SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Salisbury Bancorp, Inc.
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SALISBURY BANCORP, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 14, 2008
TABLE OF CONTENTS
Page
NOTICE OF ANNUAL MEETING......................................................3
INTRODUCTION .................................................................4
OUTSTANDING STOCK AND VOTING RIGHTS...........................................4
SECURITY OWNERSHIP OF MANAGEMENT
AND RELATED SHAREHOLDER MATTERS.............................................5
Principal Shareholders of the Company................................6
Equity Compensation Plan Information.................................6
Executive Officers...................................................6
PROPOSAL 1 - ELECTION OF DIRECTORS............................................7
Nominees and Board of Directors and Director Independence............7
CORPORATE GOVERNANCE..........................................................9
Meetings and Committees of the Board of Directors....................9
Code of Ethics......................................................11
Board of Directors' Communications with Shareholders................11
Audit Committee Report..............................................12
EXECUTIVE COMPENSATION.......................................................13
Compensation of Executive Officers..................................13
2007 Summary Compensation Table ..................................13
Employment and Other Agreements.....................................13
BOARD OF DIRECTOR COMPENSATION...............................................15
2007 Director Compensation Table....................................15
Directors' Fees.....................................................16
Directors' Stock Retainer Plan......................................16
Certain Relationships and Related Transactions......................16
Indebtedness of Management and Others...............................16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE......................17
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.........17
Independence........................................................18
Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors...........................18
OTHER BUSINESS...............................................................18
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS.............................19
SHAREHOLDER INFORMATION......................................................19
2
SALISBURY BANCORP, INC.
5 BISSELL STREET
P. O. BOX 1868
LAKEVILLE, CONNECTICUT 06039
(860) 435-9801
NOTICE OF 2008 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 14, 2008
NOTICE IS HEREBY GIVEN that the 2008 Annual Meeting of Shareholders of Salisbury
Bancorp, Inc. (the "Company") will be held at 4:00 p.m. on Wednesday, May 14,
2008 at the Interlaken Inn, 74 Interlaken Road, in Lakeville, Connecticut 06039,
for the following purposes:
1. To elect three (3) Directors for a three (3) year term who, with the
six (6) Directors whose terms do not expire at this meeting, will
constitute the full Board of Directors of the Company.
2. To ratify the appointment of Shatswell, MacLeod & Company, P.C. as
independent auditors for the Company for the year ending December 31,
2008.
3. To transact such other business as may properly come before the
meeting, or any adjournment(s) thereof.
Only those Shareholders of record at the close of business on the 28th
day of March, 2008 are entitled to notice of, and to vote at, this Annual
Meeting or any adjournment thereof. In order that you may be represented at the
meeting, please complete, date, sign and mail promptly the enclosed proxy for
which a postage-prepaid return envelope is provided.
BY ORDER OF THE BOARD OF DIRECTORS OF
SALISBURY BANCORP, INC.
/s/ John F. Foley
John F. Foley
Secretary
April 7, 2008
Lakeville, CT
SHAREHOLDERS ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY AS
SOON AS POSSIBLE REGARDLESS OF WHETHER THEY PLAN TO ATTEND THE MEETING. ANY
----------------
PROXY GIVEN BY A SHAREHOLDER MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED,
AND ANY SHAREHOLDER WHO EXECUTES AND RETURNS A PROXY AND WHO ATTENDS THE ANNUAL
MEETING MAY WITHDRAW THE PROXY AT ANY TIME BEFORE IT IS VOTED AND VOTE HIS OR
HER SHARES IN PERSON. A PROXY MAY ALSO BE REVOKED BY GIVING NOTICE TO JOHN F.
FOLEY, SECRETARY OF THE COMPANY, 5 BISSELL STREET, P. O. BOX 1868, LAKEVILLE, CT
06039, IN WRITING PRIOR TO THE TAKING OF A VOTE.
3
SALISBURY BANCORP, INC.
5 BISSELL STREET
LAKEVILLE, CT 06039
(860) 435-9801
PROXY STATEMENT
FOR 2008 ANNUAL MEETING OF SHAREHOLDERS
May 14, 2008
INTRODUCTION
The enclosed proxy card (the "Proxy") is solicited by the Board of
Directors (the "Board of Directors") of Salisbury Bancorp, Inc. (the "Company"),
for use at the 2008 Annual Meeting of Shareholders (the "Annual Meeting") to be
held on Wednesday, May 14, 2008, at 4:00 p.m., at the Interlaken Inn, 74
Interlaken Road, Lakeville, Connecticut 06039, and at any and all adjournments
thereof. Any Proxy given may be revoked at any time before it is actually voted
on any matter in accordance with the procedures set forth on the Notice of
Annual Meeting. This Proxy Statement and the enclosed form of Proxy are being
mailed to shareholders (the "Shareholders") on or about April 7, 2008. The cost
of preparing, assembling and mailing this Proxy Statement and the material
enclosed herewith is being borne by the Company. In addition, proxies may be
solicited by Directors, officers and employees of the Company and Salisbury Bank
and Trust Company (the "Bank") personally by telephone or other means. The
Company will reimburse banks, brokers, and other custodians, nominees, and
fiduciaries for their reasonable and actual costs in sending the proxy materials
to the beneficial owners of the Company's common stock (the "Common Stock").
