SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] 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
BANKNORTH GROUP, 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)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
---------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
(3) Filing party:
---------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------
[Logo] Banknorth Group, Inc.
April 9, 1999
Dear Fellow Shareholders:
You are cordially invited to attend our Annual Meeting of
Shareholders to be held at the Holiday Inn Centre of Vermont Complex, 476
U.S. Route 7 South, Rutland, Vermont on Tuesday, May 11, 1999 at 11:00 a.m.
A formal notice of meeting and proxy statement are attached.
At the meeting you will be asked to elect five directors to a three-
year term and to ratify the selection of the Company's independent auditors
for 1999.
We hope that you will be able to attend our Annual Meeting, the first
since our merger with Evergreen Bancorp last year, and that you will take
the opportunity to meet our three newest directors, all former directors of
Evergreen, George Dougan, Robert Flacke and Anthony Mashuta. I look
forward to seeing you there.
Sincerely,
/s/ William H. Chadwick
William H. Chadwick
President and Chief Executive Officer
300 Financial Plaza, Burlington, Vermont 05401 (802) 658-9959
[Logo] Banknorth Group, Inc.
300 Financial Plaza
Burlington, Vermont 05401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 11, 1999
The Annual Meeting of Shareholders of Banknorth Group, Inc. will be
held at the Holiday Inn Centre of Vermont Complex, 476 U.S. Route 7 South,
Rutland, Vermont on Tuesday, May 11, 1999 at 11:00 a.m. for the following
purposes:
1. To elect five directors to serve until the Annual Meeting of
Shareholders in 2002;
2. To ratify the selection of KPMG LLP as independent auditors of
the Company for 1999; and
3. To transact such other business as may properly be brought
before the meeting.
Only holders of Banknorth Group, Inc. Common Stock of record as of
the close of business on March 16, 1999, are entitled to notice of, and to
vote at, the Annual Meeting. A list of such shareholders will be available
for examination by any shareholder ten days prior to the meeting during
ordinary business hours at the Company's offices at 300 Financial Plaza in
Burlington, Vermont, and at the offices of First Vermont Bank and Trust
Company, 77 Merchants Row, Rutland, Vermont.
By order of the Board of Directors,
/s/ Thomas M. Dowling
Thomas M. Dowling
Secretary
Burlington, Vermont
April 9, 1999
- ---------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
WE URGE YOU TO FILL IN, DATE, SIGN AND RETURN YOUR PROXY CARD
PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE WHETHER OR NOT YOU PLAN TO
BE PRESENT AT THE MEETING. SHOULD YOU ATTEND THE MEETING, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
- ---------------------------------------------------------------------------
BANKNORTH GROUP, INC.
300 Financial Plaza
Burlington, Vermont 05401
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 11, 1999
This proxy statement is furnished in connection with the solicitation
of proxies by or on behalf of the Board of Directors of Banknorth Group,
Inc. (the "Company") for use at the Annual Meeting of Shareholders to be
held on Tuesday, May 11, 1999, at 11:00 a.m., at the Holiday Inn Centre of
Vermont Complex, 476 U.S. Route 7 South, Rutland, Vermont, or at any
adjournment or adjournments thereof.
Proxy cards duly executed and returned by a shareholder will be voted
as directed on the card. If no choice is specified, the proxy will be
voted (i) FOR the election of the five nominees for director named in the
proxy to serve until the Annual Meeting of Shareholders in 2002; and (ii)
FOR ratification of the independent public accounting firm of KPMG LLP as
the independent auditors of the Company for the ensuing year. If other
matters are voted upon, the persons named in the proxy and acting
thereunder will vote in accordance with the recommendations of management
pursuant to the discretionary authority conferred in the proxy. Any proxy
may be revoked by written notice to the Secretary of the Company prior to
the voting of such proxy.
All expenses of this solicitation will be paid by the Company. This
solicitation of proxies by mail may be followed by solicitation either in
person, or by letter or telephone, by officers or employees of the Company
or its wholly-owned banking subsidiaries, Evergreen Bank, N.A., Farmington
National Bank, First Massachusetts Bank, N.A., First Vermont Bank and Trust
Company, Franklin Lamoille Bank, Granite Savings Bank and Trust Company,
The Howard Bank, N.A., The Stratevest Group, N.A. and Woodstock National
Bank. The Company will request brokers, banks and other similar agents or
fiduciaries to forward proxy materials to beneficial owners of stock and,
if requested, will reimburse them for the costs thereof.
Under the rules of the Securities and Exchange Commission ("SEC"),
boxes and a blank space are provided on the proxy card for shareholders to
designate whether they wish to vote "for", "against", or "abstain" on any
proposal, or to withhold authority to vote for one or more of the Company's
nominees for director. Under Delaware law and the Company's By-laws, a
majority of the shares entitled to vote, represented in person or by proxy,
will constitute a quorum at the meeting. Votes withheld from director
nominees, abstentions and broker non-votes (as defined below) are counted
for purposes of determining whether a quorum is present and for determining
the number of votes required to adopt a proposal. Assuming a quorum is
present, a majority of the shares represented at the meeting in person or
by proxy will be required to elect a nominee for director, to ratify the
selection of the Company's independent auditors and to approve any other
matter voted on. Since votes withheld from director nominees and
abstentions and broker non-votes on other proposals are treated as shares
outstanding and present at the meeting, they would have the effect of a
vote against the nominee or proposal, as the case may be. A broker non-
vote occurs when a broker who holds shares in street name for a customer
does not have the authority under applicable stock exchange or broker self-
regulatory organization rules to cast a vote on a particular matter
(despite having voted the proxy on one or more other, discretionary
matters) because such matter is deemed non-discretionary and the broker's
customer has not furnished voting instructions. The difference between the
number of votes cast by a broker on discretionary and non-discretionary
proposals represents broker non-votes on the non-discretionary proposals.
This proxy statement and accompanying proxy card were first sent to
shareholders on or about April 9, 1999. A copy of the Company's Annual
Report to Shareholders containing its audited financial statements for 1998
accompanies this proxy statement.
VOTING SECURITIES
Only holders of record of the Company's shares of common stock
outstanding as of the close of business on March 16, 1999 will be entitled
to notice of and to vote at the Annual Meeting. As of such date, there
were 23,201,336 shares of the Company's common stock issued and
outstanding. Each such share is entitled to one vote on all matters
presented to the shareholders for vote.
As of February 1, 1999, the Company's wholly-owned trust company
subsidiary, The Stratevest Group, N.A. ("Stratevest"), held as fiduciary
approximately 307,859 shares (or 1.33%) over which it had sole voting and
investment power and approximately 355,064 shares (or 1.53%) as to which it
sought voting instructions from beneficial owners, donors, beneficiaries,
co-trustees or co-executors. In cases in which Stratevest does not have
sole voting control under the governing instrument, Stratevest will vote
shares of the Company's common stock in accordance with instructions from
donors, beneficiaries, co-trustees or co-executors and will not vote such
shares unless instructions are received. Shares held by Stratevest as
fiduciary over which it has sole voting power under either the governing
instrument or applicable statute will be voted in a manner that best serves
the interests of trust beneficiaries.
The Company is not aware of any individual, person, entity or group
within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934 (the "Exchange Act") which currently owns beneficially more than 5% of
the Company's outstanding common stock. In accordance with Section 13(g)
under the Exchange Act, the Company was informed that, as of December 31,
1998, John Hancock Mutual Life Insurance Company and related entities
owned, in the aggregate, 911,000 shares, with sole voting and investment
power over such shares vested in John Hancock Advisors, Inc., an investment
advisory firm affiliated with John Hancock Mutual Life Insurance Company.
Those shareholdings represented approximately 5.96% of the Company's
outstanding stock, before giving effect to the issuance on December 31,
1998 of shares of the Company's common stock in connection with completion
of the merger with Evergreen Bancorp, Inc.("Evergreen") (the "Evergreen
Merger"), and approximately 3.93% after giving effect to such Merger.
Stock Ownership of Directors and Executive Officers
The following table shows the amount of common stock owned
beneficially, directly or indirectly, by each incumbent director and
nominee for director, by each of the executive officers named in the
summary compensation table presented elsewhere in this proxy statement, and
by all incumbent directors, nominees and executive officers of the Company
as a group. Except as otherwise indicated in the footnotes to the table
(i) share data is presented as of March 1, 1999; and (ii) the named
individuals possess sole voting and investment power over the shares
listed.
