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<PRE> BAR HARBOR BANKSHARES
April 2, 2002 Dear Stockholder: The 2002 Annual Meeting of Bar Harbor
Bankshares will be held at 11:00 a.m. on Tuesday, May 7, 2002 in the Atlantic Oakes
Conference Center, located next to the Bay Ferries Terminal on Route 3 in Bar Harbor,
Maine. The Directors and Officers join me in inviting you to attend this meeting and
the reception, which will follow. 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
7th. 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 Enclosures Each stockholder is urged to fill in, date and sign the enclosed form of proxy
and mail it in the envelope provided. If you attend the meeting, you may, if
you wish, revoke your proxy and vote your shares in person. BAR HARBOR BANKSHARES NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS Notice is hereby given that the Annual
Meeting of the Stockholders of Bar Harbor Bankshares will be held at the Atlantic
Oakes Conference Center on Route 3 in Bar Harbor, Maine on May 7, 2002 at 11:00 a.m.
to consider and act upon the following proposals. Stockholders of record as of the close
of business on March 19, 2002 will be entitled to notice of and to vote at the meeting. By Order of the Board of Directors Marsha C. Sawyer, Clerk BAR HARBOR BANKSHARES ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT
This Proxy Statement is furnished to the stockholders 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 Stockholders (the Meeting). The Meeting will be
held on Tuesday, May 7, 2002 at 11:00 a.m. at the Atlantic Oakes Conference Center on
Route 3 in Bar Harbor, Maine. The official Notice of the Annual Meeting of Stockholders
accompanies this Statement. A Form of Proxy for use at the meeting and a return
envelope for the proxy are enclosed. A stockholder 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 stockholders of the
Company on or about April 2, 2002.
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. VOTING SECURITIES AND PRINCIPAL HOLDERS
THEREOF
As of March 19, 2002, the Company had outstanding 3,246,020 shares of its common stock
(the Common Stock), par value $2 per share, each of which is entitled to one vote upon
each matter presented at the Meeting. Only stockholders of record at the close of business
on March 19, 2002 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. Assuming a quorum is present, action may
be taken on any matter considered by the holders of a majority of the shares present and
voting. Abstentions and shares otherwise not voting will not be deemed present and voting.
Stockholders who are present will have an opportunity to vote on each matter brought
before the Meeting.
As of March 19, 2002, to the knowledge of the Company, Bernard K. Cough was the only
beneficial owner of 5% or more of the Companys common stock. Mr. Coughs common
stock ownership is set forth in detail in the "Directors and Executive Officers"
table herein below. Mr. Coughs address is 5 Norman Road, Bar Harbor, ME 04609.
The following table lists, as of March 19, 2002, the number of shares of Common Stock and
the percentage of the Common Stock represented thereby, beneficially owned by each
director and nominee and by all principal executive officers and directors of the Company
as a group. Name & Address of Beneficial Owner Directors and Executive Officers Title of Class Amount
of Direct Beneficial Ownership Amount
of Indirect Beneficial Ownership Percent of Class Thomas A.
Colwell Common 5,400 0 * Bernard K.
Cough Common 126,830 41,740 5.19 Dwight L.
Eaton Common 8,687 0 * Ruth S.
Foster Common 3,350 0 * Cooper F.
Friend Common 3,523 0 * H. Lee Judd Common 1,400 0 * Joseph M.
Murphy Common 0 0 * Dean S.
Read Common 1,390 0 * John P.
Reeves Common 14,760 11.370 * Lynda Z.
Tyson Common 1,650 150 * Paul G.
Ahern Common 1,303 0 * Gerald
Shencavitz Common 501 0 * Total
Ownership of all Directors and Executive Officers of Company as a group (12 persons) 168,814 53,260 6.84%
* Less than 1%
For purposes of the foregoing table, beneficial ownership has been determined in
accordance with the provisions of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended, under which, in general, a person is deemed to be the beneficial
owner of a security if he or she has or shares the power to vote or to direct the voting
of the security, or if he or she had the right to acquire beneficial ownership of the
security within 60 days. Beneficial ownership does not include, in the case of each
director, 31,360 shares (0.0097%) of the Common Stock held by two trusts which, for
purposes of voting, are allocated equally among the directors under the terms of the
respective trust instruments. No director has any other beneficial interest in such
shares. Ownership figures for directors and nominees include directors qualifying
shares owned by each person named. The information provided is based on the records of the
Company and on information furnished by the persons listed.
