SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ______)
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Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss. 240.14a-12
Berkshire Hills Bancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(2) Aggregate number of securities to which transactions applies:
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to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
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[Lettterhead of Berkshire Hills Bancorp, Inc.]
April 1, 2005
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Berkshire Hills Bancorp, Inc. The meeting will be held at the Crowne Plaza
Hotel, One West Street, Pittsfield, Massachusetts on Thursday, May 5, 2005 at
10:00 a.m., local time.
The notice of annual meeting and proxy statement appearing on the
following pages describe the formal business to be transacted at the meeting.
Directors and officers of the Company, as well as a representative of Wolf &
Company, P.C., the Company's independent auditors, will be present to respond to
appropriate questions of stockholders.
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person and regardless of the number of shares
you own. To make sure your shares are represented, we urge you to complete and
mail the enclosed proxy card promptly. If you attend the meeting, you may vote
in person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Michael P. Daly /s/ Lawrence A. Bossidy
Michael P. Daly Lawrence A. Bossidy
President and Chief Executive Non-Executive Chairman of the
Officer Board
Berkshire Hills Bancorp, Inc.
24 North Street
Pittsfield, Massachusetts 01201
(413) 443-5601
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Notice of Annual Meeting of Stockholders
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On Thursday, May 5, 2005, Berkshire Hills Bancorp, Inc. (the "Company")
will hold its annual meeting of stockholders at the Crowne Plaza Hotel, One West
Street, Pittsfield, Massachusetts. The meeting will begin at 10:00 a.m., local
time. At the meeting, the stockholders will consider and act on the following:
1. The election of three directors to serve for terms of three years;
2. The ratification of the appointment of Wolf & Company, P.C. as
independent auditors for the Company for the fiscal year ending
December 31, 2005; and
3. The transaction of any other business that may properly come before
the meeting.
NOTE: The Board of Directors is not aware of any other business scheduled
to come before the meeting.
Only stockholders of record at the close of business on March 17, 2005 are
entitled to receive notice of and to vote at the meeting and any adjournment or
postponement of the meeting.
Please complete and sign the enclosed proxy card, which is solicited by
the Board of Directors, and mail it promptly in the enclosed envelope. The proxy
will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gerald A. Denmark
Gerald A. Denmark
Corporate Secretary
Pittsfield, Massachusetts
April 1, 2005
IMPORTANT: The prompt return of proxies will save the Company the expense of
further requests for proxies to ensure a quorum. A self-addressed envelope is
enclosed for your convenience. No postage is required if mailed in the United
States.
Berkshire Hills Bancorp, Inc.
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Proxy Statement
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This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Berkshire Hills Bancorp, Inc. (the
"Company" or "Berkshire Hills") to be used at the annual meeting of stockholders
of the Company. The Company is the holding company for Berkshire Bank (the
"Bank"). The annual meeting will be held at the Crowne Plaza Hotel, One West
Street, Pittsfield, Massachusetts on Thursday, May 5, 2005 at 10:00 a.m., local
time. This proxy statement and the enclosed proxy card are being mailed to
stockholders of record on or about April 1, 2005.
Voting and Proxy Procedure
Who Can Vote at the Meeting
You are entitled to vote your Company common stock if the records of the
Company show that you held your shares as of the close of business on March 17,
2005. If your shares are held in a stock brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares held in "street name"
and these proxy materials are being forwarded to you by your broker or nominee.
As the beneficial owner, you have the right to direct your broker how to vote.
As of the close of business on March 17, 2005, there were 5,830,843 shares
of Company common stock outstanding. Each share of common stock has one vote.
The Company's Certificate of Incorporation provides that a record owner of the
Company's common stock who beneficially owns, either directly or indirectly, in
excess of 10% of the Company's outstanding shares, is not entitled to any vote
in respect of the shares held in excess of the 10% limit.
