<PAGE>
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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BSB Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
BSB BANCORP, INC.
58-68 EXCHANGE STREET
BINGHAMTON, NEW YORK 13902
(607) 779-2492
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 28, 1997
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of BSB
Bancorp, Inc. (the "Company") will be held at Roberson Museum and Science
Center, 30 Front Street, Binghamton, New York 13905, on April 28, 1997, at
10:00 a.m., Eastern Time, and at any adjournment thereof, for the following
purposes, all of which are more completely set forth in the accompanying Proxy
Statement:
1. To elect four directors for a term of three years, or until their
successors have been elected and qualified;
2. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent auditors for the fiscal year ending December 31, 1997; and
3. To transact such other business as may properly come before the Annual
Meeting. Except with respect to procedural matters incident to the
conduct of the meeting, the Board of Directors is not aware of any other
matters which may properly come before the Annual Meeting.
Shareholders of the Company of record at the close of business on March 5,
1997 are entitled to notice of and to vote at the Annual Meeting and at any
adjournment thereof.
By Order of the Board of Directors
/s/ Larry G. Denniston
Larry G. Denniston
Senior Vice President and Corporate
Secretary
Binghamton, New York
March 25, 1997
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>
BSB BANCORP, INC.
58-68 EXCHANGE STREET
BINGHAMTON, NEW YORK 13902
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 1997
----------------
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement, which is first being mailed on or about March 25,
1997, is furnished to shareholders of BSB Bancorp, Inc. (the "Company") in
connection with the solicitation of proxies on behalf of the Board of
Directors to be used at the 1997 Annual Meeting of Shareholders (the "Annual
Meeting"). The Annual Meeting will be held at the Roberson Museum and Science
Center, 30 Front Street, Binghamton, New York 13905, on April 28, 1997 at
10:00 a.m., Eastern Time, and at any adjournment thereof. The Annual Meeting
has been called for the purposes set forth in the Notice of Annual Meeting.
The proxies solicited hereby, if properly signed and returned to the Company
and not revoked prior to their use, will be voted in accordance with the
instructions contained therein by a member of the law firm of Hinman, Howard &
Kattell, L.L.P., general counsel to the Company, which has been duly appointed
by the Board of Directors to vote such proxies. If no contrary instructions
are given, each proxy will be voted FOR the election of the nominees of the
Board of Directors as directors, FOR ratification of the appointment of
Coopers & Lybrand L.L.P. as the Company's independent auditors for the fiscal
year ending December 31, 1997, and, upon the transaction of such other
business as may properly come before the Annual Meeting, in accordance with
the best judgment of the person appointed as proxy.
Any shareholder giving a proxy has the power to revoke it any time before it
is exercised by (i) filing with the Corporate Secretary of the Company written
notice thereof (Larry G. Denniston, Senior Vice President and Corporate
Secretary, BSB Bancorp, Inc., 58-68 Exchange Street, Binghamton, New York
13902), (ii) submitting a duly executed proxy bearing a later date, or (iii)
appearing at the Annual Meeting and giving the Corporate Secretary 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.
The securities which can be voted at the Annual Meeting consist of shares of
the Company's common stock, par value $.01 per share (the "Common Stock"),
with each share entitling its owner to one vote on each matter presented. The
close of business on March 5, 1997 has been fixed by the Board of Directors as
the record date for determination of shareholders entitled to notice of and to
vote at the Annual Meeting. The number of shares of Common Stock outstanding
on March 5, 1997 was 5,656,225. The presence, in person or by proxy, of a
majority of the total number of outstanding shares of Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting. Shareholders' votes will be tabulated by the person appointed by the
Board of Directors to act as inspector of election of the Annual Meeting.
Under Delaware corporate law and the Company's Bylaws, directors are elected
by a plurality of votes of shares present (in person or by proxy) and entitled
to vote. Unless otherwise required by law or the Company's Certificate of
Incorporation or Bylaws, any other matter put to a shareholder vote will be
decided by the affirmative vote of a majority of the votes cast on the matter.
Abstentions and broker non-votes will be treated as shares that are present,
or represented, and entitled to vote for purposes of determining the presence
of a quorum at the Annual Meeting. Broker non-votes will not be counted as a
vote cast on any matter presented at the Annual Meeting. Abstentions will not
be counted in determining the number of votes cast in connection with any
matter presented at the Annual Meeting.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 5, 1997 with respect
to the beneficial ownership of the Common Stock by any person or group as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") who is known to the Company to be the beneficial owner of
more than 5% of the Common Stock, with respect to ownership of the Common
Stock by all directors and executive officers of the Company as a group, and
with respect to the ownership of the Common Stock by each of the "named
executive officers" (defined below) of the Company.
<TABLE>
<CAPTION>
TITLE AMOUNT AND NATURE PERCENT
OF OF BENEFICIAL OF
CLASS BENEFICIAL OWNER OWNERSHIP(1) CLASS
----- ---------------- ----------------- -------
<C> <S> <C> <C>
Common First Union Corporation ("First Union")
One First Union Center
Charlotte, NC 28288-0137.................... 504,650(2) 8.92%
Common Beck, Mack & Oliver, LLC ("BMO")
330 Madison Avenue
New York, NY 10017.......................... 454,125(3) 8.03%
Common Dimensional Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401...................... 387,750(4) 6.86%
Common William H. Rincker.......................... 91,131(5) 1.61%
Common Alex S. DePersis............................ 36,559(6) 0.64%
Common Glenn R. Small.............................. 44,226(7) 0.78%
Common Edward R. Andrejko.......................... 46,440(8) 0.82%
Common Fielding Simmons III........................ 19,385(9) 0.34%
Common All directors and executive officers of the
Company,
as a group (18 people)...................... 738,122(10) 12.73%
</TABLE>
- --------
* Unless otherwise indicated, holdings represent less than one percent (1%)
of the issued and outstanding shares of Common Stock.
(1) Based on information provided by the respective beneficial owners and
upon the most recent Schedule 13D or 13G filed with the Securities and
Exchange Commission ("Commission") pursuant to the Exchange Act, unless
otherwise indicated. Beneficial ownership is direct except as otherwise
indicated by footnote. In accordance with Rule 13d-3 of the Exchange Act,
a person is deemed to be the beneficial owner of a security if he or she
has or shares voting power or investment power with respect to such
security or has the right to acquire such ownership within 60 days.
Unless otherwise indicated, shares beneficially owned by named executive
officers are held with sole voting and dispositive power.
(2) First Union claims sole dispositive power and sole voting power over
435,600 shares and shared dispositive power and shared voting power over
69,050 shares. First Union reports its beneficial ownership of such
shares on behalf of its subsidiaries Evergreen Asset Management Group and
Lieber and Company, both of which are investment advisers registered
under the Investment Advisers Act of 1940. Evergreen Asset Management
Group and Lieber and Company are investment advisers for mutual funds and
other clients which beneficially own the Common Stock.
(3) BMO claims shared dispositive power over 454,125 shares owned by
investment advisory clients of BMO, none of which report ownership of
more than 5% of the outstanding Common Stock. BMO is an investment
adviser registered under the Investment Advisers Act of 1940.
