<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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 Rule 14a-11(c) or Rule 14a-12
BSB Bancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
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(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)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------
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):
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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: _______________________________________________
2) Form, Schedule or Registration Statement No.: _________________________
3) Filing Party: _________________________________________________________
4) Date Filed: ___________________________________________________________
<PAGE>
BSB BANCORP, INC.
58-68 Exchange Street
Binghamton, New York 13901
(607) 779-2406
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 2000
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of BSB
Bancorp, Inc. (the "Company") will be held at the Binghamton Regency Hotel and
Conference Center, One Sarbro Square, 225 Water Street, Binghamton, New York
13901, on April 24, 2000, 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 PricewaterhouseCoopers, LLP as the
Company's independent auditors for the fiscal year ending December 31,
2000; 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 6,
2000 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
April 3, 2000
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 VOTE BY COMPLETING, SIGNING, DATING AND
RETURNING THE ENCLOSED PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED OR BY
VOTING BY TELEPHONE USING THE NUMBER PROVIDED ON YOUR PROXY CARD. 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, IN PERSON, OR BY A SUBSEQUENT TELEPHONIC VOTE
AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
BSB BANCORP, INC.
58-68 Exchange Street
Binghamton, New York 13901
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
April 24, 2000
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement, which is first being mailed on or about April 3, 2000,
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 2000 Annual Meeting of Shareholders (the "Annual
Meeting"). The Annual Meeting will be held at the Binghamton Regency Hotel and
Conference Center, One Sarbro Square, 225 Water Street, Binghamton, New York
13901, on April 24, 2000, 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 voted 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, LLP, general counsel
to the Company, which has been duly appointed by the Board of Directors to
vote such proxies. To properly vote your proxy, sign and return the proxy card
to the Company or call the toll-free number listed on the proxy card. 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 PricewaterhouseCoopers, LLP as the Company's independent
auditors for the fiscal year ending December 31, 2000, 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
13901), (ii) submitting a duly executed proxy bearing a later date, (iii)
voting again by telephone on a later date or (iv) 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 6, 2000 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 6, 2000 was 10,245,842. 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, directors are elected by a plurality of the
votes of the shares present (in person or represented by proxy) at the Annual
Meeting and entitled to vote at the Annual Meeting. 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 shares present (either in person or represented by proxy) at
the Annual Meeting and entitled to vote on the matter at the Annual Meeting.
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 or entitled to vote 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.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of March 6, 2000 with respect
to the beneficial ownership of 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 and with respect to ownership of Common Stock by
each of the "named executive officers" (defined below) of the Company and by
all directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and
Nature
Title of Name and Addresses of of Beneficial Percent of
Class Beneficial Owners Ownership(1) Class
-------- --------------------- ------------- ----------
<C> <S> <C> <C>
Beck, Mack & Oliver LLC
Common ("BMO")..................... 573,394 (2) 5.60%
330 Madison Avenue
New York, NY 10017
Dimensional Fund Advisors,
Common Inc. ("DFA")................ 669,063 (3) 6.53%
1299 Ocean Avenue, 11th
Floor
Santa Monica, CA 90401
Wellington Management
Common Company, LLP ("WMC")........ 519,000 (4) 5.07%
75 State Street
Boston, MA 02109
Common Alex S. DePersis.......... 124,181 (5) 1.20%
Common John P. Driscoll.......... 50,843 (6) *
Common Glenn R. Small............ 99,096 (7) *
Common Arthur C. Smith........... 58,044 (8) *
Common Larry G. Denniston........ 42,714 (9) *
Common All directors and
executive officers of the
Company as a group
(17 people)................ 1,163,052 (10) 11.02%
</TABLE>
- --------
* Less than 1%.
(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 (the "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) BMO reports shared dispositive power over these shares, which are owned by
investment advisory clients of BMO, none of which own more than 5% of the
Common Stock. The Schedule 13G reports that BMO's clients have the right
to receive or the power to direct the receipt of dividends from or the
proceeds from the sale of these shares. BMO is an investment advisor
registered under the Investment Advisers Act of 1940.
(3) DFA reports sole voting and sole dispositive power over these shares. DFA
also reports that it is an investment advisor registered under Section 203
of the Investment Advisors Act of 1940, and that it furnishes investment
advice to four investment companies registered under the Investment
Company Act of 1940, and serves as investment manager to certain other
commingled group trusts and separate accounts. (These investment
companies, trusts and accounts are the "Funds"). In its role as investment
advisor or manager, DFA possesses both voting and/or investment power over
the Common Stock owned by the Funds. All of the shares reported by DFA are
owned by the Funds and DFA disclaims beneficial ownership of such
securities.
2
<PAGE>
(4) WMC reports shared voting power over 341,500 shares and shared
dispositive power over 519,000 shares. The Schedule 13G reports that the
shares are owned of record by clients of WMC and that WMC may be deemed
to beneficially own these shares in its capacity as investment advisor.
WMC's clients have the right to receive, or the power to direct the
receipt of, dividends from, or the proceeds from the sale of, such
securities and that no such client is known to have such right or power
with respect to more than five percent of the Common Stock.
(5) Effective February 2000, Mr. DePersis retired as a director and an
officer. Beneficial ownership includes 20,430 shares owned directly by
Mr. DePersis's wife, with respect to which Mr. DePersis has no voting or
dispositive power. Also includes 26 shares owned by Mr. DePersis as
custodian for his son, and 65,000 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 Long-Term
Incentive and Capital Accumulation Plan ("Incentive Plan") and the 1996
Long-Term Incentive and Capital Accumulation Plan (the "1996 Incentive
Plan").