Attending the Meeting
If you were a stockholder as of the close of business on March 17, 2005,
you may attend the meeting. However, if you held your shares in street name, you
will need proof of ownership to be admitted to the meeting. A recent brokerage
statement or a letter from a bank or broker are examples of proof of ownership.
If you want to vote your shares of Company common stock held in street name in
person at the meeting, you will have to get a written proxy in your name from
the broker, bank or other nominee who holds your shares.
Vote Required
A majority of the outstanding shares of common stock entitled to vote is
required to be represented at the meeting to constitute a quorum for the
transaction of business. If you return valid proxy instructions or attend the
meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received voting instructions from the beneficial owner.
In voting on the election of directors, you may vote in favor of all
nominees, withhold votes as to all nominees or withhold votes as to specific
nominees. There is no cumulative voting for the election of directors. Directors
are elected by a plurality of the votes cast at the annual meeting. This means
that the nominees receiving the greatest number of votes will be elected. Votes
that are withheld and broker non-votes will have no effect on the outcome of the
election.
In voting on the ratification of the appointment of Wolf & Company, P.C.
as independent auditors, you may vote in favor of the proposal, against the
proposal or abstain from voting. To be approved, this matter requires the
affirmative vote of a majority of the votes cast at the annual meeting. Broker
non-votes and abstentions will not be counted as votes cast and will have no
effect on the voting on this proposal.
Voting by Proxy
The Company's Board of Directors is sending you this proxy statement to
request that you allow your shares of Company common stock to be represented at
the annual meeting by the persons named in the enclosed proxy card. All shares
of Company common stock represented at the meeting by properly executed and
dated proxies will be voted according to the instructions indicated on the proxy
card. If you sign, date and return a proxy card without giving voting
instructions, your shares will be voted as recommended by the Company's Board of
Directors. The Board of Directors recommends that you vote "FOR" each of the
nominees for director and "FOR" ratification of Wolf & Company, P.C. as the
Company's independent auditors for the 2005 fiscal year.
If any matters not described in this proxy statement are properly
presented at the annual meeting, the persons named in the proxy card will use
their judgment to determine how to vote your shares. This includes a motion to
adjourn or postpone the meeting to solicit additional proxies. If the annual
meeting is postponed or adjourned, your Company common stock may be voted by the
persons named in the proxy card on the new meeting date as well, provided such
new meeting occurs within 30 days of the annual meeting and you have not revoked
your proxy. The Company does not currently know of any other matters to be
presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy, you must either advise the Corporate Secretary of
the Company in writing before your common stock has been voted at the annual
meeting, deliver a later dated proxy or attend the meeting and vote your shares
in person by ballot. Attendance at the annual meeting will not in itself
constitute revocation of your proxy.
If your Company common stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow to
have your shares voted. Your broker, bank or other nominee may allow you to
deliver your voting instructions via the telephone or the Internet. Please
review the proxy card or instruction form provided by your broker, bank or other
nominee that accompanies this proxy statement.
2
Participants in Berkshire Bank's ESOP or 401(k) Plan
If you participate in the Berkshire Bank Employee Stock Ownership Plan
(the "ESOP") or if you hold Berkshire Hills common stock through the Berkshire
Bank Employees' Savings & Profit Sharing Plan (the "401(k) Plan"), you will
receive vote authorization materials for each plan that will reflect all the
shares that you may direct the trustees to vote on your behalf under the plans.
Under the terms of the ESOP, the ESOP trustee votes all shares held by the ESOP,
but each ESOP participant may direct the trustee how to vote the shares of
common stock allocated to his or her account. The ESOP trustee, subject to the
exercise of its fiduciary duties, will vote all unallocated shares of Company
common stock held by the ESOP and allocated shares for which no voting
instructions are received in the same proportion as shares for which it has
received timely voting instructions. Under the terms of the 401(k) Plan, you are
entitled to direct the trustee how to vote the shares of Berkshire Hills common
stock credited to your account in the 401(k) Plan. The trustee will vote all
shares for which it does not receive timely instructions from participants in
the same proportion as the instructions the trustee receives from participants.
