUNT PERCENT
- ------------------------ ---------- --------
<S> <C> <C>
J.P. Morgan & Co. Incorporated............................ 5,817,353(2) 5.7%
60 Wall Street
New York, New York 10260
Directors:
Gary R. Bahre............................................. 1,212 --
P. Kevin Condron.......................................... 54,799(3) --
Katherine M. Greenleaf.................................... 23,729(4) --
Douglas S. Hatfield....................................... 71,771(3) --
David D. Hindle........................................... 150,240(8) --
Dana S. Levenson.......................................... 30,743(4) --
Philip A. Mason........................................... 34,009(3) --
John M. Naughton.......................................... 67,424(6) --
Malcolm W. Philbrook, Jr. ................................ 91,267(4)(7) --
Pamela P. Plumb........................................... 28,112(4) --
Seth A. Resnicoff......................................... 45,737(3) --
William J. Ryan........................................... 666,003(8) --
Curtis M. Scribner........................................ 26,989(4) --
Paul R. Shea.............................................. 23,693(5) --
John E. Veasey............................................ 322,886(5) --
Executive officers continuing in office who are not
Directors and who are named in the Summary Compensation
Table below:
Peter J. Verrill.......................................... 211,487(8) --
R. Scott Bacon............................................ 59,225(8) --
Christopher W. Bramley.................................... 133,253(8) --
David J. Ott.............................................. 46,259(8) --
All directors and executive officers of the Company as a 2,498,020(9) 2.4%
group (23 Persons)........................................
</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
(continued on following page)
11
<PAGE> 15
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) Based on a Schedule 13G filed under the Exchange Act, J.P. Morgan & Co.
Incorporated, through its bank and investment advisor subsidiaries, has the
sole power to vote 4,252,620 shares of Common Stock and the sole power to
dispose 5,603,728 shares of Common Stock.
(3) In the case of Directors Condron, Mason, Hatfield and Resnicoff includes
options to purchase 4,500 shares of Common Stock granted pursuant to the
1995 Plan and options to purchase 10,672, 26,524, 26,524 and 8,064 shares 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.
(4) In the case of Directors Greenleaf, Levenson, Philbrook, Plumb and Scribner
includes options to purchase 10,500 shares of Common Stock granted pursuant
to the 1995 Plan.
(5) In the case of Directors Shea and Veasey includes options to purchase 6,500
shares of Common Stock, respectively, granted pursuant to the 1995 Plan.
(6) 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 and options to purchase
2,000 shares of Common Stock granted pursuant to the 1995 Plan.
(7) 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.
(8) 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, 1999, as follows:
<TABLE>
<CAPTION>
PROFIT SHARING CURRENTLY
THRIFT INCENTIVE EMPLOYEE STOCK EXERCISABLE
PLAN OWNERSHIP PLAN OPTIONS
---------------- -------------- -----------
<S> <C> <C> <C>
William J. Ryan............................ 52,516 7,298 575,336
Peter J. Verrill........................... 38,522 7,297 141,286
R. Scott Bacon............................. 4,977 669 48,650
Christopher W. Bramley..................... 0 229 79,858
David D. Hindle............................ 0 6,326 56,050
David J. Ott............................... 16,259 0 25,000
</TABLE>
(9) Includes an aggregate of 162,256 shares of Common Stock which are held by
the trusts established pursuant to the Company's Thrift Incentive Plan
(127,338 shares) and the Company's Profit Sharing Employee Stock Ownership
Plan (34,918 shares) on behalf of executive officers of the Company as a
group. Also includes 1,438,914 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, 1999; 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 1999.