(4) Dimensional Fund Advisors Inc. ("DFA") claims sole dispositive power over
387,750 shares and sole voting power over 240,675 shares. In its Schedule
13G, DFA reported that persons who are officers of DFA also serve as
officers of DFA Investment Dimensions Group Inc. (the "Fund") and the DFA
Investment Trust Company (the "Trust"), each an open-end management
investment company registered
2
<PAGE>
under the Investment Company Act of 1940. In their capacities as officers
of the Fund and the Trust, these persons vote 74,975 shares that are owned
by the Fund and 72,100 shares that are owned by the Trust. DFA is an
investment adviser registered under the Investment Advisers Act of 1940.
All securities reported in its Schedule 13G are owned by advisory clients
of DFA, no one of which, to the knowledge of DFA, owns more than 5% of the
class.
(5) Includes 78,104 shares held jointly with Mr. Rincker's wife, and with
respect to which Mr. Rincker shares voting and dispositive power, and
includes 13,027 shares owned directly by Mr. Rincker's wife with respect
to which Mr. Rincker has no voting or dispositive power.
(6) Includes 15,872 shares held jointly with Mr. DePersis's wife, with
respect to which Mr. DePersis shares voting and dispositive power. Also
includes 15,795 shares with respect to which Mr. DePersis has the right
to acquire beneficial ownership of Common Stock through the exercise of
options granted pursuant to the Incentive Plan (as defined below) and the
1996 Incentive Plan (as defined below).
(7) Includes 12,856 shares held jointly with Mr. Small's wife, with respect
to which Mr. Small shares voting and dispositive power. Also includes
19,995 shares with respect to which Mr. Small has the right to acquire
beneficial ownership of Common Stock through the exercise of options
granted pursuant to the Incentive Plan and the 1996 Incentive Plan.
(8) Includes 26,172 shares held jointly with Mr. Andrejko's wife, with
respect to which Mr. Andrejko shares voting and dispositive power, 2,353
shares held jointly with another family member with respect to which Mr.
Andrejko shares voting and dispositive power, and 1,014 shares held
directly by Mr. Andrejko's wife in an individual retirement account with
respect to which Mr. Andrejko has no voting or dispositive power. Also
includes 16,901 shares with respect to which Mr. Andrejko has the right
to acquire beneficial ownership of Common Stock through the exercise of
options granted pursuant to the Incentive Plan and the 1996 Incentive
Plan.
(9) Includes 8,109 shares held jointly with Mr. Simmons's wife, with respect
to which Mr. Simmons shares voting and dispositive power. Also includes
11,276 shares with respect to which Mr. Simmons has the right to acquire
beneficial ownership of Common Stock through the exercise of options
granted pursuant to the Incentive Plan and the 1996 Incentive Plan.
(10) Includes 142,516 shares as to which members of the group have the right
to acquire beneficial ownership of Common Stock through the exercise of
options. See "Information with Respect to Nominees for Director,
Directors Whose Terms Continue and Executive Officers". Excludes
approximately 650 shares with respect to which members of the group are
entitled to receive as a result of participation in the Company's
dividend reinvestment plan for a dividend declared on January 28, 1997,
which is payable March 10, 1997. Computation of the precise number of
shares involves unnecessary burden and expense due to the timetable for
preparation of this proxy statement.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTOR,
DIRECTORS WHOSE TERMS CONTINUE AND EXECUTIVE OFFICERS
(PROPOSAL ONE)
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation states that the Board of
Directors shall consist of 14 members unless otherwise determined from time to
time by resolution adopted by an affirmative vote of at least a majority of
the Board of Directors. The Company's Bylaws provide that the directors shall
be divided into three classes as nearly equal in number as possible. Pursuant
to a resolution adopted by the Board of Directors on May 20, 1996, the Board
of Directors currently consists of 12 members. 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.
Presently, all directors of the Company also are directors of the Company's
wholly owned subsidiary, BSB Bank & Trust Company (the "Bank").
3
<PAGE>
THE NOMINEES
Unless otherwise directed, each proxy executed and returned by a shareholder
will be voted FOR the election of the four nominees listed below who are being
nominated for a three-year term. There are no arrangements or understandings
between the persons named and any other person pursuant to which such nominee
was selected. If any person named as nominee should be unable or unwilling to
stand for election at the time of the Annual Meeting, the proxy 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.
NOMINEES FOR DIRECTOR FOR TERMS EXPIRING IN 2000
<TABLE>
<CAPTION>
COMPANY
COMMON STOCK
BENEFICIALLY OWNED
POSITION WITH THE COMPANY AND THE DIRECTLY OR
BANK AND PRINCIPAL OCCUPATION DIRECTOR INDIRECTLY AS OF
NAME AGE* DURING THE PAST FIVE YEARS(1) SINCE(2) MARCH 5, 1997(1)**
---- ---- --------------------------------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Helen A. Gamble 69 Former Treasurer and Board member of the 1976 19,257(3)
National Board YWCA; Corporate member of
United Health Services Foundation; Director,
Broome County Historical Society; Member,
Advisory Council of Decker School of
Nursing, Binghamton University; Member,
Binghamton University Foundation.
David A. Niermeyer 55 President and Chief Executive Officer, 1994 8,250(4)
Stakmore Co., Inc. since April 1980; Member
of Board of Directors of United Health
Services Hospitals; Founder and Director of
the Niermeyer Foundation.
Mark T. O'Neil, Jr. 44 President and Chief Executive Officer, 1994 8,632(5)
United Health Services, Inc. since February
1993; President and Chief Executive Officer,
UHS Hospitals from August 1990 to February
1993; Past President, Board of Directors,
Broome County United Way; Chairman, Board of
Directors of Broome County Chamber of
Commerce; Chairman, Board of Directors of
Iroquois Health Care Alliance; Member of
Binghamton University School of Management
Advisory Committee; Member of Boards of
Directors, Partnership 2000 and Health Care
Association of New York State.
Thomas L. Thorn 53 Private Investor; Executive Vice President 1995 151,875(6) 2.68%
and Treasurer, Diamond Page International
Corporation from September 1978 to December
1996.
</TABLE>
- --------
* Age as of Record Date, March 5, 1997.
** Unless otherwise indicated, holdings represent less than one percent (1%)
of the issued and outstanding shares of Common Stock.
(1) Based upon information provided by the respective directors.
(2) Includes service on the Board of Directors of the Bank.
(3) Includes 7,500 shares with respect to which Mrs. Gamble has the right to
acquire beneficial ownership of Common Stock through the exercise of
options granted pursuant to the Directors' Stock Option Plan.
(4) Includes 6,500 shares with respect to which Mr. Niermeyer has the right to
acquire beneficial ownership of Common Stock through the exercise of
options granted pursuant to the Directors' Stock Option Plan.
4
<PAGE>
(5) Includes 1,132 shares held jointly with Mr. O'Neil's wife, with respect to
which Mr. O'Neil shares voting and dispositive power. Also includes 7,500
shares with respect to which Mr. O'Neil has the right to acquire
beneficial ownership of Common Stock through the exercise of options
granted pursuant to the Directors' Stock Option Plan.