The deadline for returning your voting instructions to each plan's trustee is
April 27, 2005.
Corporate Governance
General
The Company periodically reviews its corporate governance policies and
procedures to ensure that the Company meets the highest standards of ethical
conduct, reports results with accuracy and transparency and maintains full
compliance with the laws, rules and regulations that govern the Company's
operations. As part of this periodic corporate governance review, the Board of
Directors reviews and adopts best corporate governance policies and practices
for the Company.
Code of Business Conduct
The Company has adopted a Code of Business Conduct that is designed to
promote the highest standards of ethical conduct by the Company's directors,
executive officers and employees. The Code of Business Conduct requires that the
Company's directors, executive officers and employees avoid conflicts of
interest, comply with all laws and other legal requirements, conduct business in
an honest and ethical manner and otherwise act with integrity and in the
Company's best interest. Under the terms of the Code of Business Conduct,
directors, executive officers and employees are required to report any conduct
that they believe in good faith to be an actual or apparent violation of the
Code of Business Conduct. A copy of the Code of Business Conduct can be found in
the Governance Documents portion of the Investor Relations section of the
Company's website (www.berkshirebank.com).
As a mechanism to encourage compliance with the Code of Business Conduct,
the Company has established procedures to receive, retain and treat complaints
regarding accounting, internal accounting controls and auditing matters. These
procedures ensure that individuals may submit concerns regarding questionable
accounting or auditing matters in a confidential and anonymous manner. The Code
of Business Conduct also prohibits the Company from retaliating against any
director, executive officer or employee who reports actual or apparent
violations of the Code of Business Conduct.
3
Meetings of the Board of Directors
The Company conducts business through meetings of its Board of Directors
and through activities of its committees. The Board of Directors generally meets
monthly and may have additional meetings as needed. During 2004, the Board of
Directors held 11 meetings. All of the current directors attended at least 75%
of the total number of the board meetings held and committee meetings on which
such directors served during 2004.
Committees of the Board of Directors
The Company's Board of Directors maintains three standing committees: the
Audit, Compensation and Corporate Governance/Nominating Committees. All members
of each committee are independent in accordance with the listing standards of
the American Stock Exchange. The charters of all three committees are available
in the Governance Documents portion of the Investor Relations section of the
Company's website (www.berkshirebank.com).
Audit Committee. The Audit Committee, consisting of Thomas R. Dawson
(Chair), A. Allen Gray, Peter J. Lafayette and Corydon L. Thurston, assists the
Board of Directors in its oversight of the Company's accounting and reporting
practices, the quality and integrity of the Company's financial reports and the
Company's compliance with applicable laws and regulations. The Committee is also
responsible for engaging the Company's independent auditors and monitoring their
conduct and independence. The Audit Committee met five times in 2004. The Board
of Directors has designated Thomas R. Dawson as an audit committee financial
expert under the rules of the Securities and Exchange Commission. The report of
the Audit Committee required by the rules of the Securities and Exchange
Commission is included in this proxy statement. See "Proposal 2 - Audit
Committee Report."
Compensation Committee. The Compensation Committee, consisting of
Catherine B. Miller (Chair), Lawrence A. Bossidy and Edward G. McCormick,
reviews and establishes the compensation for all executive officers. The
Committee also assists the Board of Directors in evaluating potential candidates
for executive positions. The Compensation Committee met six times in 2004. The
report of the Compensation Committee required by the rules of the Securities and
Exchange Commission is included in this proxy statement. See "Compensation
Committee Report on Executive Compensation."
Corporate Governance/Nominating Committee. The Company's Corporate
Governance/Nominating Committee, consisting of Messrs. Bossidy (Chair) and
McCormick, Ms. Miller and Ann H. Trabulsi, assists the Board of Directors in
identifying qualified individuals to serve as Board members, in determining the
composition of the Board of Directors and its committees, in monitoring a
process to assess Board effectiveness and in developing and implementing the
Company's corporate governance guidelines. The Corporate Governance/Nominating
Committee also considers and recommends the nominees for director to stand for
election at the Company's annual meeting of stockholders. The Corporate
Governance/Nominating Committee met five times in 2004. The procedures of the
Corporate Governance/Nominating Committee required to be disclosed by the rules
of the Securities and Exchange Commission are included in this proxy statement.