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 five other most highly compensated executive officers
of the Company for the three years ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- -------------------------- ----------
OTHER ANNUAL RESTRICTED OPTIONS/ LTIP ALL OTHER
EXECUTIVE OFFICER YEAR SALARY($) BONUS($) COMPENSATION($) STOCK AWARDS($) SARS(#) PAYOUTS($) COMPENSATION($)
- ----------------- ---- --------- -------- --------------- --------------- -------- ---------- ---------------
(1) (2) (3) (4) (5) (6)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Ryan......... 1999 $579,397 $401,030 $3,098 $ 0 108,000 0 $9,600
Chairman, President and 1998 526,360 231,525 5,053 0 135,000 0 9,600
Chief Executive
Officer 1997 434,476 327,600 7,974 0 70,000 0 9,550
Peter J. Verrill........ 1999 323,048 224,610 6,469 0 50,400 0 9,600
Executive Vice
President, 1998 314,106 130,985 2,784 0 75,000 0 9,600
Chief Operating
Officer 1997 280,810 224,450 2,850 0 23,400 0 9,550
and Chief Financial
Officer
R. Scott Bacon.......... 1999 211,680 143,500 786 0 27,000 0 9,600
Executive Vice President 1998 209,569 114,981 738 0 40,500 0 9,600
of the Company and 1997 182,524 126,175 738 0 14,200 0 9,550
President and Chief
Executive Officer of
Bank of New
Hampshire(7)
David D. Hindle......... 1999 254,176 97,812 3,540 0 32,400 0 9,600
Executive Vice President 1998 261,320 132,507 4,180 0 40,500 0 9,600
of the Company(7) 1997 242,013 107,950 0 0 14,200 0 9,550
Christopher W.
Bramley............... 1999 245,209 143,500 4,889 0 32,400 0 9,600
Executive Vice President
of the Company and
Chief Executive
Officer of Family
Bank(8)
David J. Ott............ 1999 190,385 116,594 3,099 93,700 77,000 0 0
Executive Vice President
of the Company and
Chief Executive
Officer of Peoples
Heritage Bank(9)
</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, Bramley and Ott, and club memberships for Messrs. Ryan,
Verrill, Bacon and Bramley, 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 1996 Equity Incentive
Plan. The December 31, 1999 value of the Restricted Stock grant to Mr. Ott
was $75,262. Three thousand (3,000) shares vest on the third anniversary of
the grant date, one thousand (1,000) shares vest on the fourth anniversary
of the grant date and the final one thousand (1,000) shares vest on the
fifth anniversary of the grant date. Any dividends with respect to the
restricted shares will be paid directly to Mr. Ott.
(5) Consists of awards granted pursuant to the Company's stock option plans.
(continued on following page)
13
<PAGE> 17
(6) Includes matching contributions by the Company pursuant to the Company's
Thrift Incentive Plan and, in 1998, contributions to the Company's Profit
Sharing Employee Stock Ownership Plan. Contributions to the Profit Sharing
Employee Stock Ownership Plan in 1999 have not yet been allocated to
individuals by the Plan's recordkeeper. This contribution, when allocated,
will approximate 1.5% - 2% of W-2 compensation up to the allowed limit of
$160,000.
(7) 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 and became
an informal consultant of the Company with respect to certain customer
service matters. Effective January 1, 2000, the Company and Mr. Hindle
formally continued this arrangement pursuant to a one year consulting
agreement which provides for $28,200 of total annual compensation to Mr.
Hindle.
(8) Mr. Bramley became an executive officer of the Company effective January 1,
1999.
(9) Mr. Ott became an executive officer of the Company effective March 8, 1999.
OPTIONS/SAR GRANTS IN 1999
The following table provides information relating to option grants pursuant
to the Company's stock option plans during 1999 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) 1999(2) PRICE(3) DATE 5% 10%
- ----------------- ------- ---------------- -------- ---------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan.......... 90,000 8.21% $17.375 October 26, 2009 $983,434 $2,492,215
18,000 1.64% 18.625 March 16, 2009 210,837 534,302
Peter J. Verrill......... 42,000 3.83% 17.375 October 26, 2009 458,936 1,163,034
8,400 0.77% 18.625 March 16, 2009 98,391 249,341
David D. Hindle.......... 27,000 2.46% 17.375 October 26, 2009 295,030 747,664
5,400 0.49% 18.625 March 16, 2009 63,251 160,291
R. Scott Bacon........... 27,000 2.46% 17.375 October 26, 2009 295,030 747,664
Christopher W. Bramley... 27,000 2.46% 17.375 October 26, 2009 295,030 747,664
5,400 0.49% 18.625 March 16, 2009 63,251 160,291
David J. Ott............. 27,000 2.46% 17.375 October 26, 2009 295,030 747,664
50,000 4.56% 18.75 March 8, 2009 589,589 1,494,133
</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 1,023,720 shares of Common
Stock granted to all employees during 1999.