(6) Includes 6,000 shares with respect to which Mr. Thorn has the right to
acquire beneficial ownership of Common Stock through the exercise of
options granted pursuant to the Directors' Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT
THE NOMINEES BE ELECTED AS DIRECTORS
DIRECTORS WITH TERMS EXPIRING IN 1999
<TABLE>
<CAPTION>
COMPANY
COMMON STOCK
BENEFICIALLY OWNED
POSITION WITH THE COMPANY AND THE DIRECTLY OR
BANK AND PRINCIPAL OCCUPATION DIRECTOR INDIRECTLY AS OF
NAME AGE* DURING THE PAST FIVE YEARS(1) SINCE(2) MARCH 5, 1997(1)**
---- ---- --------------------------------- -------- -------------------------
<S> <C> <C> <C> <C> <C>
Robert W. Allen 53 President and Chief Executive Officer, 1987 16,280(3)
Lehigh Valley Dairies, Inc., Lansdale, PA
since April 1996; Independent Consultant
from December 1995 to April 1996; Executive
Vice President, Borden Inc., Columbus, Ohio
from February 1995 to December 1995;
President, Borden Inc. Dairy Group from
September 1993 to December 1995; Chairman of
the Board and Chief Executive Officer,
Marigold Foods, Inc., Minneapolis, Minnesota
from April 1992 to September 1993; Chairman
of the Board and Chief Executive Officer,
Crowley Foods Inc. of Binghamton, New York
from January 1991 to September 1993; Member
of the Board of Directors of Azon Corp.,
Johnson City, New York.
Alex S. DePersis 49 President and Chief Executive Officer of the 1996 36,559(4)
Company and the Bank since January 1, 1997;
prior to that, President and Chief Operating
Officer since 1995; Executive Vice President
of the Company and the Bank from 1990 to
1995; Member, Boards of Directors of Broome
County Chamber of Commerce, Broome Community
College Foundation and Twin Tiers Home
Health; Member, Regional Loan Committee, New
York Business Development Corporation.
Thomas F. Kelly 49 Vice President for External Affairs, 1987 9,622(5)
Binghamton University, October 1991 to
present; Interim Vice President for External
Affairs, June 1991 to October 1991; Dean of
the School of Management, February 1986 to
June 1991; honorary director, United
Methodist Homes for the Aging of New York
and Pennsylvania; Trustee, Guthrie
Healthcare System, Inc.; Director, Board of
Binghamton Summer Music Festival; Member,
Administrative Board, First United Methodist
Church of Endicott; Member, Advisory
Committee, WICZ-TV; Member, University
Counsel, Wilkes University; Member, Board of
Sponsors of the Business School.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
COMPANY
COMMON STOCK
BENEFICIALLY OWNED
POSITION WITH THE COMPANY AND THE DIRECTLY OR
BANK AND PRINCIPAL OCCUPATION DIRECTOR INDIRECTLY AS OF
NAME AGE* DURING THE PAST FIVE YEARS(1) SINCE(2) MARCH 5, 1997(1)**
---- ---- --------------------------------- -------- -------------------------
<S> <C> <C> <C> <C> <C>
John V. Sponyoe 58 President, Lockheed Martin Federal Systems, 1991 10,014(6)
Owego, NY since April 1996; President, Loral
Federal Systems, Owego, New York, from March
1994 to April 1996; Vice President and Site
General Manager, Federal Systems Company,
IBM Corp., Owego, New York, from May 1987 to
February 1994; Member of Board of Directors
and Member of Board of Trustees of Guthrie
Healthcare System, Inc.; Director, Roberson
Museum and Science Center; Director, A M &
T; Director, Raymond Corporation; Member,
Management Advisory Committee, SUNY-
Binghamton School of Management.
</TABLE>
- --------
* Age as of Record Date, March 5, 1997.
** Unless otherwise indicated, holdings represent less than one percent (1%)
of the issued and outstanding shares of the Common Stock.
(1) Based upon information provided by the respective directors.
(2) Includes service on the Board of Directors of the Bank.
(3) Includes 8,780 shares held jointly with Mr. Allen's wife, with respect to
which Mr. Allen shares voting and dispositive power. Also includes 7,500
shares with respect to which Mr. Allen has the right to acquire beneficial
ownership of Common Stock through the exercise of options granted pursuant
to the Directors' Stock Option Plan.
(4) Includes 15,872 shares held jointly with Mr. DePersis's wife, with respect
to which Mr. DePersis shares voting and dispositive power. Also includes
15,795 shares with respect to which Mr. DePersis has the right to acquire
beneficial ownership of Common Stock through the exercise of options
granted pursuant to the Incentive Plan and the 1996 Incentive Plan.
(5) Includes 2,122 shares held jointly with Dr. Kelly's wife, with respect to
which Dr. Kelly shares voting and dispositive power. Also includes 7,500
shares with respect to which Dr. Kelly has the right to acquire beneficial
ownership of Common Stock through the exercise of options granted pursuant
to the Directors' Stock Option Plan.
(6) Includes 2,514 shares held jointly with Mr. Sponyoe's wife, with respect
to which Mr. Sponyoe shares voting and dispositive power. Also includes
7,500 shares with respect to which Mr. Sponyoe has the right to acquire
beneficial ownership of Common Stock through the exercise of options
granted pursuant to the Directors' Stock Option Plan.
6
<PAGE>
DIRECTORS WITH TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
COMPANY
COMMON STOCK
BENEFICIALLY OWNED
POSITION WITH THE COMPANY AND THE DIRECTLY OR
BANK AND PRINCIPAL OCCUPATION DIRECTOR INDIRECTLY AS OF
NAME AGE* DURING THE PAST FIVE YEARS(1) SINCE(2) MARCH 5, 1997(1)**
---- ---- --------------------------------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Ferris G. Akel 64 President, Binghamton Giant Markets, Inc. 1986 107,614(3) 1.90%
since 1959; Chairman, Board of Directors,
Dr. G. Clifford and Florence B. Decker
Foundation; Member of Boards of Directors of
Partnership 2000, United Health Services,
Inc., Professional Home Care, Inc.,
Binghamton University Foundation, Binghamton
University School of Management Advisory
Board, Binghamton Summer Music Festival,
Inc., Press & Sun-Bulletin Business Advisory
Board; Member, WICZ Advisory Board, Business
Community Alliance and Physician Volunteer
Services Committee.
William C. Craine 48 President and Chief Executive Officer, Mang 1976 56,393(4) 1.00%
Group, Inc.; President and Chief Executive
Officer, Craine & Mirabito Insurance and
Mang Group, Inc. until 1996; Member, Boards
of Directors, Preferred Mutual Insurance
Company, New Berlin, NY and UHS Hospitals,
Binghamton, NY; Member, Board of Trustees,
Carleton College, Northfield, MN.
Herbert R. Levine 68 Chairman of the Board, Van Cott Jeweler, 1974 64,975(5) 1.15%
Ltd. since 1988; Past President of American
Gem Society and Past President of New York
State Jewelers Association; Member of
Executive Committee, Gulf Stream Council,
Boy Scouts of America.
William H. Rincker 66 Prior to retirement January 1, 1997, 1981 91,131(6) 1.61%
Chairman of the Company since 1995 and Chief
Executive Officer of the Company since 1988;
President of the Company from 1988 to 1995;
Chairman of the Bank since 1995 and Chief
Executive Officer of the Bank since December
1984; President of the Bank from 1981 to
1995; Chairman, Board of Directors, United
Health Services, Inc.; Secretary/Treasurer,
Hoyt Foundation Board; Member, Boards of
Directors of A M & T and Partnership 2000.
</TABLE>
- --------
* Age as of Record Date, March 5, 1997.
** Unless otherwise indicated, holdings represent less than one percent (1%)
of the issued and outstanding shares of Common Stock.
(1) Based upon information provided by the respective directors.