See "Corporate Governance/Nominating Committee Procedures."
Attendance at the Annual Meeting. The Board of Directors encourages each
director to attend annual meetings of stockholders. All but two directors
attended the 2004 annual meeting of stockholders.
4
Directors' Compensation
Fees. Non-employee directors of the Bank each receive an annual retainer
of $17,200 for board service and an annual retainer of $7,200 for each committee
on which he or she serves. The Bank does not pay additional fees for attendance
at board or committee meetings. Additionally, the Clerk of the Bank receives an
annual retainer of $500. The Company does not pay separate fees for service on
its Board of Directors.
Award Grants. On January 30, 2004, each non-employee director received
non-statutory stock options to purchase 495 shares of common stock at an
exercise price of $37.80, the fair market value of the common stock on the date
of grant. Additionally, these non-employee directors were each granted 287
shares of restricted stock awards. The restricted stock awards vest and the
options become exercisable on January 30, 2007.
Stock Ownership
The following table provides information as of March 17, 2005, with
respect to persons known by the Company to be the beneficial owners of more than
5% of the Company's outstanding common stock. A person may be considered to own
any shares of common stock over which he or she has, directly or indirectly,
sole or shared voting or investing power.
Number of Shares Percent of Common
Name and Address Owned Stock Outstanding
---------------- ------------------ -------------------
Berkshire Bank Employee Stock Ownership Plan 603,785(1) 10.36%
24 North Street
Pittsfield, Massachusetts 01201
Private Capital Management 578,811(2) 9.93%
8889 Pelican Bay Boulevard
Naples, Florida 34108
Berkshire Bank Foundation 568,427(3) 9.75%
24 North Street
Pittsfield, Massachusetts 01201
Goldman Sachs Asset Management, L.P. 335,852(4) 5.76%
32 Old Slip
New York, New York 10005
Morris Massry 312,300(5) 5.36%
c/o Tri City Rentals
255 Washington Avenue Extension
Albany, New York 12205
Barclays Global Investors, NA 312,063(6) 5.35%
Barclays Global Fund Advisors
45 Fremont Street
San Francisco, California 94105
(1) Includes 149,545 shares that have not been allocated to participants'
accounts. Under the terms of the ESOP, the ESOP trustee will vote shares
allocated to participants' accounts in the manner directed by the
participants. The ESOP trustee, subject to its fiduciary responsibilities,
will vote unallocated shares and allocated shares for which no timely
voting instructions are received in the same proportion as shares for
which the trustee has received proper voting instructions from
participants.
(footnotes continued on following page)
5
(2) Based on information contained in a Schedule 13G/A filed with the U.S.
Securities and Exchange Commission on February 14, 2005.
(3) The foundation's gift instrument requires that all shares of common stock
held by the foundation must be voted in the same ratio as all other shares
of Company common stock on all proposals considered by stockholders of the
Company.
(4) Based on information contained in a Schedule 13G filed with the U.S.
Securities and Exchange Commission on February 7, 2005.
(5) Based on information contained in a Schedule 13D filed with the U.S.
Securities and Exchange Commission on October 26, 2004.
(6) Barclays Global Investors, NA and Barclays Global Fund Advisors
beneficially own 239,210 and 72,853 shares, respectively, of the Company's
common stock and are considered to be a "group" as the term is defined
under the Securities and Exchange Act of 1934, as amended. Based on
information contained in a Schedule 13G filed with the U.S. Securities and
Exchange Commission on February 14, 2005.