(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 $28.30 and $45.06 for options granted on
October 26, 1999, $30.54 and $48.63 for options granted on March 8, 1999,
and $30.34 and $48.31 for options granted on March 16, 1999 at compounded
rates of return of 5% and 10%, respectively. No discount has been applied to
determine a net present value of each award; however, a 7.0% discount would
yield real values of 51% of the values shown under the 5% and 10% columns,
respectively.
14
<PAGE> 18
AGGREGATED OPTION/SAR EXERCISES IN 1999 AND YEAR-END OPTION/SAR VALUES
The following table provides information relating to option/SAR exercises
in 1999 by the named executive officers and the value of such officers'
unexercised options/SARs at December 31, 1999.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS AT
AT YEAR END(#) YEAR END($)(1)
SHARES ACQUIRED VALUE ---------------------------- ---------------------------
EXECUTIVE OFFICER ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William J. Ryan......... 0 $0 566,336 295,500 $3,416,815 $416,250
Peter J. Verrill........ 0 $0 137,086 147,900 418,379 208,125
David D. Hindle......... 0 $0 53,350 52,650 240,928 0
R. Scott Bacon.......... 0 $0 48,650 47,250 47,481 0
Christopher W.
Bramley............... 0 $0 77,158 52,650 126,768 0
David J. Ott............ 0 $0 0 77,000 0 0
</TABLE>
- ---------------
(1) Based on a per share market price of $15.0625.
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 $170,000 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............................... $24,594 $36,890 $49,187 $61,484 $ 73,781
150,000............................... 29,969 44,953 59,937 74,921 89,906
170,000............................... 34,269 51,403 68,537 85,671 102,806
</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 $35,100.
(2) Career average salary limited to $170,000.
(3) Maximum allowable annual benefit for 2000 is $135,000.
The maximum annual compensation which may be taken into account under
qualified plans is indexed for inflation after 1994.
At December 31, 1999, Messrs. Ryan, Verrill, Bacon, Bramley, Hindle and Ott
had ten, 22, three, two, three and one 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;
15
<PAGE> 19
(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, 1999, the expected annual benefits under the supplemental
retirement agreements with Messrs. Ryan, Verrill and Hindle were $263,576,
$95,380 and $64,756, respectively, assuming level future salaries and an 8%
return on defined contribution investment accounts. These figures are based on
nine, 14 and five years until retirement for Messrs. Ryan, Verrill and Hindle,
respectively.
The Company also has entered into supplemental retirement agreements with
Mr. Bacon, Mr. Ott and certain other executive officers of the Company. The
agreements 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 $170,000 plan compensation limitation under Section
401 of the Code or the limitations contained in Section 415 of the Code. At
December 31, 1999, the expected annual benefit under the agreements with Messrs.
Bacon and Ott were $81,178 and $76,131, respectively, assuming level future
salaries and an 8% return on defined contribution investment accounts. This
figure is based upon 19 years and 17 years until retirement for Messrs. Bacon
and Ott, respectively.
In connection with the acquisition of CFX, the Company assumed the
supplemental retirement agreement in effect between CFX and Mr. Bramley. The
agreement provides for a lump sum payment at retirement which is the accumulated
value of a rabbi trust to which the Company makes an annual $30,000
contribution.
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,
1999.
During 1999, the members of the Human Resources Committee were Dana S.
Levenson (Chairman), Everett W. Gray, Andrew W. Greene, Douglas S. Hatfield,
Pamela P. Plumb, Paul R. Shea, John M. Naughton and Malcolm W. Philbrook. In
April 1999, Directors Gray and Greene left the Board. Directors Naughton and
Philbrook became members of the Committee in July 1999.
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.
16
<PAGE> 20
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 1999 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 1999 based on this
methodology and with the assistance of Towers Perrin.
Mr. Ryan's salary was increased from $525,000 to $595,000 during 1999,
which was at the mid-range of the selected comparison group. Mr. Ryan's salary,
after adjustment in 1998, was at the mid-point for that year, consistent with
the policy described above. The mid-point for comparable companies increased in
1999, and due to the continued excellent results achieved by the Company in
1998, 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 50%, 45%
and 40% of base salary range mid-point for the President and Chief Executive
Officer, the Chief Operating Officer and certain Executive Vice President
levels, respectively, upon achieving earnings per share results, with a maximum
payout of 80%, 75% and 70%, respectively. As a result of the Company's earnings
for 1999, bonuses for Messrs. Ryan, Verrill, Hindle, Bramley, Bacon and Ott were
$401,030, $224,640, $97,812, $143,500, $143,500 and $116,594, 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 were 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 26, 1999, options to purchase
90,000 shares, 42,000 shares, 27,000 shares, 27,000 shares, 27,000 shares and
27,000 shares were granted to Messrs. Ryan, Verrill, Hindle, Bramley, Bacon and
Ott, respectively.
