BAR HARBOR BANKSHARES
82 Main Street
Bar Harbor, ME
March 17, 2008
Dear Shareholder:
The
2008 Annual Meeting of Bar Harbor Bankshares will be held at
11:00 a.m. EDT on Tuesday, May 20, 2008
, at the
Bar Harbor Club located at 111 West
Street in Bar Harbor, Maine
. Our directors and officers join me in inviting you to
attend this meeting and the reception following.
Enclosed are the Clerks official
Notice of Annual Meeting
,
a
Proxy Statement
, and the
Form of Proxy
. Please sign the Form
of Proxy and return it in the envelope provided so that your shares will be voted at the
Annual Meeting if you are unable to attend. Please also complete the reception postcard
and mail it separately from the
Form of Proxy
if you will be attending the
reception.
We look forward to seeing you on May 20
th
. Please join us
for the reception even if you are unable to attend the business meeting.
Very truly yours,
/s/Joseph M. Murphy
Joseph M. Murphy
President and
Chief Executive Officer
Enclosures
IT IS IMPORTANT THAT PROXIES BE
RETURNED PROMPTLY
Each Shareholder is urged to fill in, date and sign the enclosed
Form
of Proxy
and mail it in the envelope provided.
A Shareholder who executes this
Form of Proxy
may, prior to its
use, revoke it by written instrument, by a subsequently executed
Form of Proxy
or,
if attending the Annual Meeting of Shareholders, by notifying the Clerk or by giving
notice at the Annual Meeting.
|
(Page 2)
BAR HARBOR BANKSHARES
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 2008
Notice is hereby given that the
Annual Meeting of the Shareholders
of Bar Harbor Bankshares
will be held at the
Bar Harbor Club at 111 West Street in
Bar Harbor, Maine
, on
Tuesday, May 20, 2008, at 11:00 a.m. EDT
to consider and
act upon the following proposals:
-
To elect fourteen [14] persons to serve as directors for a term of one year.
-
To set the number of directors for the ensuing year at fourteen [14].
-
To transact such other business as may properly come before the Annual Meeting or any
adjournment thereof.
Shareholders of record as of the close of business on
March 24, 2008
,
will be entitled to notice of and to vote at the meeting.
The Board of Directors unanimously recommends that you vote
"FOR" each of the fourteen [14] director-nominees as directors on the
Companys Board of Directors and "FOR" setting the number of directors for
the ensuing year at fourteen [14].
The Board of Directors requests that you complete, sign, and date the
enclosed Proxy Card and mail it promptly in the enclosed postage-paid envelope. Any proxy
that you deliver may be revoked prior to the Annual Shareholder Meeting, in writing,
delivered to the Company, Attention: Marsha C. Sawyer, Clerk, 82 Main Street, Bar Harbor,
Maine 04609, stating that your proxy is revoked or by delivering a subsequently dated
proxy. Shareholders of record of the Companys common stock who attend the Annual
Shareholder Meeting may vote in person, even if they have previously delivered a signed
Proxy Card.
By Order of the Board of Directors
/s/Marsha C. Sawyer
Marsha C. Sawyer, Clerk
(Page 3)
BAR HARBOR BANKSHARES
82 Main Street
Bar Harbor, ME
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MAY 20, 2008
PROXY STATEMENT
This
Proxy Statement is furnished to the Shareholders of Bar Harbor Bankshares (the
"Company") in connection with the solicitation of proxies on behalf of the Board
of Directors for use at the Annual Meeting of Shareholders (the "Meeting"). The
Meeting will be held on Tuesday, May 20, 2008, at 11:00 a.m. EDT at the
Bar Harbor Club
located at 111 West Street in Bar Harbor, Maine
. The official
Notice of the Annual
Meeting of Shareholders
accompanies this Statement. A
Form of Proxy
for use at
the meeting and a return envelope for the proxy are enclosed. A Shareholder who executes
the proxy may, prior to its use, revoke it by written instrument, by a subsequently
executed proxy or, if attending the Meeting, by notifying the Clerk or by giving notice at
the Meeting. This
Proxy Statement
and the enclosed
Form of Proxy
will be
mailed to the Shareholders of the Company on or about April 7, 2008.
Proxies are being solicited by the Board of Directors of the Company,
(the "Board"), principally through the mail.
The Board of Directors and
Management of the Company may also solicit proxies personally, or by telephone, e-mail, or
facsimile transmission. The entire expense of solicitation, including costs of preparing,
assembling, and mailing the proxy material will be borne by the Company. These expenses
are not expected to exceed the amount normally expended for an annual meeting at which
directors will be elected.
Unless contrary instructions are specified, if the enclosed proxy is
executed and returned (and not revoked) prior to the Annual Meeting, the shares of common
stock of the Company represented thereby will be voted (1)
FOR
the election
of the fourteen [14] persons nominated as directors by the Board of Directors for a term
of one year, (2)
FOR
setting the number of directors at fourteen [14], and
(3) to transact such other business as may properly come before the Annual Meeting or any
adjournment thereof.
Shareholders of record as of the close of business on March 24, 2008,
(the "Record Date") will be entitled to notice of and to vote at the Annual
Meeting. Each share of Company common stock issued and outstanding is entitled to one vote
upon each matter presented at the Meeting. Only Shareholders of record at the close of
business on the Record Date are entitled to vote at the Meeting. The presence at the
Meeting, either in person or by proxy, of the holders of not less than a majority of the
shares entitled to vote at any meeting will constitute a quorum. If a quorum is present at
the Annual Meeting, action may be taken on any matter considered by the holders of a
majority of the shares present and voting. The inspector of election will treat
abstentions as shares that are present and entitled to vote for purposes of determining
the presence of a quorum, but not for purposes of voting with respect to determining the
approval of any matter submitted to the Shareholders for a vote. Shareholders who are
present will have an opportunity to vote on each matter properly brought before the
Meeting. If a broker indicates on the Proxy Card that it does not have discretionary
authority as to certain shares to vote on a particular matter those shares will be
considered as present for purposes of determining a quorum, but not for purpose of voting
with respect to that matter.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As
of March 3, 2008, the Company had outstanding 2,978,491 shares of its common stock (the
"Common Stock"), par value $2 per share.
The
following table sets forth information with respect to the beneficial owner of the
Companys Common Stock as of February 15, 2008, by: (i) each person or entity known
by the Company to own beneficially more than five percent (5%) of the outstanding Common
Stock, (ii) each current director-nominee for director on the Companys Board of
Directors, (iii) the Companys named executive officers (as defined on page 17 of
this Proxy under the heading "2007 Summary Compensation Table," and (iv) all
executive officers and directors as a group.
(Page 4)
Name of Beneficial Owners
|
Title of
Class
|
Amount of
Beneficial
Ownership
1
|
Percent
of Class
|
|
|
|
|
5% or more beneficial owners
|
|
|
|
John Sheldon Clark
1633 Broadway, 30
th
Floor
New York, NY 10019
|
Common
|
162,156
2
|
5.44%
|
|
|
|
|
Shufro Rose & Co., LLC
745 Fifth Avenue
New York, NY 10151-2600
|
Common
|
214,850
3
|
7.21%
|
|
|
|
|
Director- Nominees:
|
|
|
|
Robert
C. Carter
|
Common
|
1,900
8
|
*
|
|
|
|
|
Thomas
A. Colwell
|
Common
|
5,633
8
|
*
|
|
|
|
|
Jacquelyn
S. Dearborn
|
Common
|
1,745
8
|
*
|
|
|
|
|
Peter
Dodge
|
Common
|
4,760
8
|
*
|
|
|
|
|
Martha
T. Dudman
|
Common
|
2,218
8
|
*
|
|
|
|
|
Lauri
E. Fernald
|
Common
|
1,000
8
|
*
|
|
|
|
|
Gregg
S. Hannah
|
Common
|
500
8
|
*
|
|
|
|
|
Clyde
H. Lewis
|
Common
|
1,733
4,8
|
*
|
|
|
|
|
Joseph
M. Murphy
|
Common
|
111,736
8,9
|
3.75%
|
|
|
|
|
Robert
M. Phillips
|
Common
|
2,000
5,8
|
*
|
|
|
|
|
Constance
C. Shea
|
Common
|
1,300
8
|
*
|
|
|
|
|
Kenneth
E. Smith
|
Common
|
1,421
6,8
|
*
|
|
|
|
|
Scott
G. Toothaker
|
Common
|
750
7,8
|
*
|
|
|
|
|
David
B. Woodside
|
Common
|
1,000
8
|
*
|
|
|
|
|
Named Executive Officers:
|
|
|
|
Joseph
M. Murphy
|
Share
data set forth above in this table
|
Share
data set forth above in this table
|
Share
data set forth above in this table
|
|
|
|
|
Michael
W. Bonsey
|
Common
|
9,831
9
|
*
|
|
|
|
|
Gregory
W. Dalton
|
Common
|
5,005
9
|
*
|
|
|
|
|
Daniel
A. Hurley, III
|
Common
|
7,464
9
|
*
|
|
|
|
|
Stephen
M. Leackfeldt
|
Common
|
7,745
9
|
*
|
|
|
|
|
Gerald
Shencavitz
|
Common
|
15,393
9
|
*
|
|
|
|
|
Total
Ownership of all director-nominees, named executive officers, and specified Trust shares
of the Company as a group (nineteen [19] persons)
|
|
590,940
10
|
19.84%
|
(Page 5)
1
The number of shares beneficially
owned by the persons set forth above is determined under the rules of Section 13 of the
Exchange Act, and the information is not necessarily indicative of beneficial ownership
for any other purpose. Under such rules, an individual is considered to beneficially own
any shares of Common Stock if he or she directly or indirectly has or shares, (i) voting
power, which includes the power to vote or to direct the voting of the shares, or (ii)
investment power, which includes the power to dispose or direct the disposition of shares.
Unless otherwise indicated, an individual has sole voting power and sole investment power
with respect to the indicated shares. All individual holdings amounting to less than 1% of
issued and outstanding Common Stock are marked with an (*).
2
Includes 2,000 shares beneficially owned by Mr.
Clarks spouse over which Mr. Clark has shared voting and dispositive powers. This
figure also includes 84,566 shares held by trusts for which Mr. Clark serves as the sole
trustee.
3
Includes 7,500 shares with sole voting power and
dispositive power over all 214,850 shares.
4
Includes 1,175 shares held joint with Mr. Lewis wife.
5
Includes 500 shares over which voting and dispositive power
are shared jointly with Mr. Phillips spouse.
6
Includes 780 shares owned jointly with Mr. Smiths
spouse.
7
Includes 250 shares jointly owned with Mr. Toothakers
minor children.
8
Ownership figures for directors- nominees
include
500 director-qualifying shares owned by each person indicated.
9
Includes shares over which present executives have voting
power under the Companys 401(k) Plan and options to purchase shares of common stock
granted pursuant to the Company stock option plan which are exercisable within 60 days of
March 3, 2008, as follows:
Name
|
401K
|
Exercisable Options
|
Joseph M. Murphy
|
21,236
|
90,000
|
Michael W. Bonsey
|
631
|
8,770
|
Gregory W. Dalton
|
N/A
|
5,005
|
Daniel A. Hurley, III
|
1,144
|
5,120
|
Stephen M. Leackfeldt
|
N/A
|
7,645
|
Gerald Shencavitz
|
2,309
|
13,084
|
10
Total
beneficial ownership includes,
30,800
shares (1.03%) of the Common Stock held by two trusts, which, for purposes of voting, are
allocated equally among the directors present at the Annual Meeting under the terms of the
respective trust instruments. No director has any other beneficial interest in these
shares. These trusts are denominated for purposes of this Proxy Statement as the
"Parker Trust" and the "Lynam Trust".
The Parker Trust was established in 1955 in perpetuity. Bar Harbor
Trust Services, the Companys second tier non-depository trust services company
located in Ellsworth, Maine, is the sole Trustee, with full powers, of this trust
benefiting the Mt. Heights Cemetery in Southwest Harbor, Maine.
The Lynam Trust was established in 1942 in perpetuity to benefit four
named non-profit entities and to provide scholarships to graduates of Mount Desert Island
High School. Bar Harbor Trust Services is the sole Trustee, with full powers, and
administers the trust with the assistance of an established Scholarship Committee made up
of members of the Bar Harbor Bankshares Board of Directors and one community
representative.
The information provided is based on the records of the Company and on
information furnished by the persons listed.
The Company is not aware of any arrangement that could at a subsequent
date result in a change in control of the Company.
(Page 6)
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Companys officers,
directors, and persons who own more than 5% of a registered class of the Companys
equity securities (collectively "Section 16 Persons") to file initial reports of
ownership and reports of changes of ownership with the U. S. Securities and Exchange
Commission (the "Commission") and the American Stock Exchange
("AMEX"). Section 16 Persons are required by the Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Companys knowledge, based solely on review of such reports
provided to the Company and written representatives, all reports were filed timely and as
required except for:
On August 17, 2007, Mrs. Constance Shea purchased 100 shares of Company
common stock for which timely reporting did not occur. On August 22, 2007, a Form 4 was
filed reflecting her correct ownership.