The following table provides information about the shares of Company
common stock that may be considered to be owned by each director or nominee for
director of the Company, by the executive officers named in the Summary
Compensation Table and by all directors, nominees for director and executive
officers of the Company as a group as of March 17, 2005. A person may be
considered to own any shares of common stock over which he or she has, directly
or indirectly, sole or shared voting or investment power. Unless otherwise
indicated, each of the named individuals has sole voting and investment power
with respect to the shares shown.
Number of Number of Shares
Shares Owned That May Be Percent of
(Excluding Options) Acquired Within 60 Days Common Stock
Name (1)(2)(3) by Exercising Options Outstanding (4)
---- ------------------- ----------------------- ---------------
Thomas O. Andrews ............................ 31,042 9,208 *
Lawrence A. Bossidy .......................... 36,042 4,604 *
Michael P. Daly .............................. 73,747(5) 31,349 1.79%
Thomas R. Dawson ............................. 12,689 9,208 *
David B. Farrell ............................. 1,000 -- *
Gayle P. Fawcett ............................. 29,999 16,141 *
A. Allen Gray ................................ 21,132 9,208 *
Peter J. Lafayette ........................... 12,042(6) 9,208 *
Edward G. McCormick .......................... 18,975 9,208 *
Catherine B. Miller .......................... 19,530(7) 4,604 *
Wayne F. Patenaude ........................... 14,396(8) 10,000 *
Corydon L. Thurston .......................... 11,256(9) 9,208 *
Ann H. Trabulsi .............................. 17,042(10) 9,208 *
Robert A. Wells .............................. 63,659(11) 20,356 1.44%
All Executive Officers, Directors and
Director Nominees, as a Group (14
persons) .................................. 362,551 167,450 8.84%
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* Represents less than 1% of the Company's outstanding shares.
(1) Includes unvested shares of restricted stock awards held in trust, with
respect to which the beneficial owner has voting but not investment power
as follows: Messrs. Andrews, Dawson, Gray, Lafayette, McCormick and
Thurston, Ms. Miller and Ms. Trabulsi, each--1,438 shares; Mr.
Bossidy--3,740 shares; Mr. Daly--32,106 shares; Ms. Fawcett--13,198
shares; Mr. Patenaude--9,055 shares; and Mr. Wells--7,653 shares.
(footnotes continued on following page)
6
(2) Includes shares allocated under the Berkshire Bank Employee Stock
Ownership Plan, with respect to which each individual has voting but not
investment power as follows: Mr. Daly--3,937 shares; Ms. Fawcett--3,431
shares; Mr. Patenaude-778 shares; and Mr. Wells--3,375 shares.
(3) Includes shares held in trust in the Berkshire Bank 401(k) Plan as to
which each participant has investment and voting power as follows: Mr.
Daly--8,181 shares; Ms. Fawcett--2,864 shares; and Mr. Wells-- 26,985
shares.
(4) Based on 5,830,843 shares of Company common stock outstanding and entitled
to vote as of March 17, 2005, plus the number of shares that each person
may acquire within 60 days by exercising stock options.
(5) Includes 3,075 shares held in trust as part of the Berkshire Bank
Supplemental Executive Retirement Plan, with respect to which Mr. Daly has
shared voting power.
(6) Includes 2,460 shares held by the individual retirement account of Mr.
Lafayette's spouse.
(7) Includes 1,069 shares held by Ms. Miller's spouse.
(8) Includes 950 shares held by the individual retirement account of Mr.
Patenaude's spouse.
(9) Includes 106 held by Mr. Thurston's child and 107 shares held by a
custodian for Mr. Thurston's other child.
(10) Includes 1,000 shares held by Ms. Trabulsi's spouse.
(11) Includes 1,100 shares held by Mr. Wells' spouse.
Proposal 1 -- Election of Directors
The Company's Board of Directors currently consists of eleven members. All
of the directors are independent under the current listing standards of the
American Stock Exchange, except for Michael P. Daly and Robert A. Wells. Mr.