In recognition of the significant effort required in closing and
integrating the acquisition of SIS Bancorp, Inc., the Committee granted stock
options to certain members of management. Options to purchase 18,000 shares,
8,400 shares, 5,400 shares, and 5,400 shares were granted to Messrs. Ryan,
Verrill, Hindle and Bramley, respectively.
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<PAGE> 21
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. In 1999, the Committee voted to
amend the Deferred Compensation Plan to provide for the automatic deferral of an
executive's bonus to the extent the executive's annual earnings subject to the
limit would otherwise exceed $1 million. Amounts thus deferred will be paid
after the executive has terminated employment. The $1 million limit does not
apply to payments made following termination of employment.
Respectfully submitted,
Dana S. Levenson, Chairman
Douglas S. Hatfield
John M. Naughton
Pamela P. Plumb
Malcolm W. Philbrook
Paul R. Shea
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<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>
12/31/94 100.00 100.00 100.00
3/31/95 109.71 112.27 106.13
6/30/95 120.15 127.55 127.18
9/30/95 129.66 145.95 155.84
12/31/95 137.45 156.08 195.55
3/31/96 144.82 156.40 188.33
6/30/96 151.30 165.88 177.89
9/30/96 155.94 186.41 205.57
12/31/96 168.92 215.58 247.74
3/31/97 173.48 223.86 273.66
6/30/97 203.70 268.99 338.68
9/30/97 218.94 317.44 380.06
12/31/97 225.21 370.62 415.06
3/31/98 256.55 393.17 437.35
6/30/98 265.00 383.42 430.28
9/30/98 238.69 300.56 328.70
12/31/98 289.43 342.49 368.51
3/31/99 303.84 313.67 333.78
6/30/99 325.22 353.23 350.97
9/30/99 304.95 319.14 312.40
12/31/99 350.26 303.96 285.30
</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, 1999, 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 W.
Philbrook, Jr. 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 A. 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 A. Resnicoff is Chairman of the
Board, purchases its malpractice insurance through the Company's insurance
brokerage agency subsidiary.
The Company believes that the foregoing transactions are fair to and in the
best interests of the Company and its stockholders.
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<PAGE> 23
PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL TWO)
At the Annual Meeting, stockholders will be asked to consider and approve a
proposal to amend the Company's Articles of Incorporation to increase the number
of shares of authorized Common Stock from 200,000,000 to 400,000,000. Such
amendment was unanimously approved by the Board of Directors of the Company on
February 22, 2000 primarily as a result of the fact that following the
completion of the Company's acquisition of Banknorth Group, Inc. ("Banknorth")
the Company will have issued and outstanding approximately 148,200,000 shares
with 51,800,000 remaining for issuance, of which approximately 4,700,000 are
reserved for issuance for various purposes.
DISCUSSION OF THE PROPOSED AMENDMENT
The Company's Articles of Incorporation currently authorize 205,000,000
shares of capital stock, consisting of 200,000,000 shares of Common Stock and
5,000,000 shares of preferred stock, par value $.01 per share ("Preferred
Stock"). The proposed amendment to the Articles of Incorporation would increase
the number of shares of authorized capital stock by 200,000,000, from
205,000,000 to 405,000,000 shares. If the amendment is authorized, the first two
sentences of Article 4 of the Company's Articles of Incorporation would be
amended to read as follows:
"The total number of shares of capital stock which the Corporation has
authority to issue is 405,000,000, of which 5,000,000 shall be serial
preferred stock, $.01 par value per share (hereinafter "Preferred Stock"),
and 400,000,000 shall be common stock, par value $.01 per share
(hereinafter "Common Stock"). The aggregate par value of all authorized
shares of capital stock having a par value is $4,050,000."