(2) Includes service on the Board of Directors of the Bank.
(3) Includes 4,105 shares held jointly with Mr. Akel's wife, with respect to
which Mr. Akel shares voting and dispositive power, 6,075 shares
beneficially owned as custodian for Mr. Akel's children and 86,784 shares
owned by Akel Wholesale Grocery Corporation. Also includes 7,500 shares
with respect to which Mr. Akel has the right to acquire beneficial
ownership of Common Stock through the exercise of options granted pursuant
to the Directors' Stock Option Plan.
7
<PAGE>
(4) Includes 450 shares held directly by Mr. Craine's wife in an individual
retirement account with respect to which Mr. Craine has no voting and
dispositive power, and 1,523 shares held in a trust for Mr. Craine's
daughter with respect to which Mr. Craine has power to change the trustee
but not to manage the investments of the trust. Also includes 3,000 shares
with respect to which Mr. Craine has the right to acquire beneficial
ownership through the exercise of options granted pursuant to the
Directors' Stock Option Plan.
(5) Includes 18,090 shares held by Van Cott Jeweler, Ltd., 12,975 shares held
directly by Mr. Levine's wife in an individual retirement account with
respect to which Mr. Levine has no voting or dispositive power, 4,618
shares held in a trust for the benefit of Mr. Levine with respect to which
Mr. Levine has sole voting and dispositive power, 3,058 shares in a profit
sharing plan for Mr. Levine with respect to which Mr. Levine shares voting
and dispositive power with his wife, 4,600 shares in a target benefit plan
with respect to which Mr. Levine has sole voting and dispositive power and
8,980 shares held in a trust for the benefit of Mr. Levine's wife, with
respect to which Mr. Levine has no voting or dispositive power. Also
includes 1,500 shares with respect to which Mr. Levine has the right to
acquire beneficial ownership through the exercise of options granted
pursuant to the Directors' Stock Option Plan.
(6) Includes 78,104 shares held jointly with Mr. Rincker's wife, with respect
to which Mr. Rincker shares voting and dispositive power. Also includes
13,027 shares owned directly by Mr. Rincker's wife, with respect to which
Mr. Rincker has no voting or dispositive power.
SHAREHOLDER NOMINATIONS
Section 7.2(c) of the Company's Certificate of Incorporation provides that
nominations of candidates for election as directors at any annual meeting may
be made (i) by or at the direction of a majority of the Board of Directors or
(ii) by any shareholder entitled to vote at such annual meeting. Shareholders
may name nominees for election to the Board of Directors by submitting written
nominations to the Corporate Secretary of the Company not less than 20 days
prior to the date of the Annual Meeting; provided, however, that if less than
30 days notice of the date of the scheduled annual meeting is given, notice by
the shareholder must be so delivered or received not later than the close of
business on the tenth day following the day on which such notice of annual
meeting was mailed, provided further that the notice by the shareholder must
be delivered or received no later than the close of business on the fifth day
preceding the date of the meeting. Such shareholder's notice must set forth
(a) as to each person whom the shareholder proposes to nominate for election
or reelection as a director and as to the shareholder giving notice: (i) the
name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number
of shares of Common Stock which are beneficially owned by such person on the
date of such shareholder notice, and (iv) any other information relating to
such person that is required to be disclosed in solicitation of proxies with
respect to nominees for election of directors pursuant to Regulation 14A under
the Exchange Act; and (b) as to the shareholder giving the notice: (i) the
name and address, as they appear on the Company's books, of such shareholder
and any other shareholders known by such shareholder to be supporting such
nominees, and (ii) the class and number of shares of Common Stock which are
beneficially owned by such shareholder and any other shareholders known by
such shareholder to be supporting such nominees on the date of such
shareholder notice. If any shareholder nomination is properly and timely made,
ballots will be provided for use by shareholders at the Annual Meeting bearing
the name of such nominee or nominees.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company meets regularly each month and may
have additional special meetings. Each member of the Board of Directors of the
Company also serves as a Director of the Bank. The Board of Directors of the
Company met 12 times during the year ended December 31, 1996. No incumbent
director attended fewer than 75% of the aggregate total number of meetings
held by the Board of Directors of the Company and all committees of the Board
on which such director served during the last fiscal year.
During 1996, the Board of Directors of the Company had a number of
committees, including a standing Audit Committee and a Compensation Committee.
In addition, during 1996 the Board of Directors of the Bank
8
<PAGE>
had a number of committees, including a standing Salary and Personnel
Administration Committee, among others. The entire Board of the Company serves
as a Nominating Committee.
The Audit Committee meets with the Company's independent auditors and
reviews the scope and results of the audit performed by such auditors. The
Audit Committee also monitors and reviews the Company's system of internal
control and audit with management and the independent auditors. The Audit
Committee consists of Messrs. Akel, Kelly, Levine, Niermeyer and O'Neil, and
Mrs. Gamble. The Audit Committee met four times during 1996.
The Company's Compensation Committee has the authority to grant options,
stock appreciation rights ("SARs") and performance shares and the Bank's
Salary and Personnel Administration Committee reviews both employee and
executive compensation and makes recommendations to the Board of Directors
with regard to executive compensation. Both committees consist of Messrs.
Akel, Allen, Levine and Sponyoe, and Mrs. Gamble. The Company's Compensation
Committee met three times during 1996. The Bank's Salary and Personnel
Administration Committee met eight times during 1996.
The Nominating Committee selects nominees for election as directors of the
Company. The Nominating Committee will consider nominees recommended by
shareholders in accordance with the procedures set forth in the Company's
Certificate of Incorporation, as described above. The Nominating Committee
consists of all members of the Board of Directors, and in that capacity met
one time during 1996.
COMPENSATION OF DIRECTORS
Directors' Fees. Directors of the Company did not receive any fees for
attendance at meetings of the Board of the Company during 1996. In their
capacity as Directors of the Bank, however, such persons received an annual
retainer of $12,000 plus $350 for each Board meeting attended. Also, committee
members received fees of $350 per meeting attended, except that members of the
Bank's Loan Committee received fees of $400 per meeting attended and the
Chairman of each of the Audit Committee and the Salary and Personnel
Administration Committee received fees of $400 per meeting attended. In 1997
each non-rotating member of the Bank's Executive Committee serving for the
entire year will receive an annual retainer of $2,400 except for the Chairman
of the Committee, who will receive an annual retainer of $4,800, and rotating
members of the Committee, who will receive fees of $350 per meeting attended.
The Executive Committee did not meet in 1996, during which members would have
received fees of $350 per meeting attended. No director or committee fees were
paid to officers of the Company who are also Directors. Directors may elect to
defer the receipt of all or a portion of their fees pursuant to a nonqualified
deferred compensation agreement. Interest is credited on the deferred amounts
at a rate equal to the Bank's earning asset yield (as defined). During 1996,
no directors elected to defer fees under this arrangement.
Directors' Stock Option Plan. Pursuant to the Directors' Stock Option Plan,
Messrs. Akel, Allen, Consey, Craine, Kelly, Levine, Niermeyer, O'Neil,
Sponyoe, and Thorn, and Mrs. Gamble received a grant of a non-qualifying
option for 1,500 shares at an exercise price of $22.63 per share on January
24, 1996, the fair market value on the date of grant. To the extent shares
remain available for grant under the Directors' Stock Option Plan, each non-
employee director shall receive in January of each year an option to purchase
1,500 shares at the fair market value on the date of grant. For 1997, the non-
employee directors received an option for 1,500 shares at an exercise price of
$28.25 per share, the fair market value on the date of grant, January 24,
1997.