Management is not aware of any arrangement, which could, at a subsequent date; result in a
change in control of the Company.
Company Directors, executive officers and owners of 10% or more of the Common Stock of the
Company are required to file periodic reports with the Securities and Exchange Commission
with respect to their beneficial ownership of the Common Stock. Based upon a review of
appropriate forms furnished to and retained by the Company, the Company is not aware of
any officer, director, or owner of 10% or more of the Common Stock who has failed to file
any such report. MANAGEMENT OF THE COMPANY Directors
Management recommends that the number of directors for the coming year be set at 9. The
Bylaws of the Company provide for no fewer than 9 or more than 27 directors, with
directors serving staggered terms of three years. The Board of Directors has
nominated for re-election two incumbent directors, Thomas A. Colwell and Dwight L. Eaton,
whose terms expire in 2002. Cooper F. Friend, who was elected by the Board of Directors on
February 18, 2002, to fill the vacancy created by the resignation of Warren C. Cook, also
has been nominated to stand for election for a term of three years. Each has been
nominated for re-election for a term of three years and has consented to be named as a
nominee and to serve if elected.
The following table sets forth the names, occupations, ages and terms of service of all
directors. Each person listed also serves as a Director of Bar Harbor Banking and Trust
Company: 57 1991
Nominees for election to the Board are selected by the full Board. The Board will consider
nominees recommended by stockholders if submitted in writing to Marsha C. Sawyer, Clerk,
Bar Harbor Bankshares, 82 Main Street, Bar Harbor, Maine 04609, not less than three months
in advance of the date of the Annual Meeting.
The Board of Directors of the Company held eleven meetings in 2001. The Bylaws of the
Company provide for quarterly meetings. Each director attended at least 75% of the total
number of meetings held by the Board of Directors in 2001. Executive Officers
Each principal executive officer of the Company is identified in the following table,
which also sets forth the respective office, age, and period served in that office for
each person listed. Principal
Occupation Now and for
The Bylaws of the Company provide that the executive officers be elected annually by the
Board of Directors and that the President, Chairman 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. Committees The Bylaws of the
Company provide that after each Annual Meeting of Directors, the Board shall designate
from among its members an Executive Committee which has 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 2001 included Messrs. Reeves, Colwell, Eaton, Read, and Ms. Tyson.
The Executive Committee met one time in 2001.
The Bylaws provide that the Board may elect or appoint such other committees, as it may
deem necessary or convenient to the operations of the Company. The Board has appointed a
standing Audit Committee and a standing Compensation Committee. It has not appointed a
Nominating Committee, and nominations are considered by the Board as a whole.
The Audit Committee and the Board of Directors have adopted a written charter setting
forth the duties and responsibilities of the Audit Committee. The Audit Committee is
responsible for assisting the Board of Directors to fulfill its fiduciary obligations with
respect to the accounting, financial reporting, internal control and compliance functions
of the Company and its subsidiaries. The Committee recommends to the Board and the
shareholders the appointment of independent accountants and oversees the audit function.
It meets with and reviews the audit plans and reports of both the internal and independent
auditors for the Company. The current members of the Audit Committee include Messrs.