(6) Includes 21,194 shares owned directly by Mr. Driscoll's wife, with
respect to which Mr. Driscoll has no voting or dispositive power. Also
includes 4,850 shares with respect to which Mr. Driscoll has the right to
acquire beneficial ownership of Common Stock through the exercise of
options pursuant to the 1996 Incentive Plan, that were granted originally
to Mr. Driscoll pursuant to the Skaneateles Bancorp, Inc. 1991 Long-Term
Incentive and Capital Accumulation Plan and converted to the Company's
options upon the completion of the merger of Skaneateles with the Company
in July 1999.
(7) Includes 19,284 shares held jointly with Mr. Small's wife. Also includes
45,133 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 27,745 shares held jointly with Mr. Smith's wife, with respect
to which Mr. Smith shares voting and dispositive power. Also includes
30,299 shares with respect to which Mr. Smith 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 4,080 shares held individually by Mr. Denniston's wife, with
respect to which Mr. Denniston has no voting or dispositive power, 4,400
shares held jointly with Mr. Denniston's wife, with respect to which Mr.
Denniston shares voting and dispositive power, and 555 shares held by Mr.
Denniston's wife as custodian for her daughter. Also includes 29,802
shares with respect to which Mr. Denniston 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 311,039 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."
3
<PAGE>
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 of the Board of Directors. The Board of Directors currently
consists of 11 members and one vacancy. The Company's Certificate of
Incorporation and Bylaws provide that the directors shall be divided into
three classes as nearly equal in number as possible. 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"). Under the
terms of the Company's July 1999 acquisition of Skaneateles Bancorp, Inc.
("Skaneateles"), BSB invited two former Skaneateles directors, Mr. John P.
Driscoll and Mrs. Ann G. Higbee, to serve as members of the Board of the
Company for terms expiring in 2002 and 2001, respectively.
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 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 a director if elected.
4
<PAGE>
Nominees for Directors with Terms Expiring in 2003
<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 Since (1) March 6, 2000**
---- ---- --------------------------------- --------- ------------------
<C> <C> <S> <C> <C>
Diana J. Bendz 54 Director; IBM Endicott 1998 9,750 (2)
Senior Location
Executive and Director
of Environmentally
Conscious Products,
Corporate Operations,
IBM, July 1996 to
present; Director of
Integrated Safety
Technology, Technical
Operations Staff, IBM,
January 1992 to July
1996.
David A. Niermeyer 58 Director; President and 1994 20,425 (3)
Chief Executive Officer,
Stakmore Co., Inc. since
April 1980.
Mark T. O'Neil, Jr. 47 Director; President and 1994 20,710 (4)
Chief Executive Officer,
United Health Services,
Inc. since February
1993; Member, Boards of
Directors, Health Care
Underwriters Mutual
Insurance Company;
Member, Advisory Board,
Liberty Mutual Insurance
Company.
Thomas L. Thorn 56 Director; Acting 1995 224,587 (5)
President and Chief
Executive
Officer of the Company 2.19%
and the Bank; Private
Investor since 1997;
Executive Vice President
and Treasurer, Diamond
Page International
Corporation from
September 1978 to
December 1996.
</TABLE>
- --------
* Age as of Record Date, March 6, 2000.
** Unless otherwise indicated, holdings represent less than 1% of the issued
and outstanding shares of Common Stock.
(1) Includes service on the Board of Directors of the Bank.
(2) Includes 9,000 shares with respect to which Mrs. Bendz has the right to
acquire beneficial ownership of Common Stock through the exercise of
options granted pursuant to the Directors' Stock Option Plan.
(3) Includes 4,500 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) Includes 3,710 shares held jointly with Mr. O'Neil's wife, with respect to
which Mr. O'Neil shares voting and dispositive power. Also includes 17,000
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.
(5) Includes 4,500 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.
Required Vote
Directors will be elected by a plurality of the shares present, either in
person or represented by proxy, at the Annual Meeting and entitled to vote at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE ELECTION OF THE NOMINEES AS DIRECTORS
* * *
5
<PAGE>
Directors with Terms Expiring in 2002
<TABLE>
<CAPTION>
Position with the Company Company Common
and the Stock
Bank and Principal Beneficially Owned
Occupation Directly or
During the Past Five Director Indirectly as of
Name Age* Years Since (1) March 6, 2000**
---- ---- ------------------------- -------- ------------------
<C> <C> <S> <C> <C>
Robert W. Allen 56 Director; General 1987 34,380 (2)
Partner, Allen Family
Limited Partnership since
April 1999; President and
Chief Executive Officer,
Tuscan/Lehigh Dairies,
L.P., Lansdale, PA from
May 1997 to March 1999;
President and Chief
Executive Officer, Lehigh
Valley Dairies, Inc.,
Lansdale, PA from April
1996 to May 1997;
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,
Board of Directors Azon
Corp., Johnson City, New
York.
John P. Driscoll 59 Director; Executive Vice 1999 50,843 (3)
President and Treasurer
of the Company and the
Bank since March 2000;
Executive Vice
President--CNY Region of
the Company and the Bank
from July 1999 to March
2000; Interim Treasury
Administration Officer of
the Bank from November
1999 to March 2000;
Chairman, President and
Chief Executive Officer
of Skaneateles Bancorp,
Inc. and Skaneateles
Savings Bank from
September 1992 to June
1999.
Thomas F. Kelly 52 Director; Vice President 1987 21,802 (4)
for External Affairs and
Professor of Management,
Binghamton University,
October 1991 to present.
</TABLE>
- --------
* Age as of Record Date, March 6, 2000.