<TABLE>
<CAPTION>
Shares
Beneficially Percent
Shareholder or Group Owned (1) of Class
---------------------------------------------------------------
<S> <C> <C>
Incumbent Directors and Nominees
Thomas J. Amidon, Esq. (2) 23,490 .101%
Jacqueline D. Arthur (3) 1,736 .007%
Robert A. Carrara (4) 7,220 .031%
William H. Chadwick (5) 121,012 .522%
Susan C. Crampton, CPA (6) 17,086 .074%
George W. Dougan (7) 180,722 .779%
Robert F. Flacke (8) 14,052 .061%
Luther Frederick Hackett (9) 58,590 .253%
Kathleen Hoisington 1,039 .004%
Douglas G. Hyde (10) 1,652 .007%
Anthony J. Mashuta (11) 11,593 .050%
Richard M. Narkewicz, M.D. (12) 27,966 .121%
John B. Packard (13) 1,337 .006%
R. Allan Paul, Esq. (14) 20,800 .090%
Angelo P. Pizzagalli (15) 22,668 .098%
Thomas P. Salmon, Esq. (16) 3,257 .014%
Patrick E. Welch (17) 563 .002%
Certain Executive Officers
Owen H. Becker (18) 9,500 .041%
Richard J. Fitzpatrick (19) 29,504 .127%
John M. Keel (20).... 2,200 .009%
Thomas J. Pruitt (21) 57,473 .248%
All Directors, Nominees and Executive
Officers as a Group (22 individuals) 629,543 2.713%
- --------------------
<FN>
<F1> Includes (i) 21,795 shares with respect to which voting or investment
powers are shared; (ii) 6,277 shares as to which beneficial ownership
is disclaimed; (iii) 55,400 shares of unvested performance stock
awarded to certain members of the group under the Company's 1997
Equity Compensation Plan or predecessor plans (together, the "Equity
Compensation Plan"); (iv) 203,200 shares underlying exercisable stock
options awarded to certain members of the group under the Equity
Compensation Plan, as amended ; (v) 71,297 stock units accrued to the
accounts of certain members of the group under the Company's 1994
Deferred Compensation Plan, as amended (the "Deferred Compensation
Plan"); and (vi) approximately 26,180 shares in which certain members
of the group have an indirect interest by virtue of their
participation in a pooled Company stock fund maintained under the
Company's 401(k) Plan. Each stock unit accrued under the Deferred
Compensation Plan will be payable in the form of one share of the
Company's Common Stock. Share information relating to the 401(k)
Plan and to the Deferred Compensation Plan is as of December 31,
1998, the date of the most recent 401(k) Plan report and most recent
quarterly Deferred Compensation Plan accrual.
<F2> Includes 8,404 stock units accrued to Mr. Amidon's account under the
Deferred Compensation Plan.
<F3> Includes 1,536 stock units accrued to Ms. Arthur's account under the
Deferred Compensation Plan.
<F4> Includes 3,482 stock units accrued to Mr. Carrara's account under the
Deferred Compensation Plan.
<F5> Includes (i) 11,252 shares held by Mr. Chadwick indirectly through
the Company's 401(k) Plan; (ii) 28,200 shares of unvested performance
stock granted under the Equity Compensation Plan; and (iii) 20,000
shares underlying exercisable stock options awarded to Mr. Chadwick
under the Equity Compensation Plan.
<F6> Includes (i) 6,264 shares held by Mrs. Crampton jointly with her
husband; (ii) 4,080 shares held by her husband; and (iii) 6,742 stock
units accrued to Ms. Crampton's account under the Deferred
Compensation Plan.
<F7> Includes (i) 126,000 shares underlying exercisable stock options
which were awarded to Mr. Dougan by Evergreen and converted into
stock options to purchase common stock of the Company upon
consummation of the Evergreen Merger; and (ii) 1,284 shares allocated
to Mr. Dougan's account under Evergreen's Employee Stock Ownership
Plan.
<F8> Includes (i) 3,600 shares underlying exercisable stock options which
were awarded to Mr. Flacke by Evergreen and converted into stock
options to purchase common stock of the Company upon consummation of
the Evergreen Merger; and (ii) 1,013 shares held by Mr. Flacke's
wife, as to which beneficial ownership is disclaimed.
<F9> Includes (i) 49,504 shares held by various corporations controlled by
Mr. Hackett; and (ii) 114 shares held by Mrs. Hackett's wife, as to
which beneficial ownership is disclaimed.
<F10> Includes 1,394 stock units accrued to Mr. Hyde's account under the
Deferred Compensation Plan.
<F11> Includes (i) 3,600 shares underlying exercisable stock options which
were awarded to Mr. Mashuta by Evergreen and converted into stock
options to purchase common stock of the Company upon consummation of
the Evergreen Merger; (ii) 2,700 shares held by Cool Insuring Agency,
Inc., of which Mr. Mashuta is President; and (iii) 2,610 shares
accrued to Mr. Mashuta's account under the Deferred Compensation
Plan.
<F12> Includes (i) 4,013 shares held by Dr. Narkewicz jointly with his wife
as to which voting and investment power is shared; and (ii) 23,813
stock units accrued to Dr. Narkewicz's account under the Company's
Deferred Compensation Plan.
<F13> Includes 1,137 stock units accrued to Mr. Packard's account under the
Deferred Compensation Plan.
<F14> Includes (i) 4,574 shares held by Mr. Paul's wife as to which Mr.
Paul disclaims beneficial ownership; and (ii) 9,040 stock units
accrued to Mr. Paul's account under the Deferred Compensation Plan.
<F15> Includes (i) 6,718 shares held by Pizzagalli Construction Company,
Inc., an affiliate of Mr. Pizzagalli as to which voting and
investment power is shared; and (ii) 13,950 stock units accrued to
Mr. Pizzagalli's account under the Deferred Compensation Plan.
<F16> Includes (i) 576 shares held by Mr. Salmon's wife as to which Mr.
Salmon disclaims beneficial ownership; and (ii) 1,536 stock units
accrued to Mr. Salmon's account under the Deferred Compensation Plan.
<F17> Includes 263 stock units accrued to Mr. Welch's account under the
Deferred Compensation Plan.
<F18> Includes (i) 4,500 shares of unvested performance stock granted to
Mr. Becker under the Equity Compensation Plan; and (ii) 5,000 shares
underlying exercisable stock options awarded to Mr. Becker under the
Equity Compensation Plan.
<F19> Includes (i) 7,254 shares held by Mr. Fitzpatrick indirectly through
the Company's 401(k) Plan; (ii) 8,500 shares of unvested performance
stock granted under the Equity Compensation Plan; and (iii) 10,000
shares underlying exercisable stock options awarded to Mr.
Fitzpatrick under the Equity Compensation Plan.
<F20> Includes 1,800 shares of unvested performance stock granted to Mr.
Keel under the Equity Compensation Plan.
<F21> Includes (i) 7,065 shares held by Mr. Pruitt indirectly through the
Company's 401(k) Plan; (ii) 12,400 shares of unvested performance
stock granted under the Equity Compensation Plan; and (iii) 21,000
shares underlying exercisable stock options awarded to Mr. Pruitt
under the Equity Compensation Plan.
</FN>
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's officers and
directors to file with the Securities and Exchange Commission reports of
their ownership and changes in ownership of the Company's equity securities
and to furnish the Company with copies of all such reports. Except as
noted in the following sentence, and based solely on its review of copies
of Section 16 reports received by it, or on written representations from
certain reporting persons that no filings were required for those persons,
the Company believes that during 1998 all Section 16(a) filing requirements
applicable to its officers and directors were complied with. During 1998,
one Form 4 report was inadvertently filed late, relating to Mr. Chadwick's
exercise of a stock option and related sale of the option shares pursuant
to the cashless exercise procedures under the 1997 Equity Compensation
Plan. Also during 1998, one Form 4 report was inadvertently filed late,
relating to a sale of Company stock by Robert M. Gillis, a former Executive
Vice President of the Company and former president of First Vermont Bank
and Trust Company, following his retirement from the Company.
ARTICLE I
ELECTION OF DIRECTORS
The Certificate of Incorporation and By-laws of the Company provide
for division of the Board of Directors into three classes, as nearly equal
in number as possible, each class serving for a period of three years. As
of the end of 1998, with the completion of the Company's merger with
Evergreen Bancorp, Inc. ("Evergreen"), the Board of Directors consisted of
seventeen persons. Of the six incumbent directors whose terms expire at
the 1999 Annual Meeting, the following five directors will stand for re-
election to serve a three-year term expiring in 2002: Kathleen Hoisington,
Douglas G. Hyde, Anthony J. Mashuta, Angelo Pizzagalli and Thomas P.