On May 9, 2007, Ms. Lauri Fernald purchased 400 shares of Company
common stock for which only the purchase of 225 were reported on a timely basis. On
February 5, 2008 an amended Form 4 was filed to reflect her correct ownership.
DIRECTORS AND EXECUTIVE OFFICERS
Directors and Nominees:
Proposal I Election of Directors
At the Annual Meeting of Shareholders, fourteen [14] director-nominees
will stand for re-election to serve until the 2009 Annual Meeting of Shareholders and
until each directors successor is elected and qualified. The Companys Bylaws
were amended in November, 2007 to provide for the annual election of all directors. Each
director-nominee has consented to serve and to the use of his or her name in this Proxy.
All fourteen [14] of the director-nominees currently serve on the Board of the Company.
The Board has determined the majority of director-nominees are
"independent directors" as required in accordance with applicable laws,
regulations, and AMEX listing requirements. The exception is director-nominee Murphy, who
serves as President and Chief Executive Officer of the Company. Mr. Murphy does not serve
as a voting member of the Audit, Compensation and Human Resources, or Governance
Committees.
Proxies will be voted, unless authority to do so is expressly withheld,
in favor of the fourteen [14] director-nominees. The Board of Directors recommends voting
"FOR"
the election of each nominee as a director of the Company.
Proposal II Setting the Number of Directors to Fourteen [14]
The Companys Board of Directors currently consists of fourteen
[14] members. The Board of Directors recommends the number of Company directors for the
coming year be set at fourteen [14]. The Bylaws of the Company provide for no fewer than
nine [9] or more than twenty-seven [27] directors, with directors serving
annual terms
.
The Board of Directors recommends that you vote
"FOR"
setting the number
of directors for the ensuing year at fourteen [14].
(Page 7)
The following table sets forth for each director-nominee for election,
their name, age as of March 24, 2008, and positions with the Company or its subsidiaries,
Bar Harbor Bank &Trust ("BHBT") and Bar Harbor Trust Services
("BHTS") for purposes of the next two tables.
DIRECTOR-
NOMINEES
FOR
RE-ELECTION
Terms to Expire
in 2009
Name
|
Age
|
Year
First
Elected
Director
|
Current
Term to
Expire
|
Position
with
the Company
|
Positions
with Subsidiaries
|
Thomas A. Colwell
|
63
|
1991
|
2008
|
Chairman
and Director
|
Director,
BHBT since 1991.
Director, BHTS since 2004.
|
Robert
C. Carter
|
64
|
2003
1
|
2008
|
Director
|
Director,
BHBT since 1996.
Director, BHTS since 2004.
|
Jacquelyn
S. Dearborn
|
55
|
2006
|
2008
|
Director
|
Director,
BHBT since 2006.
Director, BHTS since 2006.
|
Peter
Dodge
|
64
|
2003
2
|
2008
|
Director
|
Director,
BHBT since 1987.
|
Martha
T. Dudman
|
56
|
2003
|
2008
|
Director
|
Director,
BHBT since 2003.
Director, BHTS since 2003.
|
Lauri
E. Fernald
|
46
|
2005
|
2008
|
Director
|
Director,
BHBT since 2005.
|
Gregg
S. Hannah
|
65
|
2006
|
2008
|
Director
|
Director,
BHBT since 2006.
Director, BHTS since 2006.
|
Clyde
H. Lewis
|
63
|
2005
|
2008
|
Director
|
Director,
BHBT since 2005.
|
Joseph
M. Murphy
|
65
|
2002
|
2008
|
Director
President and Chief
Executive Officer
|
Chairperson
and Director, BHBT since 2002. Chief Executive Officer of BHBT since 2003.
President, BHBT since February, 2005. Director, BHTS since 2002
|
Robert
M. Phillips
|
66
|
2003
3
|
2008
|
Director
|
Director,
BHBT since 1993.
Director, BHTS from 2000 through 2004.
|
Constance
C. Shea
|
63
|
2003
|
2008
|
Director
|
Director,
BHBT since 2001.
|
Kenneth
E. Smith
|
54
|
2004
|
2008
|
Director
|
Director,
BHBT since 2004.
Director, BHTS since 2004.
|
Scott
G. Toothaker
|
45
|
2003
|
2008
|
Director
|
Director,
BHBT since 2003.
|
David
B. Woodside
|
56
|
2003
|
2008
|
Director
|
Director,
BHBT since 2003.
|
1
Robert Carter served as a director of
the Company from 1996 through 2000 and then again from 2003 to present.
2
Peter Dodge served as a director of the Company from 1987 through 2000 and
then again from 2003 to present.
3
Robert Phillips served as a director of the Company from 1993 through 2000 and
then again from 2003 to present.
(Page 8)
Executive Officers:
Set forth below is a list of the Companys executive officers,
including their ages as of March 24, 2008, and positions with the Company and its
subsidiaries, Bar Harbor Bank & Trust ("BHBT") and Bar Harbor Trust Services
("BHTS") as of the Record Date:
Name
|
Age
|
Year
First
Elected
As Officer
|
Position with the Company
|
Positions with Subsidiaries
|
Joseph M. Murphy
|
65
|
2002
|
Director,
President and Chief
Executive Officer
|
Chairperson
and Director, BHBT since 2002. Chief Executive Officer, BHBT since 2003. President, BHBT
since February 2005. Director, BHTS since 2002.
|
|
|
|
|
|
Gerald
Shencavitz
|
54
|
1998
|
Executive
Vice President
Chief Financial Officer
and Treasurer
|
Executive
Vice President, Chief Financial Officer, and Chief Operating Officer since December, 2007
of BHBT
Chief Financial Officer, Senior Vice President, and Chief Operating Officer from 2001
through December 2007 for BHBT
Treasurer, BHTS since June 2001.
|
|
|
|
|
|
Michael
W. Bonsey
|
43
|
2001
|
N/A
|
Senior
Vice President of BHBT since 2001.
|
|
|
|
|
|
Gregory
W. Dalton
|
48
|
2000
|
N/A
|
Senior
Vice President of BHBT since 2000.
|
|
|
|
|
|
Daniel
A. Hurley III
|
55
|
2004
|
N/A
|
President
of BHTS and Senior Vice President of BHBT since 2004.
|
|
|
|
|
|
Stephen
M. Leackfeldt
|
51
|
2001
|
N/A
|
Senior
Vice President of BHBT since 2001.
|
The Bylaws of the Company provide that the executive officers be
elected annually by the Board of Directors and that the President and Chief Executive
Officer, Chairperson of the Board, Treasurer, and Clerk shall serve at the pleasure of the
Board and until their successors have been chosen and qualified. All other officers serve
at the pleasure of the Chief Executive Officer. There are no arrangements or understanding
between any of the directors, executive officers, or any other persons pursuant to which
the above directors have been selected as directors or any of the above officers have been
selected as officers. There are no "family relationships" as defined by the
Commission, between any director, executive officer, or person nominated or chosen by the
Company to become a director or executive officer.
(Page 9)
Business Experience
The principal occupation and business experience for at least the last
five [5] years for each director, nominee, and executive officer is set forth below. None
of the organizations discussed below, except for Bar Harbor Bank & Trust and Bar
Harbor Trust Services, are affiliated with the Company.
Directors and Nominees:
Robert C. Carter.
Mr. Carter resides in Machias, Maine, is now
retired and is the former owner of the Machias Motor Inn, Machias, Maine. He presently
operates Carter Enterprises, a rental management business also located in Machias, Maine.
Thomas A. Colwell.
Mr. Colwell resides in Deer Isle, Maine. Mr.
Colwell is the former President of Colwell Bros. Inc. (lobster pounding) and retired from
that position as of December 31, 2006.
Jacquelyn S. Dearborn.
Mrs. Dearborn resides in Holden, Maine,
and serves as a mediator for the Ellsworth and Bangor court systems. Mrs. Dearborn is also
employed as Treasurer of the law office of Joel A. Dearborn Sr. Esq., PA located in
Brewer, Maine, and President of C. K. Foster, Co., Inc. located in Ellsworth, Maine.
Peter Dodge.
Mr. Dodge resides in Blue Hill, Maine, and is
President, Insurance Agent, and majority owner of Peter Dodge Agency d/b/a Merle B.
Grindle Agency, John R. Crooker Agency, and The Endicott Agency, providing insurance
services from locations in Blue Hill, Bucksport, and Castine, Maine.
Martha T. Dudman.
Ms. Dudman resides in Northeast Harbor,
Maine, and is an author and President of Dudman Communications Corporation.
Lauri E. Fernald.
Ms. Fernald resides in Mount Desert, Maine,
and is a Funeral Director, Assistant Treasurer, and an owner in Jordan-Fernald
headquartered in Mount Desert, Maine. She is also Managing Partner of Jordan Family
Properties LLC and L. E. Fernald LLC, operating as real estate holding companies.
Gregg S. Hannah.
Mr. Hannah resides in Surry, Maine, and
formerly served as Secretary and Treasurer of Hannah & Associates Inc., a marketing
consulting firm. He is a past Associate Professor of Business Management at Nichols
College in Dudley, Massachusetts.
Clyde H. Lewis.
Mr. Lewis resides in Sullivan, Maine, and is
Vice President, General Manager, and an owner of Morrison Chevrolet Inc., of Ellsworth,
Maine.
Joseph M. Murphy.
Mr. Murphy resides in Mount Desert, Maine,
and is President and Chief Executive Officer of Bar Harbor Bankshares and Bar Harbor Bank
& Trust, and until its dissolution in 2004, President of BTI Financial Group.
Robert M. Phillips.
Mr. Phillips resides in Sullivan, Maine,
and is a former consultant for Cherryfield Foods, Maine Wild Blueberry, and Oxford Foods,
food processors with locations in Washington County, Maine. Mr. Phillips serves as a
consultant for the Wild Blueberry Association of North America and the Maine Wild
Blueberry Commission.
Constance C. Shea.
Mrs. Shea resides in Mount Desert, Maine,
and is a Real Estate Broker and a former owner in Sylvia Shea Inc. d/b/a Lynam Real Estate
Agency, Bar Harbor, Maine. Mrs. Shea is also the owner of a commercial real estate
property located in Bar Harbor, Maine.
Kenneth E. Smith.
Mr. Smith resides in Bar Harbor, Maine, and
has been owner and Innkeeper of Manor House Inn since 2003 and former owner of Wonder View
Inn, both lodging facilities located in Bar Harbor, Maine.
Scott G. Toothaker.
Mr. Toothaker resides in Ellsworth, Maine, and
is Principal and Vice President of Melanson Heath & Co., PC, a CPA firm with an office
located in Ellsworth, Maine.
(Page 10)
David B. Woodside.
Mr. Woodside resides in Bar Harbor, Maine,
and is President and General Manager of Acadia Corporation, a corporation operating
restaurants and retail shops located in Acadia National Park and Bar Harbor, Maine.
Executive Officers:
Joseph M. Murphy.
For a summary of Mr. Murphys business
experience, refer to the Directors Nominee section immediately above.
Michael W. Bonsey
. Mr. Bonsey resides in Bar Harbor, Maine, and
has served as Senior Vice President of Credit Administration of Bar Harbor Bank &
Trust since December, 2001. Mr. Bonsey served as Vice President of Credit Administration
from 2000 through December, 2001.
Gregory W. Dalton.
Mr. Dalton resides in Mount Desert, Maine,
and has served as Senior Vice President of Business Banking of Bar Harbor Bank & Trust
since 2000. He is also an owner in both the Bar Harbor Jam Co. and its real estate holding
company, Blueberry Partners LLC, located in Bar Harbor, Maine.
Daniel A. Hurley III.
Mr. Hurley resides in Ellsworth, Maine,
and has served as President of Bar Harbor Trust Services and Senior Vice President of Bar
Harbor Bank & Trust since August of 2004. He was formerly Vice President and Senior
Trust Officer at Essex Savings Bank.
Stephen M. Leackfeldt.
Mr. Leackfeldt resides in Harrington,
Maine, and has served as Senior Vice President of Retail Banking and Consumer Lending of
Bar Harbor Bank & Trust since 2001. He is also the owner of State Cinemas located in
Calais, Maine.
Gerald Shencavitz.
Mr. Shencavitz resides in Mount Desert,
Maine, and served as Executive Vice President, Chief Financial Officer, and Treasurer of
the Company since December, 2007. Prior to his promotion in December 2007, he served as
Chief Financial Officer and Treasurer of the Company since June 2001. Mr. Shencavitz
served as Executive President, Chief Financial Officer, and Chief Operating Officer of Bar
Harbor Bank & Trust following his promotion in December, 2007. He was Chief Financial
Officer, Senior Vice President and Chief Operating Officer of Bar Harbor Bank & Trust
between 2001 and December, 2007. Mr. Shencavitz has also served as Treasurer of Bar
Harbor Trust Services since 2001.
CORPORATE GOVERNANCE
Board of Directors:
A Board of Directors comprised of fourteen [14] members managed the
Company during 2007. A majority of the Board of Directors meets the independence standards
established by AMEX. The Board has determined that all the named director-nominees listed
in this Proxy, with the exception of Mr. Murphy, meet applicable independence standards
established by AMEX. The Board of Directors of the Company held a total of eleven [11]
regular meetings, one special meeting, and one [1] annual meeting during 2007. The Bylaws
of the Company provide for a minimum of quarterly meetings. Each director attended at
least 75% of the total number of board and committee meetings that he or she was eligible
to attend.