** Unless otherwise indicated, holdings represent less than 1% of the issued
and outstanding shares of the Common Stock.
(1) Includes service on the Board of Directors of the Bank including, where
applicable, service prior to the organization of the Company in 1988.
(2) Includes 16,380 shares held jointly with Mr. Allen's wife, with respect to
which Mr. Allen shares voting and dispositive power. Also includes 18,000
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.
(3) Includes 21,194 shares owned directly by Mr. Driscoll's wife, with respect
to which Mr. Driscoll has no voting or dispositive power. Also includes
4,850 shares with respect to which Mr. Driscoll has the right to acquire
beneficial ownership of Common Stock through the exercise of options
pursuant to the 1996 Incentive Plan, that were granted originally to Mr.
Driscoll pursuant to the Skaneateles Bancorp, Inc. 1991 Long-Term
Incentive and Capital Accumulation Plan and converted to the Company's
options upon the completion of the merger of Skaneateles with the Company
in July 1999.
(4) Includes 3,802 shares held jointly with Dr. Kelly's wife, with respect to
which Dr. Kelly shares voting and dispositive power. Also includes 18,000
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
<PAGE>
Directors with Terms Expiring in 2001
<TABLE>
<CAPTION>
Position with the Company
Company and the Common Stock
Bank and Principal Beneficially Owned
Occupation Directly or
During the Past Five Director Indirectly as of
Name Age* Years Since (1) March 6, 2000**
---- ---- ------------------------ -------- ------------------
<C> <C> <S> <C> <C>
Ferris G. Akel 67 Director; President, 1986 163,699 (2)
Binghamton Giant
Markets, Inc. 1.59%
since 1959.
William C. Craine 51 Director; Chairman of 1976 87,906 (3)
the Company and the Bank
since February 2000;
Chairman, Granite
Capital Holdings, Inc.,
November 1998 to
present; President and
Chief Executive Officer,
Mang Group, Inc. from
November 1994 to
November 1998; Member,
Boards of Directors,
Preferred Mutual
Insurance Company, New
Berlin, NY and UHS
Hospitals, Inc.,
Binghamton, NY.
Ann G. Higbee 57 Director; Managing 1999 15,806 (4)
Partner, Public
Relations Services, Eric
Mower and Associates,
Syracuse, NY since 1990.
William H. Rincker 69 Director; prior to 1981 133,857 (5)
retirement after year-
end 1996,
served as Chairman of 1.31%
the Company and the Bank
since 1995, Chief
Executive Officer of the
Company since 1988;
former President of the
Company from 1988 to
1995 and Chief Executive
Officer of the Bank
since 1984; and
President of the Bank
from 1981 to 1995.
</TABLE>
- --------
* Age as of Record Date, March 6, 2000.
(1) Includes service on the Board of Directors of the Bank including, where
applicable, service prior to the organization of the Company in 1988.
(2) Includes 4,003 shares held jointly with Mr. Akel's wife, with respect to
which Mr. Akel shares voting and dispositive power and 130,176 shares
owned by Akel Wholesale Grocery, Inc., with respect to which Mr. Akel
shares voting and dispositive power. Also includes 18,000 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.
(3) Includes 700 shares held directly by Mr. Craine's wife, with respect to
which Mr. Craine has no voting or dispositive power, 1,585 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
and 500 shares beneficially owned as custodian for Mr. Craine's son. Also
includes 4,500 shares with respect to which Mr. Craine 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 4,525 shares held jointly with Mrs. Higbee's husband, with
respect to which Mrs. Higbee shares voting and dispositive power and 457
shares held directly by Mrs. Higbee's husband, with respect to which Mrs.
Higbee has no voting or dispositive power. Also includes 6,750 shares with
respect to which Mrs. Higbee has the right to acquire beneficial ownership
of Common Stock through the exercise of options granted pursuant to the
Directors' Stock Option Plan.
(5) Includes 101,291 shares held jointly with Mr. Rincker's wife, with respect
to which Mr. Rincker shares voting and dispositive power. Also includes
19,540 shares owned directly by Mr. Rincker's wife, with respect to which
Mr. Rincker has no voting or dispositive power. Also includes 6,750 shares
with respect to which Mr. Rincker has the right to acquire beneficial
ownership through the exercise of options granted pursuant to the
Directors' Stock Option Plan.
7
<PAGE>
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 14 times during the year ended December 31, 1999. 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 1999, the Board of Directors of the Company had a number of
committees, including an Executive Committee, an Audit Committee and a
Compensation Committee. In addition, during 1999 the Board of Directors of the
Bank had a number of committees, including an Executive Committee and a
standing Salary and Personnel Administration Committee. The entire Board of
the Company serves as a Nominating Committee.
The Executive Committee of the Company consists of Messrs. Craine
(Chairman), Akel and Thorn, and two rotating members. Mr. Levine was a member
prior to his retirement in April 1999 and attended two meetings. Mr. DePersis
was a member prior to his retirement in February 2000 and attended nine
meetings. The Executive Committee met ten times in 1999.