Colwell, Judd, and Ms. Foster, and before their resignations, Ms. Tyson and Mr. Cook. The
Audit Committee met four times during 2001. See Appendix A for Report of Audit Committee. The
Compensation Committee is responsible for setting compensation levels for all employees,
including executive officers. The Compensation Committee for 2001 included Messrs. Dodge,
Eaton, Phillips, Reeves, Read, Ms. Sawyer, and until his resignation, Mr. Cook. The
Compensation Committee met six times during 2001. Family Relationships and Other
Arrangements
There are no family relationships among any director, executive officer, or person
nominated by the Company to become a director or executive officer. There are also no
arrangements or understandings between any nominee, director, executive officer, or
associate of any of the foregoing and any other person pursuant to which the nominee was
or is to be elected as a director or an executive officer. No person or entity listed
above as the employer of an officer or director, other than the Bank and BTI Financial
Group, is an affiliate of the Company. COMPENSATION OF DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth all annual compensation received during each of the
Companys last three fiscal years by Sheldon F. Goldthwait, Jr., Dean S. Read, Paul
G. Ahern, Gerald Shencavitz, and Dwight L. Eaton who are the only executive officers for
whom compensation exceeded $100,000 in any year. Compensation for each named officer was
paid by the subsidiary of the company by which he was employed. SUMMARY COMPENSATION TABLE Other
Annual Paul G.
Ahern 1999 N/A N/A N/A 1999 153,327 9,546 2,933 1999 N/A N/A N/A LONG TERM COMPENSATION AWARDS PAYOUTS Year Restricted
Stock Awards ($) Securities
Underlying Options/SARs (#) LTIP Payouts ($) All Other Compensation ($) Paul G.
Ahern 1999 N/A N/A 0 0 Dwight L.
Eaton 1999 N/A N/A 0 0 Sheldon F.
Goldthwait, Jr. 1999 N/A N/A 0 0 Dean S.
Read 1999 N/A N/A N/A 0 Gerald
Shencavitz 1999 N/A N/A N/A 0
Items included in Mr. Eatons and Mr. Goldthwaits Annual Compensation
Salary include deferred compensation to reflect accounting entries for the
Companys Deferred Compensation Plans. Items included in the Other Annual
Compensation column include social club dues, imputed life insurance amounts, and
reimbursed spousal travel expenses.
Pursuant to Non-Qualified Deferred Compensation Agreements Mr. Goldthwait voluntarily
deferred a portion of his 1999 base salary; Mr. Goldthwait and Mr. Read deferred in 2000,
and Mr. Read deferred in 2001. The deferred amounts are included in the base salaries
disclosed in the Compensation Table. Mr. Goldthwait began receiving payments pursuant to
his deferred compensation agreement in 2000.
The Bank has an incentive plan for which all employees, including the executive officers
listed above, are eligible. The Bank utilizes the Performance Compensation Plan for
Stakeholders developed by Mike Higgins & Associates, Inc. The plan creates an
incentive model based on multiple goal achievements and is weighted to provide potential
payments based on improvement over pre-established measures. Goals are established in the
areas of profit, growth, productivity, and quality. Examples of these measures include
growth in the area of deposits, loans, and Net Interest Margin, and reduction in the
Banks efficiency ratio. Payments to each Bank employee were made in December 2000
equal to 3.395% of each employees salary. Bank Executive Officers and BTI employees
voluntarily elected not to participate in the 2000 Plan. There was no payment under the
plan for 2001. Options Grants During the Year Ended
December 31, 2001 (1)
82 Main Street
Bar Harbor, ME 04609
Chief Executive Officer
IT IS IMPORTANT
THAT PROXIES BE RETURNED PROMPTLY
TO BE HELD MAY 7, 2002
82 Main Street
Bar Harbor, ME 04609
TO BE HELD TUESDAY, MAY 7, 2002
Deer Isle, ME
Bar Harbor, ME
Brooksville, ME
Ellsworth, ME
Ellsworth, ME
Southwest Harbor, ME
Bar Harbor, ME
Bar Harbor, ME
Bar Harbor, ME
Salisbury Cove, ME
Penobscot, ME
Mt. Desert, ME
NamePrincipal Occupation
Now and for
Past 5 YearsAge
as of
3/19/02Year First
Elected
Director
Nominated for a Term
Expiring in 2005
Thomas A. Colwell
President of Colwell Bros., Inc. (Lobster pounding) of
Stonington, Maine
Dwight L. Eaton
Retired February 2000. Formerly President and CEO of BTI
Financial Group and Senior Vice President and Trust Officer of Bar Harbor Banking and
Trust Company; Vice President of the Company since 1987. Current Chairman and
director of BTI Financial Group.