The purposes of the Directors' Stock Option Plan are to enhance the
Company's ability to attract and retain highly qualified individuals to serve
as members of the Company's Board of Directors and to provide additional
incentives to non-employee directors to promote the success of the Company.
9
<PAGE>
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following information is supplied with respect to executive officers of
the Company who do not serve on the Board of Directors of the Company. There
are no arrangements or understandings between the Company and any person
pursuant to which such person has been elected as an officer.
<TABLE>
<CAPTION>
NAME AGE TITLE(S)
---- --- --------
<S> <C> <C>
Glenn R. Small.......... 51 Executive Vice President
Arthur C. Smith......... 50 Executive Vice President
Edward R. Andrejko...... 56 Senior Vice President and Chief Financial Officer
Larry G. Denniston...... 51 Senior Vice President and Corporate Secretary
Fielding Simmons III.... 57 Senior Vice President and Treasurer
Douglas R. Johnson...... 54 Senior Vice President
</TABLE>
Glenn R. Small joined the Bank in 1982. He became Executive Vice President
of the Bank and the Company in October 1996. He was Senior Vice President of
the Bank from 1985 to October 1996 and of the Company upon its formation in
1988 until October 1996. Prior to that time, he was Vice President--Commercial
Loans of the Bank since 1982.
Arthur C. Smith joined the Bank in 1967. He became Executive Vice President
of the Company and the Bank in October 1996. He was Senior Vice President of
the Company and the Bank from 1994 to October 1996. Prior to that time, he was
Vice President of the Bank from 1987 and of the Company since its formation in
1988.
Edward R. Andrejko joined the Bank in 1962. He became Senior Vice President
and Chief Financial Officer of the Company and the Bank in 1991. Prior to that
time, he was Vice President and Chief Financial Officer of the Bank since 1985
and the Company since its formation in 1988.
Larry G. Denniston joined the Bank in 1983. He became Senior Vice President
and Corporate Secretary of the Company and the Bank in December 1996. He was
Vice President and Secretary of the Company and the Bank from 1990 to December
1996. Prior to that time, he was Vice President--Financial Services of the
Bank since 1985 and of the Company since its formation in 1988.
Fielding Simmons III joined the Bank in 1976. He became Senior Vice
President and Treasurer of the Company and the Bank in 1991. Prior to that
time, he was Vice President and Treasurer of the Bank since 1985 and the
Company since its formation in 1988.
Douglas R. Johnson joined the Bank in 1990. He became Senior Vice President
of the Company in January 1997. He has been Senior Vice President and Senior
Trust Officer of the Bank since December 1990.
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth a summary of all compensation paid during the
last three fiscal years to the Company's chief executive officer and the
Company's four other most highly compensated executive officers for the fiscal
year ended December 31, 1996 (the "named executive officers"). All cash
compensation has been paid by the Bank. None of the named executive officers
received any separate form of compensation in their capacities as officers of
the Company. As to each of the named executive officers, the aggregate amount
of perquisites and other personal benefits was less than 10% of the total
annual salary and bonus reported for the periods indicated. The Company has
not granted any SARs.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
--------------------- ---------------------
NAME AND SALARY SECURITIES UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR ($) BONUS ($)(1) OPTIONS/SARS (#) COMPENSATION ($)(2)
------------------ ---- -------- ------------ --------------------- -------------------
<S> <C> <C> <C> <C> <C>
William H. Rincker...... 1996 $225,000 $ 22,246(3) 5,000 $4,500(4)
Director, Chairman and 1995 216,320 148,500(5) 4,500(6) 6,490(7)
Chief Executive Officer 1994 208,000 173,168 4,500(6) 6,240(7)
Alex S. DePersis........ 1996 150,000 14,830 5,000 4,500
Director, President and 1995 114,735 70,657 3,000(6) 3,442
Chief Operating Officer 1994 101,275 85,242 3,000(6) 3,038
Glenn R. Small.......... 1996 100,877 7,013 3,000 3,026
Executive Vice
President 1995 93,139 64,284 3,000(6) 2,794
1994 90,426 78,110 3,000(6) 2,713
Edward R. Andrejko...... 1996 93,083 9,052 2,000 2,792
Senior Vice President
and 1995 89,503 62,063 1,875(6) 2,685
Chief Financial Officer 1994 86,061 75,183 1,875(6) 2,582
Fielding Simmons III.... 1996 92,836 8,236 2,000 2,785
Senior Vice President
and 1995 89,265 61,899 1,875(6) 2,678
Treasurer 1994 86,246 75,060 1,875(6) 2,588
</TABLE>
- --------
(1) Bonuses in 1994 and 1995 were paid in accordance with the Bank's Three-
Year Executive Plan, which became effective in 1993. Although the
performance measurements for bonuses covered a three year period, the
ultimate determination of the bonus was subject to the Board of Directors'
discretion and approval, and therefore is reported as annual compensation
rather than long term compensation. The bonus in 1996 was paid under the
Bank's Stakeholder Compensation Incentive Plan (as defined below). See
"Company Compensation Committee and Bank Salary and Personnel
Administration Committee Report on Executive Compensation".
(2) Consists of matching contributions under the Bank's defined contribution
plan.
(3) Payment of Mr. Rincker's $22,246 1996 Stakeholder Bonus was deferred.
(4) Also includes supplemental retirement benefits under the defined
contribution portion of the SERP (as defined below) of $2,250 for 1996,
which were granted to Mr. Rincker in 1996.
(5) Payment of $100,000 of Mr. Rincker's $148,500 1995 bonus was deferred.
(6) As adjusted for 3-for-2 stock split in December 1995.
(7) Also includes supplemental retirement benefits under the defined
contribution portion of the SERP (as defined below) of $1,740 for 1994 and
$1,990 for 1995, all of which was granted to Mr. Rincker in 1995 upon
adoption of the Bank's SERP in March 1995.
11
<PAGE>
OPTIONS EXERCISES AND HOLDINGS
The following table sets forth information with respect to grants of stock
options to each of the named executive officers during the fiscal year ended
December 31, 1996 and the potential realized value by such individuals. All
options were granted at current market price on the date of grant.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZED VALUE
------------------------------------------------- AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS/SARS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS/SARS IN FISCAL OR BASE EXPIRATION ----------------
NAME GRANTED (#) YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
---- ------------ ------------ ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
William H. Rincker...... 5,000 7.2% $25.75 6/24/06 $80,970 $205,194
Alex S. DePersis........ 5,000 7.2 25.75 6/24/06 80,970 205,194
Glenn R. Small.......... 3,000 4.3 25.75 6/24/06 48,582 123,117
Edward R. Andrejko...... 2,000 2.9 25.75 6/24/06 32,388 82,078
Fielding Simmons III.... 2,000 2.9 25.75 6/24/06 32,388 82,078
</TABLE>
The following table sets forth information with respect to each of the named
executive officers concerning the exercise of stock options during the fiscal
year ended December 31, 1996 and the year-end value of all unexercised options
held by such individuals.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT YEAR-END IN-THE-MONEY OPTIONS
ACQUIRED ON (#)(2) AT YEAR-END ($)(3)
EXERCISE VALUE ------------------------- -------------------------
NAME (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William H. Rincker...... 3,150 $58,695 31,033 10,625 $529,479 $59,563
Alex S. DePersis........ 2,700 48,450 14,295 8,750 230,265 41,375
Glenn R. Small.......... 2,625 48,198 18,495 6,750 309,949 39,375
Edward R. Andrejko...... -- -- 15,963 4,344 279,567 24,735
Fielding Simmons III.... 9,950 185,744 10,513 4,344 176,169 24,735
</TABLE>
- --------
(1) Difference between fair market value per share, or price per share if
sold, less exercise price per share times the number of shares.