Audit Committee Report
The Company's Audit Committee currently has four members and one vacancy,
Dr. Kelly (Chairman), Mr. O'Neil, Mrs. Bendz and Mrs. Higbee, each of whom is
an "independent director" under the Nasdaq Stock Market rules. The Audit
Committee's responsibilities are described in a written charter that was
adopted by the Company's Board of Directors.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 1999 with
Company's management. The Audit Committee has discussed with
PricewaterhouseCoopers, LLP, the Company's independent accountants, the
matters required to be discussed by SAS 61, Codification of Statements on
Auditing Standards. The Audit Committee has received the written disclosures
and the letter from PricewaterhouseCoopers, LLP required by Independence
Standards Board
8
<PAGE>
Standard No. 1, Independence Discussions with Audit Committees, and has
discussed with PricewaterhouseCoopers, LLP the independence of
PricewaterhouseCoopers, LLP. Based on the review and discussions described in
this paragraph, the Audit Committee recommended to BSB Bancorp's Board of
Directors that the Company's audited financial statements for the year ended
December 31, 1999 be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999 for filing with the Securities and
Exchange Commission.
Audit Committee (1)
Thomas F. Kelly (Chairman) (2)
Diana J. Bendz (3)
Ann G. Higbee (4)
Mark T. O'Neil, Jr.
- --------
(1) Mr. Thorn was a member of the Committee prior to his appointment as Acting
President and Chief Executive Officer in February 2000 and served as
Chairman of the Committee from August 1999 to February 2000.
(2) Dr. Kelly was appointed Chairman of the Committee in February 2000 and was
Chairman prior to August 1999.
(3) Mrs. Bendz became a member of the Committee in January 1999.
(4) Mrs. Higbee became a member of the Committee in July 1999.
The Company's Compensation Committee has the authority to grant options,
stock appreciation rights 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. Messrs. Allen (Chairman), Akel, Niermeyer and
O'Neil and Mrs. Bendz are members of both Committees. Mr. Levine was a member
of both Committees prior to his retirement in April 1999, however, no meetings
were held in 1999 prior to that date. Mrs. Bendz was named to the Company's
Compensation Committee and the Bank's Salary and Personnel Administration
Committee in July 1999. The Company's Compensation Committee met two times
during 1999. The Bank's Salary and Personnel Administration Committee met six
times during 1999.
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
two times during 1999.
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 1999. In their
capacity as directors of the Bank, however, such persons received an annual
retainer of $12,000 plus $500 for each Bank Board meeting attended. Also,
committee members received fees of $500 per meeting attended. The Chairman of
each of the Audit Committee, the Salary and Personnel Administration Committee
and the Trust Committee received fees of $600 per meeting attended. In 1999,
each non-rotating member of the Bank's Executive Committee serving for the
entire year received an annual retainer of $2,400 except for the Chairman of
the Executive Committee, who received an annual retainer of $4,800. Rotating
members of the Executive Committee received fees of $500 per meeting attended.
For 2000, all Board and Executive Committee retainer fees will remain
unchanged. 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 non-qualified deferred compensation
agreement. Interest is credited on the deferred amounts at a rate equal to the
Bank's earning asset yield, as defined below. During 1999, Mr. Rincker and
Mr. Thorn elected to defer their retainer under this arrangement.
9
<PAGE>
Effective with his appointment as Chairman of the Board of Directors of the
Company and the Bank on February 14, 2000, Mr. Craine will receive a monthly
director fee of $5,000. This fee is in lieu of all fees Mr. Craine otherwise
would be entitled to receive as a director, including retainers and fees for
attending board or committee meetings. Mr. Craine is not an executive officer
of either the Company or the Bank and will not participate in any cash bonus
or stock option compensation plans established for the benefit of executive
officers of the Company or the Bank. Mr. Craine will continue to participate
in the Company's Directors' Stock Option Plan.
Effective as of his appointment as Acting President and Chief Executive
Officer of the Company and the Bank on February 14, 2000, Mr. Thorn will not
receive any director's fees, including retainers or fees payable for attending
board or committee meetings. Mr. Thorn will not participate in any cash bonus
or stock option compensation plans established for executive officers of the
Company or the Bank. Mr. Thorn will continue to participate in the Company's
Directors' Stock Option Plan.
Directors' Stock Option Plan. Pursuant to the Directors' Stock Option Plan,
Messrs. Akel, Allen, Craine, Levine, Niermeyer, O'Neil, Rincker, and Thorn,
Dr. Kelly and Mrs. Bendz each received a grant of a non-qualifying option, for
2,250 shares of Common Stock at an exercise price of $28.75 per share on
January 24, 1999, the fair market value on the date of grant. Mrs. Higbee
received a non-qualifying option for 6,750 shares at an exercise price of
$27.0625, upon her election as a director on July 1, 1999. 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 2,250 shares at the fair market value on the date of grant. For 2000,
the non-employee directors received an option for 2,250 shares at an exercise
price of $19.50 per share, the fair market value on the date of grant, January
24, 2000.
The purpose of the Directors' Stock Option Plan is 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.
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> <C> <C>
Glenn R. Small...... 54 Executive Vice President
Arthur C. Smith..... 53 Executive Vice President
Rexford C. Decker... 47 Senior Vice President and Chief Financial Officer
Larry G. Denniston.. 54 Senior Vice President and Corporate Secretary
Douglas R. Johnson.. 57 Senior Vice President
</TABLE>
Glenn R. Small joined the Bank in 1982. He became Executive Vice President,
Senior Credit Officer of the Bank and Executive Vice President of 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,
Retail Banking Officer of the Bank and Executive Vice President of the Company
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.
Rexford C. Decker joined the Bank in 1982. He became Senior Vice President
and Chief Financial Officer of the Company and the Bank in February 1999. Mr.
Decker served as Treasurer of the Company and the Bank
10
<PAGE>
from November 1999 to March 2000. He was Administrative Vice President and
Controller of the Bank from December 1996 to February 1999, Vice President and
Controller of the Bank from December 1991 to December 1996, and Controller of
the Bank from December 1985 to December 1991.
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.
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.