The Board encourages, but does not require, each director to attend its
Annual Meeting. All but one of the Boards members attended the 2007 Annual Meeting.
Committees:
The Board of Directors has a standing Audit Committee, Executive
Committee, Governance Committee, and Compensation and Human Resources Committee.
(Page 11)
Executive Committee
The
Bylaws of the Company provide that after each Annual Meeting of Shareholders, the
Board shall designate from among its members an Executive Committee with the authority to
exercise all the powers of the Board of Directors in regard to ordinary operations of the
business of the Company when the Board is not in session, subject to any specific vote of
the Board. The Executive Committee for 2007 included directors Colwell, Dodge, Dudman,
Murphy, Phillips, Shea, and Toothaker. Mr. Colwell serves as Chairperson. The Executive
Committee held three [3] meetings in 2007.
Audit Committee
The
members of the Audit Committee included directors Toothaker, Dudman, Fernald, Hannah,
Smith, and Woodside. Mr. Toothaker serves as Chairperson of the Committee. The Audit
Committee met four [4] times during 2007. See
Appendix A
for Report of Audit
Committee. The Audit Committee has a written charter, which may be viewed on the
Companys general website at
www.BHBT.com
.
The
Companys Board has determined that the Audit Committee is composed of independent
directors, in accordance with applicable AMEX listing requirements and Rule 10A-3(b)(1)
under the Exchange Act. The Audit Committee operates under a written charter, which has
been adopted by the Audit Committee and the Company Board. Audit Committee members do not
accept any consulting, advisory, or other compensatory fees (except directors fees) and
are not affiliated with the Company (except as a director) or any of its subsidiaries. The
Board of Directors has determined that the Company has at least one "audit committee
financial expert" serving on its Audit Committee. Mr. Scott G. Toothaker, CPA, meets
the criteria for an "audit committee financial expert" and is
"independent" within the meaning of the rules adopted by the AMEX pursuant to
the Sarbanes-Oxley Act of 2002.
The
Audit Committee has the sole authority to appoint and replace the Independent Registered
Public Accounting Firm. The Audit Committee is responsible for the compensation and
oversight of the Independent Registered Public Accounting Firm and this firm reports
directly to the Audit Committee. The Audit Committee assists the Board of Directors in
fulfilling its oversight responsibilities with respect to (i) the financial information to
be provided to Shareholders and the Commission; (ii) the review of quarterly financial
statements; (iii) the system of financial controls management has established; and (iv)
the internal audit, external audit, and loan review processes.
Governance Committee
The
Governance Committee for 2007 was comprised of directors Shea, Colwell, Dodge, Fernald,
and Phillips. The Governance Committee met five [5] times during 2007. Mrs. Shea served as
Chairperson of the Committee. The Company Board of Directors has determined that each
member of the Governance Committee is independent for purposes of AMEX listing standards.
The
Governance Committees responsibilities include screening director candidates,
recommending nominees to the full Board of Directors (including the slate of returning
directors) to be elected each year, making recommendations concerning the size and
composition of the Board of Directors, recommending Committee structure and membership,
and sponsoring new director orientation and education. The Governance Committee has a
written charter, which may be viewed on the Companys general website at
www.BHBT.com
.
The
Governance Committee expects to identify nominees to serve as directors of the Company
primarily by accepting and considering the suggestions and nominee recommendations made by
directors, management, and shareholders. To date the Governance Committee has not engaged
any third parties to assist it in identifying candidates for the Board of Directors. The
Governance Committee considers among other things the background, business and
professional experience (including any requisite financial expertise or other special
qualifications), current employment, community service, and other board service of its
director-nominees, as well as racial, ethnic, and gender diversity of the Board as a
whole. The Governance Committee generally considers a candidates qualifications in
light of these broad criteria as well as an assessment as to whether the candidate can
make decisions on behalf of or while representing the Company in a manner consistent with
its stated business goals and objectives. The Governance Committee will also consider the
candidates "independent" status in accordance with applicable regulations
and listing standards. The Governance Committee will consider nominees recommended by
Shareholders. Any shareholder wishing to nominate a candidate for director must follow the
procedures for submission of proposals set forth in the section of this Proxy Statement
entitled "Nominations by shareholders."
(Page 12)
Compensation and Human Resources Committee
The
Compensation and Human Resources Committee reviews and considers recommendations from
management, consultants, and directors concerning executive compensation policies,
employee benefit plans, and salary administration programs, including reviewing annually
the performance, total compensation, and recommended adjustments for all executive
officers and the executive officers of the Companys subsidiaries. The deliberations
of the Compensation and Human Resources Committee are reported to the Board of Directors
for review and approval. The Compensation and Human Resources Committee has a written
charter, which may be viewed on the Companys general website at
www.BHBT.com
.
The
Compensation and Human Resources Committee is comprised of Company directors Phillips,
Dearborn, Dodge, Fernald, and Shea. Mr. Phillips serves as Chairperson of the Committee.
The Companys and Banks President and Chief Executive Officer, Mr. Murphy,
serves on the Committee in a non-voting, ex-officio capacity, as does the Banks
Human Resources Officer, Mrs. Marsha C. Sawyer. All voting members of the Compensation
Committee are independent for purposes of AMEX listing standards. The Compensation and
Human Resources Committee met eight [8] times during 2007.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
In
the paragraphs that follow, we will provide an overview and analysis of our compensation
program and policies, the material compensation decisions we have made under those
programs and policies with respect to our named executive officers, and the material
factors that we considered in making those decisions. Later in this Proxy Statement under
the heading, "Executive Compensation" is a series of tables containing specific
information about the compensation earned or paid in 2007 to the executives, whom we refer
to as our named executive officers.
The
discussion below is intended to help you understand the detailed information provided in
those tables and put that information into context within our overall compensation
program.
Objectives of the Companys Compensation Program
The
objective of the Companys compensation program is to attract, retain, motivate, and
reward executives who contribute to our financial and operational success, which
ultimately builds value for our shareholders. We believe that, in order to do this
effectively, our program must:
-
provide our executives with total compensation opportunities at levels that are
competitive for comparable positions at companies and banks with whom we compete for
talent
-
directly link a significant portion of total compensation to the Companys
achievement of performance goals in a way that proportionally rewards higher performance
levels
-
provide significant upside opportunities for exceptional individual performance, which
can result in differentiated compensation among executives based on performance, and
-
closely align our executives interest with those of our shareholders by making
stock-based incentives a core element of our executives compensation
Role of the Compensation Committee
The Compensation and Human Resources Committee (the
"Committee") administers the Companys executive compensation programs. The
Committee recommends these programs to the Companys Board of Directors for approval
at least annually and more frequently, if circumstances warrant. These executive programs
are intended to provide a variety of competitive compensation components including base
salaries, traditional benefits,
(Page 13)
annual performance incentives, and retirement programs. In addition,
the Company has sought to align the long-term interests of its executives with those of
the shareholders by providing share-based incentives in the form of stock option grants.
Market and Comparative Data
The
Committee approves and recommends to the Board compensation programs it believes meets the
Companys ongoing need to attract, motivate, and retain talented and qualified
executives who have the capacity to make a major contribution to the leadership and
success of the Company. In fulfilling this requirement, the Committee has used a variety
of consultants, employment attorneys, and third party providers of service as sources to
assist in the establishment and implementation of its executive compensation programs. The
Committee regularly reviews industry-standard compensation surveys provided by objective
sources for state and regional perspectives. These resources primarily include the
Financial Institutions Compensation and Benefit Survey for Northern New England and
Salary.coms.on-line surveys. In addition, the Committee reviews comparative salary
and benefit information gleaned from some public filings of a peer group the Company
established for financial results comparison (the "Company Peer Group"). The
Committee believes these Company Peer Group filings disclose compensation programs of
similarly situated executives in comparable institutions throughout Maine and the
Northeast region and are a useful comparative tool for the Committee in establishing
executive compensation programs and individual criteria. In 2007, the Company Peer Group
was comprised of the following:
-
Arrow Financial Corp (AROW)
-
Bancorp Rhode Island ( BARI)
-
Bridge Bancorp (BDGE)
-
Camden National Corporation (CAC)
-
First National Lincoln Corp (FNLC)
-
Merchants Bankshares Inc/VT (MBVT)
-
Northeast Bancorp ME (NBN)
-
Slades Ferry Bancorp (SFBC)
-
Union Bankshares /ME (UNBH)
-
The Wilbur Corp (GIW)
The Committee also considers the relative scarcity of senior banking
executive candidates in its immediate market area and the difficulties of recruiting
out-of-market candidates to work in rural Maine. The Committee does not use any formal,
fixed, or indexed criteria for establishing compensation levels for any of its executive
officers. The Committee believes over time, the growth in total compensation provided to
its executive officers should be more heavily weighted towards incentive compensation
opportunities directly tied to corporate performance with less emphasis upon growth in
base salaries.
Role of Executives in Establishing Compensation
On
an annual basis Mrs. Marsha C. Sawyer, the Senior Vice President of Human Resources, with
the oversight of the Chief Executive Officer, provides the Committee with general
information on executive officer compensation. The Committee then reviews, discusses, and
considers this information and any recommendations. The Chief Executive Officer and the
Senior Vice President of Human Resources generally attend Committee meetings but were not
present for the executive sessions or for any discussion of their own compensation. Mrs.
Sawyer assists in the administration of all executive compensation programs, prepares
Committee and Board meeting materials and performs work as requested by the Committee,
including the preparation of peer analyses. Mr. Murphy, the Companys President &
Chief Executive Officer, attends portions of the Committees meetings and makes
recommendations on base salary, annual incentives, and equity compensation for executive
officers who report to him. No changes occurred in 2007 with respect to this participation
by the foregoing executive officers.
Compensation Consultants
The
Committee has occasionally utilized, and expects to utilize in the future, various outside
consultants, actuaries, and employment attorneys to assist it in developing and
implementing certain of the Companys compensation program components, including its
stock option program, Supplemental Executive Retirement Plan ("SERP"), and
incentive compensation arrangements.
(Page 14)
During 2007, Committee Chair Phillips met with several compensation consulting firm
representatives and attended a multi-day conference sponsored by
Bank Director Magazine
,
NASDAQ, and Institutional Shareholder Services specifically targeted at Bank Executive
& Board Compensation best practices. In January, 2008, the Committee, under authority
granted by its Charter, engaged Pearl Meyer & Partners to assist in a total review of
the Companys executive and director compensation packages. The scope of Pearl
Meyers engagement includes:
-
A comprehensive and competitive review of the Companys total compensation
arrangements including base salaries, equity and retirement programs for the
Companys CEO and its senior executives including the named executive officers
-
A comprehensive review of the Companys compensation program for its directors
-
Recommending possible members for an expanded, appropriate Peer Company comparison group
-
Assisting in the establishment an appropriate compensation mix and pay for performance
plan based on the Companys size, geographic location, and unique characteristics
-
Developing short term and long term incentive programs for its executives to include
thresholds, targets, and stretch goals tied to the Companys strategic and long term
financial plans
-
Providing guidance in the Boards development of a future CEO compensation package
and its separate components as part of the Companys long-term succession planning
Compensation Plan Components
The
Companys executive compensation program is comprised of the following primary
components: (a) base salaries and benefits, (b) annual incentive cash compensation
programs, (c) long-term incentives in the form of stock option grants, and (d) retirement
benefits:
(a)
|
Base Salary and Benefits.
The executive compensation program provides
base salaries and benefits, which include health and life insurance programs, a 401(k)
retirement program, and vacation awards to compensate executive officers for capable
performance of core duties and responsibilities associated with their positions. The
Committee reviews base salaries annually in the context of the comparative industry
information, as described above. The Committee also considers the specific contributions
of the individual executive officer and the officers opportunity for professional
growth, as well as market factors, when it sets and adjusts base salaries. In addition,
the Committee considers the prevailing economic climate, the overall performance of the
Company, and its most current business plan.
The Committee believes that the 2007 base salaries for named executive
officers, Bonsey, Hurley, and Leackfeldt were conservatively adjusted within a nominal
1.60% to 2.00% range pending the selection and engagement of a consulting firm
specializing in financial executive compensation programs. At the request of CEO Murphy,
no adjustment was made to his base salary for 2007. The 2007 base salaries of two named
executives, Dalton and Shencavitz, were initially adjusted by 2.00% and 2.68%,
respectively, but further adjusted during the calendar year. Mr. Daltons base salary
was increased to $117,106 (9.34%) in August, 2007 in recognition of strong functional
performance and local pressure on market salaries for similar positions. Mr.
Shencavitzs base salary was increased in December, 2007 to $174,000 (13.47%) in
recognition of his strong corporate contributions and his promotion to Executive Vice
President.
|
|
|
(b)
|
Incentive Cash Compensation Program.