66
1988
Cooper F. Friend
President of Friend & Friend, Inc., a recreational motor
sports dealer.
48
2002
Term Expires 2003
Bernard K. Cough
Treasurer of Atlantic Oakes, Inc., Atlantic Eyrie and several
other resort motels, Bar Harbor, Maine
74
1985
Dean S. Read
President and Chief Executive Officer of the Bank since April
2000. Executive Vice President of the Company and the Bank since January 2000.
Formerly, Senior Relationship Manager of Key Bank Corporation, Augusta, Maine.
Director BTI Financial Group since April 2000.
54
2000
Lynda Z. Tyson
Self employed writer and marketing consultant. Formerly
Chief Operating Officer and Marketing Director of Tyson & Partners, Marketing
consultants of Bar Harbor, Maine.
47
1993
Term Expires in 2004
Ruth S. Foster
Former State Senator and owner of Ruth Foster's (retail
clothing), Ellsworth, Maine.
72
1986
John P. Reeves
Chairman of the Board of the Company and the Bank since
October 1999. Director of BTI Financial Group. Formerly served as President
and Chief Executive Officer of the Company and the Bank until his retirement December 31,
1994.
67
1984
Joseph M. Murphy
President and Chief Executive Officer of Bar Harbor Bankshares
and BTI Financial Group and Director of BTI Financial Group. Formerly Executive Vice
President, Retail Banking Group for WSFS Financial Corporation.
59
2002
Name
Past 5 YearsAge as
of 4/1/02
Year
First Elected Officer
John P. Reeves
Chairman of the Board of
the Company and the Bank since October 1999. Director of BTI Financial Group. Formerly
served as President and Chief Executive Officer of the Company and the Bank until his
retirement December 31, 1994.
67
1984
Joseph M. Murphy
President and Chief
Executive Officer of Bar Harbor Bankshares and BTI Financial Group. Director of BTI
Financial Group and the Bank. Formerly Executive Vice President, Retail Banking Group for
WSFS Financial Corporation.
59
2002
Dean S. Read
Former President and Chief
Executive Officer of Bar Harbor Bankshares (2000-February 25, 2002). President and Chief
Executive Officer of Bar Harbor Banking and Trust Company (current). Director of the Bank
and BTI Financial Group since April 2000.
54
2000
Gerald Shencavitz
Chief Financial Officer and
Treasurer of the Company since June, 2001 and Senior Vice President, Chief Financial
Officer and Chief Operations Officer of the Bank since 2001. Formerly Vice President of
the Bank.
48
2001
Marsha C. Sawyer
Clerk of the Company since
July 1986; Clerk and Senior Vice President of the Bank since 1999; formerly Vice President
of the Bank.
49
1986
Paul G. Ahern
Former President and CEO
BTI Financial Group, a wholly owned subsidiary of the company. Former CEO Block Capital
Management, a wholly owned subsidiary of BTI Financial Group. Previously Vice President
and Trust Investment Officer of the Bank. Mr. Ahern resigned from the foregoing positions
in January 2002.
42
2000-March
2, 2002
Edward B. Grimball
Former Chief Financial
Officer of the Company and Bank since September 2000 through June 2001. Formerly served as
partner of CPA firm from 1999 to September 2000 and Executive Vice President and CFO of
Whitney Holding Corporation, multi-state bank holding company from 1990-1998. Presently
providing temporary executive services to BTI Financial Group.
57
2000-June,
2001
ANNUAL COMPENSATION
Year
Salary ($)
Incentive ($)
Compensation ($)
Former President, BTI Financial Group
2000
2001
110,674
115,740
1,411
500
0
0
Dwight L. Eaton
Retired Senior Vice President and
Trust Officer, Bar Harbor Banking & Trust
2000
2001
40,939
N/A
2,182
N/A
0
N/A
Sheldon F. Goldthwait, Jr.