Salmon. Director R. Allan Paul, whose term expires at the 1999 Annual
Meeting, has chosen not to stand for re-election to the Board and will
retire at the Annual Meeting. In addition, Director Richard M. Narkewicz,
M.D., whose term expires in 2000, has indicated that he will retire from
the Board at the 1999 Annual Meeting. It is expected that both Directors
Narkewicz and Paul will become Directors Emeriti upon their retirement from
the Board. In light of these retirements, the Board has fixed at fifteen
the number of directors for the ensuing year. Unless authority is
withheld, proxies solicited hereby will be voted in favor of each of the
five nominees to serve a three-year term expiring at the Annual Meeting in
2002. If for any reason not now known by the Company any of the five
nominees should not be able to serve, proxies will be voted for a
substitute nominee or nominees designated by the Board of Directors, or for
fewer than five nominees if the Board has instead voted to fix the number
of Directors at fewer than fifteen, as the Directors deem appropriate.
Set forth in the table below is certain information concerning each
of the nominees and other incumbent directors in the two classes whose
stated terms expire in future years. The dates indicated for service on
the Company's Board of Directors include service on the boards of the
Company's predecessor bank holding companies, but not the subsidiaries.
<TABLE>
<CAPTION>
Served as
Director
Name and Age Since Principal Occupation
- ---------------------------------------------------------------------
Nominees for Director whose terms (if elected) will expire in 2002:
<S> <C> <C>
Kathleen Hoisington, 56 1996 President,
Hoisington Realty, Inc.
Bennington, VT
(real estate agency)
Douglas G. Hyde, Esq., 56 1997 Principal,
Douglas Hyde Associates
Shelburne, VT
(business development)
Anthony J. Mashuta, 42 1998(1) President,
Cool Insuring Agency, Inc.
Latham, NY
(insurance services)
Angelo P. Pizzagalli, 64 1983 Co-Chairman,
(Chairman of the Board of Pizzagalli Construction Company
Banknorth Group, Inc.) South Burlington, VT
(construction business)
Thomas P. Salmon, Esq., 66 1982 Of Counsel,
Salmon and Nostrand
Bellows Falls, VT
(law firm)
Incumbent Directors whose terms will expire in 2001:
Thomas J. Amidon, Esq., 59 1982 Attorney at Law
Stowe, VT
Jacqueline D. Arthur, 49 1996 President and Chief Financial Officer,
Frontline Solutions, Inc.
Lowell, MA
(association of technical and professional
training companies)
Robert A. Carrara, 59 1983 Vice President and Treasurer,
J.P. Carrara & Sons, Inc.
North Clarendon, VT
(concrete products)
William H. Chadwick, 62 1987 President and Chief Executive Officer,
Banknorth Group, Inc.
Burlington, VT
Susan C. Crampton, C.P.A., 58 1985 Principal,
The Vermont Partnership
Jericho, VT
(business consultants)
George W. Dougan, 59 1998(1) Vice Chairman,
Banknorth Group, Inc.
Burlington, VT
Incumbent Directors whose terms will expire in 2000:
Robert F. Flacke, 66 1998(1) President,
Fort William Henry Corporation
Lake George, NY
(Hotel operations)
Luther Frederick Hackett, 65 1983 President,
Hackett, Valine & MacDonald, Inc.
South Burlington, VT
(insurance agency)
Richard M. Narkewicz, MD, 65 1983 Retired Physician,
CHP/Kaiser Permanente, Northeast
Shelburne, VT
John B. Packard, 53 1997 President,
Catamount-Eagle Company, LLC
Rye, NH
(manufacturer and distributor,
industrial equipment)
Patrick E. Welch, 52 1998 Chairman and Chief Executive Officer,
National Life Insurance Company
Montpelier, VT
- --------------------
<FN>
<F1> Messrs. Dougan, Flacke and Mashuta formerly served on the Board of
Directors of Evergreen and were appointed to Banknorth's Board upon
completion of the Evergreen Merger. Mr. Dougan also served as
Evergreen's President and Chief Executive Officer prior to the
merger.
</FN>
</TABLE>
Except as otherwise indicated, each of the individuals listed in the
foregoing table has been employed by the firm or has had the occupation set
forth opposite his or her name for the past five years. Before joining
Frontline Solutions, Inc. (and its corporate predecessor, American Training
Solutions, LLC) Ms. Arthur served as the Vice President and Chief
Financial Officer of CP Clare Corporation, an electronics manufacturer in
Beverly Massachusetts, and as Vice President and Chief Financial Officer of
T Cell Sciences, Inc., a biotechnology firm in Needham, Massachusetts.
Before forming his business development firm, Douglas Hyde Associates, Mr.
Hyde served as President of Green Mountain Energy Resources LLC (1998) and
President and Chief Executive Officer of Green Mountain Power Corporation
(prior to 1998). Mr. Salmon previously served as President of the
University of Vermont until his retirement from that position and his
return to the practice of law with the firm of Salmon and Nostrand in 1998.
Before joining National Life Insurance Company in 1997, Mr. Welch served as
the Chairman of the Board and Chief Executive Officer of GNA Corporation in
Seattle, Washington.
Certain of the nominees and incumbent directors also serve as
directors of other companies registered or filing reports under the
Securities Exchange Act of 1934, or investment companies registered under
the Investment Company Act of 1940, as follows;
Mr. Dougan - Trans World Entertainment Corp.
Mr. Hackett - Central Vermont Public Service Corporation and Vermont
Electric Power Company, Inc.
Mr. Salmon - Green Mountain Power Corporation (Chairman of the Board)
Mr. Welch - The Sentinel Group Funds
Committees of the Board and Meeting Attendance
During 1998, the Company's Board of Directors held nine regular
meetings and three special meetings. Each incumbent director attended at
least 75% of the aggregate of all meetings of the Company's Board of
Directors and committees of which he or she was a member.
The Company's Board of Directors has standing Executive, Audit,
Compensation and Nominating/Governance Committees. Members of the
committees are appointed annually by the Board of Directors.
The Executive Committee has substantially all powers of the Board of
Directors in the management of the business and affairs of the Company
between meetings of the Board of Directors. The present members of the
Company's Executive Committee are R. Allan Paul (Chair), Susan C. Crampton,
William H. Chadwick, Luther F. Hackett, Richard M. Narkewicz, M.D., Angelo
P. Pizzagalli and Thomas P. Salmon. During 1998, the Executive Committee
met six times.
The functions of the Audit Committee are to recommend to the
Company's Board of Directors the engagement of independent accountants and
to review with the independent accountants the scope and results of the
audits, the Company's internal controls and the professional services
furnished by the independent accountants. The Audit Committee also has
oversight responsibility for the Company's internal loan review functions.
The present members of the Company's Audit Committee are Susan C. Crampton
( Chair), Thomas J. Amidon, Jacqueline D. Arthur, Robert A. Carrara,
Kathleen Hoisington, John B. Packard and Patrick E. Welch. The Chairman of
the Board attends meetings of the Committee ex officio but is not a member
of the Committee and does not vote on matters considered by the Committee.
During 1998, the Audit Committee met four times.
The functions of the Nominating/Governance Committee are to recommend
candidates for election as Directors of the Company and its subsidiaries
and to consider recommendations for improvements in corporate governance.
The Committee will consider recommendations by stockholders for nomination
as Directors, provided such recommendations are submitted in writing to the
Secretary of the Company. The present members of the Nominating/Governance
Committee are Thomas P. Salmon (Chair), Thomas J. Amidon (Vice Chair),
Robert A. Carrara, William H. Chadwick, Robert F. Flacke, Kathleen
Hoisington, Luther F. Hackett and Douglas G. Hyde. The Chairman of the
Board attends meetings of the Committee ex officio, but is not a member of
the Committee and does not vote on matters considered by the Committee.
During 1998, the Nominating/Governance Committee met three times.
The functions and membership of the Company's Compensation Committee
are described below under the caption "Compensation Committee Interlocks
and Insider Participation."
Compensation Committee Interlocks and Insider Participation
The Company is not aware of the existence of any interlocking
relationships between the senior management of the Company and that of any
other company.
The present members of the Compensation Committee of the Board are
Richard M. Narkewicz, M.D. (Chair), John B. Packard (Vice Chair),
Jacqueline D. Arthur, Douglas G. Hyde, R. Allan Paul, Anthony J. Mashuta,
Angelo P. Pizzagalli and Patrick E. Welch. President and Chief Executive
Officer William H. Chadwick attends meetings of the Compensation Committee
ex officio, but is not a member of the Committee and does not participate
in its votes. The function of the Company's Compensation Committee is to
review and to make recommendations to the Board of Directors concerning
compensation and benefits paid to the Company's employees and to the Boards
of Directors of the Company's subsidiaries. A Report of the Compensation
Committee on matters relating to executive compensation is set forth below
under the caption "COMPENSATION COMMITTEE REPORT." During 1998, the
Compensation Committee met five times.