During 2007, named executive
officers, Messrs. Murphy, Shencavitz, Bonsey, Dalton, Hurley, and Leackfeldt participated
in an annual cash incentive compensation plan with two tiers representing an opportunity
for incentive payments. This plan was approved by the Company's Board of Directors in
2007, but was not reduced to a formal written plan, arrangement, or program. The first
tier provided for a payment equal to the corporate payout to the majority of all staff
based on the final net income of the Company for 2007. A second tier provided for a pool
of funds of one-and a half times the percentage paid under the general corporate plan to
be distributed among nine identified senior managers at the Boards discretion based
on performance, completion of strategic initiates, and functional results for 2007. Each
named executive received 5% of their 2007 base salary under tier one and a pro-rata share
of the second $83,850 discretionary pool distributed among the nine senior managers. The
total distribution to named executive officers represented 12.50% of their 2007 base
earnings.
|
(Page 15)
The 2007 two tiered incentive program is detailed in the
table immediately below. Line A represents the 2007 income threshold required to trigger
any incentive payment to plan participants. The Company achieved the $7.154 million net
income bolded on Line D, and payments were distributed accordingly to the named executive
officers.
|
2007
Net Income
|
Tier 1
General Incentive Payout as Percent of Salary
|
Tier 2
Percentage of Salary Contributed to Discretionary Pool for Senior Management
|
Dollars Contributed to Senior Management Discretionary Pool
|
|
|
|
|
|
A
|
$6,880,000
(Threshold)
|
3.00%
|
4.50%
|
$
50,316
|
B
|
$7,017,000
|
4.00%
|
6.00%
|
$
67,088
|
C
|
$7,085,000
|
4.50%
|
6.75%
|
$
75,474
|
D
|
$7,154,000
|
5.00%
|
7.50%
|
$
83,850
|
E
|
$7,223,000
|
5.50%
|
8.25%
|
$
92,246
|
F
|
$7,292,000
|
6.00%
|
9.00%
|
$100,632
|
|
|
|
|
|
(c)
|
Stock Option Plan.
Since adopting its Stock Option Plan in 2000, the
Company has provided its officers and managers, including its named executive officers,
with a share-based compensation component in the form of stock options. This compensation
component is used to align the interest of the Companys participating officers and
managers, particularly its executive officers, with those of its Shareholders over a
long-term horizon. The Company grants options upon date of hire or promotion for qualified
individuals, and from time to time for special recognition. The Company awards all grants
at the closing market price on the business day just prior to the enabling vote by the
Companys Board of Directors. The Board of Directors also sets the vesting schedule,
which is typically over a period of three to seven years. During 2007, the Company granted
2,400 stock options to each of its named executive officers, with the exception of the
CEO, upon the recommendation of the Chief Executive Officer in recognition of progress on
long term strategic goals as a balance to the conservative 2007 base salary adjustments.
|
|
|
(d)
|
Benefits, Retirement and Post Termination Compensation Elements.
The
Company provides for all employees meeting minimum age and service requirements a
qualified defined contribution 401(k) benefit retirement plan. In addition, the Company
provides a nonqualified, noncontributory, defined-benefit, ("SERP") for certain
highly compensated officers. Currently, the Chief Executive Officer and Executive Vice
President/Chief Financial Officer are the only two named executive officers that
participate in a SERP. The Companys 401(k) plan has imbedded regulatory ceilings
that limit the two most senior executives from deferring amounts sufficient to provide for
a reasonable, final average salary retirement benefit. The Company utilizes its SERP plan
as a vehicle to assist in funding the Chief Executive Officers and Executive Vice
President/Chief Financial Officers total retirement program.
The Company also maintains change in control agreements for named
executive officers Murphy, Shencavitz, Bonsey, Dalton and Hurley. The agreements provide
for the payment of their salary and other specified benefits for a period of twelve to
twenty-four months in the event of both a change of control of the Company and subsequent
termination (or constructive termination) within set timeframes after a change of control,
unless such termination was for cause. These specific payments and timeframes were
established under the advice of a compensation consultant and employment attorney as
representative of similar type agreements in the industry.
The Committee believes that the Companys SERP plan and change in
control agreements are advisable to provide a competitive total compensation plan to
attract and retain the employment of named executive officers that are a party to the
agreements.
|
Other Compensation and Benefits
In
addition to the foregoing, all executive officers of the company are entitled to
participate in certain group health, dental, and term life insurance benefits. In
accordance with Company policy, all such benefits are generally available to employees of
the Company and its subsidiaries.
(Page 16)
Stock Ownership Guidelines
While many of the Companys executive officers have significant Company stock
holdings, it does not have specific guidelines regarding stock ownership for its named
executive officers.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code limits the deductibility of executive
compensation paid by publicly held companies to certain of their executive officers to $1
million per year, but contains an exception for performance based compensation. Although
the Company intends to maximize the deductibility of compensation paid to executive
officers, it also intends to maintain the flexibility to take actions it considers to be
in the Companys best interest including, when circumstances are appropriate, to
consider factors other than tax deductibility. The Committees objective is to
structure executive compensation programs to maximize the deductibility of executive
compensation under the Internal Revenue Code. The Committee reserves the right, however,
in the exercise of its business judgment, to establish appropriate compensation levels for
executive officers that may exceed the limits on tax deductibility established under
Section 162(m). In 2007, no compensation was paid which exceeded the deductibility limit
of $1 million.
Compensation Committee Report
The
Compensation Committee has reviewed the Compensation Discussion and Analysis included in
this proxy statement and has discussed it with members of management. Based on such review
and discussion, the Compensation Committee recommended to the Board of Director members
that the Compensation Discussion and Analysis be included in its Annual Report on Form
10-K and this Proxy Statement.
Robert M. Phillips, Chair
Jacquelyn S. Dearborn
Peter Dodge
Lauri E. Fernald
Constance C. Shea
(This space intentionally left blank)
(Page 17)
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table discloses compensation for the years ended December
31, 2007 and 2006, received by the Companys principal executive officer, principal
financial officer, and four other most highly compensated executive officers (the
"named executive officers"). The Company, or the subsidiary by which he was
employed, paid compensation for each named executive officer.
Name and Principal Position
|
Year
|
Salary
1
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
2
($)
|
Non-Equity Incentive Plan Compen-sation
($)
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings
3
($)
|
All Other Compen-sation
4
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Joseph
M. Murphy
President and CEO of Bar Harbor Bankshares and Bar Harbor Bank & Trust
|
2007
2006
|
258,440
258,440
|
0
0
|
0
0
|
49,956
49,956
|
32,305
0
|
201,145
175,028
|
20,999
22,391
|
562,845
505,815
|
Gerald
Shencavitz
EVP, CFO and Treasurer of Bar Harbor Bankshares and EVP, CFO, and COO of Bar Harbor
Bank & Trust
|
2007
2006
|
153,351
149,347
|
0
0
|
0
0
|
18,466
15,547
|
19,169
0
|
51,518
43,555
|
7,807
11,560
|
250,311
220,009
|
Michael
W. Bonsey
SVP, Credit Administration of Bar Harbor Bank & Trust
|
2007
2006
|
104,038
102,003
|
0
0
|
0
0
|
10,191
6,969
|
13,004
0
|
0
0
|
4,563
7,568
|
131,796
116,540
|
Gregory
W. Dalton
SVP, Business Banking of Bar Harbor Bank & Trust
|
2007
2006
|
111,343
105,007
|
0
0
|
0
0
|
8,841
4,847
|
13,918
0
|
0
0
|
5,092
7,925
|
139,194
117,779
|
Daniel
A. Hurley III
President of Bar Harbor Trust Services and SVP of Bar Harbor Bank & Trust
|
2007
2006
|
126,500
124,497
|
0
0
|
0
0
|
12,514
8,519
|
15,813
0
|
0
0
|
6,308
8,336
|
161,135
141,352
|
Stephen
M. Leackfeldt
SVP, Retail Banking of Bar Harbor Bank & Trust
|
2007
2006
|
111,680
109,494
|
0
0
|
0
0
|
10,191
6,969
|
13,960
0
|
0
0
|
5,386
7,634
|
141,217
124,097
|
1
Included in base salary amounts disclosed above for each
named executive officer are monies they deferred pursuant to the Companys 401(k)
Plan, which allows employees of the Company and its wholly owned subsidiaries to defer up
to 50% of their compensation, subject to applicable limitations in section 401(k) of the
Internal Revenue Code of 1986, as amended, and amounts deferred pursuant to the
Companys Section 125 Cafeteria plan providing health, life, and disability insurance
benefits.
2
Stock option awards were granted to five of the six named
executive officers in 2007. Details of these awards are disclosed in the table entitled
"Grants of Plan Based Awards2007" (on page 21 of this Proxy).
The amounts included in the "Option Awards" column are the
amounts of compensation cost recognized by the Company in fiscal 2007 related to stock
option awards in prior fiscal years, as described in Financial Accounting Standards No.
123(R). For a discussion of valuation assumptions, see Note 13 to the Companys 2007
Consolidated Financial Statements included in the Companys Annual Report on Form
10-K for the year ended December 31, 2007.
3
The amounts in this column reflect the changes in value of
the Companys nonqualified, noncontributory, defined-benefit supplemental executive
retirement program between December 31, 2006, and December 31, 2007.
4
Other Annual Compensation includes match and contribution
amounts into the Companys 401(k) plan in the same formula and schedule as available
to all other employees and imputed life insurance amounts on group term insurance in
excess of the allowable $50,000, non-taxable IRS limit.
(Page 18)
The named executive officers
participate in certain group life, health, disability insurance, and medical reimbursement
plans, not disclosed in the Summary Compensation Table, that are generally available to
all employees and do not discriminate in scope, terms, and operation.
|
Year
|
All Other Compensation Detail
|
|
|
|
Name
|
|
Employer 401(k)
Contribution Match and Contribution
($)
|
Club
Dues
($)
|
Spousal
Travel
($)
|
Imputed Life
Insurance
($)
|
Other
1
($)
|
TOTAL
($)
|
Joseph M. Murphy
|
2007
2006
|
9,145
16,176
|
925
895
|
1,111
1,116
|
6,858
1,629
|
2,960
2,575
|
20,999
22,391
|
Gerald Shencavitz
|
2007
2006
|
6,143
9,555
|
0
0
|
622
395
|
284
969
|
758
641
|
7,807
11,560
|
Michael W. Bonsey
|
2007
2006
|
4,047
7,139
|
0
0
|
77
0
|
439
429
|
0
0
|
4,563
7,568
|
Gregory W. Dalton
|
2007
2006
|
4,632
7,442
|
350
0
|
0
385
|
110
98
|
0
0
|
5,092
7,925
|
Daniel A. Hurley III
|
2007
2006
|
5,262
7,788
|
0
0
|
0
0
|
1,046
548
|
0
0
|
6,308
8,336
|
Stephen M. Leackfeldt
|
2007
2006
|
4,446
7,048
|
0
0
|
155
0
|
785
586
|
0
0
|
5,386
7,634
|
1
Includes applicable Medicare (1.45%) gross up amounts on
the SERP benefits amounting to $2,960 for Mr. Murphy and $758 for Mr. Shencavitz
The Company provides non-cash perquisites that do not exceed $10,000 in
the aggregate for any individual and are not included in the reported figures. Benefits
not disclosed in the table above are of
de minimus
value such as incidental
service fee waivers on deposit accounts, the purchase of travelers checks, or safe
deposit rental fees.
NARRATIVE DISCUSSION AND ANALYSIS OF SUMMARY COMPENSATION TABLE
The
Committee believes the following information and discussion is useful to the reader in
understanding the information set forth in the above Summary Compensation Table.
Chief Executive Officer Employment Agreement
The
Company has a written employment agreement (the "Employment Agreement")
originally dated January 3, 2003, with Mr. Joseph M. Murphy, its Chief Executive Officer
("CEO"). On November 7, 2003, the Company amended its written employment
agreement with Mr. Murphy in connection with adoption of the Companys Supplemental
Executive Retirement Program and Change of Control Agreement. The Employment Agreement
provides for the payment of an annual base salary to the CEO of not less than $18,333.00
per month (an annualized rate of not less than $220,000.00 per annum). The Employment
Agreement provides for a review of the CEOs base salary not less than annually and
may be adjusted at the Companys sole discretion. The CEO is also eligible to
participate in a performance compensation plan with goals and incentive payments to be
approved by the Board annually. The Employment Agreement is for an initial term of two [2]
years with provisions for automatic extensions of one [1] year each in the absence of
notice from the Company of its intention not to extend the term of the Employment
Agreement. The initial term of the Employment Agreement commenced on January 3, 2003, and
continued through January 3, 2005, unless sooner terminated. Neither the Company nor the
CEO has given notice of termination, and, therefore, the Employment Agreement has been
extended by its terms through January 3, 2009. The Employment Agreement contains
restrictions on competition by the CEO with the Company during the term of the Employment
Agreement and for a period of one [1] year following the cessation of the CEOs
employment with the Company regardless of reason.
Mr.