As of December 31, 1999, there were 102,181,789 shares of Common Stock
outstanding. At such date, the Company also had reserved an aggregate of
approximately 46,000,000 shares of Common Stock for issuance to holders of
outstanding shares of common stock of Banknorth and outstanding options and
other rights to purchase such shares pursuant to an Agreement and Plan of
Merger, dated as of June 1, 1999, between Banknorth and the Company, as amended,
(the "Agreement"), which provides, among other things, for the merger of
Banknorth with and into the Company (the "Merger"). In addition to the shares of
Common Stock which have been reserved for issuance pursuant to the Agreement, as
of December 31, 1999, an aggregate of 3,789,444 shares of Common Stock were
reserved for issuance pursuant to the Company's 1986 Stock Option and Stock
Appreciation Rights Plan (the "1986 Option Plan"), Employee Stock Purchase Plan,
the 1995 Plan and the 1996 Equity Plan, and an additional 847,694 shares of
Common Stock were reserved for issuance pursuant to options issued in connection
with prior acquisitions. Also, the Board of Directors has proposed to reserve up
to an additional 530,000 shares of Common Stock for issuance pursuant to the
1995 Plan.
Assuming that (i) the Merger had been consummated as of December 31, 1999
and (ii) the maximum number of shares of Common Stock reserved for issuance in
connection therewith was issued by the Company, the Company would have
148,181,789 shares outstanding on a pro forma basis at December 31, 1999 (the
"Pro Forma Shares"). The proposed 200,000,000 increase in the number of
authorized shares of Common Stock amounts to 1.35 times the Pro Forma Shares,
which does not reflect shares reserved for issuance and proposed to be reserved
for issuance pursuant to the Company's stock compensation plans and prior
acquisitions, as discussed above.
The Board of Directors has determined that the number of shares of
authorized Common Stock should be increased to provide the Company with the
flexibility to conduct the Company's future operations, including the issuance,
distribution, exchange or reservation of shares of Common Stock for stock
dividends, acquisitions, financing and employee stock compensation plans. The
Board of Directors currently has no specific plans to issue additional Common
Stock, except pursuant to the Company's director and employee stock compensation
plans and in connection with the acquisition of Banknorth pursuant to the
Agreement.
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<PAGE> 24
Under certain circumstances, authorized but unissued shares of Common Stock
and Preferred Stock can provide the Board of Directors with a means of
discouraging an unsolicited change in control of the Company. Although the
proposed amendment may allow the Board of Directors to issue additional shares
of Common Stock in the event of an unsolicited attempt to acquire control of the
Company as a means of discouraging a hostile acquirer, the Board of Directors
has no present intention of using the existing or proposed authorized but
unissued Common Stock or the existing authorized but unissued Preferred Stock
for such purpose, except to the extent that such an issuance could occur
pursuant to the Company's existing Stockholder Rights Plan. The Board of
Directors is not presently aware of any plans to acquire control of the Company.
Holders of Common Stock do not have preemptive rights to subscribe to
additional securities that may be issued by the Company, which means that
current stockholders do not have a prior right to purchase any new issue of
capital stock of the Company in order to maintain their proportionate ownership.
Stockholders who desire to maintain their interest may be able to do so through
normal market purchases, however.
If stockholders of the Company approve the proposed amendment to the
Articles of Incorporation, the Company will file articles of amendment to the
Articles of Incorporation of the Company with the Secretary of State of the
State of Maine reflecting the increase in authorized capitalization.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS OF THE COMPANY VOTE "FOR" APPROVAL OF ADOPTION OF THE PROPOSAL TO
AMEND THE ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK.
PROPOSAL TO AMEND THE AMENDED AND RESTATED
1995 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(PROPOSAL THREE)
Since 1995, the Company has emphasized the grant of stock options at market
rate exercise prices as a means of attracting and retaining the services of
experienced and knowledgeable non-employee Directors for the Company and for
subsidiaries of the Company. It is intended that options granted under the 1995
Plan will provide an incentive for non-employee Directors and participating
subsidiary directors to increase their proprietary interests in the Company's
long-term success and progress. The number of shares of Common Stock reserved
for issuance upon exercise of options granted under the 1995 Plan is 530,000 (as
adjusted for a two-for-one split of the Common Stock in 1998). The shares of
Common Stock issued on exercise of options granted under the 1995 Plan may be
authorized but unissued shares and/or shares acquired by the Company in public
or private transactions. If any option granted under the 1995 Plan expires or
terminates without being exercised in full, the shares subject to the
unexercised portion shall be available for reissuance under the 1995 Plan.