Retired President and Chief
Executive Officer, Bar Harbor Bankshares1999
2000
2001209,488
823,868
N/A6,309
0
N/A4,097
0
N/A
Dean S. Read
Former President and Chief Executive
Officer, Bar Harbor Bankshares.
President and Chief Executive Officer
Bar Harbor Banking and Trust Company
2000
2001
194,388
186,911
0
500
1,242
2,741
Gerald Shencavitz
Chief Financial Officer and Treasurer
Bar Harbor Bankshares1999
2000
2001N/A
N/A
101,130N/A
N/A
500N/A
N/A
873
2000
2001
N/A
N/A
N/A
20,000
0
0
0
0
2000
2001
N/A
N/A
N/A
N/A
0
N/A
0
0
2000
2001
N/A
N/A
N/A
N/A
0
0
0
0
2000
2001
N/A
N/A
N/A
45,000
N/A
N/A
0
0
2000
2001
N/A
N/A
N/A
15,000
N/A
0
0
0
Individual Grants
Potential
Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
Alernative
to
Grant and Date
Value
Name
Number of Securities
Underlying Options/SARs Granted (#)
Percentage of total
Options/SARs Granted to Employees in Fiscal Year
Exercise of Base
Price ($/Sh)
Expiration Date
5% ($)
10% ($)
Grant Date Present
Value ($)
Dean S. Read(1)
45,000
23.65%
$15.40
6/20/2010
Paul G. Ahern(2)
20,000
10.51%
$15.40
6/20/2010
Gerald Shencavitz(3)
15,000
7.88%
$15.40
6/20/2011
(2)2,850 options vested at the time of Mr. Aherns resignation. Mr. Ahern
is not eligible for any future vesting of options previously granted.
(3)None vested at time of grant. First incremental vesting to occur June 2002.
Compensation Committee
The Company has a seven member Compensation Committee that includes both directors and representatives of management. The Compensation Committee meets several times each year and makes compensation recommendations for the ensuing year to the full Board of Directors for all employees, including executive officers. The recommendations of the Compensation Committee are then considered by the full Board.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee for 2001 included Messrs. Dodge, Eaton, Phillips, Read, Reeves, Ms. Sawyer, and until his resignation, Mr. Cook. Messrs. Dodge, Eaton, Phillips, Read and Reeves served on the Board of Directors. Ms. Sawyer did not serve on the Board of Directors, but served as a non-voting member of the Committee. Ms. Sawyer and Mr. Read were full time employees of the Bank during 2001. They abstained from participating in discussion, formulating recommendations or voting with respect to their own compensation. Mr. Dodge served as chairman of the Committee.
Report of the Compensation Committee on Executive Compensation
The Board of Directors has no formal compensation policy applicable to compensation decisions with respect to its executive officers. While there are no objective criteria which specifically relate corporate performance to compensation determinations, in formulating its recommendation with respect to compensation of Messrs. Read, Shencavitz and Ahern during the last fiscal year, the Board of Directors considered, among other factors, overall responsibilities, individual performance, years of service, and salary surveys of executive officers at comparable financial institutions in Maine and New England. The Board of Directors also reviewed the Corporations overall performance and the performance of the Corporation in relationship to that of other similarly situated financial institutions in Maine and New England.
The foregoing report to stockholders regarding compensation has been submitted by the 2001 Compensation Committee, including Messrs. Dodge, Cook, Read, Reeves, Phillips, Eaton, and Ms. Sawyer.
Compensation of Directors
The directors of the Company, the Bank and BTI receive a fee of $300 for each meeting of the Bankshares and subsidiary boards attended and $250 for each committee meeting attended. The fee paid for the attendance at the Annual Meeting is $500.00 per member of the Board of Directors. The Chairman of the Bankshares Board receives an annual retainer of $3,000 in addition to meeting fees. Meetings of the Board of Directors of the Company are held no less than quarterly. Those directors of the Company who are also officers do not receive directors fees.