Murphys Employment Agreement also provides, with limited exceptions, for a severance
payment to the CEO in the event his employment is terminated within one [1] year prior to
or following certain events defined to constitute a change in control of the Company. This
severance payment resulting from a termination of
(Page 19)
employment (constructive termination) following a change in control is equal to two [2]
times the CEOs base annual salary, incentive compensation payments earned, and any
accrued but unused vacation time. In addition, Mr. Murphys stock options and
supplemental executive retirement benefits will vest in accordance with the terms of the
plans under which they were granted and vest fully upon a change in control. In the event
that Mr. Murphy becomes subject to an excise tax on payments made under his agreements and
various benefit plans in connection with a change in control, he will be reimbursed for
payment of such amounts upon such time as the assumptions and calculations have been
prepared, reviewed, and confirmed by a nationally recognized accounting firm.
Both the Committee and the Board of Directors have reviewed and
approved Mr. Murphys Employment Agreement and Change of Control Agreement.
Compensation of the Chief Executive Officer
On
an annual basis, the Committee reviews the existing compensation plan for the
Companys Chief Executive Officer, Joseph M. Murphy (the "CEO"). The
Committee reviews this compensation plan in the context of the Companys overall
performance, the achievement of certain financial and non-financial goals and the judgment
of the entire Board of Directors as to the quality of the CEOs leadership. In
addition, the Committee compares the CEOs compensation to CEOs of the Companys
Peer Group and salary survey information for comparable positions. In making these
comparisons, the Committee takes into account appropriate differences in the size,
business model, and financial performance of the other banking institutions.
In
accordance with the CEOs Employment Agreement with the Company, the Committee
reviews the CEOs base salary no less often than annually and may recommend an
increase in his base salary to the Board of Directors at the Committees sole
discretion. During 2007, at the request of CEO Murphy, no adjustment was made to his base
salary. CEO Murphy requested the Compensation Committee distributed the budgeted pool of
funds for 2007 base salary adjustments among the remaining eight senior management
members.
As
further discussed below, the CEO participated in the two-tiered annual incentive cash
compensation plan provided to all executive officers. During 2007, Mr. Murphy received a
payment under each tier for a total of 12.50% of salary.
During 2007, the Committee did not grant the CEO any additional stock options. The
Committee believes the initial grant provided upon his hire in February 2002 was
sufficient and reasonable to provide a potential reward for shareholder gains over the
estimated term of his employment with the Company.
The
CEO is a member of the Board of Directors of the Company and its subsidiaries. He does not
receive any director fees for participating in the activities of these Boards.
Other Change in Control, Confidentiality, and Non-competition
Agreements
The
Company entered into Change in Control, Confidentiality, and Non-competition Agreements
with the Companys Executive Vice President and Chief Financial Officer, Mr. Gerald
Shencavitz. This agreement provides Mr. Shencavitz with severance of both salary and
benefits for a period of eighteen [18] months in the event of both a change of control of
the Company and subsequent termination (or constructive termination) within twelve [12]
months after a change of control, unless such termination was for cause. In addition, Mr.
Shencavitzs stock options and supplemental executive retirement benefits will vest
in accordance with the terms of the plans under which they were granted and vest fully
upon a change in control. In the event that Mr. Shencavitz becomes subject to an excise
tax on payments made under his agreements and various benefit plans in connection with a
change in control, he will be reimbursed for payment of such amounts upon such time as the
assumptions and calculations have been prepared, reviewed, and confirmed by a nationally
recognized accounting firm.
The
Company has also entered into Change in Control, Confidentiality, and Non-competition
Agreements with Bar Harbor Trust Services President, Daniel A. Hurley III, and the
Banks Senior Vice Presidents, Michael W. Bonsey and Gregory W. Dalton along with
three other senior managers. Their agreements provide for severance of
(Page 20)
both salary and benefits for a period of twelve [12] months in the
event of both a change of control of the Company and subsequent termination (or
constructive termination) within twelve [12] months of a change of control, unless such
termination was for cause.
All
of these agreements were entered into as part of a total compensation program to attract
and/or retain qualified executives and not entered into in response to any effort known to
the Board of Directors by any party or entity to acquire control of the Company.
Incentive Cash Compensation
During 2007, named executive officers, Messrs. Murphy, Shencavitz, Bonsey, Dalton, Hurley,
and Leackfeldt participated in an annual cash incentive compensation program with two
tiers representing opportunities for incentive payments. The first tier provided for a
payment equal to the corporate payout to the Companys general employee population
based on the final net income of the Company. The second tier provided for a pool of
one-and a half times the percentage paid under the corporate program to be distributed
equally among nine identified senior managers, including the named executive officers, or
at the Boards discretion based on performance, completion of strategic initiatives,
and functional results. At the recommendation of the Compensation Committee, the Board
approved each named executive to receive 5% of their 2007 earned base salary under the
general corporate payout and 7.50% of their earned base salary under the second tier of
the program.
Other Compensation and Benefits
In
addition to the foregoing, all executive officers of the Company are entitled to
participate in certain group health, dental, and term life insurance benefits. In
accordance with Company policy, all such benefits are generally available to employees of
the Company and its subsidiaries.
(This space intentionally left blank)
(Page 21)
2007 Grants of Plan-Based Awards
The following table outlines the outstanding equity awards at fiscal
year-end held by named executive officers
Name
|
Grant Date
1
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards
|
Estimated Future Payouts Under Equity Incentive Plan Awards
|
All other Stock Awards; Number of shares of Stock or units
($)
|
All other Option Awards; Number of Securities Under-lying Options
(#)
|
Exercise or Base Price of Option Awards
($/Sh)
|
Grant Date Fair Value of Stock and Option Awards
6
($)
|
Thresh-
old
2
($)
|
Target
($)
|
Maxi-
Mum
($)
|
Thresh-
old
(#)
|
Target
(#)
|
Maxi-
mum
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
(k)
|
(l)
|
Joseph M. Murphy
|
01/22/2007
|
19,383
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Gerald Shencavitz
|
01/22/2007
01/23/2007
12/18/2007
|
11,501
|
0
|
0
|
0
|
0
|
0
|
0
|
2,400
3,5
5,000
4,6
|
33.00
31.50
|
5,334
4,469
|
Michael W. Bonsey
|
01/22/2007
01/23/2007
|
7,803
|
0
|
0
|
0
|
0
|
0
|
0
|
2,400
3,5
|
33.00
|
5,334
|
Gregory W. Dalton
|
01/22/2007
01/23/2007
|
8,351
|
0
|
0
|
0
|
0
|
0
|
0
|
2,400
3,5
|
33.00
|
5,334
|
Daniel A. Hurley III
|
01/22/2007
01/23/2007
|
9,488
|
0
|
0
|
0
|
0
|
0
|
0
|
2,400
3,5
|
33.00
|
5,334
|
Stephen M. Leackfeldt
|
01/22/2007
01/23/2007
|
8,376
|
0
|
0
|
0
|
0
|
0
|
0
|
2,400
3,5
|
33.00
|
5,334
|
1
The initial budget threshold for 2007
was voted by the Board of Directors in January, 2007. The payout formula to named
executive officers was redefined in August, 2007 and amended again in November 2007 to the
plan components described in this document and under which payments were made.
2
The 2007 plan had no Target or Maximum, as defined. The
figures under the column titled "Threshold" represent the named executive
officers 7.50 % payout triggered upon reaching the 2007 budgeted net income of
$6,880,000. Please refer to Section (b) under Compensation Plan Components on page 14.
3
800 shares vest on January 23, 2008, January 23, 2009, and
January 23, 2010
4
1,000 shares vest on December 18, 2008, December 18, 2009,
December 18, 2010, December 18, 2011 and 1,000 on December 18, 2012
5
Closing price on January 23, 2007 was $32.79
6
Closing price on December 18, 2007 was $31.50
7
For a discussion of valuation assumptions, see Note 13 to the
Companys 2007 Consolidated Financial Statements included in the Companys
Annual Report on Form 10-K for the year ended December 31, 2007
(This space intentionally left blank)
(Page 22)
2007 Outstanding Equity Awards at Fiscal Year-End
|
Option Awards
|
Stock Awards
|
Name
|
Number of
Securities Underlying Unexercised
Options
Exercisable
($)
|
Number of Securities Underlying Unexercised Options
Unexercisable
($)
|
Equity
Incentive Plan Awards; Number of Securities Underlying Unexercised Unearned
Options
(#)
|
Option Exercise Price
($)
|
Option Expiration Date
|
Number of Shares or Units of Stock That Have Not Vested
(#)
|
Market Value of Shares or Units of Stock That Have Not
Vested
($)
|
Equity Incentive Plan Awards; Number of Unearned Shares,
Units or Other Rights That Have Not Vested
(#)
|
Equity Incentive Plan Awards; Market or Payout Value of
Unearned Shares, Units or Other Rights That Have Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Joseph
M. Murphy
|
75,000
|
15,000
1
|
0
|
16.05
|
2/25/2012
|
0
|
0
|
0
|
0
|
Gerald
Shencavitz
|
3,284
5,000
4,000
0
0
|
2,142
2
0
1,000
2,400
5,000
|
0
0
0
0
0
|
15.40
18.50
22.70
33.00
31.50
|
6/20/2011
8/20/2012
9/16/2013
1/23/2017
12/18/2017
|
0
|
0
|
0
|
0
|
Michael
W. Bonsey
|
4,970
3,000
0
|
1,420
3
0
2,400
|
0
0
0
|
15.40
18.50
33.00
|
6/20/2011
8/20/2012
1/23/2017
|
0
|
0
|
0
|
0
|
Gregory
W. Dalton
|
4,205
|
1,420
4
2,400
|
0
0
|
15.40
33.00
|
6/20/2011
1/23/2017
|
0
|
0
|
0
|
0
|
Daniel
A.
Hurley III
|
4,320
|
5,680
5
2,400
|
0
0
|
27.00
33.00
|
9/21/2014
1/23/2017
|
0
|
0
|
0
|
0
|
Stephen
M. Leackfeldt
|
4,445
2,400
0
|
1,420
6
0
2,400
|
0
0
0
|
15.40
18.50
33.00
|
6/20/2011
8/20/2012
1/23/2017
|
0
|
0
|
0
|
0
|
1
Joseph M. Murphy
|
15,000
vested on February 25, 2008
|
2
Gerald Shencavitz
|
2,142
shares vest on June 20, 2008
1,000 shares vest on September 16, 2008
800 shares vested on January 23, 2008, 800 will vest on January 23, 2009 and January 23,
2010
1,000 shares will vest on December 18, 2008, December 18, 2009, December 18, 2010,
December 18, 2011, and December 18, 2012
|
3
Michael W. Bonsey
|
1,420
shares vest on June 20, 2008
800 shares vested on January 23, 2008, 800 will vest on January 23, 2009 and January 23,
2010
|
4
Gregory W. Dalton
|
1,420
shares vest on June 20, 2008
800 shares vested on January 23, 2008, 800 will vest on January 23, 2009 and January 23,
2010
|
5
Daniel A. Hurley III
|
1,420
shares vest on September 21, 2008, September 21, 2009, September 21, 2010, and September
21, 2011
800 shares vested on January 23, 2008, 800 will vest on January 23, 2009 and January 23,
2010
|
6
Stephen M. Leackfeldt
|
1,420
shares vest on June 20, 2008
800 shares vested on January 23, 2008, 800 will vest on January 23, 2009 and January 23,
2010
|
(Page 23)
2007 Option Exercises and Stock Vested Table
|
Option Awards
|
Stock Awards
|
Name
|
Number of Shares
Acquired on Exercise
(#)
|
Value Realized
on Exercise
($)
|
Number of Shares
Acquired on Vesting
(#)
|
Value Realized
on Vesting
($)
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Joseph M. Murphy
|
0
|
0
|
0
|
0
|
Gerald Shencavitz
|
3,142
|
50,534
|
0
|
0
|
Michael W. Bonsey
|
0
|
0
|
0
|
0
|
Gregory W. Dalton
|
1,100
|
16,625
|
0
|
0
|
Daniel A. Hurley III
|
0
|
0
|
0
|
0
|
Stephen M. Leackfeldt
|
2,305
|
35,858
|
0
|
0
|
Pension Benefits
The table below shows at December 31, 2007, the present value of
accumulated benefits payable to each of the named executive officers, including the number
of years of service credited to each such named executive officer, under the Supplemental
Executive Retirement Plan and using interest rate assumptions consistent with those used
in Company financial statements. Additional information regarding the Supplemental
Executive Retirement Plan benefits follows the table.
Name
|
Plan Name
|
Number of Years of Credited Service
(#)
|
Present Value of Accumulated Benefits
($)
|
Payments During Last Fiscal Year
($)
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Joseph M. Murphy
|
Bar Harbor Bankshares Supplemental Executive Retirement Plan
|
6
1
|
921,293
|
0
|
Gerald Shencavitz
|
Bar Harbor Bankshares Supplemental Executive Retirement Plan
|
6
1
|
255,365
|
0
|
Michael W. Bonsey
|
N/A
|
0
|
0
|
0
|
Gregory W. Dalton
|
N/A
|
0
|
0
|
0
|
Daniel A. Hurley III
|
N/A
|
0
|
0
|
0
|
Stephen M. Leackfeldt
|
N/A
|
0
|
0
|
0
|
1
Years of credited service are
determined by the vesting schedule contained within the Plan and not years of employment
with the Company.