As of December 31, 1999, there were 173,000 shares of Common Stock
available for grant pursuant to the 1995 Plan. The Company believes that stock
options and other stock compensation have enhanced the Company's ability to meet
its long-term goals and intends to continue to utilize this means of attracting
and retaining qualified Directors for the Company and for its subsidiaries. The
number of shares remaining for grant under the 1995 Plan, however, is
insufficient to permit awards which the Company would expect to make in future
years pursuant to its practices. Accordingly, on February 22, 2000, the Board of
Directors unanimously adopted, subject to stockholder approval at the Annual
Meeting, an amendment to the Amended and Restated 1995 Stock Option Plan for
Non-employee Directors which increases the number of shares of Common Stock
which may be issued pursuant to the 1995 Plan from 530,000 to 1,060,000.
Set forth below is a description of the principal terms of the 1995 Plan.
The description is only a summary and is qualified by reference to the text of
the 1995 Plan, a copy of which has been filed as an exhibit to the Company's
reports under the Exchange Act with the Securities and Exchange Commission and
is available upon written request from the Secretary of the Company.
21
<PAGE> 25
PURPOSES AND ELIGIBILITY
The purposes of the 1995 Plan are to attract and retain the services of
experienced and knowledgeable non-employee Directors of the Company and each
subsidiary of the Company as may be designated by the Board of Directors of the
Company or a duly authorized committee thereof to participate in the 1995 Plan
(each a "Subsidiary" and collectively, the "Subsidiaries"). It is intended that
options granted under the 1995 Plan will provide an incentive for non-employee
Directors of the Company and participating Subsidiaries to increase their
proprietary interests in the Company's long-term success and progress.
ADMINISTRATOR
The 1995 Plan is administered by the Board of Directors of the Company or a
duly authorized committee thereof consisting solely of two or more Non-employee
Directors, as defined in Rule 16b-3 under the Exchange Act (the "Plan
Administrator"). The Plan Administrator has the power to make determinations
regarding awards to non-employee Directors of the Company and participating
Subsidiaries under the 1995 Plan, to determine participating Subsidiaries under
the 1995 Plan, to construe the provisions of the 1995 Plan, to determine all
questions arising under the 1995 Plan and to adopt and amend such rules and
regulations for the administration of the 1995 Plan as it may deem desirable.
SHARES RESERVED
The number of shares of Common Stock reserved for issuance upon exercise of
options granted under the 1995 Plan is currently 530,000, and will be increased
to 1,060,000 if the amendment to the 1995 Plan is approved by stockholders at
the Annual Meeting. The shares of Common Stock issued on exercise of options
granted under the 1995 Plan may be authorized but unissued shares and/or shares
acquired by the Company in public or private transactions. If any option granted
under the 1995 Plan expires or terminates without being exercised in full, the
shares subject to the unexercised portion shall be available for reissuance
under the 1995 Plan.
GRANTS, VESTING AND EXERCISE PRICE OF OPTIONS
Each Director of the Company and each Director of a participating
Subsidiary who in each case is not an employee of the Company or a parent or
Subsidiary of the Company shall be eligible to receive an option to purchase
shares of Common Stock under the 1995 Plan. Options may be granted to such
persons under the 1995 Plan at such times and in such amounts as may be
determined by the Plan Administrator. The Plan Administrator shall promptly
notify each Director of each option granted to that Director under the 1995 Plan
and each such option shall be evidenced by an option agreement duly executed on
behalf of the Company and by the optionee.
The exercise price per share for shares of Common Stock which may be
acquired upon exercise of an option granted under the 1995 Plan shall be the
fair market value per share of the Common Stock on the day the option is
granted. For purposes of the 1995 Plan, under current circumstances "fair market
value" shall be the per share closing price of the Common Stock on the date in
question on the Nasdaq Stock Market's National Market.