11
<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 1999 (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 stock
appreciation rights.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Awards
------------
Annual Compensation Securities
-------------------------- Underlying
Name and Principal Salary Options/SARs All Other
Position Year ($) Bonus ($) (1) (#) Compensation ($) (2)
- ------------------ ---- -------- ------------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
Alex S. DePersis (3).... 1999 $255,000 $ 0 26,000 $ 7,650
Former President, Chief 1998 214,038 170,100 15,000 6,300
Executive Officer and a 1997 185,000 42,226 15,000 (7) 5,549
Director (retired in
February 2000)
John P. Driscoll (4).... 1999 147,795 (5) 37,854 (6) 0 429,390 (9)
Executive Vice 1998 169,129 27,600 4,850 (8) 18,004
President, Treasurer 1997 143,691 34,588 5,529 21,233
and a Director
Glenn R. Small.......... 1999 135,500 0 18,000 4,065
Executive Vice 1998 127,404 56,250 13,000 3,822
President 1997 113,163 25,829 11,250 (7) 3,395
Arthur C. Smith......... 1999 129,000 0 15,000 3,870
Executive Vice 1998 121,288 53,550 11,000 3,638
President 1997 113,163 25,829 9,000 (7) 3,395
Larry G. Denniston...... 1999 112,000 0 13,000 2,240
Senior Vice President 1998 104,981 46,350 9,000 2,100
and Corporate Secretary 1997 90,292 20,609 6,000 (7) 1,806
</TABLE>
- --------
(1) The bonuses for 1997 and 1998 for Messrs. DePersis, Denniston, Small and
Smith were paid under the Bank's 1997 Executive Incentive Plan and 1998
Executive Incentive Plan. 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 and, with respect to Mr. DePersis, contribution benefit amounts of
$750, $1,500, and $2,850 for 1997, 1998 and 1999, respectively under the
Company's Supplemental Executive Retirement Plan.
(3) Mr. DePersis retired from the Company in February 2000.
(4) Mr. Driscoll joined the Company in July 1999.
(5) Consists of $72,829 paid by Skaneateles Bancorp, Inc. for the six-month
period from January 1, 1999 through June 30, 1999 and $74,966 paid by BSB
Bancorp, Inc. for the six-month period from July 1, 1999 through December
31, 1999.
(6) All bonuses paid to Mr. Driscoll were paid by Skaneateles Bancorp, Inc.
prior to July 1, 1999.
(7) Share data has been adjusted to reflect a 3-for-2 stock split in September
1997.
12
<PAGE>
(8) The 1998 and 1997 options have been converted to BSB options based on .97
exchange ratio.
(9) Consists of a $419,759 lump sum payment made by the Company to Mr.
Driscoll under the terms of the Employment Agreement between the Company
and Mr. Driscoll, dated January 25, 1999, $5,098 in contributions to Mr.
Driscoll's 401(k) plan paid by Skaneateles Bancorp, Inc. for the period
January 1, 1999 to June 30, 1999, and $4,533 in contributions to Mr.
Driscoll's 401(k) plan paid by the Company for the period July 1, 1999 to
December 31, 1999.
Option Grant Exercises and Holdings
The following table sets forth information with respect to grants of stock
options to each of the named executive officers during 1999 and the potential
realized value by such individuals. All options were granted at current market
price on the date of grant.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Individual Grants Realizable Value at
------------------------------------------------- Assumed Annual
Number of % of Total Rates of Stock
Securities Options/SARs Price Appreciation
Underlying Granted to Exercise for Option Term
Options/SARs Employees in or Base Expiration -------------------
Name Granted (#) Fiscal Year Price ($/Sh) Date 5% ($) 10%($)
- ---- ------------ ------------ ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Alex S. DePersis........ 15,000 7.6% $27.063 1/27/2009 $ 255,292 $ 646,960
11,000 5.6 26.625 7/26/2009 184,188 466,767
John P. Driscoll........ 0 0 0 0 0 0
Glenn R. Small.......... 15,000 7.6 27.063 1/27/2009 255,292 646,960
3,000 1.5 26.625 7/26/2009 50,233 127,300
Arthur C. Smith......... 15,000 7.6 27.063 1/27/2009 255,292 646,960
Larry G. Denniston...... 13,000 6.6 27.063 1/27/2009 221,253 560,699
</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, 1999 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 In-the-Money Options/SARs
Acquired on At Fiscal Year End (#) At Fiscal Year End (#)(2)
Exercise Value ------------------------- -------------------------
Name (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Alex S. DePersis........ 0 0 27,215 37,785 $37,095 $7,031
John P. Driscoll........ 43,067 787,774 4,850 -- 0 --
Glenn R. Small.......... 9,180 206,952 34,120 28,380 149,063 4,688
Arthur C. Smith......... 0 0 20,349 23,775 45,283 4,219
Larry G. Denniston...... 1,982 43,214 24,962 19,080 140,366 2,813
</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) Market value of underlying securities at year-end, minus the exercise or
base price.
13
<PAGE>
Employment Agreements
In 1999, the Company and the Bank entered into employment contracts and
agreements with Alex S. DePersis, who was serving as President and Chief
Executive Officer of the Company and the Bank and John P. Driscoll, who became
an Executive Vice President of the Company and the Bank upon the Company's
acquisition of Skaneateles Bancorp, Inc. on July 1, 1999.