EMPLOYEE BENEFIT PLANS
401(k) Plan
The Company has a contributory 401(k) plan available to all employees. Employees may contribute between 1% and 15% of their compensation, to which the Company will match .50% of the first 3% deferred by an employee and 25% on the second 3% deferred. For the years ended December 31, 2001, 2000, and 1999, the Company contributed $54,021, $55,904.11, and $52,250, respectively, to its 401(k) plan. In 1999 the Board of Directors voted to credit each eligible participants 401(k) account with 3% of salary; that amount was increased to 4% for the years 2000 and 2001. Total contributions made were $190,324, $184,905, and $133,950 for the years ended December 31, 2001, 2000, and 1999, respectively.
Retirement Plans
The Company has two non-qualified supplemental retirement plans for certain officers, including Messrs. Reeves, Eaton, Goldthwait and MacDonald. The agreements provide supplemental retirement benefits payable in installments over a period of years upon retirement or death. The Company recognizes the cost associated with the agreements over the service lives of the participating officers.
The Bank has entered into deferred compensation agreements with Messrs. Reeves, Goldthwait, and Eaton whereby those individuals, or their beneficiaries, will receive upon death or retirement, an annual supplemental pension benefit over a period of 10 years in the amount of $15,000 per annum (in the case of Mr. Reeves), and in the amount of $10,000 per annum (in the case of Messrs. Goldthwait and Eaton). These plans are unfunded and benefits are paid out of Bank earnings. For 2001, 2000, and 1999, the expense of these supplemental plans was $13,750, $13,750, and $13,080, respectively. All three participating executives of this plan are now retired. Mr. Reeves began drawing his annual installment on January 1, 1996. He receives $5,300 annually, reduced from $10,000 for early retirement, under the terms of his agreement. Messrs. Eaton and Goldthwait retired in February and April 2000, respectively. Because he elected early retirement, Mr. Goldthwaits annual benefit was reduced under the terms of his agreement from $10,000 to $6,800. Messrs. Eaton and Goldthwait began drawing their annual installments of $10,000 and $6,800, respectively in 2000.
In 1993 the Company established a non-qualified supplemental retirement plan for Messrs. Reeves, Eaton, Goldthwait, and MacDonald. The agreements provide supplemental retirement benefits payable in installments over twenty years upon retirement or death. The Company recognizes the costs associated with the agreements over the service lives of the participating officers. In 1999, the company modified the plan for Mr. Goldthwait, which resulted in an estimated one-time expense of $639,700.00. The $759,683.00 Deferred Compensation entry to Mr. Goldthwaits benefit package reflects the 1999 plan modification and 2000 accounting entries necessitated by his early retirement. The annual expense associated with this supplemental plan was $ 125,070.12, $111,909, and $866,200, for 2001, 2000, and 1999, respectively. The agreements with Messrs. Reeves, Eaton, Goldthwait, and MacDonald provide for annual installment payments in the amounts of $49,020, $22,600, $87,176 and $7,700 respectively. Mr. Reeves began drawing his annual installment in January 1995, Mr. Eaton in March 2000, and Mr. Goldthwait in April 2000. Mr. Reeves and Mr. Goldthwait are both receiving reduced payments under a predetermined early retirement schedule.
Officers of the Company are entitled to participate in certain group insurance benefits. In accordance with Company policy, all such benefits are available generally to employees of the Company.
TRANSACTIONS WITH DIRECTORS, OFFICERS AND PRINCIPAL STOCKHOLDERS
The Company and its affiliates utilize the occasional services of self-employed marketing consultants Charles and Lynda Tyson. Ms. Tyson serves as a director of the Company. Management believes that the fees charged by the Tysons are at least as favorable as any that could be obtained from persons not affiliated with the Company.
The Company has had, and expects to have in the future, banking transactions in the ordinary course of its business with other directors, officers, principal stockholders, and their associates, including members of the Compensation Committee and Audit Committee. All such transactions have been and will be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with others. No such transactions have involved more than normal risk of collectability or presented other unfavorable features, and no loans outstanding to directors, officers, principal stockholders, or their associates in an amount in excess of $60,000 are non-accruing or past due or are otherwise considered to be potential problem loans.