Each option granted under the 1995 Plan shall have a term of ten years from
the date of grant, provided that in the event that an optionee ceases to be a
Director of the Company or a participating Subsidiary for any reason, the
unexercised portion of any option granted under the 1995 Plan held by such
optionee shall expire as of the earlier of the termination date of the option or
the first anniversary of the day the optionee ceases to be a Director of the
Company or a participating Subsidiary. Subject to the foregoing, an option
granted under the 1995 Plan shall be exercisable in whole or in part on any
business day or days during its term. An option may be exercised by giving
written notice to the Company stating the number of shares of Common Stock with
respect to which the option is being exercised, accompanied by payment in full
for such shares. Payment may be made in whole or in part (i) in cash or by check
or (ii) by delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker directing the broker to sell the shares of
Common
22
<PAGE> 26
Stock subject to the option and then to properly deliver to the Company the
amount of sale proceeds to pay the exercise price.
TRANSFERABILITY
Except as may be approved by the Plan Administrator, an option granted
under the 1995 Plan may not be sold, transferred, assigned, pledged,
hypothecated, attached, executed upon or otherwise disposed of in whole or in
part in any way other than by will or the laws of descent and distribution. A
beneficiary may be designated with respect to an option in the event of the
death of the optionee.
LIMITATION AS TO DIRECTORSHIP
Neither the 1995 Plan nor the grant of an option thereunder, nor any other
action taken pursuant to the 1995 Plan, shall constitute or be evidence of any
agreement or understanding that an optionee has the right to continue as a
Director of the Company or a participating Subsidiary for any period of time.
CAPITAL ADJUSTMENTS
In the event that the Plan Administrator determines that any dividend or
other distribution (whether in the form of cash, shares of Common Stock, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, exchange of shares of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase shares of Common Stock
or other securities of the Company, or other similar corporate transaction or
event affects the shares of Common Stock such that an adjustment is determined
by the Plan Administrator to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the 1995 Plan, then the Plan Administrator shall, in such manner as it may
deem equitable, adjust any or all of the aggregate number and class of shares
for which options may be granted under the 1995 Plan, the number and class of
shares covered by each outstanding option under the 1995 Plan and the exercise
price per share of each such outstanding option. In the event of any adjustment
in the number of shares of Common Stock covered by an option granted under the
1995 Plan, any fractional shares shall be disregarded and each such option shall
cover only the number of full shares resulting from such adjustment.
EFFECTIVE DATE; TERMINATION AND AMENDMENT
The 1995 Plan initially became effective upon adoption by the Board of
Directors and stockholders of the Company in 1995. In 1997, the 1995 Plan was
amended and restated to increase the total number of shares of Common Stock
reserved for issuance thereunder to 265,000 (530,000 as adjusted for a
two-for-one split of the Common Stock in 1998) and to conform the 1995 Plan to
amendments adopted to the rules under Section 16 of the Exchange Act. The
amendment to the 1995 Plan increasing the total number of shares of Common Stock
which may be issued upon exercise of options granted thereunder to 1,060,000
became effective upon adoption by the Board of Directors of the Company on
February 22, 2000, subject to approval of the stockholders of the Company at the
Annual Meeting. In the event of such approval, the 1995 Plan shall continue in
effect until it is terminated in accordance with its terms.
Subject to any approval of the Company's stockholders required under
applicable law, the Board of Directors of the Company may amend, terminate or
suspend the 1995 Plan at any time, provided that no such action shall adversely
affect any then-outstanding options granted thereunder.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is only a summary of the principal federal income
tax consequences of options granted under the 1995 Plan, and is based on
existing federal law (including administrative regulations and rulings), which
is subject to change, in some cases retroactively. This discussion also is
qualified by the particular circumstances of individual optionees, which may
substantially alter or modify the federal income tax consequences herein
discussed.
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<PAGE> 27
No income generally will be recognized by an optionee at the time of the
grant of an option under the 1995 Plan. Under present law, the optionee
generally will recognize ordinary income at the time the option is exercised
equal to the aggregate fair market value of the shares of Common Stock acquired
less the option exercise price.
Shares acquired upon exercise of an option granted under the 1995 Plan will
have a tax basis equal to their fair market value on the exercise date or other
relevant date on which ordinary income is recognized and the holding period for
the shares generally will begin on the date of exercise or such other relevant
date. Upon subsequent disposition of the shares, the optionee generally will
recognize capital gain or loss. Provided the shares are held by the optionee for
more than one year prior to the disposition, such gain or loss will be long-
term capital gain or loss.