Compensation Committee member R. Allan Paul is Of Counsel to the
Burlington, Vermont law firm of Paul, Frank Collins, Inc., which performed
various legal services for the Company or its subsidiaries during 1998 and
is expected to also perform legal services for the Company or its
subsidiaries during 1999.
Other Director Affiliations and Related Transactions
Thomas J. Amidon is an attorney who practices law in Stowe, Vermont.
Thomas P. Salmon is Of Counsel to the law firm of Salmon & Nostrand in
Bellows Falls, Vermont. Susan C. Crampton's husband is a part owner of the
law firm of Gravel and Shea in Burlington, Vermont. Each of these law
firms performed various legal services for the Company or its subsidiaries
during 1998 and it is expected that they will perform legal services for
the Company or its subsidiaries during 1999.
The Company's banking subsidiaries have had, and in the future expect
to have, banking transactions with directors and officers of the Company,
with members of their immediate families and with corporations and
organizations with which the directors and officers are affiliated. These
transactions were undertaken in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other
persons, and do not involve more than normal risk of collectibility or
present any other unfavorable features.
Directors' Fees
Directors of the Company who are not also salaried employees of the
Company or its subsidiaries receive an annual retainer of $10,000. The
Chair of the Board receives an additional annual retainer of $20,000.
Chairs of the Company's standing committees receive an annual retainer of
$2,000. All directors, other than salaried employees of the Company,
receive $750 for each Board meeting attended and $600 for each committee
attended, except that if a committee meeting is held on the same day as a
Board meeting the committee meeting fee is $400. From time to time Board
meetings and committee meetings may be held by telephone conference, in
which case reduced meeting fees apply ($375 for Board meetings; $300 for
committee meetings).Directors are reimbursed for their out-of-pocket
expenses incurred in attending meetings of the Board or its committees.
Deferred Compensation Plan
Directors may elect to defer current receipt of some or all of their
fees under the Company's Amended and Restated 1994 Deferred Compensation
Plan For Directors and Selected Executives. Under the terms of the plan,
participants may elect to credit deferrals to either or both of (i) a cash
account which bears interest (adjusted annually) at a rate equal to one-
half a percentage point above the one-year Treasury bill rate, and (ii) a
Company common stock unit account. The number of common stock units
credited to a participant's account is determined by the amount of the
deferrals and the market value of the Company's common stock at the time
the deferrals are credited to the account. Payment of deferrals from the
cash account is made only in cash and payment from the Company stock
account is made only in the form of common stock. Payments are deferred
until the participant's retirement, death or disability, or at an earlier
or later date elected by the participant. Amounts deferred and interest
and other accruals under the plan represent a general unsecured obligation
of the Company and no assets of the Company have been segregated to meet
the Company's obligations under the plan.
Directors' Stock Ownership Guidelines
Because the Board believes that ownership of Company stock helps
align management and shareholder interests, the Board has adopted stock
ownership guidelines for directors and certain officers. The stock
ownership guidelines for executive officers are described below under the
caption "COMPENSATION COMMITTEE REPORT." The directors' stock ownership
guidelines recommend that each director own Company common stock equal in
value to five times the amount of the director's annual retainer. If a
director fails to achieve the recommended level of stock ownership within
five years, the director will receive his or her retainer partially in the
form of the Company's stock. Under the guidelines, stock units accrued
under the Deferred Compensation Plan are considered in satisfying the stock
ownership test, but stock options are not.
Directors Emeriti
Several former directors of the Company have been appointed to serve
as Directors Emeriti. Under By-law amendments adopted by the Board of
Directors in 1996, only individuals who were directors of the Company on
February 27, 1996 and who continue to serve until their retirement will
qualify for appointment as Directors Emeriti, provided that they retire
following attainment of age 65 and prior to the first Annual Meeting after
attainment of age 67. Directors Emeriti are entitled to attend meetings of
the Board of Directors, but do not vote on matters acted upon by the Board,
nor is their presence counted for purposes of determining a quorum.
Director Emeritus status terminates at the Annual Meeting following
attainment of age 72. The Director Emeritus designation will terminate
after all individuals who served on the Board of Directors on February 27,
1996 have served as Directors Emeriti or no longer qualify for such status.
Each Director Emeritus is paid an annual retainer of $10,000, but receives
no meeting or other fees. The present Directors Emeriti are Stephen E.
Baker, Richard J. Fleming, Sr., Lawrence H. Reilly, Margaret E. Richey,
Theodore H. Thomas, Jr. and Elizabeth G. Woods. Directors Richard M.
Narkewicz, M.D. and R. Allan Paul, Esq. will become Directors Emeriti upon
their retirement from the Board at the 1999 Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 1.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. During 1998 the
Committee was composed of seven independent, non-employee directors.
Recommendations of the Committee on compensation are submitted to the full
Board of Directors for approval.
Based on the Committee's recommendation, the Board has approved the
following principal objectives for the Company's executive policies:
* To increase management's focus on long-term strategic plans to
further the growth in the earnings of the Company.
* To increase management's focus on decisions to maximize annual
earnings.
* To link shareholder and management interests by tying a
significant portion of executive compensation rewards to changes
in shareholder value.
* To link shareholder and management interests by requiring
executive stock ownership.
* To attract experienced management.
* To retain quality management.
To reach these objectives, the executive compensation program
contains three components:
1. Base salary with possible annual merit increases based upon
individual performance.
2. Short-term cash incentive payments based on meeting annual plans
and budgets approved by the Board of Directors and based upon a
comparison to a select group of peer banking companies.
3. Long-term stock and stock-based cash awards, for meeting
performance goals approved by the Board of Directors over a two-
to five-year period and based on corporate performance.
The Committee believes that this compensation program fairly balances
individual, subsidiary and corporate performance and recognizes both the
short-term and long-term objectives of the Company.
It is the philosophy of the Committee to place significant emphasis
on incentive compensation, which reduces the relative amount of
compensation that is fixed. Compensation for management positions is a mix
of three components. For example, the portions of total compensation for
the President and Chief Executive Officer ("CEO") under the approved plan
for 1998, which would be earned if the Company met all performance
objectives would be:
<TABLE>
<S> <C>
Base Salary 45%
Short-Term Cash Incentives 22%
Long-Term Stock Awards 33%
Total Compensation 100%
</TABLE>
In general, the greater the executive's responsibilities, the greater
is the portion of his or her potential total compensation that is tied to
performance incentives and to the value of the Company's common stock. The
Committee and the Board believe that this approach properly reflects the
greater potential impact senior management has on the strength and
performance of the Company over the longer term.
The Committee and Board have established a peer group of like-sized,
publicly traded commercial banking organizations to use for executive
compensation comparisons. The Company's executive compensation program
compares total compensation levels of the CEO and other executives to
approximately the 50th percentile of the compensation peer group, which in
1998 consisted of 32 companies. There is no published data readily
available on the combined stock performance of that peer group, though the
Compensation Committee does review the relative stock performance over both
one and five year periods of individual companies included in the group.
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to a public company for compensation in excess of $1 million paid
to its CEO or any of its four most highly compensated executive officers
(other than the CEO). Certain compensation deemed to be "performance
based" under applicable Internal Revenue Service regulations is exempt from
this limitation. The Committee has periodically considered the impact of
Section 162(m) on the Company and in the past has concluded, based on
historical compensation levels, that Section 162(m) was not an immediate
concern to the Company. The Committee is now evaluating that position
based on anticipated future taxable compensation levels for certain Company
executives that could result from short-term and long-term incentive
compensation, including compensation resulting from exercise of stock
options and vesting of performance stock awards, which reflects
appreciation in the market value of the Company's Common Stock. The
Committee and the Board will continue to review the Company's executive
compensation arrangements in light of the issue of Section 162(m)
deductibility and the Company's overall compensation goals described above.
Components of Compensation
Base Salary. Consistent with the philosophy described above, the
base salary of executive officers is generally targeted to be below the
median of comparable businesses. Base salaries for all managers are
reviewed annually and salaries may be increased based on individual
contributions to the Company. Each position is assigned to a grade level
and each grade level has a range of base salary.
Management and the Compensation Committee work with the consulting
firm of Watson Wyatt Worldwide in reviewing and setting the overall
compensation strategy for the company. The pay ranges were reviewed in
1998, based on annual survey information from Watson Wyatt Worldwide. The
midpoint (50th percentile) for the President and CEO for 1998 was $343,855
and for 1999 is $425,000.