DePersis Employment Contract. On June 28, 1999, the Company and the Bank
entered into a renewable three-year employment contract with Alex S. DePersis
(the "DePersis Contract"). Mr. DePersis retired from his positions with the
Company and the Bank in February 2000. Under the DePersis Contract, the
Company and the Bank will pay Mr. DePersis an amount equal to the salary which
he would have been entitled to receive under the remaining term of the
contract (June 27, 2003), except that such payments will cease if Mr. DePersis
becomes employed, directly or indirectly, by a financial institution or
holding company located near the Bank's home office.
Driscoll Employment Agreement. On January 25, 1999, the Company and the Bank
entered into an Employment Agreement with John P. Driscoll, who was then
serving as the Chairman, President and Chief Executive Officer of Skaneateles
Bancorp, Inc., in connection with the proposed acquisition of Skaneateles by
the Company (the "Driscoll Agreement"). Under the terms of the Driscoll
Agreement, Mr. Driscoll will serve as the Executive Vice President of the
Company and the Bank from July 1, 1999 until December 31, 2001 at an annual
salary of no less than $147,660. In addition, Mr. Driscoll is entitled to
certain benefits including monthly membership dues for clubs, the use of a
company car, reimbursement for reasonable business entertainment and travel
expenses, participation in all the incentive, bonus, management recognition
and benefit plans of the Company and the Bank, health, disability and life
insurance, and a carry-over of any vested retirement benefits he was entitled
to under any former Skaneateles Bancorp, Inc. benefit plans.
The Company and the Bank may terminate Mr. Driscoll's employment at any
time. In the event of an involuntary termination other than for cause, the
Company and Bank are required to continue to pay Mr. Driscoll the same level
of compensation for the remaining term of the Driscoll Agreement, as well as
all medical, prescription drug, dental, and disability benefits, and employee
life, group life, and other insurance that Mr. Driscoll and his family
received prior to the termination, unless such benefits are available to Mr.
Driscoll from a subsequent employer. Mr. Driscoll is not entitled to any
payments that would constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"). In the event of a voluntary termination or an involuntary termination
of Mr. Driscoll's employment for cause by the Company and/or the Bank, Mr.
Driscoll has no right to compensation under the Driscoll Agreement. If Mr.
Driscoll terminates his employment prior to December 31, 2001, he is
prohibited from entering into any other employment with a commercial bank,
savings bank, savings and loan association, or mortgage banking company with
an office within 75 miles of the Bank's East Fayette Street, Syracuse office
for the lesser of a period of 1 year or the months remaining until December
31, 2001, plus six months.
Change of Control Severance Agreements. The Company and the Bank (the
"Employers") entered into new three-year Change of Control Severance
Agreements, referred to as Severance Agreements on June 28, 1999 with the
following BSB executive officers:
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
Glenn R. Small........... Executive Vice President
Arthur C. Smith.......... Executive Vice President
Rexford C. Decker........ Senior Vice President and Chief Financial Officer
Larry G. Denniston....... Senior Vice President and Corporate Secretary
Douglas R. Johnson....... Senior Vice President
</TABLE>
The Severance Agreements amend and restate in their entirety the Severance
Agreements entered into with Mr. Decker in February 1999, Messrs. Denniston,
Johnson and Small in November 1990, as amended on
14
<PAGE>
December 18, 1995, and with Mr. Smith in January 1996. The Severance
Agreements provide that the term of each Severance Agreement will be extended
automatically by one year on the anniversary date of the Severance Agreement,
unless the Boards of Directors of the Employers, or the executive provides
contrary written notice.
If an executive's employment under any Severance Agreement is terminated:
. for any reason prior to a change in control, or
. after a change in control, by the Employers for good cause, or
. by the voluntary action of the executive without good reason,
the Employers are required to pay the executive 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 the payment
of certain accrued benefits.
If the termination of an executive's employment under any Severance
Agreement is the result of:
. an involuntary termination of employment in connection with any change
in control other than for good cause, or
. a voluntary termination for good cause,
the Employer is required to pay the executive for a period of up to two years
a salary equal to the higher of the executive's base salary on the date of the
change in control or the date of termination of employment, and other
benefits.
In the event any of the payments to an executive under the Severance
Agreements are subject to the excise tax described in Section 4999 of the
Code, the Employers will pay the executives an additional payment, referred to
as a gross-up payment, to equal to the excise tax imposed on the payments. The
Severance Agreements do not contain any provision restricting the right to
compete against the Bank upon termination of employment.
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 1999, Douglas R. Johnson elected to
defer his bonus under this arrangement.
Company Compensation Committee and Bank Salary and Personnel Administration
Committee Report on Executive Compensation
During 1999 none of the executive officers of the Company 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. Allen (Chairman), Akel, Niermeyer and O'Neil and Mrs. Bendz. The same
persons comprise the Compensation Committee of the Board of Directors of the
Company, which had the authority to grant options, stock appreciation rights
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 report, the Salary and Personnel Administration Committee and
the Compensation Committee together are referred to as the "Committee." Each
member of the Committee is a 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 SEC
designed to enhance disclosure of executive compensation policies, set forth
below is a report submitted by the Committee, addressing the Company's
compensation policies for 1999 as they affected the Company's executive
officers, including the Chief Executive Officer and the named executive
officers.
15
<PAGE>
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 1999 consisted of the
following components: base salary, stock options under the 1996 Incentive
Plan, benefits under the Bank's defined benefit retirement plan and defined
contribution plan, and certain other benefits.
Base Salary. The Committee reviews executive base salaries annually. The
1999 base salary for Mr. DePersis increased 19.1% over the 1998 level. Mr.
DePersis's base salary adjustment, in addition to being based on the Company's
performance in 1998 and on his individual performance, reflected an adjustment
to bring his base salary more closely into alignment with the base salaries of
Chief Executive Officers at peer Companies. Mr. Driscoll's base salary is
governed by the Employment Agreement entered into between the Company and Mr.