If your shares are in a brokerage or fiduciary account, your broker or
bank will send you a voting instruction form instead of a Proxy. Please follow
the instructions on such form to instruct your broker or bank how to vote your
shares. If you wish to attend the meeting and vote your shares in person, you
must follow the instructions on the voting instructions form to obtain a legal
proxy from your broker or bank.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on March 28,
2008 as the record date (the "Record Date") for the determination of
Shareholders entitled to notice of and to vote at the Annual Meeting. As of the
Record Date, 1,685,021 shares of the Company's Common Stock (par value $.10 per
share) were outstanding and entitled to vote and held of record by approximately
780 Shareholders of Record. Each share of Common Stock is entitled to one vote
on all matters to be presented at the Annual Meeting. Votes withheld,
abstentions and broker non-votes are not treated as having voted in favor of any
proposal and are counted only for purposes of determining whether a quorum is
present at the Annual Meeting.
A Proxy card is enclosed for your use. YOU ARE SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS TO COMPLETE, DATE, SIGN AND RETURN THE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, which is postage-prepaid if mailed in the United States.
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If the enclosed form of Proxy is properly executed and received by the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed, but unmarked proxies will be voted "FOR" Proposals 1 and 2 discussed
in this Proxy Statement. As of the date of this Proxy Statement, the Board of
Directors and management do not know of any matters other than those described
in the Notice of Annual Meeting that are to come before the Annual Meeting. If
any other matters are properly brought before the Annual Meeting, the persons
named in the Proxy will vote the shares represented by such Proxy upon such
matters as determined by a majority of the Board of Directors.
SECURITY OWNERSHIP OF MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The following table sets forth certain information as of March 28, 2008
regarding the number of shares of Common Stock beneficially owned by each
nominee for Director, Director and Executive Officer of the Company and by all
nominees for Director, Directors and Executive Officers of the Company as a
group.
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership (1) Percent of Class (2)
------------------------ ------------------------ --------------------
Louis E. Allyn, II 1,346 .08%
John R. H. Blum 16,145 (3) .96%
Louise F. Brown 2,808 .17%
Richard J. Cantele, Jr. 3,006 (4) .18%
Robert S. Drucker 8,348 (5) .50%
John F. Foley 7,443 (6) .44%
Nancy F. Humphreys 1,720 (7) .10%
Holly J. Nelson 1,768 (8) .10%
John F. Perotti 11,454 (9) .68%
Michael A. Varet 66,366 (10) 3.94%
--------------------------------- -------------- -------
(All Nominees for Directors, 120,404 7.15%
Directors and Executive Officers
of the Company as a group of ten
(10) persons)
-----------------------
(1) The shareholdings also include, in certain cases, shares owned by or in
trust for a director's spouse and/or children or grandchildren, and in
which all beneficial interest has been disclaimed by the Director or
has the right to acquire such security within sixty (60) days of March
28, 2008.
(2) Percentages are based upon the 1,685,021 shares of the Company's Common
Stock outstanding and entitled to vote on March 28, 2008. The
definition of beneficial owner includes any person who, directly or
indirectly, through any contract, agreement or understanding,
relationship or otherwise, has or shares voting power or investment
power with respect to such security.
(3) Includes 2,100 shares owned by John R. H. Blum's spouse.
(4) Includes 1,320 shares owned jointly by Richard J. Cantele, Jr. and his
spouse and 6 shares owned by Richard J. Cantele, Jr. as custodian for
his daughter.
(5) Includes 1,500 shares owned by Robert S. Drucker's spouse.
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(6) Includes 3,322 shares owned jointly by John F. Foley and his spouse,
1,543 owned by his spouse and 100 shares owned by John F. Foley as
custodian for his children.
(7) Includes 1,000 shares owned jointly by Nancy F. Humphreys and her
spouse.
(8) Includes 6 shares owned by Holly J. Nelson as guardian for a minor
child.
(9) Includes 9,514 shares owned jointly by John F. Perotti and his spouse,
1,100 shares owned by his spouse and 564 shares owned by his son which
shares John F. Perotti has disclaimed beneficial ownership.
(10) Includes 18,540 shares which are owned by Michael A. Varet's spouse and
18,546 shares which are owned by his children, of which shares Michael
A. Varet has disclaimed beneficial ownership.
Principal Shareholders of the Company
-------------------------------------
Management is not aware of any person (including any "group" as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") who owns beneficially more than 5% of the Company's
Common Stock as of the Record Date.
Equity Compensation Plan Information
------------------------------------
The Company does not have any equity compensation plans pursuant to
which equity securities are authorized for issuance for the compensation of
Executive Officers. The Company has a Directors Stock Retainer Plan, which
provides non-employee Directors with shares of the Common Stock as a component
of their compensation. Such Plan is discussed further under "Board of Director
Compensation" below.
Executive Officers
------------------
The following table sets forth the name and age of each Executive
Officer, his principal occupation for the last five (5) years and the year in
which he was first appointed an Executive Officer of the Company.
Executive Officer
Name Age Position of the Company since:
---- --- -------- ---------------------
John F. Perotti 61 Chairman and 1998 (1)
Chief Executive Officer
Richard J. Cantele, Jr. 48 President and 2001 (2)
Chief Operating Officer
John F. Foley 57 Chief Financial Officer, 1998 (3)
Treasurer and Secretary
---------------
(1) Mr. Perotti is also the Chairman and Chief Executive Officer of the
Bank and has been an Executive Officer of the Bank since 1982.
(2) Mr. Cantele is also the President and Chief Operating Officer of the
Bank and has been an Executive Officer of the Bank since 1989.
(3) Mr. Foley is also the Chief Financial Officer and Treasurer of the Bank
and has been an Executive Officer of the Bank since 1986.