(Page 24)
PENSION TABLE NARRATIVE
Supplemental Executive Retirement
The Company maintains a nonqualified, noncontributory, defined-benefit;
supplemental executive retirement program (the "SERP") for certain highly
compensated executive employees. Messrs. Murphy and Shencavitz were the only authorized
participants (the "Participants") in the SERP as of December 31, 2007. Under the
SERP the Participants are eligible to receive upon most termination events, disability, or
death, an individually defined benefit payment based upon a predetermined vesting
schedule. No plan benefits are payable to these individuals if they are terminated for
cause as defined in the document.
Upon Normal Retirement Age, defined as age 68 for Mr. Murphy and age 65
for Mr. Shencavitz, monthly payments of $11,200 and $8,583, respectively will be paid
under the SERP to the named executives (or their beneficiary) for a period of 240 months.
There are also provisions under the SERP for reduced monthly payments in the event of an
early retirement by any of these individuals. As of December 31, 2007, Messrs. Murphy and
Shencavitz have vested monthly benefits of $6,457 and $1,768, respectively.
SERP benefits for both participants will fully vest upon a defined
change of control of the Company.
Potential Payments upon Termination or Change in Control
The
Company has entered into change of control agreements and maintains certain benefit plans
that require it to provide compensation to executive officers in the event of a
termination of employment or a change in control. The tables below set forth the amount
and types of compensation payable to each executive officer upon voluntary termination
without good reason, involuntary termination without cause, voluntary termination for good
reason, termination for cause, death, disability, retirement, or termination after a
change in control. The amounts assume a hypothetical termination of employment effective
as of December 31, 2007, and include estimates of the amounts, which would be paid to the
executives in each specified circumstance. The actual amounts to be paid can only be
determined at the time of an executives actual separation.
Payments Made Upon Voluntary Termination Without Good Reason.
Regardless of the
manner in which named executive officers Messrs. Murphy, Shencavitz, Bonsey, Dalton,
Hurley, or Leackfeldt may terminate their employment with the Company, they would be
entitled to receive amounts earned during their term of employment pursuant to Company
policies, programs, and benefit plans bulleted directly below.
-
Salary earned through the date of termination
-
Reimbursement of reasonable and necessary expenses incurred in connection with
employment through the date of termination
-
Any incentive earned but not yet paid for the fiscal year ending prior to the year of
termination
-
Earned but unused vacation pay if terminated prior to December 31 of any year
-
All vested stock options
-
Amounts contributed and vested under the Company 401(k) Plan
Messrs. Murphy and Shencavitz would be entitled to the payments and
benefits above plus:
-
Vested benefits through their date of termination payable under the Companys SERP
Plan
(Page 25)
Payments Made Upon Involuntary Termination by Bar Harbor Bankshares Without Cause or by
the Executive for Good Reason.
Messrs. Murphy, Shencavitz, Bonsey, Dalton, Hurley,
and Leackfeldt would be entitled to the payments and benefits below.
-
Salary earned through the date of termination
-
Reimbursement of reasonable and necessary expenses incurred in connection with
employment through the date of termination
-
Any incentive earned but not yet paid for the fiscal year ending prior to the year of
termination
-
Earned but unused vacation pay if terminated prior to December 31 of any year
-
All vested stock options
-
Amounts contributed and vested under the Company 401(k) Plan
Messrs. Murphy and Shencavitz would be entitled to the payments and
benefits above plus:
-
Vested benefit amounts payable under the Companys SERP Plan
Mr. Murphy would also be entitled to the payments and benefits above
plus:
-
Lump sum payment of two times base salary
-
All vested stock options would become exercisable
-
Health and welfare benefits for 24 months
Mr. Murphy would also be entitled to the following payments and
benefits in addition to those listed above if his termination occurs with the twelve month
prior or twelve months following a change of control event
-
All unvested SERP payments would become vested
-
All unvested stock options would become vested
Payments Made Upon a Termination for Cause
.
Messrs. Murphy, Shencavitz, Bonsey,
Dalton, Hurley, and Leackfeldt would be entitled to the payments and benefits below:
-
Salary earned through the date of termination
-
Reimbursement of reasonable and necessary expenses incurred in connection with
employment through the date of termination
-
Earned but unused vacation pay if terminated prior to December 31 of any year
-
Amounts contributed and vested under the Companys 401(k) Plan
-
All vested and unexercised stock options would be forfeited
-
Any incentive earned but not yet paid for the fiscal year ending prior to the year of
termination will be forfeited.
Messrs. Murphy and Shencavitz would be entitled to the payments and
benefits above plus:
-
All vested and unvested benefits under the Companys SERP Plan would be forfeited
Payments Made Upon Death or Disability.
In the event of the death or disability of
Messrs. Murphy, Shencavitz, Bonsey, Dalton, Hurley, and Leackfeldt each would be eligible
to receive the following payments and benefits:
-
Salary earned through the date of death or disability
-
Reimbursement of reasonable and necessary expenses incurred in connection with
employment through the date of death or disability
-
Any incentive earned but not yet paid for the fiscal year ending prior to the year of
death or disability
-
Earned but unused vacation pay in the event of death or disability through date of event
(Page 26)
-
All vested stock options would become exercisable by the executive, or in the case of
death, by their estate
-
Amounts contributed and vested under the Company 401(k) Plan
-
Life insurance proceeds and/or disability payments under the Companys general
benefit plans are paid to the executive or their beneficiary by a third party insurance
provider
Messrs. Murphy and Shencavitz would be entitled to the payments and
benefits above plus:
-
Vested benefit amounts, as of the date of disability, would be payable under the
Companys SERP Plan
-
Fully vested benefit amount would be payable under the Companys SERP Plan to their
beneficiary or estate in the event of death
Payments Made Upon Retirement.
Messrs. Murphy, Shencavitz, Bonsey, Dalton, Hurley,
and Leackfeldt would be eligible for the following payments and benefits:
-
Salary earned through the date of retirement
-
Reimbursement of reasonable and necessary expenses incurred in connection with
employment through the date of retirement
-
Any incentive earned but not yet paid for the fiscal year ending prior to the year
retirement
-
Earned but unused vacation pay as of retirement date
-
All vested stock options would be available for exercise
-
Amounts contributed and vested under the Company 401(k) Plan
In addition, Messrs. Murphy and Shencavitz would be eligible for:
-
Vested benefit amounts payable under the Companys SERP Plan
Payments and Benefits Due Upon a Change in Control.
Messrs. Murphy, Shencavitz,
Bonsey, Dalton, Hurley, and Leackfeldt would be eligible for the following payments and
benefits:
-
Salary earned through the date of termination
-
Reimbursement of reasonable and necessary expenses incurred in connection with
employment through the date of termination
-
Any incentive earned but not yet paid for the fiscal year ending prior to the year in
which the change of control occurs
-
Earned but unused vacation pay as of termination date
-
All vested stock options along with unvested options would be available for exercise
-
Amounts contributed and vested under the Companys 401(k) Plan
Messrs. Bonsey, Dalton and Hurley would be eligible for:
-
Twelve months of base salary and specified benefits if terminated as a result of the
change of control
Messrs. Murphy and Shencavitz would be eligible for:
-
Fully vested benefit amounts payable under the Companys SERP Plan
In addition, Messrs. Murphy and Shencavitz would be eligible for:
-
Severance of base salary and specified benefits of twenty-four months for Mr. Murphy and
eighteen months for Mr. Shencavitz upon a termination (or constructive termination) within
defined time limits detailed within their agreements and tax gross up payments, if
applicable
(Page 27)
The following table describes the potential payments to
Joseph M.
Murphy
, President and Chief Executive Officer, upon an assumed termination of
employment or change in control as of December 31, 2007.
Payments and Benefits
|
Voluntary
Dermination
Without Good Reason
($)
|
Involuntary Termination Without Cause
($)
|
Voluntary Termination For Good Cause
($)
|
Termination for Cause
($)
|
Termination Upon Death
($)
|
Termination Upon Disability
($)
|
Retirement
($)
|
Termination
After a Change in Control
($)
|
Cash Services
Note A
|
0
|
516,880
|
516,880
|
0
|
0
|
0
|
0
|
516,880
|
Pro Rata Bonus/Incentive
Note B
|
21,967
|
21,967
|
21,967
|
0
|
21,967
|
21,967
|
21,967
|
21,967
|
Vested Stock
Options/SARs
Note C
|
1,151,250
|
1,151,250
1
|
1,151,250
1
|
0
|
1,151,250
|
1,151,250
|
1,151,250
|
1,151,250
|
Accelerated Stock
Options/SARs
Note C
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
230,250
|
Health Care Benefits
Note D
|
0
|
0
1
|
0
1
|
0
|
0
|
0
|
0
|
21,835
|
Vested Pension Benefits
Note E
|
1,549,680
|
1,549,680
2
|
1,549,680
2
|
0
|
1,549,680
|
1,549,680
|
1,549,680
|
1,549,680
|
Accelerated Pension
Benefits
Note E
|
0
|
0
|
0
|
0
|
1,138,320
|
0
|
0
|
1,138,320
|
Nonqualified Deferred
Compensation
Note F
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Life Insurance Proceeds/
Disability Benefits
Note G
|
0
|
0
|
0
|
0
|
500,000
|
155,064
|
0
|
0
|
Other Perquisites
Note H
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Tax Gross-Up
Note I
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
1,699,548
|
Total
|
2,722,897
|
3,239,777
|
3,239,777
|
0
|
4,361,217
|
2,877,961
|
2,722,897
|
6,329,730
|
1
In the event Mr. Murphy was terminated involuntarily within
a time period of one year prior to or one year following a change of control event, his
remaining unvested options would fully vest and this number would be $1,381,500. Mr.
Murphy would also receive $21,835 in benefit continuation funds.
2
If Mr. Murphy terminates his employment on or after his
Early Retirement Date and prior to his Normal Retirement Date and within three years after
a Change in Control,
and
if he terminates employment for Good Reason or is
terminated Without Cause, then the amount of his SERP benefit would accelerate to his full
vested benefit of $2,688,000.
(This space intentionally left blank)
(Page 28)
The following table describes the potential payments to
Gerald
Shencavitz
, Executive Vice President, Chief Financial Officer and Treasurer of Bar
Harbor Bankshares and Executive Vice President, Chief Financial Officer, and Chief
Operating Officer of Bar Harbor Bank & Trust, upon an assumed termination of
employment or change in control as of December 31, 2007.
Payments and Benefits
|
Voluntary
Termination
Without Good Reason
($)
|
Involuntary
Termination
Without Cause
($)
|
Voluntary Termination For Good Cause
($)
|
Termination for Cause
($)
|
Termination Upon Death
($)
|
Termination Upon Disability
($)
|
Retirement
($)
|
Termination
After a Change in Control
($)
|
Cash Services
Note A
|
0
|
0
1
|
0
1
|
0
|
0
|
0
|
0
|
261,000
|
Pro Rata Bonus/Incentive
Note B
|
13,035
|
13,035
|
13,035
|
0
|
13,035
|
13,035
|
13,035
|
13,035
|
Vested Stock Options/SARs
Note C
|
151,844
|
151,844
1
|
151,844
1
|
0
|
151,844
|
151,844
|
151,844
|
151,884
|
Accelerated Stock Options/SARs
Note C
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
40,972
|
Health Care Benefits
Note D
|
0
|
0
1
|
0
1
|
0
|
0
|
0
|
0
|
15,899
|
Vested Pension Benefits
Note E
|
424,320
|
424,320
2
|
424,320
2
|
0
|
424,320
|
424,320
|
424,320
|
424,320
|
Accelerated Pension Benefits
Note E
|
0
|
0
|
0
|
0
|
1,635,600
|
0
|
0
|
1,635,600
|
Nonqualified Deferred Compensation
Note F
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Life Insurance Proceeds/
Disability Benefits
Note G
|
0
|
0
|
0
|
0
|
175,000
|
105,000
|
0
|
0
|
Other Perquisites
Note H
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Tax Gross-Up
Note I
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
1,226,590
|
Total
|
589,199
|
589,199
|
589,199
|
0
|
2,399,799
|
694,199
|
589,199
|
3,617,416
|
1
In the event Mr. Shencavitz was terminated
involuntarily within a time period of one year priot to or one year following a change of
control event, his remaining unvested options would fully vest and this number would by
$192,856. He would also receive $261,000 in base salary and $15,899 in benefit
continuation funds.
2
If Mr. Shencavitz terminates his employment on or after
his Early Retirement Date and prior to his Normal Retirement Date and within three years
after a Change in Control,
and
if he terminates employment for Good Reason or is
terminated Without Cause, then the amount of his SERP benefit shall accelerate to his full
vested benefit and this figure would be $2,059,920.
(This space intentionally left blank)
(Page 28)
The following table describes the potential payments to
Michael
W. Bonsey
, Senior Vice President, Credit Administration of Bar Harbor Bank &
Trust, upon an assumed termination of employment or change in control as of December 31,
2007.