Driscoll in January 1999, in connection with the Company's acquisition of
Skaneateles on July 1, 1999. The base salary for Messrs. Small and Smith each
rose by 6.4% over the 1998 level. The base salary for Mr. Denniston rose by
6.7% for 1999 compared to 1998. Base salaries 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 in setting 1999 salaries were the following: individual performance
in 1998; net income was $19.9 million in 1998, a 17.0% increase over net
income of $17.0 in 1997; return on average equity was 15.61% in 1998, compared
to 14.65% in 1997; and diluted earnings per share were $2.24 in 1998, an
increase of 16.1% compared to $1.93 in 1997.
Bonuses. The 1999 Executive Bonus Plan (the "1999 Plan") established certain
earnings per share levels in 1999 and certain individual performance
requirements. The earnings per share goals were established by the Board of
Directors at the beginning of the 1999 fiscal year. Although the participating
executive officers met their individual performance requirements, the
Company's 1999 earnings per share was less than established goals, so no
bonuses were paid under the 1999 Plan.
Stock Options. The Company's 1996 Incentive Plan provides 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 additional 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 were granted to the
named executive officers other than Mr. Driscoll under the 1996 Incentive Plan
in 1997, 1998 and 1999. All options were granted at the current market price
on the date of grant. On February 28, 2000, the Company granted options at an
exercise price of $18.00 per share for 15,000 shares of the Company's Common
Stock to Messrs. Denniston, Small, and Smith and options for 12,000 shares of
the Company's Common Stock to Messrs. Decker and Johnson under the 1996
Incentive Plan.
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 retirement plan and matching contributions under the Bank's defined
contribution plan. The executive officers also receive group term life
insurance on the same terms as other employees, and certain other perquisites.
16
<PAGE>
Chief Executive Officer Compensation. The base salary for Mr. DePersis as
CEO was increased for 1999 from $214,038 to $255,000 based on the Company's
performance in 1998 and on his individual performance. Mr. DePersis's 1999
salary was determined using the same factors noted above with respect to
individual performance in 1998, increases in net income, return on average
equity and diluted earnings per share in 1998 as compared to 1997. Mr.
DePersis also participated in the 1999 Plan. No bonus was paid to Mr. DePersis
under the 1999 Plan. Mr. DePersis received options for 26,000 shares of Common
Stock during 1999 pursuant to the Company's 1996 Incentive Plan.
Effective as of his appointment as Acting President and Chief Executive
Officer of the Company and the Bank on February 14, 2000, Mr. Thorn's base
salary is $180,000. During his tenure as Acting President and Chief Executive
Officer, Mr. Thorn will not receive any director's fees, including retainers
or fees payable for attending board or committee meetings. Mr. Thorn will not
participate in any cash bonus or stock option compensation plans established
for executive officers of the Company or the Bank. Mr. Thorn will continue to
participate in the Company's Directors' Stock Option Plan.
Compensation Committee of Company and
Salary and Personnel Administration Committee of Bank
Robert W. Allen (Chairman)
Ferris G. Akel
Diana J. Bendz (1)
David A. Niermeyer
Mark T. O'Neil, Jr.
- --------
(1) Mrs. Bendz became a member of the Committee in July 1999.
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 currently comprised of Messrs. Akel, Allen,
Niermeyer and O'Neil and Mrs. Bendz.
In fiscal 1999, the Bank had outstanding commercial real estate loans and
commercial loans secured by real estate to Apalachin Development LLC, and
Newman Development Group of CP, LLC, outstanding unsecured commercial loans to
Vestal Plaza, LLC, Newman Development Group, L.L.C., Newman Development Group
of Dickinson L.L.C., TSM LLC, Malta Saratoga Development Corp., Newman
Development Group of Batavia, LLC, Town Square Mall Associates, L.L.C., as
well as a letters of credit to Town Square Mall Associates, L.L.C., Campus
Plaza L.L.C. and Parkway Plaza L.L.C., each of which was guaranteed by Mr.
Akel. Mr. Akel is a member of each of the LLCs listed above. In fiscal 1999,
the Bank also had outstanding commercial loans, both unsecured and secured by
accounts, inventory and equipment to Stakmore Company, Inc., each guaranteed
by Mr. Niermeyer, as well as a commercial loan secured by securities to Mr.
Niermeyer. Mr. Niermeyer is the President and Chief Executive Officer of
Stakmore Company, Inc. As to the foregoing loans and the guarantees by Mr.
Akel and Mr. Niermeyer, 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
guarantees did not involve more than the normal risk of collectability nor
present any other unfavorable features.
For the year ended December 31, 1999, the Bank paid an aggregate of $163,960
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.
17
<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, 1995 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.
<TABLE>
<CAPTION>
[Performance Graph Appears Here]
Period Ending
Index 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ----- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BSB Bancorp, Inc......... 100.00 132.10 147.87 305.72 289.78 176.68
NASDAQ--Total US*........ 100.00 141.33 173.89 213.07 300.25 542.43
SNL $1B-$5B Bank Asset-
Size Index.............. 100.00 134.48 174.33 290.73 290.06 266.58
</TABLE>
- --------
*Source: CRSP, Center for Research in Security Prices, Graduate School of
Business, The University of Chicago 1999. Used with permission. All
rights reserved. crsp.com.
18
<PAGE>
Employee Defined Benefit Plan
The following table illustrates current annual pension benefits under the
Company's defined benefit retirement plan for retirement in 1999 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 $130,000, subject to
cost-of-living adjustments. Additionally, annual compensation in excess of
$160,000 (subject to cost of living increases) may not be used in calculation
of retirements.