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PROPOSAL 1
ELECTION OF DIRECTORS
The Certificate of Incorporation and Bylaws of the Company provide for
a Board of Directors of not less than seven (7) members, as determined from time
to time by resolution of the Board of Directors. The Board of Directors has set
the number of directorships at nine (9). The Board of Directors of the Company
is divided into three (3) classes as nearly equal in number as possible. Classes
of Directors serve for staggered three (3) year terms. A successor class is
elected at each annual meeting of shareholders when the terms of office of the
members of one class expire. Vacant directorships may be filled, until the
expiration of the term of the vacated directorship, by the vote of a majority of
the Directors then in office. A plurality of votes cast in favor is necessary
for the election of Directors.
Nominees and Board of Directors and Director Independence
---------------------------------------------------------
There are three (3) directorships on the Board of Directors which are
up for election this year. The following individuals have been nominated to
serve for a three (3) year term: Louise F. Brown, Richard J. Cantele, Jr. and
Nancy F. Humphreys. The three (3) nominees are presently members of the Board of
Directors. Unless otherwise directed, the enclosed Proxy will be voted "FOR"
such nominees. In the event any one or more nominees is unable or declines to
serve (events which are not anticipated), the persons named in the Proxy may
vote for some other person or persons as the Board of Directors may recommend.
The following table sets forth certain information, as of March 28,
2008, with respect to the Directors of the Company. All Directors are considered
"independent" within the meaning of the American Stock Exchange ("AMEX")
independence standards with the exception of John F. Perotti and Richard J.
Cantele, Jr., who are Executive Officers of the Company and the Bank.
NOMINEES FOR ELECTION FOR TERMS EXPIRING IN 2008
Position Held with
Name Age the Company Director Since
---- --- ----------- --------------
Louise F. Brown 64 Director 1998
President, Chief
Richard J. Cantele, Jr. 48 Operating Officer, 2005
Director
Nancy F. Humphreys 66 Director 2001
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2009
-----------------------------------------------
John R. H. Blum 78 Director 1998
Holly J. Nelson 54 Director 1998
Chairman, Chief
John F. Perotti 61 Executive Officer, 1998
Director
7
CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2010
-----------------------------------------------
Louis E. Allyn, II 60 Director 2004
Robert S. Drucker 66 Director 2004
Michael A. Varet 66 Presiding Director 1998
Presented below is additional information concerning the Directors of
the Company. Unless otherwise stated, all Directors have held the position
described for at least five (5) years.
Louis E. Allyn, II has been a Director of the Bank since 2004. He is
President of Allyndale Corporation. Allyndale Corporation mines and processes
limestone into a variety of agricultural and lawn and garden products that are
distributed throughout southern New England and New York state.
John R. H. Blum is a retired attorney and former Commissioner of
Agriculture for the State of Connecticut. He has been a Director of the Bank
since 1995 and was elected Presiding Director in 2005, a position he held until
2007. Prior to 2005, he was Chairman of the Board of Directors of the Company
and the Bank since 1998.
Louise F. Brown has been a Director of the Bank since 1992 and is a
partner in the law firm of Ackerly Brown, LLP.
Richard J. Cantele, Jr. has been President and Chief Operating Officer
of the Company and the Bank since 2005. Prior to that he served as Executive
Vice President, Treasurer and Chief Operating Officer of the Bank and Secretary
of the Company. He has been a Director of the Bank since 2005.
Robert S. Drucker has been a Director of the Bank since 2004. He is
proprietor of Barrington Outfitters.
Nancy F. Humphreys has been a Director of the Bank since 2001. She
retired from Citigroup New York, Citibank in February of 2000 as Managing
Director and Treasurer of Global Corporate Investment Bank North America.
Holly J. Nelson has been a Director of the Bank since 1995. She is a
member of Horses North, LLC, a tour operator, and is a member in Oblong Property
Management, LLC.
John F. Perotti has been Chairman and Chief Executive Officer of the
Company and the Bank since 2005. Prior to that he served as President and Chief
Executive Officer of the Company and the Bank, Executive Vice President and
Chief Operating Officer of the Bank and Vice President and Treasurer of the
Bank. He has been a Director of the Bank since 1985.
Michael A. Varet is a partner in the law firm of DLA Piper US LLP. Mr.
Varet has been a Director of the Bank since 1997 and was elected Presiding
Director in 2007.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO ELECT
EACH OF THE THREE (3) NOMINEES TO THE BOARD OF DIRECTORS FOR A TERM OF THREE (3)
YEARS. DIRECTORS ARE ELECTED BY A PLURALITY OF THE VOTES CAST BY THE SHARES
ENTITLED TO VOTE AT THE MEETING. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY
CARD.
8
CORPORATE GOVERNANCE
Meetings and Committees of the Board of Directors
-------------------------------------------------
The Board of Directors met thirteen (13) times during the year 2007,
and has various committees including an Executive Committee, Human Resources and
Compensation Committee, Nominating and Governance Committee and Audit Committee.
The members of the committees are appointed by the Board of Directors.
During 2007 no Director attended fewer than 75% of the aggregate of (1)
the total number of meetings held by the Company's Board of Directors during the
period that the individual served, and (2) the total number of meetings held by
all committees of the Company's Board of Directors on which he/she served. The
Company does not maintain a policy for Directors attendance at the Company's
annual meetings, but encourages all Directors to attend. All Directors of the
Company attended the Company's annual meeting on May 16, 2007.
Executive Committee
The Executive Committee has general supervision over the affairs of the
Company between meetings of the Board of Directors. The members of the Executive
Committee are Louis E. Allyn, II, John R. H. Blum, Louise F. Brown, John F.
Perotti and Michael A. Varet. The Executive Committee did not meet separately
from the Board during the year 2007.