(2) Based on unexercised options following 3-for-2 stock splits in both
December 1993 and December 1995.
(3) Market value of underlying securities at year-end, minus the exercise or
base price.
EMPLOYMENT AGREEMENTS
In November 1990, the Company and the Bank entered into a three-year
employment contract (the "Contract") with Alex S. DePersis. The Contract was
amended on December 18, 1995 and December 30, 1996. Also in November 1990, the
Company and the Bank entered into a three-year Change of Control Severance
Agreement (a "Severance Agreement") with each of Glenn R. Small, Edward R.
Andrejko and Fielding Simmons III, which Severance Agreements were amended on
December 18, 1995. The Company also has entered into Change of Control
Severance Agreements with each of its other executive officers. The Contract
and the Severance Agreements provide that the term of each agreement shall be
automatically extended by one year on each anniversary date of each agreement,
unless the Boards of Directors of the Company and the Bank (together, the
"Employers"), or the executive provides contrary written notice.
12
<PAGE>
Notwithstanding the above, the Employers may terminate the Contract for
Cause (as defined), or for other than Cause, in which case the Employers must
pay Mr. DePersis the salary which he would have been entitled to receive under
the remaining term of a Contract, except that such payments will cease at the
earlier of (i) the end of the term of a Contract, or (ii) if Mr. DePersis
becomes employed, directly or indirectly, by a financial institution or
holding company located near the Bank's home office. The Contract also
provides for severance payments in the amount of two and one-half times the
highest annual compensation paid to Mr. DePersis for any of the three calendar
years ending with the year of termination, in the event of involuntary
termination of employment in connection with any Change of Control (as
defined). Mr. DePersis also would be entitled to payments under any
performance incentive plan in which he participates, when the other
participants are paid, subject to proration through his date of termination. A
similar severance payment will also be provided on a similar basis to Mr.
DePersis in connection with a voluntary termination of employment for Good
Reason (as defined). Severance and other benefits payable pursuant to the
Contracts and other plans and arrangements of the Company and the Bank are
limited to the maximum amount which can be paid without constituting "excess
parachute payments" within the meaning of the Internal Revenue Code of 1986,
as amended. As of March 5, 1997, the amount to which Mr. DePersis would be
entitled under his Contract with the Company and the Bank, if his employment
with the Company or the Bank is terminated in 1997 in connection with a Change
of Control, would be $462,500, plus the prorated portion of any performance
incentive plan award which may be due.
If an executive's employment under any Severance Agreement is terminated:
(i) for any reason prior to a Change in Control (as defined), or (ii) after a
Change in Control, by the Employers for Good Cause (as defined), or by the
voluntary action of the executive without Good Reason (as defined), the
executive shall continue to receive his base salary through the date of
termination, and the Employers shall have no further obligation to the
executive or his spouse under the Severance Agreement, except for certain
accrued benefits. The Severance Agreements also provide for a severance
payment during a period of up to two years at an annual rate equal to the
higher of the executive's base salary on the date of (i) the Change in
Control, or (ii) the date of termination of employment, and other benefits, in
the event of (a) involuntary termination of employment in connection with any
Change in Control, for other than Good Cause, or (b) voluntary termination for
Good Cause. As is the case with the Contract, severance and other benefits
payable pursuant to the Severance Agreements are limited to the maximum amount
payable without constituting "excess parachute payments." The Severance
Agreements do not contain any provision restricting the right to compete
against the Bank upon termination of employment. As of March 5, 1997, the
amounts to which Mr. Small, Mr. Andrejko and Mr. Simmons would be entitled
under their respective Severance Agreement if their employment with the
Company and the Bank were terminated in 1997 in connection with a Change in
Control, would be $226,326, $195,000 and $195,000, respectively, plus the
prorated portion of any performance incentive plan award which may be due.
Executive employees may elect to defer the receipt of compensation income
pursuant to a nonqualified deferred compensation agreement with the Bank.
Interest is credited on the deferred amounts at a rate equal to the Bank's
earning asset yield (as defined). During 1996, no executives elected to defer
compensation under this arrangement.
COMPANY COMPENSATION COMMITTEE AND BANK SALARY AND PERSONNEL ADMINISTRATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
During 1996 no person received any separate form of compensation as an
officer of the Company. Accordingly, decisions on compensation of the
Company's executives, except with respect to stock options, are made by the
five-member Salary and Personnel Administration Committee of the Bank's Board
of Directors. The members of that committee are Messrs. Akel, Allen, Levine
and Sponyoe, and Mrs. Gamble. The same persons comprise the Compensation
Committee of the Board of Directors of the Company, which committee had the
authority to grant options, SARs and performance shares under the Company's
Long-Term Incentive and Capital Accumulation Plan (the "Incentive Plan") prior
to 1996 and has the same authority for grants beginning April 22, 1996 under
the 1996 Long-Term Incentive and Capital Accumulation Plan (the "1996
Incentive Plan"). For purposes of this Proxy Statement the Salary and
Personnel Administration Committee and the Compensation Committee are together
referred to as the "Committee." Each member of the Committee is a
13
<PAGE>
non-employee director. All decisions by the Committee relating to the
compensation of the Company's executive officers are reviewed by the full
Board of Directors. Pursuant to rules adopted by the Commission designed to
enhance disclosure of policies toward executive compensation, set forth below
is a report submitted by the Committee, addressing the Company's compensation
policies for 1996 as they affected the Company's executive officers, including
the Chief Executive Officer and the named executive officers.
COMPENSATION POLICIES FOR EXECUTIVE OFFICERS. The Committee's executive
compensation policies are designed to provide competitive levels of
compensation and assist the Company in attracting and retaining qualified
executives. Target levels of executive officers' overall compensation are
intended to be consistent with banks in the northeastern United States with
assets between $1.0 billion and $5.0 billion. The Committee endorses the
position that stock ownership by management and stock-based plans are
beneficial in aligning management's and shareholders' interests in the
enhancement of shareholder value. The Committee also endorses the position
that cash bonuses tied to annual and long-term target levels of income
strengthen management's incentive to increase consolidated net income of the
Company.
RELATIONSHIP OF PERFORMANCE TO EXECUTIVE COMPENSATION. Compensation paid to
the Company's named executive officers in fiscal 1996 consisted of the
following components: base salary, bonuses under the Bank's Stakeholder
Compensation Incentive Plan (the "Plan"), stock options under the Company's
1996 Incentive Plan, benefits under the Bank's defined benefit pension plan
and defined contribution savings plan, and certain other benefits.
Base Salary. The Committee reviews executive base salaries annually. Base
salaries for the named executive officers for fiscal 1996, other than Mr.