Mr. Chadwick's base salary was increased from $295,000 to $320,000 in
1998. In establishing his salary level the Committee and the Board
considered the Company's 1997 performance, as measured by established goals
for net income, return on average equity (ROAE), return on average assets
(ROAA), efficiency ratio and the ratio of non-performing assets to total
assets (NPA/TA), as well as the Company's 1997 performance relative to its
peer group. The other senior executives whose performance met or exceeded
expectations, were also given base salary increases in 1998. All salary
increases for senior executives were approved by the Compensation Committee
and the Board.
Short-Term Cash Incentives. During 1998 Executive personnel of the
Company and its subsidiaries earned cash incentives under the Management
Incentive Compensation Plan for meeting annual goals established by the
Board. Incentives for the parent company executives are based 100% on
corporate performance. Incentives for the subsidiary presidents are based
on 75% on corporate performance and 25% on the respective subsidiary's
performance. Incentives for designated members of senior management of
each subsidiary are based 50% on corporate performance and 50% on the
respective subsidiary's performance. In every case, the requirements of
the Company to meet its overall goal must be met before any incentives are
paid for the subsidiary's performance. The Board retains the discretion
under the Plan to adjust the performance targets and/or payments amounts at
any time in cases of significant nonrecurring events.
For 1998, there were five levels of incentives of participants.
Possible incentives for the President and CEO ranged between 0% and 90% of
salary paid for the calendar year and for the other four most highly
compensated executives, between 0% and 63%. Performance targets for the
Company included targets based on ROAE, ROAA, efficiency ratio and NPA/TA.
Performance targets for each subsidiary are based on that subsidiary's
ROAA, as well as the subsidiary's efficiency ratio and NPA/TA ratio. The
corporate and subsidiary performance targets for 1998 included ROAE and
ROAA in order to emphasize the link between short-term and long-term
performance.
A performance-based peer comparison component is included to
emphasize the Board's desire to rank in the higher percentiles of the peer
group's performance. ROAE (weighted at two), and relative total return to
shareholders (weighted at one) were chosen as peer group measures due to
the high correlation between those measures and the market value of
publicly traded commercial banking company stocks.
Based upon 1998 performance, the President and CEO earned an
incentive award of 55.7% of base salary. The other four most highly
compensated executive officers of the Company earned incentive awards for
1998 ranging from 39.6% to 38.1% of base salary.
Long-Term Stock Awards. Improvements in the Company's long-term
performance, as evidenced by meeting Board-adopted goals for ROAE and ROAA
and increased market value of its stock, are rewarded under the Banknorth
Group, Inc. Equity Compensation Plan (the Plan). The Plan provides for
discretionary awards to executives designated by the Compensation
Committee. Awards may include stock options, stock appreciation rights,
restricted stock, performance shares, restricted stock units and
performance share units. Because awards of options and stock appreciation
rights are keyed to the market value of the Company's stock at the time of
grant, the future value of those awards is entirely dependent on increases
in the market value of the Company's stock.
During 1998, the Board of Directors granted an aggregate of 30,338
incentive stock options and 158,017 non-qualified stock options and awarded
7,000 performance shares (restricted stock with performance-based
restrictions) to all Plan participants. The award amounts were set to
approximate the compensation mix described above. The CEO received 2,758
incentive stock options, 7,242 non-qualified stock options and 3,200
performance shares. These awards were the highest of any Company
executive. The other four most highly compensated executive officers
received, in the aggregate, 11,032 incentive stock options, 14,573 non-
qualified stock options and 2,800 performance shares with vesting of
performance shares over five years tied to attainment of annual ROAE and
ROAA targets.
The Board intends that future option and performance share and unit
awards will be consistent with the emphasis on performance-driven
compensation and will be consistent with the mix of components of
compensation described earlier in this report. The Committee and the Board
consider stock-based awards annually based on the targeted compensation mix
described above and not based upon prior or anticipated future awards.
Executive Stock Ownership Guidelines
In order to further align the interests of executives and
shareholders, the Board in 1994 adopted stock ownership guidelines for the
Company's executives. (Similar guidelines were also adopted for the
Directors). The guidelines recommend that executives own Company stock
equal in market value to specified multiples of their base salary. The
recommended multiple for the CEO is three times base salary and for the
next four most highly compensated executive officers, the recommended
multiple is two times base salary. If an executive has not attained these
levels of stock ownership within five years, the executive may subsequently
receive stock in lieu of cash awards to which the executive may otherwise
be entitled. Stock options are excluded from the stock ownership
calculations under the guidelines.
Banknorth Group, Inc. Compensation Committee
<TABLE>
<S> <S> <S>
Richard M. Narkewicz, M.D., Chair Luther F. Hackett* R. Allan Paul, Esq.
Thomas J. Amidon* Douglas G. Hyde, Esq. Angelo P. Pizzagalli
Jacqueline D. Arthur John B. Packard Patrick Welch
- --------------------
<FN>
<F*> Messrs. Amidon and Hackett served on the Committee until May, 1998.
</FN>
Pursuant to Item 402(a)(9) of Regulation S-K promulgated by the SEC,
neither the foregoing Report nor the material set forth below under the
caption "STOCK PERFORMANCE COMPARISON" shall be deemed to be filed with the
SEC for purposes of the Securities Exchange Act of 1934, nor shall such
Report or such material be deemed to be incorporated by reference in any
past or future filing by the Company under the Securities Exchange Act of
1934 or the Securities Act of 1933, as amended.
STOCK PERFORMANCE COMPARISON
Set forth below is a line-graph presentation comparing the change in
cumulative, five-year shareholder returns on the Company's stock with
cumulative, five-year returns of two peer indices--the Nasdaq U.S.
Companies Stock Index and the Nasdaq Bank Stock Index. Both indices are
unmanaged and published by Nasdaq.
</TABLE>
<TABLE>
<CAPTION>
NASDAQ US NASDAQ BANK NASDAQ BKNG
--------- ----------- -----------
<S> <C> <C> <C>
December 1993 100.000 100.000 100.000
103.035 101.643 106.410
102.073 100.365 102.050
March 1994 95.797 98.790 93.650
94.553 101.984 99.470
94.785 106.634 106.060
June 1994 91.318 106.639 107.030
93.193 108.119 123.620
99.135 110.882 132.210
September 1994 98.881 107.821 126.980
100.824 104.581 119.120
97.479 100.216 122.530
December 1994 97.752 99.636 115.940
98.310 102.982 134.380
103.509 108.018 134.280
March 1995 106.578 109.084 124.970
109.936 112.107 130.290
112.772 115.524 136.830
June 1995 121.911 120.435 144.210
130.873 126.109 158.960
133.526 132.878 170.260
September 1995 136.596 135.945 179.720
135.807 138.159 171.610
138.996 145.244 186.370
December 1995 138.256 148.383 209.490
138.936 148.729 183.650
144.224 150.772 186.370
March 1996 144.699 154.228 193.220
156.700 153.443 191.850
163.896 156.019 183.630
June 1996 156.508 156.788 189.150
142.551 154.835 180.860
150.538 165.560 196.050
September 1996 162.052 173.490 207.870
160.261 181.172 191.880
170.168 194.714 215.520
December 1996 170.015 195.908 232.310
182.098 206.805 228.110
172.026 218.474 253.530
March 1997 160.793 210.605 228.170
165.820 215.342 239.440
184.612 228.788 246.710
June 1997 190.266 245.068 262.310
210.349 263.878 275.070
210.028 261.731 285.220
September 1997 222.440 289.029 311.600
210.924 290.198 345.110
211.979 301.508 346.770
December 1997 208.580 328.018 368.260
215.158 313.620 356.800
235.360 330.930 369.380
March 1998 244.052 346.761 420.500
248.196 351.227 417.620
234.573 339.439 422.350
June 1998 251.119 340.136 428.130
248.467 329.863 404.270
199.752 268.966 318.610
September 1998 227.341 286.870 340.430
236.632 307.340 370.990
259.943 317.206 390.310
December 1998 293.209 324.902 440.010
</TABLE>
Assumes $100 invested at the close of trading day preceding the first day
of the fifth preceding fiscal year in BKNG common stock, NASDAQ, and NASDAQ
Banks.
* Cumulative total return assumes reinvestment of dividends.
EXECUTIVE OFFICERS
Set forth below is certain information regarding the executive
officers of the Company.
<TABLE>
<CAPTION>
Position with the Company
Name and Age and Occupation for Past Five Years
- -------------------------------------------------------------------------------
<S> <C>
William H. Chadwick, 62 President, Chief Executive Officer and Director;
Chair, Banknorth Policy Committee.
George W. Dougan, 59 Vice Chairman and Director; Member, Banknorth Policy Committee.