Human Resources and Compensation Committee
The Human Resources and Compensation Committee is responsible for
reviewing the Company's general compensation strategy; establishing salaries and
reviewing benefit programs, including pensions and incentive compensation plans;
and advising the Board of Directors and making recommendations with respect to
such plans. In particular, the Committee reviews and approves the Company's
compensation strategies and objectives, reviews and makes recommendations to the
Board for its approval regarding Executive Officers' compensation, administers
incentive plans and reviews and makes recommendations to the Board regarding
general employee pension benefit plans and other benefit plans on an as needed
basis. The Company strives for pay packages that are fair. In determining
whether compensation of Executive Officers is fair, the Committee considers each
component of compensation including salary and bonus, stock compensation,
amounts to be received from any deferred compensation, severance, perquisites
and others. In establishing levels of compensation, the Committee endeavors to
take into consideration an individual's performance, level of expertise,
responsibilities, length of service and comparable levels of compensation paid
to executives of other companies of comparable size and development within the
industry. No individual Executive Officer may participate in the review,
discussion or decision of the Committee regarding his or her compensation or the
compensation of any senior Executive Officer, but Executive Officers may
participate in the review, discussion or decision of the Committee regarding
Director compensation. The Committee directly engaged the services of Clark
Consulting to provide an external annual analysis of the compensation of
Executive Officers. The members of the Committee are Louis E. Allyn, II, Nancy
F. Humphreys, Holly J. Nelson and Michael A. Varet, all of whom are independent
in accordance with the AMEX independence standards. The Committee met nine (9)
times during the year 2007.
A copy of the Committee's Charter, which the Committee and Board review
and assess at least annually, is available on the Company's website at
www.salisburybank.com.
---------------------
9
Nominating and Governance Committee
The Nominating and Governance Committee is responsible for assisting
the Board of Directors in identifying and evaluating potential nominees for
director and recommending qualified nominees to the Board for consideration. The
Nominating and Governance Committee selects the director nominees to stand for
election at the Company's annual meetings of shareholders. The Nominating and
Governance Committee's process for identifying and evaluating nominees for
director, including nominees recommended by shareholders, has historically
operated informally and without any differences in the manner in which nominees
recommended by shareholders are evaluated. However, the Company's Bylaws provide
that if the Committee or Board proposes a nominee age 72 or greater, then such
nomination requires two-thirds approval by the full Board.
The Nominating and Governance Committee and the Board of Directors
consider factors such as those summarized below in evaluating director
candidates, including any nominee submitted by shareholders, and believe that
the Company's Bylaws, Nominating and Governance Committee Charter and the
qualifications and considerations such as those enumerated below provide
adequate guidance and flexibility in evaluating candidates.
o Sound business judgment and financial sophistication in order to
understand the Company's financial and operating performance and to
provide strategic guidance to management.
o Business management experience.
o Integrity, commitment, honesty and objectivity.
o A general familiarity with (i) prudent banking principles; (ii) bank
operations/technology; (iii) pertinent laws, policies and regulations;
(iv) markets and trends affecting the financial services industry; and
(v) local economic and business opportunities.
o Strong communication skills in order to function effectively with the
Company's constituencies.
o A financial interest in the Company as a shareholder. Generally,
candidates should not have relationships with the Company or the Bank
which would disqualify the candidate from being considered independent.
o Generally, candidates should be involved in philanthropic, education,
business or civic leadership positions.
o Generally, candidates should be familiar with the geographic areas
served by the Company.
o Candidates should evidence a willingness and commitment to devote
sufficient time and energy to prepare for and attend Board and
Committee meetings and to diligently perform the duties and
responsibilities of service as a director.
o Candidates should not have interests which conflict with those of the
Company or the Bank.
The Company has not paid a fee to any third party or parties to
identify or assist in identifying or evaluating potential nominees. The Board
and Nominating and Governance Committee do not discriminate on the basis of sex,
race, color, gender, national origin, religion or disability in the evaluation
of candidates.
A copy of the Company's written Nominating and Governance Committee
Charter is available on the Company's website at www.salisburybank.com.
---------------------
10
Any shareholder who wishes to recommend a nominee for director should
send the required information to the attention of the Chair of the Nominating
and Governance Committee at the address of the Company. See also the information
under "Deadline for Submission of Shareholder Proposals" below.
The members of the Nominating and Governance Committee are John R. H.
Blum, Louise F. Brown and Michael A. Varet. All such members are "independent"
in accordance with the independence standards of AMEX. The Committee met once
during the year 2007. All nominees for directors at the 2008 Annual Meeting were
nominated by the Nominating and Governance Committee and the Board of Directors.
Audit Committee
The Company has an Audit Committee established in accordance with
Section 3(a)(58)(A) of the Exchange Act. Subject to the Audit Committee Charter,
the Audit Committee provides assistance to the Board of Directors in fulfilling
its responsibility to the shareholders, potential shareholders and investment
community relating to corporate accounting, reporting practices of the Company,
and the quality and integrity of the financial reports of the Company. In so
doing, it is the responsibility of the Audit Committee to appoint the
independent auditors for the Company and to maintain free and open means of
communication between the Directors, the independent auditors, the internal
auditors and the financial management of the Company.
The responsibilities of the Audit Committee are governed by the
Company's Audit Committee Charter which was adopted by the Company's Board of
Directors. Its members are Louis E. Allyn, II, Nancy F. Humphreys and Michael A.