Pension Plan Table
<TABLE>
<CAPTION>
Years of Service
------------------------------------------------------------------
Annual
Compensation 5 10 15 20 25 30 35
- ------------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 75,000 $7,500 $15,000 $22,500 $30,000 $37,500 $45,000 $45,000
100,000 10,000 20,000 30,000 40,000 50,000 60,000 60,000
125,000 12,500 25,000 37,500 50,000 62,500 75,000 75,000
150,000 15,000 30,000 45,000 60,000 75,000 90,000 90,000
160,000 16,000 32,000 48,000 64,000 80,000 96,000 96,000
</TABLE>
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 represent payment made during the 36
consecutive calendar months of highest earnings during the final 120 calendar
months of the employee's creditable service. Mr. DePersis's annual pension
benefit is $46,988 based on his average annual earnings in effect as of
December 31, 1999 and all Code limits. 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 periods of creditable service as of December 31, 1999 for Messrs.
DePersis, Driscoll, Small, Smith, and Denniston were 14 years, 6 months, 17
years, 32 years, and 16 years, respectively.
In 1995, the Board of Directors of the Bank adopted a Supplemental Executive
Retirement Plan (the "SERP") effective on January 1, 1995 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. DePersis was the
only participant in the SERP in 1999. 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, 1999, Mr. DePersis's accrued
annual supplemental defined benefit amount under the SERP was $2,850 payable
as a straight life annuity.
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 or second 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 consumer loans and commercial real estate and commercial
business loans to officers and directors and related persons consistent with
applicable law. Except as described below, 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.
19
<PAGE>
Effective as of August 25, 1997, the Bank adopted a policy permitting all
employees, including directors and executive officers, to obtain loans at
preferential interest rates and to obtain discounted processing fees. The Bank
extended Alex S. DePersis, the former President and Chief Executive Officer of
the Company and the Bank, a home equity line of credit in November 1997 with
preferential terms pursuant to the above policy. The largest aggregate amount
of indebtedness outstanding at any time under this line of credit during
fiscal 1999 and as of March 6, 2000, was $27,187 and $0, respectively. The
interest rate for this line of credit is prime plus 1/2% for indebtedness up
to $30,000 and prime for indebtedness of more than $30,000. The Bank also
extended William H. Rincker, a director of the Company and the Bank, a home
equity line of credit in January 1997, with preferential terms pursuant to the
above policy. The largest aggregate amount of indebtedness outstanding at any
time under this line of credit during fiscal 1999 and as of March 6, 2000, was
$100,000 and $100,000, respectively. The interest rate for this line of credit
was prime plus 1/2% for indebtedness up to $30,000 and prime for indebtedness
of more than $30,000. The Bank has an outstanding mortgage loan to Dr. Kelly
that was made in the ordinary course of business, on substantially the same
terms, including interest rate and collateral, as those prevailing at the time
for comparable transactions with other persons, and at the time of
origination, did not involve more than the usual risk of collectability nor
present any other unfavorable features. Under the Bank's policy of permitting
discounted processing fees to employees and directors, Dr. Kelly obtained a
discount on the processing fee for this loan consistent with the Bank's
policy. The interest rate on the 15-year maturity loan is 6.875%. The largest
aggregate amount of indebtedness outstanding during fiscal 1999 and as of
March 6, 2000 was $61,905 and $58,764, respectively.
For a description of certain transactions regarding Mr. Akel, Mr. Niermeyer
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 PricewaterhouseCoopers,
LLP as independent auditors of the Company for the year ending December 31,
2000, 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 PricewaterhouseCoopers, LLP 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. PricewaterhouseCoopers, LLP will
have a representative at the Annual Meeting who will 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 THAT YOU VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS, LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR FISCAL 2000
* * *
20
<PAGE>
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 13901, no later than December 4, 2000. If a 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.
The proxy being solicited hereby provides discretionary authority to vote on
any matter if the Company did not receive notice of such matter prior to
February 8, 2000. No notice of any such matter was received by the Company by
such date.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1999 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, 1999 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 13901.
The Form 10-K is not part of the proxy solicitation materials.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than 10% 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 1999 all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with,
except that one report filed by Mrs. Bendz was filed nine 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.
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 $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 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.
21
<PAGE>
REVOCABLE PROXY
BSB BANCORP, INC.
58-68 Exchange Street
Binghamton, New York 13901
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 24, 2000, 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, LLP 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 Binghamton Regency
Hotel and Conference Center, One Sarbro Square, 225 Water Street, Binghamton,
New York 13901 on April 24, 2000 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.
TO VOTE BY MAIL
- ---------------
Please mark, date, sign and mail your proxy card in the envelope provided as
soon as possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
- --------------------------------------------
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
YOUR CONTROL NUMBER IS __________
DO NOT RETURN YOUR PROXY CARD
IF YOU VOTE BY TELEPHONE
Please Detach and Mail in the Envelope Provided
----------------------------------------------------------------
<PAGE>
[X] Please mark your votes as in this example
1. Proposal to elect 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 2003 Annual Meeting who will stand
for election:
Diana J. Bendz
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 the nominee(s) above.
2. Proposal to ratify the appointment of PricewaterhouseCoopers, LLP as the
Company's independent auditors for the fiscal year ending December 31,
2000.
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,
the Board of Directors is not aware of any other matters that 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 24, 2000, and a Proxy
Statement prior to signing this Proxy.
I plan to attend the meeting. [_] Dated: , 2000
----------------------------
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
DIRECTION 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.