Previously: President, Chief Executive Officer and Director of
Evergreen Bancorp, Inc. (1994-1998).
Thomas J. Pruitt, 56 Executive Vice President and Chief Financial Officer;
Member, Banknorth Policy Committee; Chairman, Banknorth
Asset/Liability Committee.
Richard J. Fitzpatrick, 49 Executive Vice President - Chief Banking Officer;
Member, Banknorth Policy Committee; Director, The Howard Bank, N.A.
Previously: President, Chief Executive Officer and Director, The Howard
Bank, N.A.
John M. Keel, 42 Executive Vice President-Chief Information Officer;
Member, Banknorth Policy Committee. Previously: Senior Vice
President, Key Services Corp., Cleveland, OH (prior to March, 1997).
Owen H. Becker, 61 Executive Vice President-Administration, Banknorth;
Member, Banknorth Policy Committee. Previously: Consultant, Vermont
State Colleges (1994).
Neal E. Robinson, 47 Senior Vice President, Treasurer and Principal
Accounting Officer, Banknorth; Treasurer, all Banknorth subsidiaries.
</TABLE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation, and certain
other compensation, paid to the Chief Executive Officer and each of the
other four most highly compensated executive officers of the Company in
1998 for services rendered to the Company and its subsidiaries in all
capacities during each of the years 1996, 1997 and 1998.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
--------------------------- -------------------------------------
Securities
Restricted Underlying All Other
Stock Options/ Compen-
Name and Principal Position(1) Year Salary(2) Bonus Awards(3) SARs(#)(4) sation(5)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William H. Chadwick, President 1998 $327,499 $182,509 $174,000 10,000 $ 6,400
and Chief Executive Officer 1997 290,376 133,238 175,313 12,000 6,333
1996 272,096 43,195 142,875 20,000 6,000
Thomas J. Pruitt, Executive 1998 $202,385 $ 78,949 $ 54,375 7,000 $ 5,985
Vice President and Chief 1997 188,846 60,656 70,125 8,000 6,041
Financial Officer 1996 182,115 20,238 57,150 10,000 6,000
Richard J. Fitzpatrick, 1998 $193,077 $ 76,445 $ 54,375 7,000 $ 6,354
Executive Vice President of the 1997 158,846 64,634 5,063 5,000 5,708
Company - Chief Banking Officer 1996 154,038 24,261 5,719 5,000 6,055
John M. Keel, Executive Vice 1998 $148,654 $ 57,989 $ 43,500 2,758 $ 5,451
President - Chief Information 1997 101,250 32,521 35,063 5,000 69,834
Officer (6)
Owen H. Becker, Executive 1998 $147,923 $ 57,704 $ - 8,847 $ 4,478
Vice President - Administration 1997 137,692 44,226 35,063 5,000 4,933
1996 128,077 14,233 35,719 5,000 5,634
- --------------------
<FN>
<F1> Table does not include executive officers of Evergreen to whom
compensation was paid during 1999 by Evergreen and for Evergreen
Bank, N.A. prior to consummation of the Evergreen Merger. For
informational purposes, data regarding the compensation paid by
Evergreen in 1998 to Mr. Dougan, who now serves as the Company's Vice
Chairman and who previously served as Evergreen's President and Chief
Executive Officer prior to the Evergreen Merger, is set forth below
under the caption "Other Management Compensation."
<F2> Includes voluntary pre-tax and after-tax salary deferrals under the
Company's Employee Savings (401(k)) Plan.
<F3> During 1998, performance shares were awarded to the named executives
under the Company's 1997 Equity Compensation Plan as follows: Mr.
Chadwick, 3,200 shares; Mr. Pruitt, 1,000 shares; Mr. Fitzpatrick,
1,000 shares; and Mr. Keel, 800 shares. All such awards included an
award of performance share units entitling the holder to receive a
cash payment upon vesting equal to 50% of the value of the underlying
shares. Vesting of both the performance shares and performance share
units awarded in 1998 requires continuous service through the
restriction period ending five years after the date of grant and is
subject to the additional condition that vesting will occur in 25%
increments (not to exceed 100% in the aggregate) only in any of the
calendar years 1998 through 2002 in which the Company achieves a
return on average equity of at least 13% and a return on average
assets of at least 1.1%. All awards will vest immediately upon a
change in control of the Company. Holders of performance stock are
entitled to receive dividends on the performance stock during the
restriction period if and to the extent dividends are paid on the
Company's common stock generally. No dividends are paid on
performance stock units. The amounts disclosed in the table include
the value of both the performance stock and performance stock units
on the respective dates of grant ($36.25 per share for performance
stock awarded in 1998), without regard to restrictions. As of
December 31, 1998, the total number of unvested shares of performance
stock held by the individuals named in the table, together with the
market value of those shares and related performance stock units on
such date ($37.625 per share), without regard to restrictions, was as
follows: Mr. Chadwick, 28,200 shares, $1,591,538; Mr. Pruitt, 12,400
shares, $699,825; Mr. Fitzpatrick, 8,500 shares, $479,719; Mr. Keel,
1,800 shares, $101,588; and Mr. Becker, 4,500 shares, $253,969.
<F4> The numbers shown in the table represent the shares underlying stock
options granted to the named executives under the Equity Compensation
Plan (or its predecessor plan) during each of the years shown. All
options shown in the table are subject to a two-year holding period
from the date of grant before they become exercisable, and expire ten
years from the date of grant. Options become immediately exercisable
upon a change in control of the Company regardless of whether the
two-year holding period has been met. All 1998 options were issued
at an exercise price of $36.25 per share, which represents the fair
market value of the Company's stock on the date of grant (July 28,
1998).
<F5> Represents employer matching contributions under the Company's
Employee Savings (401(k)) Plan and, for Mr. Keel, $68,034 in
relocation expenses paid in 1997.
<F6> Mr. Keel became an officer of the Company in March, 1997.
</TABLE>
COMPENSATION AND BENEFIT PLANS
1997 Equity Compensation Plan
Executives may receive awards of stock options, stock appreciation
rights and restricted stock and restricted stock units (including
performance shares and performance share units) under the Company's 1997
Equity Compensation Plan (the "Equity Compensation Plan"). Eligibility is
limited to those officers and other key executive personnel of the Company
and its subsidiaries who are in positions in which they may contribute
significantly to the profitability of the Company. Eligible employees are
designated annually by the Board of Directors, upon recommendation of the
Compensation Committee, which administers the Plan. The Plan was approved
by the shareholders in 1997 and provides that up to 1,050,000 shares may be
issued, subject to standard antidilution adjustments such as for
recapitalizations, stock splits and stock dividends. The Plan terminates
in the year 2007 and any new Plan will require shareholder approval.
Awards of performance shares and performance share units made
pursuant to the Equity Compensation Plan, during the last three years to
the five executives named in the summary compensation table are disclosed
in such table and accompanying footnotes.
The following table sets forth certain information regarding the
grant of stock options under the Company's Equity Compensation Plan made
during 1998 to the five executive officers named in the summary
compensation table.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise Grant Date
Options/SARs Employees in or Base Expiration Present
Name Granted(#) Fiscal Year Price ($/Sh)(1) Date(2) Value(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William H. Chadwick 10,000 5.31% $36.25 7/28/08 $80,650
Thomas J. Pruitt 7,000 3.72% 36.25 7/28/08 60,550
Richard J. Fitzpatrick 7,000 3.72% 36.25 7/28/08 60,550
John M. Keel 2,758 1.46% 36.25 7/28/08 23,857
Owen H. Becker 8,847 4.70% 36.25 7/28/08 76,526
- --------------------
<FN>
<F1> Represents the fair market value of the Company's common stock on the
date of grant. The exercise price may be paid in cash or in shares
of the Company's stock valued at their fair market value on the date
of exercise, or a combination of the two, or through withholding of a
sufficient number of shares upon exercise.
<F2> All options listed in the table (a) were granted on July 28 1998, (b)
are subject to a two-year holding period before they become
exercisable and (c) are subject to early termination following the
optionee's termination of employment during the option period.
<F3> Represents a discounted present value of $8.65 per share, determined
using the Black-Scholes valuation method and assuming a grant date
market price and option exercise price of $36.25 per share, an
expected period of 5 years prior to option exercise, an annual
dividend yield of 2.35%, expected market value volatility of 25.95%
and an alternative, risk free investment rate of 4.50% per year.
</FN>
</TABLE>
In assessing the grant date values in the foregoing table it should
be kept in mind that no matter what theoretical value is placed on a stock
option on the date of grant, its ultimate value will be dependent on the
market value of the Company's stock at a future date and that value will in
large part depend, in turn, on the efforts of its management team to foster
the future success of the Company.