Varet. The Audit Committee met seven (7) times during the year 2007. Each of the
members of the Audit Committee is an "independent director" in accordance with
the listing standards of the AMEX. While no member of the Audit Committee
qualifies as an "audit committee financial expert" as such term is defined by
federal securities laws and regulations, the Board of Directors believes the
members of the Audit Committee bring diverse educational, business and
professional experience that is beneficial to the audit committee function of
the Company and the Bank and enables the Audit Committee to fulfill its
responsibility.
A copy of the Company's written Audit Committee Charter is available on
the Company's website at www.salisburybank.com.
---------------------
Code of Ethics
--------------
The Company has adopted a Code of Ethics that applies to the Company's
Chief Executive Officer and Chief Financial Officer. A copy of such Code of
Ethics is available upon request, without charge, by writing to John F. Foley,
Chief Financial Officer and Secretary, Salisbury Bank and Trust Company, 5
Bissell Street, P. O. Box 1868, Lakeville, Connecticut 06039.
Board of Directors' Communications with Shareholders
----------------------------------------------------
The Company's Board of Directors does not have a formal process for
shareholders to send communications to the Board. However, the volume of such
communications has historically been de minimus. Accordingly, the Board
considers the Company's informal process to be adequate to address the Company's
needs. Historically, such informal process has functioned as follows: any
shareholder communication is forwarded to the Chairman and Chief Executive
Officer for appropriate discussion by the Board and the formulation of an
appropriate response. Shareholders may forward written
11
communications to the Board by addressing such comments to the Board of
Directors of Salisbury Bancorp, Inc., 5 Bissell Street, P. O. Box 1868,
Lakeville, Connecticut 06039.
Audit Committee Report
----------------------
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2007 with management
and has discussed the matters that are required to be discussed by SAS 61 with
Shatswell, MacLeod & Company, P.C. (the Company's independent auditors)
("Shatswell").
The Audit Committee has received the written disclosures and the letter
from Shatswell required by Independence Standards Board Standard No. 1 and has
discussed Shatswell's independence with respect to the Company with Shatswell.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2007 for filing with the Securities and Exchange Commission (the "SEC").
Salisbury Bancorp, Inc. Audit Committee
Nancy F. Humphreys, Chairman
Louis E. Allyn, II
Michael A. Varet
The foregoing Report of the Company's Audit Committee is provided in
accordance with the rules and regulations of the SEC. Pursuant to such rules and
regulations, this Report shall not be deemed "soliciting material," filed with
the SEC, subject to Regulation 14A and 14C of the SEC or subject to the
liabilities of Section 18 of the Exchange Act.
12
EXECUTIVE COMPENSATION
Compensation of Executive Officers
----------------------------------
The following table provides certain information regarding the
compensation paid to the Named Executive Officers of the Company for services
rendered in all capacities during the two (2) fiscal years ended December 31,
2007. All compensation expense was paid by the Bank.
2007 Summary Compensation Table
------------------------------------------------------------------------------------------------------------------------------------
Name and Principal Year Salary Bonus Stock Option Non-Equity Nonqualified All Other Total ($)
Position ($) ($) Awards Awards Incentive Deferred Compensation
($) ($) Plan Compensation ($)
Compensation Earnings
($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)(3) (j)
------------------------------------------------------------------------------------------------------------------------------------
John F. Perotti - 2007 $212,583 $17,500(2) $20,207 $250,290
Chairman and Chief 2006 208,910 20,892(1) 22,800 252,602
Executive Officer
------------------------------------------------------------------------------------------------------------------------------------
Richard J. 2007 154,637 17,500(2) 17,837 189,974
Cantele, Jr. - 2006 144,768 15,924(1) 18,603 179,295
President and
Chief Operating
Officer
------------------------------------------------------------------------------------------------------------------------------------
John F. Foley - 2007 106,943 8,450(2) 16,186 131,579
Chief Financial 2006 100,839 9,047(1) 16,845 126,731
Officer, Treasurer
& Secretary
------------------------------------------------------------------------------------------------------------------------------------
(1) Column (d) - cash incentive bonus earned in 2006 but paid in 2007.
(2) Column (d) - cash incentive bonus earned in 2007 but paid in 2008.
(3) Column (i) - includes, for the years 2007 and 2006, respectively: Mr.
Perotti - $4,710 and $5,496 in 401(k) matching contributions and $15,497 and
$17,304 in insurance premiums; Mr. Cantele - $3,491 and $3,692 in 401(k)
matching contributions and $14,346 and $14,911 in insurance premiums; and Mr.
Foley - $2,320 and $2,413 in 401(k) matching contributions and $13,866 and
$14,432 in insurance premiums.
Employment and Other Agreements
-------------------------------
Retirement Plans - The Company has post-employment compensation plans
in place that include Company-only funded benefits as well as employee
contribution benefits. The combination of plans allows the Company to offer its
employees, including the Named Executive Officers, post-employment compensation
as incentive to remain with the Company. The Company maintains a
non-contributory tax qualified Defined Benefit Pension Plan, a Supplemental
Retirement Agreement for the Company's Chief Executive Officer, a 401(k)
Retirement Plan and a Change in Control Plan.
13
Defined Benefit Pension Plan - The Bank maintains a non-contributory
defined benefit pension plan for officers and other salaried employees of the
Bank who become participants after attaining age 21 and completing one (1) year
of service, and were hired prior to October 1, 2006. The plan was adopted in
January 1953. The Named Executive Officers are participants in this plan.