DePersis, increased by an average of 4.8% over 1995 levels. The base salary
for Mr. DePersis increased 30.7% over the 1995 level, reflecting his promotion
to President and Chief Operating Officer at the end of 1995. Base salary
levels for the executive officers are set within established salary ranges
which are based upon responsibility, experience and company performance. Base
salaries are also designed to be competitive with peer banks in the
northeastern United States with assets between $1.0 billion and $5.0 billion.
Among the factors considered by the Committee were the following: individual
performance; net loans were $912.3 million in 1995 compared to $850.5 million
in 1994; net interest income was $48.6 million in 1995 compared to $45.7
million in 1994; interest rate margin remained steady at 4.30% in 1995 and
1994; and earnings per share was $1.98 in 1995 compared to $1.95 in 1994.
Bonuses. The bonus component of compensation paid to the Company's named
executive officers in fiscal 1996 was paid under the Plan. The Plan provided
that the Bank would award bonuses to participating executive officers if the
Company met certain key performance levels during 1996. The Plan establishes
two models. The Bank-Wide Model, which required achievements of certain key
performance targets (net income, growth in deposits and loans, interest rate
margin, non-interest income, loan quality and operating efficiencies),
accounted for one-half of the bonus payment. The Subordinate Model, which
accounted for the remaining one-half of the bonus payment, included key
performance targets which were directly related to each named executive's
primary function within the Company.
Stock Options. The Company's Long-Term Incentive and Capital Accumulation
Plan (the "Incentive Plan") and 1996 Incentive Plan provide long-term
incentives to key employees, including executive officers, through the grant
of stock options. The grant of stock options is intended to foster management
team cohesion and align management and shareholder interests. Stock option
grants provide an additional means to provide incentives for executive
officers. The Company believes that the grant of stock options can be used to
encourage performance that can result in enhanced shareholder value. Options
under the Incentive Plan were granted in 1986, 1989, 1990, 1993, 1994 and
1995. Options under the 1996 Incentive Plan were granted in 1996. All options
were granted at current market price on the date of grant.
Other. In addition to the compensation paid to executive officers as
described above, executive officers receive, along with and on the same terms
as other employees, contributions by the Bank pursuant to the Bank's defined
benefit pension plan and matching contributions under the Bank's defined
contribution savings plan. The
14
<PAGE>
executive officers also receive group term life insurance on the same terms as
other employees, and certain other perquisites.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Rincker's base salary as CEO was
increased in 1996 from $216,320 to $225,000 based on the Company's
performance. Mr. Rincker's salary was designed to be competitive with the
salaries of the CEOs of peer banks in the northeastern United States with
assets between $1.0 billion and $5.0 billion. Among other factors considered
by the Committee were the following: net loans were $912.3 million in 1995
compared to $850.5 million in 1994; net interest income was $48.6 million in
1995 compared to $45.7 million in 1994; interest rate margin remained steady
at 4.30% in 1995 and 1994; and earnings per share was $1.98 in 1995 compared
to $1.95 in 1994. The increase was also based on Mr. Rincker's individual
performance. Mr. Rincker also participated in the Plan in 1996 under which his
bonus for 1996 was 9.9% of his base salary based on the levels of achievement
relative to the key performance indicators of the Bank-Wide Model and the
Subordinate Model. Mr. Rincker also received a stock option for 5,000 shares
of Common Stock during 1996 pursuant to the Company's 1996 Incentive Plan. In
1995, the Board of Directors of the Bank also adopted supplemental executive
retirement plan benefits for Mr. Rincker which were made effective, in part,
as of January 1, 1994. See "Employee Defined Benefit Plan."
COMPENSATION COMMITTEE OF COMPANY AND
SALARY AND PERSONNEL ADMINISTRATION COMMITTEE OF BANK
Ferris G. Akel
Robert W. Allen
Helen A. Gamble
Herbert R. Levine
John V. Sponyoe
COMPENSATION COMMITTEE AND SALARY AND PERSONNEL ADMINISTRATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
Each of the Compensation Committee and the Salary and Personnel
Administration Committee is comprised of Messrs. Akel, Allen, Levine and
Sponyoe, and Mrs. Gamble.
In fiscal 1996, the Bank had outstanding commercial real estate loans and
commercial loans secured by real estate to Parkway Plaza, L.L.C., Town Square
Mall Associates, L.L.C. and Campus Plaza, L.L.C., as well as a letter of
credit to Town Square Mall Associates, L.L.C., each of which was guaranteed by
Mr. Akel. Mr. Akel is a member of Parkway Plaza, L.L.C., Town Square Mall
Associates, L.L.C. and Campus Plaza, L.L.C. In fiscal 1996, the Bank had
commercial loans to Van Cott Jewelers, Ltd., of which Mr. Levine is Chairman
of the Board. As to the foregoing loans, and the guarantee by Mr. Akel, the
Bank believes that they were made in the ordinary course of business of the
Bank on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other
persons. The Bank also believes the loans and the guarantee do not involve
more than the normal risk of collectability nor present any other unfavorable
terms.
Also, for the year ended December 31, 1996, the Bank paid an aggregate of
$169,734 to Binghamton Giant Markets, Inc., of which Mr. Akel is President and
a principal stockholder. Such payment reflects fees paid in connection with
transactions on the Bank's StoreTeller electronic facilities maintained at
food markets owned by Binghamton Giant Markets, Inc.
15
<PAGE>
COMPARATIVE COMPANY PERFORMANCE
The following line graph sets forth comparative information regarding the
Company's cumulative shareholder return on its Common Stock over the last five
fiscal years. Total shareholder return is measured by dividing total dividends
(assuming dividend reinvestment) plus share price change for a period by the
share price at the beginning of the measurement period. The Company's
cumulative shareholder return based on an investment of $100 at the beginning
of the five-year period beginning December 31, 1991 is compared to the
cumulative total return of The Nasdaq Stock Market (U.S. Companies) and SNL
Securities, L.P. $1 billion to $5 billion Bank Index.
Period Ending
-------------------------------------------------------
Index 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
- ------------------------------------------------------------------------------
BSB Bancorp, Inc. 100.00 181.85 243.00 302.59 399.72 447.46
NASDAQ Total Return 100.00 116.38 133.60 130.59 184.67 227.16
Banks ($1 to $5B) 100.00 144.84 174.08 183.28 246.47 319.51
EMPLOYEE DEFINED BENEFIT PLAN
The following table illustrates current annual pension benefits under the
Company's defined benefit retirement plan for retirement in 1996 at age 65
under the most advantageous provisions available for various levels of
compensation, years of service, and full Social Security benefits. Pension
benefits are currently subject to a statutory maximum of $120,000, subject to
cost-of-living adjustments. Additionally, annual compensation in excess of
$150,000 (subject to cost of living increases) may not be used in calculation
of retirements.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
ANNUAL ----------------------------------------------------------
COMPENSATION 10 15 20 25 30 35
------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$ 75,000 $15,000 $22,500 $30,000 $37,500 $45,000 $45,000
100,000 20,000 30,000 40,000 50,000 60,000 60,000
125,000 25,000 37,500 50,000 62,500 75,000 75,000
150,000 30,000 45,000 60,000 75,000 90,000 90,000
</TABLE>
16
<PAGE>
A participant's normal retirement benefit is equal to 2% of average annual
earnings, multiplied by the number of years and fraction thereof of creditable
service. Average annual earnings represents payments made during the 36
consecutive calendar months of highest earnings during the final 120 calendar
months of the employee's creditable service. Mr. Rincker's annual pension
benefit is $115,386 based on his average annual earnings in effect prior to
the implementation of the $150,000 limit on annual compensation with respect
to the Company's defined benefit retirement plan. In no event, however, may
the normal retirement benefit exceed 60% of average annual earnings. Pension
allowances are based on 2% of the employee's average basic annual earnings
excluding overtime, bonus, or other special payments. Pension benefits are
computed on a straight life annuity benefit.