The following table sets forth certain information regarding year-end
values of outstanding stock options issued under the Equity Compensation
Plan (and its predecessor plan) to the executive officers named in the
summary compensation table, as well as information on option exercises
during 1998 by such officers:
Aggregated Option/SAR Exercises in Last Fiscal Year,
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Number Unexercised In-the-Money
Of Shares Options/SARs Options/SARs
Underlying at FY-End(#)(2) at FY-End($)(2)
Options/SARs Value Exercisable/ Exercisable/
Name Exercised Realized(1) Unexercisable Unexercisable
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William H. Chadwick 20,000 $435,375 20,000/22,000 $435,000/$181,375
Thomas J. Pruitt N/A N/A 21,000/15,000 $470,625/$123,625
Richard J. Fitzpatrick N/A N/A 5,000/7,000 $226,875/$ 80,875
John M. Keel N/A N/A 0/7,758 $ 0/$ 74,973
Owen H. Becker N/A N/A 5,000/11,089 $108,750/$ 79,470
- --------------------
<FN>
<F1> Represents the difference between the option exercise price and the
market value of the stock on the date of exercise.
<F2> Year-end values are based on the market value of the Company's stock
on December 31, 1998 ($37.625 per share), less the applicable option
exercise prices.
</FN>
</TABLE>
Management Incentive Compensation Plan
The Company's Management Incentive Compensation Plan, which provides
short-term performance incentives, is described above under the caption
"COMPENSATION COMMITTEE REPORT." Awards earned under the Plan for services
rendered during each of the last three years by the five executives named
in the summary compensation table are disclosed in such table and
accompanying footnotes.
Employee Savings (401(k)) Plan
The Company maintains an Employee Savings Plan (also known as 401(k)
Plan) which provides a means for eligible employees to accumulate savings
and investment income without payment of current income taxes. Employees
who have completed at least three months of service, as defined in the
Plan, and are scheduled to work at least twenty hours per week are eligible
to participate. Participants may elect to contribute to the Plan between
1% and 15% of eligible compensation on a pre-tax basis or between 1% and
10% on an after-tax basis, or a combination of both, up to a maximum of 15%
of eligible compensation. The Company makes a matching contribution in
cash or stock equal to 66 2/3% of the employee's contributions up to a
maximum of 6% of eligible compensation. A participant may direct the
investment of his Plan account among various portfolios maintained by the
Company's trust and investment management subsidiary, The Stratevest Group,
N.A., which serves as the trustee of the Plan. Participants are at all
times fully vested in their Plan accounts. Generally, distribution of
employee contributions is deferred until the participant's death,
disability, retirement or other termination of employment, except in cases
of financial hardship. Voluntary deferrals and matching employer
contributions credited in the years 1996 through 1998 to the Plan accounts
of the executives named in the summary compensation table are reflected in
the table and accompanying footnotes.
Deferred Compensation Plan
The Company's Amended and Restated 1994 Deferred Compensation Plan,
pursuant to which participants may elect to defer receipt of all or a
portion of their cash compensation, is described above under the caption
"ARTICLE 1-ELECTION OF DIRECTORS-Deferred Compensation Plan."
Contracts with Management
Certain officers of the Company, including Mr. Chadwick, George W.
Dougan, Vice Chairman of the Company and formerly Evergreen's President and
Chief Executive Officer, as well as the four additional executive officers
named in the summary compensation table, are each parties to a Change of
Control Agreement with the Company which provides for a lump sum payment to
the officer in the event his employment with the Company is terminated
(including a voluntary termination in some circumstances, such as due to a
material reduction in his duties) within two years following a change in
control of the Company. The change of control payment would be equal to
the value of vested and unvested benefits and accruals under the Company's
qualified and non-qualified plans, plus a specified multiple (three times
for Mr. Chadwick and two times for Mr. Dougan and the named officers) of
the aggregate of the officer's base salary then in effect, the average
annual cash bonus earned by the officer during a specified calculation
period (three years for Mr. Chadwick and two years for Mr. Dougan and the
other named officers) and the value of the annual contributions and
accruals for the officer's account under the Company's qualified and non-
qualified plans. The officer would also be entitled under the agreement to
immediate vesting of stock-based compensation, including awards under the
1997 Equity Compensation Plan and predecessor plans. Benefits under the
change of control contracts are subject to reduction to the extent
necessary to avoid payment of compensation that would be considered "excess
parachute payments" under Section 280G of the Internal Revenue Code.
Under these change of control agreements, a change in control will be
deemed to have occurred if (i) any person (including an individual, entity
or group) directly or indirectly owns, controls or has power to vote 25% or
more of the Company's voting stock, (ii) any person controls the election
of a majority of the Company's directors, or (iii) the Board of Directors
determines that any person directly or indirectly exercises a controlling
influence over the management or policies of the Company.
The Board of Directors believes that the compensation protection
afforded by the change of control agreements will facilitate an impartial
assessment by management of any change of control situation by minimizing
the possibility of conflicting personal financial interests.
Mr. Dougan and the Company are also parties to an Employment
Agreement pursuant to which Mr. Dougan will serve as Vice Chairman of the
Company for a period of three years following the Evergreen Merger, at an
annual salary of $225,000. During the term of his employment, Mr. Dougan
will be eligible to participate in the Company's employee benefit plans and
arrangements to the same extent as other Company employees. Mr. Dougan's
duties focus on strategic planning, merger and acquisition opportunities
and business development.
Other Management Compensation
Mr. Dougan received from Evergreen and/or Evergreen Bank, N.A.
regular cash compensation for services rendered during 1998, as follows:
base salary, $396,512; short-term cash inventive bonus, $168,777; and
matching employer contribution under Evergreen's 401(k) Plan, $4,800. Mr.
Dougan also received during 1998 stock options with respect to 20,000
shares of Evergreen common stock (equivalent to 18,000 shares of Company
common stock, adjusted for the merger exchange ratio), at an exercise price
equal to the fair market value of the Evergreen common stock on the date of
the grant, and became fully vested in such options upon consummation of the
merger. Under Mr. Dougan's employment agreement with Evergreen in effect
at the time of the merger, he received a change of control payment in the
amount of $1,328,353, which amount reflected a reduction in benefits in
order to avoid characterization as excess compensation under Section 280G
of the Internal Revenue Code. In addition, Mr. Dougan is entitled to
payment of benefits under the terms of Evergreen's supplemental retirement
benefit plan. All of the foregoing compensation was paid or funded by
Evergreen and/or Evergreen Bank, N.A. prior to consummation of the
Evergreen Merger.
Employee Pension Plan
The Company maintains a non-contributory, trusteed retirement income
plan for the benefit of all employees of the Company and its subsidiaries
who are 21 years of age or older and who have completed at least 1,000
hours of service during a one-year period, as defined in the plan. Pension
benefits are based on the participant's average annual compensation, years
of service and Social Security covered compensation at the date of
retirement. "Average annual compensation" is defined as the highest average
of the annual compensation earned in any three consecutive years during the
ten years prior to retirement; "Social Security covered compensation" is
the average of the taxable Social Security wage bases in effect during the
last 35 years before attainment of Social Security normal retirement age;
and a "year of service" is ordinarily a year in which a participant has
worked at least 1,000 hours. A participant who retires on or after age 55
having at least 10 years of service is entitled to early retirement
benefits, with the amount of the benefit adjusted accordingly.
Participants are fully vested after completion of five years of service.
Pension benefits are payable as a joint or single life annuity or (in
certain circumstances) as a lump sum at the election of the participant.
Death benefits are payable to an employee's spouse in certain circumstances
if an employee who is vested in the Plan dies prior to retirement. Special
"grandfather provisions" apply to certain employees of the Company or its
subsidiaries who were covered under prior plans. Benefit calculations are
subject to the annual benefit limitation under Internal Revenue Code
Section 415 ($130,000 for 1998 and 1999) and to the limitation on annual
covered compensation under Code Section 401(a)(17) ($160,000 for 1998 and
1999). However, the Company has entered into supplemental retirement
arrangements (described below) with certain officers who would be affected
by these limitations.
The following table represents estimated annual benefits payable
under the Plan upon retirement at age 65 in 1999 to participants in
specified compensation and years of service classifications. Actual
benefits for certain retirees covered by the grandfather provisions
referred to above may exceed the amounts shown in the table.