Daly is not independent because he is an employee of the Company and Berkshire
Bank. Mr. Wells is not independent because he is a former employee of the
Company and Berkshire Bank. The Board is divided into three classes as equal in
number as possible, each with three-year staggered terms, with approximately
one-third of the directors elected each year. The nominees for election this
year are Michael P. Daly, David B. Farrell and Catherine B. Miller. Both Mr.
Daly and Ms. Miller are directors of the Company and the Bank. Mr. Farrell is a
new director nominee.
Mr. Farrell was recommended to the Corporate Governance/Nominating
Committee by a non-management director. The Corporate Governance/Nominating
Committee then recommended Mr. Farrell's nomination to the full Board of
Directors.
Thomas O. Andrews, Thomas R. Dawson and A. Allen Gray will retire from the
Board of Directors, effective as of the annual meeting date. Assuming his
election by stockholders, Mr. Farrell will fill one of these vacancies. The
Board will then reduce the size of the Board to nine members.
It is intended that the proxies solicited by the Board of Directors will
be voted for the election of the nominees named above. If any nominee is unable
to serve, the persons named in the proxy card will vote your shares to approve
the election of any substitute proposed by the Board of Directors.
Alternatively, the Board of Directors may adopt a resolution to reduce the size
of the Board. At this time, the Board of Directors knows of no reason why any
nominee might be unable to serve.
The Board of Directors recommends a vote "FOR" the election of all
nominees.
Information regarding the nominees and the directors continuing in office
is provided below. Unless otherwise stated, each individual has held his or her
current occupation for the last five years. The age indicated in each nominee's
biography is as of December 31, 2004. There are no family relationships among
the directors or executive officers. The indicated period for service as a
director includes service as a director of the Bank.
7
Nominees for Election of Directors
The nominees standing for election are:
Michael P. Daly was appointed President and Chief Executive Officer of the
Company and the Bank in October 2002. Prior to his appointment, Mr. Daly served
as Senior Vice President, Commercial Lending from October 1997 until January
2000 and then as Executive Vice President of the Company and the Bank from
January 2000 to October 2002. Age 43. Director since 2002.
David B. Farrell has served as the President and a member of the Board of
Directors of Bob's Stores, a retail company headquartered in Meriden,
Connecticut, since October 1999. Bob's Stores filed for Chapter 11 bankruptcy
protection on October 22, 2003. Mr. Farrell led the company through the
bankruptcy reorganization process and on December 24, 2003, Bob's Stores emerged
from bankruptcy through the sale of substantially all of its assets to a
subsidiary of the TJX Companies, Inc. Age 49.
Catherine B. Miller is a former partner and vice president of Wheeler &
Taylor, Inc., an insurance agency with offices in Stockbridge, Great Barrington
and Sheffield, Massachusetts. Age 63. Director since 1983.
Directors Continuing in Office
The following directors have terms ending in 2006:
Lawrence A. Bossidy was the Chairman of Allied Signal from 1991 to 1999
and its Chief Executive Officer from 1992 to 1999 when he became Chairman of
Honeywell International, Inc. following the merger of the two companies. Mr.
Bossidy served as the Chairman of Honeywell from December 1999 to April 2000 and
from July 2001 until June 2002. Mr. Bossidy was also the Chief Executive Officer
of Honeywell from July 2001 to February 2002. Mr. Bossidy serves on the Boards
of Directors of J.P. Morgan Chase & Co. and Merck & Co., Inc. Age 69. Director
since 2002.
Peter J. Lafayette has been the President of Berkshire Housing Development
Corporation, a non-profit housing development and consultation organization
since 1980 and the President of Berkshire Housing Services, Inc., a property
management company, since 2000. Both entities are located in Pittsfield,
Massachusetts. Age 57. Director since 1996.
Corydon L. Thurston has served as the President of North Adams Tower
Company, Inc., which owns and manages telecommunication towers, since May 2004.
Before this position, he served as the President of Berkshire Broadcasting
Company, Inc. until it sold the three radio stations it owned and operated in
North Adams and Great Barrington, Massachusetts. Age 52. Director since 1988.