Pension benefits are based upon the annual average of an employee's
total compensation for the five (5) consecutive plan years of employment during
which the employee's compensation was the greatest and during which he or she
was a participant. The amount of the annual benefit is 2% of average salary
offset by .65% of the social security wage base per year of service (to a
maximum of 25 years) plus one-half of 1% of average salary for each year of
service over 25 years (to a maximum of ten years). This benefit formula may be
modified to conform to the pension laws. Internal Revenue Code Section 401(a)
(17) limits earnings used to calculate qualified plan benefits to $225,000 for
2007.
In September of 2006, a "soft-freeze" was approved by the Board of
Directors eliminating new participation in the Plan. All employees hired on or
after October 1, 2006 are excluded from participation in the Defined Benefit
Pension Plan. Eligible employees hired prior to October 1, 2006 will continue
receiving the benefit as outlined in the Plan.
Supplemental Retirement Agreement - John F. Perotti, Chairman and CEO,
has a supplemental retirement arrangement that has been in effect since 1994.
Following his disability or retirement, Mr. Perotti will receive monthly
payments of $1,250 (adjusted annually to reflect the lesser of a five percent
(5%) increase or "The Monthly Consumer Price Index for All Urban Consumers,
United States City Average, All Items" published by the Bureau of Labor
Statistics) for a period of ten (10) years. The supplemental retirement
agreement includes provisions that would prevent Mr. Perotti from working for a
competitor in the proximity of the Bank.
401(k) Plan - The Bank offers a 401(k) profit sharing plan to all
salaried employees. The Named Executive Officers participate in this plan. The
plan was adopted in 2000. Each plan year, the Bank will announce the amount of
the matching contributions, if any. Any match will be approved and authorized by
the Board of Directors only after an audit of year-end financials is complete.
The amount of the matching contributions is directly related to the employees'
401(k) salary deferral contribution. For the plan year that began January 1,
2007, all eligible participants received a matching contribution equal to fifty
percent (50%) of the first four percent (4%) of the employees' salary deferral.
All contributions to the plan must pass various discrimination tests. The
amounts of contributions approved by the Compensation Committee and paid to the
Named Executive Officers in 2007 are shown in the "All Other Compensation"
column of the Summary Compensation Table.
The Company has no employment agreements with the Named Executive
Officers.
Change in Control Agreement - The Company has entered into Change in
Control Agreements (the "Agreements") with each Named Executive Officer, which
become effective upon the consummation of a "Change in Control" (as defined in
the Agreements) of the Company at which point the Agreements have a twelve (12)
month term. The Agreements provide that if following a "Change in Control" (as
defined in the Agreements) of the Company or the Bank, an Executive Officer is
terminated or is reassigned under certain circumstances defined in the
Agreements within a period of twelve (12) months following such Change in
Control, such Executive Officer will be entitled to a lump
14
sum payment equal to his or her annual compensation based upon the most recent
aggregate base salary paid to the Executive Officer in the twelve (12) month
period immediately preceding his or her termination or reassignment. In certain
cases, the lump sum payment may be deferred for six (6) months pursuant to the
operation of Section 409A of the Internal Revenue Code. In addition, for twelve
(12) months following a Change in Control, certain specified insurance benefits
shall continue in effect on terms and conditions at least as favorable to the
Executive Officer as maintained immediately prior to the Change in Control. In
no event shall such payments be made in an amount that would cause them to be
deemed non-deductible to the Bank by reason of the operation of Section 280G of
the Internal Revenue Code. The purpose of the Agreements is to provide certain
potential benefits to the Executive Officer solely in the event of a Change in
Control and do not provide a contract for employment. The Agreements will expire
on September 30, 2010, provided that if a "Change in Control" occurs prior to
September 30, 2010, the Agreements shall remain in effect for twelve (12) months
after the date on which any such Change in Control is consummated.
BOARD OF DIRECTORS COMPENSATION
The following table summarizes the compensation paid to the Company's
Directors during 2007. Directors Perotti and Cantele, who are employees of the
Company, receive no additional compensation for serving as Directors or
committee members of the Company or the Bank.
2007 Director Compensation Table
Nonqualified
Non-Equity Deferred
Fees Earned or Stock Option Incentive Plan Compensation All Other
Name Paid in Cash Awards Awards Compensation Earnings Compensation Total
($)(1)(2)(3)(4) ($)(5) ($) ($) ($) ($) ($)
Louise E. Allyn, II $23,125 $4,350 $0 $0 $0 $0 $27,475
John R. H. Blum 39,175 4,350 0 0 0 0 43,525
Louise F. Brown 17,800 4,350 0 0 0 0 22,150
Richard J. Cantele, Jr. 0 0 0 0 0 0 0
Robert S. Drucker 20,950 4,350 0 0 0 0 25,300
Nancy F. Humphreys 21,625 4,350 0 0 0 0 25,975
Holly J. Nelson 18,225 4,350 0 0 0 0 22,575
John F. Perotti 0 0 0 0 0 0 0
Michael A. Varet 28,050 4,350 0 0 0 0 32,400
---------------
(1) All Directors' fees are paid in cash.
(2) Includes $21,375 paid to Director Blum and $10,625 paid to Director Varet
for their services as Presiding Director.
(3) Includes $1,125 paid to Director Nelson and $2,875 paid to Director Allyn
for their services as Chairpersons of the Human Resources and Compensation
Committee.
(4) Includes $1,875 paid to Director Varet and $3,125 paid to Director Humphreys
for their services as Chairpersons of the Audit Committee.
(5) Represents 120 shares of the Company's common stock on May 16, 2007 valued
at $36.25 per share.