Employment Contracts
BTI Financial Group, a wholly owned subsidiary of the Company, entered into a written employment agreement with Paul G. Ahern dated February 3, 2000. By letter dated January 31, 2002, Mr. Ahern resigned from his position as President and CEO of BTI Financial Group and as a director of the Company and BTI. He also resigned all other officer and director positions he held with Bar Harbor Trust Services and Block Capital Management, both wholly owned subsidiaries of BTI and indirect subsidiaries of the Company. The Ahern Employment Agreement provided for the payment of an annual base salary to Mr. Ahern of not less than $115,000.00 and also provided for additional incentive based compensation under the variable incentive compensation plan, which BTI Financial Group has adopted. Mr. Ahern did not qualify during the last fiscal year for incentive compensation under that program.
PERFORMANCE GRAPH
The following graph illustrates the estimated yearly percentage change in the Companys cumulative total shareholder return on its common stock for each of the last five years. Total shareholder return is computed by taking the difference between the ending price of the common stock at the end of the previous year and the current year, plus any dividends paid divided by the ending price of the common stock at the end of the previous year. For purposes of comparison, the graph also illustrates comparable shareholder return of American Stock Exchange (AMEX) banks as a group as measured by the AMEX Market Index and the peer group index as defined by AMEX. The graph assumes a $100 investment on December 31, 1996 in the common stock of each of the Company, the AMEX peer group banks and the AMEX Market Index as a group and measures the amount by which the market value of each, assuming reinvestment of dividends, has increased as of December 31 of each calendar year since the base measurement point of December 31, 1996.
Market values for 1997, 1998, 1999, 2000, and 2001 are based on information obtained from the American Stock Exchange.
(GRAPH )
SELECTION OF AUDITORS
Stockholder approval of the selection of auditors is not required, but the Board is of the view that an expression of opinion by the stockholders as to the appropriateness of this selection is desirable. The Board recommends that its selection of Berry, Dunn, McNeil & Parker as the principal independent accountant for the Company for the year 2001 be ratified. If the Board selection is not ratified, the Board will take action to appoint a different auditor for the Company and for its subsidiaries. It is anticipated that a representative of Berry, Dunn, McNeil & Parker will be present at the Meeting to respond to appropriate questions or to make a statement.
OTHER MATTERS
Management knows of no other matters to be presented for action at the Meeting. If any other matters properly come before the Meeting, the shares represented by the proxies will be voted with respect thereto in accordance with the judgment of the person(s) voting the proxies.
FINANCIAL STATEMENTS
A copy of the Companys Annual Report is being provided to each stockholder with the Proxy Statement.
THE COMPANY IS 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, STOCKHOLDERS MAY ALSO OBTAIN THE BANKS 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 19, 2002, 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.
STOCKHOLDER PROPOSALS
Stockholders may submit proposals for consideration at the 2003 Annual Meeting, which presently is scheduled for May 6, 2003. 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 15, 2002, which is 120 days in advance of the proposed mailing date of the 2003 proxy materials. Proposals should be addressed to Marsha C. Sawyer, Clerk, Bar Harbor Bankshares, 82 Main Street, Bar Harbor, ME 04609.
By Order of the Board of Directors
Marsha C. Sawyer, Clerk
APPENDIX A
REPORT OF THE AUDIT COMMITTEE
April 1, 2002
To the Board of Directors of Bar Harbor Bankshares:
The Audit Committee has reviewed and discussed with management the Companys audited financial statements as of and for the year ended December 31, 2001.
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 have discussed with the auditors the auditors 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, 2001.
Each of the members of the Audit Committee is independent as defined under the listing standards of the AMEX stock market.
Thomas A. Colwell, Chair
Warren C. Cook*
Ruth S. Foster
H. Lee Judd
Lynda Z. Tyson**
*Resigned as a Director and Audit
Committee member January 2, 2002.
**Resigned as an Audit Committee member January 31, 2002
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