Payments and Benefits
|
Voluntary
Termination
Without Good Reason
($)
|
Involuntary
Termination
Without Cause
($)
|
Voluntary Termination For Good Cause
($)
|
Termination for Cause
($)
|
Termination Upon Death
($)
|
Termination Upon Disability
($)
|
Retirement
($)
|
Termination
After a Change in Control
($)
|
Cash Services
Note A
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
104,038
|
Pro Rata Bonus/Incentive
Note B
|
8,843
|
8,843
|
8,843
|
0
|
8,843
|
8,843
|
8,843
|
8,843
|
Vested Stock Options/SARs
Note C
|
118,220
|
118,220
|
118,220
|
0
|
118,220
|
118.220
|
118,220
|
118,220
|
Accelerated Stock Options/SARs
Note
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
22,720
|
Health Care Benefits
Note D
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
11,189
|
Pension Benefits
Note E
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Nonqualified Deferred Compensation
Note F
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Life Insurance Proceeds/
Disability Benefits
Note G
|
0
|
0
|
0
|
0
|
208,076
|
62,423
|
0
|
0
|
Other Perquisites
Note H
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Tax Gross-Up
Note I
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Total
|
127,063
|
127,063
|
127,063
|
0
|
335,139
|
189,486
|
127,063
|
265,010
|
(This space intentionally left blank)
(Page 30)
The following table describes the potential payments to
Gregory
W. Dalton
, Senior Vice President, Business Banking of Bar Harbor Bank & Trust,
upon an assumed termination of employment or change in control as of December 31, 2007.
Payments and Benefits
|
Voluntary
Termination
Without Good Reason
($)
|
Involuntary Termination Without Cause
($)
|
Voluntary Termination For Good Cause
($)
|
Termination for Cause
($)
|
Termination Upon Death
($)
|
Termination Upon Disability
($)
|
Retirement
($)
|
Termination
After a Change in Control
($)
|
Cash Services
Note A
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
117,106
|
Pro Rata Bonus/Incentive
Note B
|
9,464
|
9,464
|
9,464
|
0
|
9,464
|
9,464
|
9,464
|
9,464
|
Stock Options/SARs
Note C
|
67,280
|
67,280
|
67,280
|
0
|
67,280
|
67,280
|
67,280
|
67,280
|
Accelerated Stock Options/SARs
Note
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
22,720
|
Health Care Benefits
Note D
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
10,963
|
Pension Benefits
Note E
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Nonqualified Deferred Compensation
Note F
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Life Insurance Proceeds/
Disability Benefits
Note G
|
0
|
0
|
0
|
0
|
117,106
|
70,264
|
0
|
0
|
Other Perquisites
Note H
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Tax Gross-Up
Note I
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Total
|
76,744
|
76,744
|
76,744
|
0
|
193,850
|
147,008
|
76,744
|
227,533
|
(This space intentionally left blank)
(Page 31)
The following table describes the potential payments to
Daniel A.
Hurley III
, President of Bar Harbor Trust Services and Senior Vice President of
Bar Harbor Bank & Trust, upon an assumed termination of employment or change in
control as of December 31, 2007.
Payments and Benefits
|
Voluntary Termination Without Good Reason
($)
|
Involuntary Termination Without Cause
($)
|
Voluntary Termination For Good Cause
($)
|
Termination for Cause
($)
|
Termination Upon Death
($)
|
Termination Upon Disability
($)
|
Retirement
($)
|
Termination After a Change in Control
($)
|
Cash Services
Note A
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
126,500
|
Pro Rata Bonus/Incentive
Note B
|
10,753
|
10,753
|
10,753
|
0
|
10,753
|
10,753
|
10,753
|
10,753
|
Stock Options/SARs
Note C
|
19,008
|
19,008
|
19,008
|
0
|
19,008
|
19,008
|
19,008
|
19,008
|
Accelerated Stock Options/SARs
Note
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
24,992
|
Health Care Benefits
Note D
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
5,104
|
Pension Benefits
Note E
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Nonqualified Deferred Compensation
Note F
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Life Insurance Proceeds/
Disability Benefits
Note G
|
0
|
0
|
0
|
0
|
253,000
|
75,900
|
0
|
0
|
Other Perquisites
Note H
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Tax Gross-Up
Note I
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Total
|
29,761
|
29,761
|
29,761
|
0
|
282,761
|
105,661
|
29,761
|
186,357
|
(This space intentionally left blank)
(Page 32)
The following table describes the potential payments to
Stephen
M. Leackfeldt
, Senior Vice President, Retail Banking of Bar Harbor Bank &
Trust, upon an assumed termination of employment or change in control as of December 31,
2007.
Payments and Benefits
|
Voluntary
Termination
Without Good
Reason
($)
|
Involuntary
Termination
Without Cause
($)
|
Voluntary Termination For Good Cause
($)
|
Termination for Cause
($)
|
Termination Upon Death
($)
|
Termination Upon Disability
($)
|
Retirement
($)
|
Termination
After a Change in Control
($)
|
Cash Services
Note A
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Pro Rata Bonus/Incentive
Note B
|
9,493
|
9,493
|
9,493
|
0
|
9,493
|
9,493
|
9,493
|
9,493
|
Vested Stock Options/SARs
Note C
|
102,080
|
102,080
|
102,080
|
0
|
102,080
|
102,080
|
102,080
|
102,080
|
Accelerated Stock Options/SARs
Note
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
22,720
|
Health Care Benefits
Note D
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Pension Benefits
Note E
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Nonqualified Deferred Compensation
Note F
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Life Insurance Proceeds/
Disability Benefits
Note G
|
0
|
0
|
0
|
0
|
223,360
|
67,008
|
0
|
0
|
Other Perquisites
Note H
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Tax Gross-Up
Note I
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Total
|
111,573
|
111,573
|
111,573
|
0
|
334,933
|
178,581
|
111,573
|
134,293
|
(This space intentionally blank)
(Page 33)
Notes
|
|
|
|
A
|
Cash
Severance. Twenty-four months of severance would have been payable to Mr. Murphy if his
employment was terminated by Bar Harbor Bankshares for any reason other than cause, death,
disability, or retirement as defined in his written Employment Agreement. Severance
payable to all other executives represents a payment due upon a hypothetical change of
control event and their subsequent termination under the terms of their agreements.
Payments disclosed represent twelve months of salary for Bonsey, Dalton, and Hurley and
eighteen months for Shencavitz. Mr. Leackfeldt has not entered into a change of control
agreement with the Company so no severance would be due him.
|
|
|
B
|
Pro
Rata Bonus. Bonuses/Incentive amounts earned in 2007 were paid in three installments. The
amount disclosed above represents the amounts due, but not yet paid, to each executive on
December 31, 2007. These amounts were paid in 2008. The full amount of incentive payments
earned for the fiscal year 2007 has been disclosed in the "Summary Compensation Table
for 2007" on page 17 of this Proxy statement.
|
|
|
C
|
Stock
Options/SARs. The price per share of Bar Harbor Bankshares common stock on December 31,
2007, was $31.40, representing the closing per share price on the AMEX exchange for that
date. Murphy would have been entitled to exercise vested options under all categories
listed except Cause. If Mr. Murphy or Mr. Shencavitz were terminated
involuntarily and without cause within one year prior to or following a change of control
event, their unvested stock options would become fully vested. Bonsey, Dalton,
Hurley, and Leackfeldt, would have been entitled to all vested options as of December 31,
2007, except in the event of a change of control whereby all unvested options would have
fully vested. Disclosed amounts would have been realized if the executive actually
exercised the vested options in the manner provided for by the Companys stock option
plan and award agreement at the December 31, 2007, market price. In the event of a
termination of employment, the executive (or the executives estate in the event of
death) would have had the right to exercise vested stock options for a set period
specified under the plan document. All executives would have forfeited the right to
exercise vested or unvested options if they had been released for cause.
|
|
|
D
|
Health
Insurance. The amount disclosed represents the cost of continued health, life, and
disability coverage for a period of twenty-four months for Murphy, eighteen months for
Shencavitz, and twelve months for Bonsey, Dalton and Hurley as provided in their
respective agreements. Leackfeldt is not eligible for this continued benefit.
|
|
|
E
|
Pension
Benefits/SERP. Amounts disclosed represent vested amounts as of December 31, 2007, payable
to Murphy and Shencavitz (or their beneficiary/estate) over the twenty-year benefit period
provided for under the Companys plan document. Amounts disclosed under Involuntary
Without Cause and Voluntary With Good Reason for Murphy and Shencavitz as well as under
Change of Control for both represent their vested benefits under the program to be paid
over the same 20-year period. See footnote 2 for exceptions. Amounts disclosed do
not reflect vested balances for each executive as part of the Company-sponsored 401(k)
plan under which participation is generally available to all employees. The Company
carries term life insurance policies on Murphy and Shencavitz in the amounts of $1,350,000
and $1,200,000, respectively, to help defray costs of these pension benefits should either
die while employed by the Company, but prior to full vesting of these benefits.
|
|
|
F
|
Nonqualified
Deferred Compensation Plan. No named executive participated under a Nonqualified Deferred
Compensation Plan as of December 31, 2007.
|
|
|
G
|
Life
Insurance Proceeds/Disability Benefits. Amounts represent benefits payable by a third
party insurer (UNUM) to the designated executives or their beneficiaries under
Company-sponsored life and disability programs. These life and disability insurance
programs were generally available to all employees of the Company. The Disability amount
quoted is representative of a 12 month, full disability paid benefit. Total benefits due
would be dependent upon the severity and length of a disability.
|
|
|
H
|
Other
Perquisites. Not applicable to Bar Harbor Bankshares.
|
|
|
I
|
Tax
Gross Ups. In the event of the hypothetical change of control of Bar Harbor Bankshares on
December 31, 2007,
and
the subsequent termination (or constructive termination) as
detailed in their individual change of control agreements, and Murphy and Shencavitz were
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, an
additional payment would be made to restore them to the after-tax position they would have
been in if the excise tax had not been imposed and such excess parachute payments exceeded
110% of three times the executives "base amount," as defined in Section
280G of the internal Revenue Code. In the event this 110% threshold is not met, the excess
parachute payments will be reduced so they do not exceed three times the executives
base amount. Amounts paid under this Gross Up provision are not tax deductible by the
Company or any successor company.
|
(Page 34)
DIRECTOR COMPENSATION
Directors of the Company, Bar Harbor Bank & Trust, and Bar Harbor Trust Services were
paid by a combination of fees for meetings attended supplemented by quarterly stipends. A
fee of $500 was paid to board members for each meeting of the Company and its subsidiary
boards attended and each committee meeting attended. Members of the Board received $500
when the Company and the Bank held joint meetings. The fee paid for attendance at the
Companys Annual Meeting was also $500 per member. Audit Committee members received
$600 for each Audit Committee meeting they attended. In addition, each director, with the
exception of the Chairman of the Board and the Chairman of the Audit Committee, received a
quarterly stipend of $1,000. The Board Chairperson received a quarterly stipend of $2,500
and the Audit Chairperson received a $1,500 stipend per quarter.
|
Meeting Fees
($)
|
Quarterly Retainer
($)
|
Chairman of the Board
|
|
2,500
|
Chairman of the Audit Committee
|
|
1,500
|
All other Directors
|
|
1,000
|
Audit Committee Attendance
|
600
|
|
All other meetings, including Annual Meeting
|
500
|
|
Meetings of the Board of Directors of the Company are held monthly.
Director Murphy, who also serves as an officer of the Company, does not receive
directors fees.
(This space intentionally left blank)
(Page 35)
2007 Director Compensation Table
The following table details the total compensation paid to all
directors from Bar Harbor Bankshares, Bar Harbor Bank & Trust, and Bar Harbor Trust
Services during the 2007 fiscal year.
|
Fees Earned or Paid in Cash
($)
|
Stock Awards
($)
|
Option Awards
($)
|
Non-Equity Incentive Plan Compensation
($)
|
Change in Pension Value and Nonqualified Deferred
Compensation Earnings
($)
|
All Other Compensation
($)
|
Total
($)
|
|
|
|
|
|
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
Thomas A. Colwell
|
26,000
|
0
|
0
|
0
|
0
|
0
|
26,000
|
Robert C. Carter
|
15,500
|
0
|
0
|
0
|
0
|
0
|
15,500
|
Jacquelyn S. Dearborn
|
20,000
|
0
|
0
|
0
|
0
|
0
|
20,000
|
Peter Dodge
|
21,500
|
0
|
0
|
0
|
0
|
0
|
21,500
|
Martha T. Dudman
|
19,900
|
0
|
0
|
0
|
0
|
0
|
19,900
|
Lauri E. Fernald
|
18,900
|
0
|
0
|
0
|
0
|
0
|
18,900
|
Gregg S. Hannah
|
18,900
|
0
|
0
|
0
|
0
|
0
|
18,900
|
Clyde S. Lewis
|
16,500
|
0
|
0
|
0
|
0
|
0
|
16,500
|
Joseph M. Murphy
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Robert M. Phillips
|
22,500
|
0
|
0
|
0
|
0
|
0
|
22,500
|
Constance C. Shea
|
23,000
|
0
|
0
|
0
|
0
|
0
|
23,000
|
Kenneth E. Smith
|
25,400
1
|
0
|
0
|
0
|
0
|
0
|
25,400
|
Scott C. Toothaker
|
20,300
|
0
|
0
|
0
|
0
|
0
|
20,300
|
David B. Woodside
|
18,900
|
0
|
0
|
0
|
0
|
0
|
18,900
|
1
Director, Kenneth E. Smith deferred a portion of his
compensation under a Non Qualified Deferred Compensation arrangement. This deferred
arrangement is funded entirely by the director and the funds are invested and remain in
the name of the Company until the director withdraws them upon his resignation,
retirement, or termination from Board membership. Director Smith assumes the investment
risk on these funds and holds the status of an unsecured creditor of the Company for the
payment of these deferred fees at a future date.