15
Directors' Fees
---------------
During 2007, each non-employee Director received an annual retainer of
$5,000. In addition, non-employee Directors received $500 for each Board of
Directors meeting attended and $350 for each committee meeting attended. The
Presiding Directors received an annual retainer of $32,000, the Chairpersons of
the Audit Committee received an annual retainer $5,000 and the Chairpersons of
the Human Resources and Compensation Committee received an annual retainer of
$4,000.
Directors' Stock Retainer Plan
------------------------------
The shareholders of the Company voted to approve the Directors Stock
Retainer Plan of Salisbury Bancorp, Inc. (the "Plan") at the 2001 Annual Meeting
of Shareholders. The Plan provides non-employee Directors of the Company with
shares of Common Stock as a component of their compensation for services as
non-employee Directors. The maximum number of shares of Common Stock that may be
issued pursuant to the Plan is 15,000. Each year the Company grants 120 shares
of Common Stock under the Plan to each non-employee Director who served for
twelve months and a prorated number of shares to reflect the number of months
served for any new non-employee Director. On May 16, 2007, 840 shares were
issued pursuant to the Plan. The next grant date under the Plan will immediately
precede the Annual Meeting which is to be held on May 14, 2008, and will be in
the amount of 120 shares per Director. All such issuances shall be exempt from
registration under the Securities Act of 1933, as amended, pursuant to Section
4(2) thereunder, as they are transactions by the Company not involving a public
offering.
Certain Relationships and Related Transactions
----------------------------------------------
The Company and the Bank have had, and expect to have in the future,
transactions in the ordinary course of business with certain Directors, officers
and their associates on substantially the same terms as those available for
comparable transactions with others.
Indebtedness of Management and Others
-------------------------------------
Some of the Directors and Executive Officers of the Company and the
Bank, as well as firms and companies with which they are associated, are or have
been customers of the Bank, and as such, have had banking transactions with the
Bank. As a matter of policy, loans to Directors and Executive Officers were, and
in the future will be, made in the ordinary course of business on substantially
the same terms, including interest rates, collateral and repayment terms, as
those prevailing at the time for comparable transactions with other persons not
related to the Company and the Bank and did not, and in the future will not,
involve more than the normal risk of collectibility or present other unfavorable
features.
Since January 1, 2006, the highest aggregate outstanding principal
amount of all loans extended by the Bank to its Directors, Executive Officers
and all associates of such persons as a group was $2,051,436, representing
approximately 4.50% of the equity capital accounts of the Bank as of such time.
16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's Executive
Officers, Directors and other persons who own more than ten percent (10%) of the
Company's Common Stock to file with the SEC reports of ownership and changes in
ownership of the Company's Common Stock and to furnish the Company with copies
of all such reports that they file.
Based solely on a review of copies of reports filed with the SEC since
January 1, 2007 and of written representations by Executive Officers and
Directors, all persons subject to the reporting requirements of Section 16(a)
are believed by management to have filed the required reports on a timely basis.
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT
OF INDEPENDENT AUDITORS
Shareholders are asked to consider and ratify the appointment of
Shatswell, MacLeod & Company, P.C. ("Shatswell") as independent auditors to
audit the consolidated financial statements of the Company for the fiscal year
ending December 31, 2008. If shareholders do not ratify the appointment of
Shatswell, the Audit Committee will consider the vote of shareholders in
selecting the independent auditors in the future. Shatswell served as the
independent auditors for the Company for the fiscal year ended December 31,
2007. A representative of Shatswell is expected to attend the Annual Meeting,
and he or she will be provided an opportunity to make a statement if he or she
desires to do so and will be available to respond to appropriate questions.
1. Audit Fees
----------
The aggregate fees billed for professional services rendered for the
audit of the Company's annual financial statements as presented on Forms 10-K
for the last two (2) fiscal years and the reviews of the financial statements
included in the Company's Forms 10-Q for the quarters of the fiscal years ended
December 31, 2007 and December 31, 2006 were $113,400 and $116,937,
respectively.
2. Audit-Related Fees
------------------
The aggregate fees billed for services rendered in each of the last two
(2) years for assurance and related services by Shatswell that are reasonably
related to regulatory audit requirements of the Trust Department were $6,000 for
the fiscal years ended December 31, 2007 and December 31, 2006.
3. Tax Fees
--------
The aggregate fees billed in each of the last two (2) years for
professional services rendered by Shatswell for tax preparation for the fiscal
years ended December 31, 2007 and December 31, 2006 were $10,546 and $9,169,
respectively.
4. All Other Fees
--------------
There were no aggregate fees billed for services rendered by Shatswell,
other than the services covered above, for the fiscal years ended December 31,
2007 and December 31, 2006.
17
Independence
------------
The Audit Committee of the Board of Directors of the Company has
considered and determined that the provision of services rendered by Shatswell
relating to matters 2 through 4 above is compatible with maintaining the
independence of such auditors.
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
--------------------------------------------------------------------------------
Independent Auditors
--------------------
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the independent auditors, other than those listed under the
de minimus exception. These services may include audit services, audit-related
services, tax services and other services. Pre-approval is detailed as to a
particular service or category of services, and is generally subject to a
specific budget. The Audit Committee has delegated pre-approval authority to its
Chairman when expeditious delivery of services is necessary. The independent
auditors and management are required to report to the full Audit Committee
regarding the extent of services provided by independent auditors in accordance
with this pre-approval and the fees for the services performed to date. In 2007,
there were no fees paid to Shatswell under the de minimus exception to the rules
that waives pre-approval for certain non-audit services.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
PROPOSAL 2. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY CARD. THE PROPOSAL TO RATIFY
THE APPOINTMENT OF SHATSWELL, MACLEOD & COMPANY, P.C. WILL BE APPROVED IF THE
AFFIRMATIVE VOTES CAST EXCEED THE VOTES CAST OPPOSING THE PROPOSAL.