<TABLE>
<CAPTION>
Assumed Average
Three-Year Years of Service
Annual ------------------------------------------------------------------
Compensation 10 15 20 25 30 35
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 25,000 3,250 4,875 6,500 8,125 8,938 9,750
$ 50,000 7,601 11,402 15,202 19,003 20,628 22,253
$ 75,000 12,476 18,714 24,952 31,190 33,628 36,065
$100,000 17,351 26,027 34,702 43,378 46,628 49,878
$125,000 22,226 33,339 44,452 55,565 59,628 63,690
$150,000 27,101 40,652 54,202 67,753 72,628 77,503
$175,000 & Higher 29,051 43,577 58,102 72,628 77,828 83,028
</TABLE>
For purposes of calculating benefits under the Plan for all
participants, including the executives named in the summary compensation
table, eligible earnings include salary and incentive compensation payments
(including any deferrals), but do not include matching employer
contributions under the 401(k) Plan. The credited years of service under
the Plan at December 31, 1998, for the executive officers named in the
summary compensation table were approximately as follows: Mr. Chadwick, 12
years; Mr. Pruitt, 10 years; Mr. Fitzpatrick, 6 years; Mr. Keel, 2 years;
and Mr. Becker, 4 years.
Supplemental Retirement Benefits
The Company maintains a supplemental retirement plan for those of its
executives (except as otherwise designated by the Board) whose pension
under the Company's pension plan would be subject to pay or benefit limits
under the Internal Revenue Code. Each of the executives named in the
summary compensation table participates in the Plan, which restores the
full amount of the benefit that would be payable under the pension plan if
the benefit formula were applied without regard to such limitations. The
Plan also provides that Mr. Becker, who joined the Company in 1995 at age
57, will receive a benefit, payable at age 65, of either $1,000 per month
for life if he leaves the Company before becoming vested in the Company's
qualified pension plan, or $2,000 per month for life if he leaves after
becoming vested. The table below shows total estimated annual pension
benefits (including supplemental benefits), for specified compensation and
years of service categories, assuming retirement at age 65 in 1999.
<TABLE>
<CAPTION>
Assumed Average
Three-Year Years of Service
Annual -------------------------------------------------------------
Compensation 10 15 20 25 30 35
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$175,000 31,976 47,964 63,952 79,940 85,628 91,315
$200,000 36,851 55,277 73,702 92,128 98,628 105,128
$225,000 41,726 62,589 83,452 104,315 111,628 118,940
$250,000 46,601 69,902 93,202 116,503 124,628 132,753
$275,000 51,476 77,214 102,952 128,690 137,628 146,565
$300,000 56,351 84,527 112,702 140,878 150,628 160,378
$325,000 61,226 91,839 122,452 153,065 163,628 174,190
$350,000 66,101 99,152 132,202 165,253 176,628 188,003
$375,000 70,976 106,464 141,952 177,440 189,628 201,815
$400,000 75,851 113,777 151,702 189,628 202,628 215,628
$425,000 80,726 121,089 161,452 201,815 215,628 229,440
$450,000 85,601 128,402 171,202 214,003 228,628 243,253
$475,000 90,476 135,714 180,952 226,190 241,628 257,065
</TABLE>
The supplemental plan also incorporates the terms of various
retirement agreements between the Company or its subsidiaries and certain
former employees, as well as the terms of a separate agreement with Mr.
Chadwick, which provides him with an additional supplemental annual
retirement benefit for the remainder of his lifetime following retirement
at age 65 (or earlier with the consent of the Company). That annual
benefit is equal to the number of years of his employment with the Company
(and its predecessor companies and subsidiaries), multiplied by $5,300, up
to a maximum annual benefit of $79,500. The annual benefit amount accrued
for Mr. Chadwick as of December 31, 1998 was $63,600. At the Company's
election, benefits under the agreement may be paid in equal monthly
installments of one-twelfth of the annual accrued benefit or in less
frequent lump sum payments. In the event of a change in control of the
Company and subsequent termination of his employment, Mr. Chadwick would be
entitled to receive in a lump sum a payment equal to the actuarial value of
his accrued annual benefit. The agreement also provides for benefits in
the event Mr. Chadwick becomes disabled while in the Company's employ.
The Board of Directors believes that supplemental retirement benefits
are an appropriate component of the Company's overall strategy for
attracting and maintaining executives of high caliber. Benefits under the
supplemental retirement arrangements referred to above will be paid out of
the general assets of the Company, either directly or through the purchase
of annuities or insurance coverage.
In connection with the Evergreen Merger, the Company assumed the
terms of Evergreen's supplemental retirement plan. Benefit payments under
such plan have been funded through assets segregated in a rabbi trust.
Beginning in April, 1999, Mr. Dougan will receive an actuarially reduced
monthly benefit under such Plan in the amount of $12,544. Mr. Dougan does
not participate in the Company's supplemental retirement plan described
above.
ARTICLE 2
APPOINTMENT OF AUDITORS
The Company has appointed KPMG LLP, independent public accountants,
as the external auditors for the Company for the year ending December 31,
1999, and requests ratification of that appointment. KPMG LLP has advised
the Company that it has no direct or indirect financial interest in the
Company.
The Company's consolidated financial statements for the year ended
December 31, 1998 were audited by KPMG LLP. Other services rendered during
1998 by KPMG LLP included tax return services, tax planning and
consultation and services relative to certain filings with the SEC. It is
expected that representatives of KPMG LLP will be present at the Annual
Meeting of the Company where they will have the opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 2.
SHAREHOLDER PROPOSALS
The Company's By-laws provide that a shareholder must furnish timely
written notice to the Company for nominations of persons for election as
Director or for bringing other business before an annual or special meeting
and the notice must contain specified information about the shareholder-
proponent and the director nominee or proposal for other business. To be
timely, a shareholder's notice must generally be delivered to the Secretary
of the Company not later than the 90th day nor earlier than the 120th day
prior to the first anniversary of the previous year's annual meeting, or
(in the case of a special meeting) not later than the 10th day following
public announcement of the date of a special meeting. The advance
notification deadline for shareholder nomination of directors or
presentation of other business for consideration at the 2000 Annual Meeting
is no earlier than January 12, 2000 and no later than February 11, 2000.
Directors nominations or proposals for the transaction of other business
will not be presented to the meeting unless the shareholder-proponent has
complied with all of the requirements of the advance notice By-law. A copy
of the Company's By-laws may be obtained upon request to the Corporate
Secretary.
Separate notification requirements apply in order for a shareholder's
proposal to be considered for inclusion in the Company's proxy material for
the 2000 Annual Meeting. In order to be so included, shareholder proposals
must be submitted in writing to the President of the Company not later than
November 26, 1999, and must comply with applicable rules and regulations of
the SEC. Any such proposal will be omitted from or included in the proxy
material at the discretion of the Board of Directors of the Company, in
accordance with applicable rules and regulations.
OTHER MATTERS
As of the date of this proxy statement, management knows of no
business expected to come before the meeting except as set forth above. If
any other matters should properly come before the meeting, proxies
solicited hereby will be voted on such matters in accordance with the
recommendations of management.
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE BANKNORTH GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 11, 1999, 11:00 A.M.
The undersigned hereby appoints Luther F. Hackett and Dr. Richard M.
Narkewicz, or either of them, as proxies, with full power of substitution
in each, to vote the common stock of Banknorth Group, Inc. that the
undersigned is (are) entitled to vote at the Annual Meeting of Shareholders
to be held at the Holiday Inn Centre of Vermont Complex, 476 Route 7 South,
Rutland, Vermont, on Tuesday, May 11, 1999, at 11:00 a.m., and at any
adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED
PRIOR TO ITS EXERCISE.
With- For All
For hold Except
1. ELECTION OF FIVE DIRECTORS [ ] [ ] [ ]
To serve until the Annual Meeting in
2002.
Kathleen Hoisington, Douglas G. Hyde, Esq., Anthony J. Mashuta,
Angelo P. Pizzagelli and Thomas P. Salmon, Esq.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except" and write that nominee's name in the space provided below.
__________________________________________________________________________
For Against Abstain
2. To ratify the selection of the [ ] [ ] [ ]
independent public accounting firm
of KPMG LLP as the Company's
external auditors for 1999.
In their discretion, to act upon such other business as may properly
come before the meeting or any adjournments thereof. If any such business
is presented, it is the intention of the proxies to vote the shares
represented hereby in accordance with recommendations of the management.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder(s). If no direction is made, this proxy
will be voted "FOR" items 1 and 2.
Please sign exactly as name(s) is (are) printed on the Proxy. When
signing as attorney, executor, administrator, trustee, guardian or in any
other representative capacity, please so indicate.
Date ________________________ Please be sure to sign and date
this proxy in the box below.
_____________________________ ______________________________
Shareholder sign above Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
BANKNORTH GROUP, INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