Compensation Committee Interlocks and Insider Participation
The
Compensation and Human Resources Committee is comprised of Company directors Phillips,
Dearborn, Dodge, Fernald, and Shea. None of the Company executive officers serve as a
member of a compensation committee of any other company that has an executive officer
serving as a member of the Companys Board of Directors. None of the executive
officers serve as a member of the board of directors of any other company that has an
executive officer serving as a member of the Committee.
(Page 36)
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Management and Others
The
Company has entered into a long-term lease for its new Bank branch located in Somesville,
Maine, effective February 1, 2006 (the "Somesville Lease"). The Somesville Lease
has an initial term of five years and five months. During the first year of the Somesville
Lease term, the base rent was Sixty Thousand Dollars ($60,000.00), pro-rated for any
partial lease year. During each subsequent lease year the base rent is increased using a
formula tied to certain changes in the consumer price index. During 2007, the lease
payments totaled $61,380. In addition to base rent, the Bank is responsible to pay as
"additional rent" certain defined real estate taxes as well as certain operating
expenses, and other costs, charges, and expenses associated with the premises. The
"Landlord" under the Somesville Lease is A. C. Fernald Sons Inc., a Maine
corporation. Mr. Robert Fernald of Mount Desert, Maine, is a shareholder, director, and
officer of A. C. Fernald Sons Inc. and is the father of Company director Lauri E. Fernald.
Lauri E. Fernald does not own any stock or hold any corporate office or other position
with A. C. Fernald Sons Inc. and has no direct or indirect interest in the Somesville
Lease other than her familial relationship with Mr. Robert Fernald.
Except as set forth above and with regard to "Indebtedness of
Management" described below, none of the director- nominees or named executive
officers of the Company or of any of its subsidiaries engaged during 2007 in any
transaction with the Company or any of its subsidiaries, in which the amount involved
exceeded $120,000.
The Company administers related party transactions (if any) under its
Related Party Transaction Policy, which policy addresses compliance to AMEX Company Rule
120. This policy provides for Board Audit Committee oversight of related party
transactions that exceed a
de minimus
lifetime income statement impact of $25,000
(except for loan transactions, which for the Company and its subsidiaries are administered
pursuant to Federal Regulation O, as described more fully below). Any transactions that
qualify under this policy are reviewed by the Board Audit Committee (or another acceptable
Board committee, or the full Board of Directors) for approval prior to being contractually
bound by the Company. Other than the lease disclosed and described herein, and loans
offered in the ordinary course of business and approved by the Bar Harbor Bank & Trust
Board of Directors, the Company had no related party transactions. The Related Party
Transaction Policy is approved annually by the Board of Directors and administered by
management of the Bank.
Indebtedness of Management
The
Companys wholly owned subsidiary, Bar Harbor Bank & Trust (the
"Bank"), offers to its directors, officers, principal Shareholders and
employees, and to businesses owned and/or controlled by those persons (collectively
"insiders"), commercial and consumer loans in the ordinary course of its
business.
All loans made by the Company and its subsidiaries to insiders are
regulated by the Companys federal and state regulators under federal Regulation O
("Reg. O"). "Reg. O" sets forth various practices and reporting
requirements for loans to insiders. In addition, the Sarbanes-Oxley Act of 2002 permits
banks and bank holding companies to extend credit to their directors and officers provided
that such extensions of credit are (a) made or provided in the ordinary course of the
consumer credit business of such issuer; (b) of a type that is generally made available to
such issuer to the public; and (c) made by such issuer on market terms, or terms that are
no more favorable than those offered by the issuer.
All loans extended by the Bank to insiders comply with Reg. O, the
Sarbanes-Oxley Act of 2002, and AMEX Company Rule 120. They are offered under the same
terms and conditions available to non-insiders, including but not limited to those terms
and conditions related to the requirements for approval, the interest rates charged, the
required repayment terms, and the required collateral, except that the Bank waives certain
fees for all employees and directors when applying for consumer residential first mortgage
loans secured by the related partys primary residence. Further, the Bank may, from
time to time at the discretion of management, provide interest rate discounts, fee waivers
or other pricing inducements to qualified employees and directors when doing so
accomplishes or furthers an objective of the Bank and/or the Company. No such programs are
made available only to insiders. The terms and conditions of all loans, including those to
insiders, and the process by which they are approved, is fully documented in the
Banks written Loan Policy. The Policy is approved annually by the Board of Directors
and administered by management of the Bank. Loans to insiders may not contain a higher
level of risk, nor be offered
(Page 37)
with terms and conditions more favorable, than loans to non-insiders
with equivalent financial profiles (except for the favorable pricing programs previously
described).
We believe that all extensions of credit to Company insiders and
executive officers satisfy the foregoing conditions.
No such transactions have involved more than normal risk of
collectibility or presented other unfavorable features and no loans outstanding to
directors, officers, principal Shareholders, or their associates in an amount in excess of
$120,000 are non-accruing or past due or otherwise considered to be potential problem
loans.
(This space intentionally left blank)
(Page 38)
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
The
Companys Audit Committee has approved the appointment of KPMG LLP as the
Companys principal independent registered public accountant for the fiscal year
ending December 31, 2008.
The reports of KPMG LLP on the Companys consolidated financial
statements as of December 31, 2007, and 2006 and for the years in the three-year period
ending on December 31, 2007, and on internal control over financial reporting as of
December 31, 2007 and 2006, did not contain any adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope, or accounting
principles.
We anticipate a representative from KPMG LLP will be present and
available to respond to questions or make a statement(s) at the Meeting.
Audit Fees
The following table summarizes KPMG LLPs audit fees for 2007 and
2006 respectively:
Service
|
2007
($)
|
2006
($)
|
Audit Fees
|
367,000
|
362,750
|
Audit Related Fees
|
26,450
|
15,000
|
Tax Fees
|
0
|
0
|
All Other Fees
|
0
|
0
|
TOTAL
|
393,450
|
377,750
|
-
Audit Fees.
The aggregate fees billed for professional service rendered by the
principal accountants KPMG LLP, for the audit of the Companys annual financial
statements and internal control over financial reporting, and review of the financial
statements included in the Companys Forms 10-Q for the years ended December 31,
2007, and 2006 were $367,000 and $362,750 respectively.
-
Audit Related Fees.
The aggregate fees billed for assurance and related services
rendered by KPMG LLP related to the performance of the audit or review of the
Companys financial statements in the years ended December 31, 2007, and 2006 were
$26,450 and $15,000 respectively. These services were related to an employee benefit plan
audit.
-
Tax Fees.
The aggregate fees billed for professional service rendered by KPMG LLP
for tax compliance, tax advice and tax planning in the years ended December 31, 2007, and
2006, were $0. The nature of the services comprising the fees disclosed under this
category is preparation of federal tax returns and tax planning.
-
All Other Fees.
No services or charges were applicable to this category the years
ended December 31, 2007, and 2006.
The Audit Committees pre-approval policies and procedures require
the Audit Committee Chair to pre-approve all audits and non-audit services, and report
such pre-approvals to the Audit Committee at its next regularly scheduled meeting.
No services were rendered for financial information systems design and
implementation or internal audit.
The Companys Audit Committee has considered the compatibility of
the non-audit services furnished by the Companys auditing firm with the firms
need to be independent.
(Page 39)
OTHER MATTERS
Financial Statements
A
copy of the Companys Annual Report is being provided to each shareholder with this
Proxy Statement.
THE COMPANY IS ALSO INCLUDING A COPY OF THE ANNUAL REPORT BY THE
COMPANY TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, INCLUDING CONSOLIDATED
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES FOR THE LAST FISCAL YEAR IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. UPON WRITTEN REQUEST,
SHAREHOLDERS MAY ALSO OBTAIN THE MOST RECENT ANNUAL DISCLOSURE STATEMENT THAT CONTAINS
FINANCIAL INFORMATION COVERING THE LAST TWO YEARS.
Any request for a copy of the Annual Disclosure Statement must contain
a representation that the person making the request was a beneficial owner of Common Stock
on March 24, 2008, which is the record date for this proxy solicitation. Requests should
be addressed to: Marsha C. Sawyer, Clerk, Bar Harbor Bankshares, 82 Main Street, Bar
Harbor, ME 04609.
Nominations by Shareholders
The
Company Bylaws provide that the Company will consider nominees for election to the Board
of Directors recommended by Shareholders if made in the same manner provided for under the
Company Bylaws with regard to typical Shareholder proposals. These procedures require in
part that the shareholder submit the proposed nomination in writing to Marsha C. Sawyer,
Clerk, Bar Harbor Bankshares, 82 Main Street, Bar Harbor, ME 04609, no less than 120 days
prior to the anniversary date of the immediately preceding Annual Meeting or the date on
which the next Annual Meeting is scheduled to occur (provided that notice of such date has
been provided to the shareholders or has been publicly announced), whichever date is
later. Any such notice shall set forth the reasons for considering such nominee, the name
and address of the shareholder proposing the nominee, the number of shares of the
Companys capital stock beneficially owned by such shareholder and any material
interest of the shareholder in the matter proposed to be brought before the Annual
Meeting. If the Governance Committee determines that any shareholder proposal (including a
nomination for election of a director) was not made in a timely fashion or that
information provided in the notice does not fulfill the information requirements set forth
above in any material respects, such proposal shall not be presented for action at the
Annual Meeting for which it is proposed. If a shareholder should propose a candidate, we
anticipate that the Governance Committee would evaluate that candidate on the basis of the
criteria noted above.
Shareholder Proposals
Shareholders may submit proposals for consideration at the 2009 Annual Meeting, which
presently is scheduled for May 19, 2009. In order to be included in the Companys
Proxy Statement and Form of Proxy relating to that meeting, such proposals must be
received by the Company no later than December 8, 2008, which is 120 days in advance of
the proposed mailing date of next years proxy materials. Proposals should be
addressed to Marsha C. Sawyer, Clerk, Bar Harbor Bankshares, 82 Main Street, Bar Harbor,
ME 04609.
Communication with Board of Directors
The
Board of Directors does not have a formal process for shareholders to send communications
to the Board. In view of the infrequency of dhareholder communications to the Board of
Directors, the Board does not believe that a formal process is necessary. Written
communications addressed to the Board of Directors received by the Company from
shareholders will be shared with the full Board of Directors no later than the next
regularly scheduled Board meeting.
(Page 40)
Code of Ethics
The
Company Board of Directors has adopted a Code of Ethics that applies to all employees,
officers, and directors. The Code covers compliance with law; fair and honest dealings
with the Company, with competitors, and with others; fair and honest disclosure to the
public; and procedures for compliance with the Code. Shareholders can review the Code of
Ethics on the website located at
www.BHBT.com
.
Other Business
As
of the date of this Proxy Statement, the Companys Board of Directors knows of no
matters that will be presented for consideration at the Annual Meeting other than as
described in this Proxy Statement. If any other business, matter, or proposal shall
properly come before the Annual Meeting and be voted upon, the enclosed proxies will be
deemed to confer discretionary authority on the individuals named as proxies therein to
vote the shares represented by such proxies as to any such matters. The persons named as
proxies intend to vote or not to vote in accordance with the recommendation of the
Companys Board of Directors.
By Order of the Board of Directors
/s/Marsha C. Sawyer
Marsha C. Sawyer, Clerk
(This space intentionally left blank)
(Page 42)
APPENDIX A
REPORT OF THE AUDIT COMMITTEE
March 13, 2008
To the Board of Directors of Bar Harbor Bankshares:
The Audit Committee has reviewed and discussed with management the
Companys audited consolidated financial statements as of and for the year ended
December 31, 2007.
The Audit Committee has discussed with the independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as amended, by the Auditing Standards
Board of the American Institute of Certified Public Accountants.
The Audit Committee has received and reviewed the written disclosures
and the letter from the independent auditors required by Independence Standard No. 1,
"Independence Discussions with Audit Committees," as amended, by the
Independence Standards Board, and has discussed with the independent accountant the
independent accountants independence.
Based on the reviews and discussions referred to above, the Audit
Committee recommends to the Board of Directors that the financial statements referred to
above be included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2007.
Each of the members of the Audit Committee is independent as defined
under the listing standards of the American Stock Exchange as of December 31, 2007.
The Board of Directors has determined that the Company has at least one
"audit committee financial expert" serving on its Audit Committee. Mr. Scott G.
Toothaker, CPA, meets the criteria for an "audit committee financial expert" and
is "independent" within the meaning of the rules adopted by the American Stock
Exchange pursuant to the Sarbanes-Oxley Act of 2002.
Scott G. Toothaker, Chair
Martha T. Dudman
Lauri E. Fernald
Gregg S. Hannah
Kenneth E. Smith
David B. Woodside
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