The Company generally will be entitled to a deduction equal to the ordinary
income (i.e., compensation) portion of the gain recognized by the optionee in
connection with the exercise of an option granted under the 1995 Plan, provided
that the Company complies with any withholding requirements of federal and state
law.
GRANT OF OPTIONS
The Company currently anticipates that grants under the 1995 Plan will be
the same as those granted in 1999. The Company has made no other determinations
as of the date hereof as to the level of future option grants under the 1995
Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE
COMPANY VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED 1995
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS TO AUTHORIZE THE ISSUANCE OF UP TO
AN ADDITIONAL 530,000 SHARES OF COMMON STOCK THEREUNDER.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL FOUR)
The Board of Directors of the Company has appointed KPMG, independent
certified public accountants, to perform the audit of the Company's financial
statements for the year ending December 31, 2000, and has further directed that
the selection of auditors be submitted for ratification by the stockholders at
the Annual Meeting.
Representatives from KPMG 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 AS INDEPENDENT
AUDITORS FOR 2000.
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 2001, 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, 2000. 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
24
<PAGE> 28
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 2001 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 24, 2001. 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, 1999 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 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.
25
<PAGE> 29
PEOPLES HERITAGE FINANCIAL GROUP, INC.
REVOCABLE PROXY
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2000
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 O. William
Robertson and Roger Percival 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 25, 2000,
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 OTHER
PROPOSALS SET FORTH ON THE REVERSE SIDE. 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> 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 2003:
Gary G. Bahre
David D. Hindle
Malcolm W. Philbrook, Jr.
Paul R. Shea
John E. Veasey
<TABLE>
<S> <C>
FOR all listed nominees (except as WITHHOLD
marked to the contrary herein) AUTHORITY
to vote for
all listed nominees
[ ] [ ]
</TABLE>
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominees's name in the line provided below.
- --------------------------------------------------------------------------------
2. To amend the Articles of Incorporation of the Company to increase the
number of authorized shares of Common Stock of the Company from
200,000,000 to 400,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To amend the Amended and Restated 1995 Stock Option Plan for
Non-employee Directors to authorize the issuance of up to an additional
530,000 shares of Common Stock thereunder.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 31
4. Ratification of the appointment of KPMG LLP as the Company's
independent auditors for the year ending December 31, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. 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 PROPOSALS. SUCH VOTES ARE HEREBY
SOLICITED BY THE BOARD OF DIRECTORS.
Dated: , 2000
------------------
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> 32
March 22, 2000
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,
/s/William J. Ryan
William J. Ryan
Chairman, President and
Chief Executive Officer
<PAGE> 33
PEOPLES HERITAGE FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2000
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 25 2000, 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 PROPOSALS 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> 34
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 2003:
Gary G. Bahre
David D. Hindle
Malcolm W. Philbrook, Jr.
Paul R. Shea
John E. Veasey
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. To amend the Articles of Incorporation of the Company to increase the
number of authorized shares of Common Stock of the Company from 200,000,000
to 400,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To amend the Amended and Restated 1995 Stock Option Plan for Non-employee
Directors to authorize the issuance of up to an additional 530,000 shares
of Common Stock thereunder.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 35
4. Ratification of the appointment of KPMG LLP as the Company's independent
auditors for the year ending December 31, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. 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 PROPOSALS. SUCH VOTES ARE HEREBY
SOLICITED BY THE BOARD OF DIRECTORS.
Dated: , 2000
-------------------------
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> 36
PEOPLES HERITAGE FINANCIAL GROUP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 2000
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 25 2000, 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 PROPOSALS 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> 37
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 2003:
Gary G. Bahre
David D. Hindle
Malcolm W. Philbrook, Jr.
Paul R. Shea
John E. Veasey
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. To amend the Articles of Incorporation of the Company to increase the
number of authorized shares of Common Stock of the Company from 200,000,000
to 400,000,000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. To amend the Amended and Restated 1995 Stock Option Plan for Non-employee
Directors to authorize the issuance of up to an additional 530,000 shares
of Common Stock thereunder.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
<PAGE> 38
4. Ratification of the appointment of KPMG LLP as the Company's independent
auditors for the year ending December 31, 2000.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. 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 PROPOSALS. SUCH VOTES ARE HEREBY
SOLICITED BY THE BOARD OF DIRECTORS.
Dated: , 2000
------------------------
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.