OTHER BUSINESS
The Company is not aware of any business to be acted upon at the Annual
Meeting other than that which is discussed in this Proxy Statement. In the event
that any other business requiring a vote of the Shareholders is properly
presented at the meeting, the holders of the Proxies will vote your shares in
accordance with their best judgment and the recommendations of a majority of the
Board of Directors.
You are encouraged to exercise your right to vote by marking the
appropriate boxes and dating and signing the enclosed Proxy card. The Proxy card
may be returned in the enclosed envelope, postage-prepaid if mailed in the
United States. In the event that you are later able to attend the Annual
Meeting, you may revoke your Proxy and vote your shares in person. A prompt
response will be helpful and your cooperation is appreciated.
A copy of the Annual Report to Shareholders for the year ended December
31, 2007, which includes the consolidated financial statements of the Company
for the year ended December 31, 2007, is being mailed with this Proxy Statement
to all shareholders entitled to vote at the Annual Meeting.
18
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any proposal that a Company shareholder wishes to have included in the
Company's Proxy Statement and form of Proxy relating to the Company's 2009
Annual Meeting of Shareholders under Rule 14a-8 of the SEC must be received by
the Company's Secretary at 5 Bissell Street, Lakeville, CT 06039 by December 8,
2008. Nothing in this paragraph shall be deemed to require the Company to
include in its Proxy Statement and form of Proxy for such meeting any
shareholder proposal which does not meet the requirements of the SEC in effect
at the time. In addition, under the Company's Bylaws, shareholders who wish to
nominate a director or bring other business before an annual meeting must comply
with the following:
o You must be a shareholder of record and must have given notice in
writing to the Secretary of the Company (a) not less than twenty
(20) days nor more than one hundred thirty (130) days prior to the
meeting with respect to matters other than the nomination of
directors and (b) not less than thirty (30) days nor more than fifty
(50) days prior to the meeting with respect to the nomination of
directors.
o Your notice must contain specific information required in the
Company's Bylaws.
SHAREHOLDER INFORMATION
The Company's Annual Report on Form 10-K for the year ended December
31, 2007 is filed with the SEC and may be obtained without charge by any
shareholder upon written request to:
John F. Foley, Chief Financial Officer, Treasurer & Secretary
Salisbury Bancorp, Inc.
P. O. Box 1868
Lakeville, Connecticut 06039-1868
The Company's Annual Report for the year ended December 31, 2007
accompanies this document and is not incorporated by reference.
By Order of the Board of Directors
/s/ John F. Foley
John F. Foley
Secretary
Lakeville, Connecticut
April 7, 2008
19
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE SALISBURY BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF SALISBURY BANCORP, INC.
The undersigned holder(s) of the Common Stock of Salisbury Bancorp, Inc.
(the "Company") do hereby nominate, constitute and appoint Louis E. Allyn, II
and Holly J. Nelson jointly and severally, proxies with full power of
substitution, for us and in our name, place and stead to vote all the Common
Stock of the Company, standing in our name on its books on March 28, 2008 at the
Annual Meeting of its Shareholders to be held at the Interlaken Inn, 74
Interlaken Road, Lakeville, Connecticut 06039 on Wednesday, May 14, 2008 at 4:00
p.m. or at any adjournment thereof with all the power the undersigned would
possess if personally present, as follows:
With- For All
For hold Except*
(1) ELECT THE FOLLOWING PERSONS (Louise F. Brown, [_] [_] [_]
Richard J. Cantele, Jr., and Nancy F. Humphreys, for three (3) year terms)
TO SERVE AS DIRECTORS OF THE COMPANY WHO ALONG WITH SIX DIRECTORS WHOSE
TERMS DO NOT EXPIRE AT THIS MEETING SHALL CONSTITUTE THE FULL BOARD OF
DIRECTORS OF THE COMPANY.
*INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Except"and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
For Against Abstain
(2) RATIFICATION OF THE APPOINTMENT OF INDEPENDENT [_] [_] [_]
AUDITORS: Proposal to ratify the appointment of
the independent public accounting firm of
Shatswell, MacLeod & Company, P.C. as the
independent auditors of the Company for the fiscal
year ending December 31, 2008.
(3) OTHER BUSINESS: To conduct whatever other business may properly be brought
before the meeting or any adjournment thereof. Management at present knows
of no other business to be presented by or on behalf of the Company or its
Management at the meeting. In the event that any other business requiring
a vote of the Shareholders is properly presented at the meeting, the
holders of the proxies will vote your shares in accordance with their best
judgment and the recommendations of a majority of the Board of Directors.
PLEASE CHECK BOX IF YOU PLAN TO [_]
ATTEND THE MEETING.
------------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
--------------------------------------------------------------------------------
| |
| |
-----------Shareholder sign above----------Co-holder (if any) sign above--------
--------------------------------------------------------------------------------
Detach above card, date, sign and mail in postage-prepaid envelope provided.
SALISBURY BANCORP, INC.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS (1) AND (2).
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION INDICATED.
IF NO SPECIFICATION IS INDICATED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS (1)
AND (2) AND IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS.
All joint owners must sign. When signing as attorney, executor,
---
administrator, trustee or guardian, please give full title. If more than one
trustee, all must sign.
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE MEETING BY PROVIDING
WRITTEN NOTICE TO THE COMPANY SECRETARY OR MAY BE WITHDRAWN AND YOU MAY VOTE IN
PERSON SHOULD YOU ATTEND THE ANNUAL MEETING.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
--------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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