The years of creditable service as of December 31, 1996 for Messrs. Rincker,
DePersis, Small, Andrejko and Simmons were 41, 11, 14, 34 and 20,
respectively.
In 1995, the Board of Directors of the Bank adopted a Supplemental Executive
Retirement Plan (the "SERP") to be effective on January 1, 1995 and to permit
designated employees of the bank to receive supplemental retirement benefits
from the Bank which amounts would be due under the benefit and contribution
formulas in the Bank's defined benefit retirement plan and its defined
contribution plan but which cannot be paid under those plans due to reductions
and other limitations imposed on such plans pursuant to the Code. Mr. Rincker
was the only participant in the SERP during 1996. Mr. DePersis will be the
only active participant in the SERP in 1997. The SERP is an unfunded, non-
qualified deferred compensation plan and benefits thereunder will be paid from
the general assets of the Bank. As of December 31, 1996, Mr. Rincker's last
date of employment, Mr. Rincker's accrued annual supplemental defined benefit
amount under the SERP is $12,581 payable during his life and the life of his
wife from the date of his retirement if he retires at age 65 and, as of
December 31, 1996 his defined contribution benefit amount was $6,907 payable
in a lump sum.
CERTAIN RELATIONSHIPS
Directors, officers and employees of the Company or the Bank are permitted
to borrow from the Bank to the extent permitted by New York law and the
regulations of the Board of Governors of the Federal Reserve System. Under
applicable New York law, the Bank may make first mortgage loans to officers
provided that each such loan is secured by the officer's primary residence and
is authorized in writing by the Board of Directors. In addition, the Bank
makes commercial real estate and commercial business loans to officers and
directors and related persons consistent with applicable law. All loans made
by the Bank to directors and executive officers or their associates and
related entities have been made in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons.
It is the belief of management that, at the time of origination, these loans
neither involved more than the normal risk of collectability nor presented any
other unfavorable features.
For a description of certain transactions regarding Mr. Akel, Mr. Levine and
the Bank, see "Compensation Committee and Salary and Personnel Administration
Committee Interlocks and Insider Participation."
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL TWO)
The Board of Directors of the Company has appointed Coopers & Lybrand L.L.P.
as independent auditors of the Company for the year ending December 31, 1997,
and has further directed that the selection of such auditors be submitted for
ratification by the shareholders at the Annual Meeting. The Company has been
advised by Coopers & Lybrand L.L.P. that neither that firm nor any of its
associates has any relationship with the Company or its subsidiaries other
than the usual relationship that exists between independent certified public
accountants and clients. Coopers & Lybrand L.L.P. will have a representative
at the Annual Meeting who will
17
<PAGE>
have an opportunity to make a statement, if he or she so desires, and who will
be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT AUDITORS FOR FISCAL 1997
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to have presented at the next Annual
Meeting of Shareholders and included in the proxy materials of the Company
must be received at the main office of the Company, 58-68 Exchange Street,
Binghamton, New York 13902, no later than November 25, 1997. If such proposal
is in compliance with all of the requirements of Rule 14a-8 of 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 Shareholders. It is urged that any
such proposals be sent by certified mail, return receipt requested.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1996 accompanies this Proxy Statement.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
SHAREHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE EXHIBITS THERETO REQUIRED TO BE
FILED WITH THE COMMISSION UNDER THE EXCHANGE ACT. SUCH WRITTEN REQUEST SHOULD
BE DIRECTED TO LARRY G. DENNISTON, SENIOR VICE PRESIDENT AND CORPORATE
SECRETARY, BSB BANCORP, INC. 58-68 EXCHANGE STREET, BINGHAMTON, NEW YORK
13902. THE FORM 10-K IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
SECTION 16(A) DISCLOSURE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Commission.
Based solely on its review of the reports submitted to the Company, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during fiscal 1996 all
filing requirements applicable to its officers, directors and greater than
ten-percent beneficial owners were complied with, except that one report filed
by Mr. Levine was filed two days late.
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 proxies solicited hereby will be voted with respect to those
other matters in accordance with the judgment of the persons voting the
proxies.
18
<PAGE>
The cost of solicitation of proxies will be borne by the Company. The
Company has retained Morrow & Co., Inc., a professional proxy solicitation
firm, to assist in the solicitation of proxies. The fee arrangement with such
firm is $4,500, 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 proxy material 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.
19
<PAGE>
LOGO
REVOCABLE PROXY
BSB BANCORP, INC.
58-68 EXCHANGE STREET
BINGHAMTON, NEW YORK 13902
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR USE ONLY AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
APRIL 28, 1997, AND AT ANY ADJOURNMENT THEREOF.
The undersigned, being a shareholder of BSB Bancorp, Inc. (the "Company"),
hereby appoints a member of the Company's general counsel, Hinman, Howard &
Kattell, L.L.P. of Binghamton, New York, as proxy, such person being duly
appointed by the Board of Directors with the power to appoint an appropriate
substitute, and hereby authorizes such proxy to represent the undersigned at
the Annual Meeting of Shareholders of the Company to be held at the Roberson
Museum and Science Center, 30 Front Street, Binghamton, New York 13905 on April
28, 1997 at 10:00 a.m., Eastern Time, and at any adjournment of said meeting,
and thereat to act with respect to all votes that the undersigned would be
entitled to cast, if then personally present, in accordance with the following
instructions.
1. Proposal to elect the four nominees for Director for a three-year term:
FOR[_] WITHHOLD AUTHORITY[_]
(except as marked to the contrary
below)
Nominees for terms expiring at the 2000 Annual Meeting who will stand for
election: Helen A. Gamble, David A. Niermeyer,
Mark T. O'Neil, Jr., Thomas L. Thorn
INSTRUCTIONS: The undersigned shareholder may withdraw authority to vote
for any nominee(s) by lining through or otherwise striking out the name of
such nominee(s) above.
(CONTINUED AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE>
LOGO
(CONTINUED FROM REVERSE SIDE)
2. Proposal to ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the fiscal year ending December 31,
1997.
FOR[_] AGAINST[_] ABSTAIN[_]
3. To vote, in its discretion, upon any other business that may properly
come before the Annual Meeting or any adjournment thereof. Except with
respect to procedural matters incident to the conduct of the meeting,
management is not aware of any other matters which should come before the
Annual Meeting.
The undersigned hereby acknowledges receipt of a Notice of Annual Meeting of
Shareholders of BSB Bancorp, Inc., called for April 28, 1997, and a Proxy
Statement prior to signing this Proxy.
I plan to attend the meeting.
[_]
Dated: _____________ , 1997
Signature ________________________________
Signature ________________________________
Note: Please sign exactly as your name
appears on this proxy. Only one signature
is required where the stock is held
jointly. When signing in a representative
capacity, please give title.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIREC-
TION IS OTHERWISE MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2 AT THE
DISCRETION OF THE PROXY. THIS PROXY MAY
BE REVOKED AT ANY TIME PRIOR TO THE TIME
IT IS VOTED AT THE ANNUAL MEETING.