The following directors have terms ending in 2007:
Edward G. McCormick is the managing partner of the law firm of McCormick,
Murtagh, Marcus & Almgren, located in Great Barrington, Massachusetts. Age 57.
Director since 1994.
Ann H. Trabulsi is a community volunteer serving on various non-profit
boards, including Berkshire Medical Center and Berkshire Health Systems. Age 69.
Director since 1976.
8
Robert A. Wells was the Chairman of the Boards of the Company, the Bank,
Berkshire Bank Foundation and Greater Berkshire Foundation, Inc. until his
retirement from all Chairman positions in December 2003. Mr. Wells served as the
President and Chief Executive Officer of Berkshire County Savings Bank prior to
its merger with Great Barrington Savings Bank in May 1997. Age 65. Director
since 1976.
Proposal 2 -- Ratification of Independent Auditors
The Audit Committee of the Board of Directors has appointed Wolf &
Company, P.C. to be its auditors for the 2005 fiscal year, subject to
ratification by stockholders. A representative of Wolf & Company, P.C. is
expected to be present at the annual meeting to respond to appropriate questions
from stockholders and will have the opportunity to make a statement should he or
she desire to do so.
If the ratification of the appointment of the auditors is not approved by
a majority of the votes cast by stockholders at the annual meeting, other
independent public accountants may be considered by the Audit Committee of the
Board of Directors.
The Board of Directors recommends that stockholders vote "FOR" the
ratification of the appointment of Wolf & Company, P.C. as independent auditors.
Audit Fees
The following table sets forth the fees billed to the Company for the
fiscal years ending December 31, 2004 and December 31, 2003 by Wolf & Company,
P.C.:
2004 2003
---- ----
Audit Fees ................ $305,250 $203,250
Audit-Related Fees(1) ..... 10,950 14,400
Tax Fees(2) ............... 48,200 45,000
All other fees ............ -- --
----------
(1) Consists primarily of the audit of the Bank's employee benefit plans and
due diligence assistance.
(2) Consists of tax filings and tax-related compliance and other advisory
services.
Pre-Approval of Services by the Independent Auditor
The Audit Committee will consider on a case-by-case basis and, if
appropriate, approve all audit and non-audit services to be provided by the
Company's independent auditors. Alternatively, the Audit Committee may adopt a
policy for pre-approval of audit and permitted non-audit services by the
Company's independent auditor.
9
The report of the Audit Committee graph shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Audit Committee Report
The Company's management is responsible for the Company's internal
controls and financial reporting process. The independent auditors are
responsible for performing an independent audit of the Company's consolidated
financial statements and issuing an opinion on the conformity of those financial
statements with generally accepted accounting principles. The Audit Committee
oversees the Company's internal controls and financial reporting process on
behalf of the Board of Directors.
In this context, the Audit Committee has met and held discussions with
management and the independent auditors. Management represented to the Audit
Committee that the Company's consolidated financial statements were prepared in
accordance with generally accepted accounting principles and the Audit Committee
has reviewed and discussed the consolidated financial statements with management
and the independent auditors. The Audit Committee discussed with the independent
auditors matters required to be discussed by Statement on Auditing Standards No.
61 (Communication With Audit Committees), including the quality, not just the
acceptability, of the accounting principles, the reasonableness of significant
judgments and the clarity of the disclosures in the financial statements.
In addition, the Audit Committee has received the written disclosures and
the letter from the independent auditors required by the Independence Standards
Board Standard No. 1 (Independence Discussions With Audit Committees) and has
discussed with the independent auditors the auditors' independence from the
Company and its management. In concluding that the auditors are independent, the
Audit Committee considered, among other factors, whether the non-audit services
provided by the auditors were compatible with its independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting.
In performing all of these functions, the Audit Committee acts only in an
oversight capacity. In its oversight role, the Audit Committee relies on the
work and assurances of the Company's management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors who, in their report, express an opinion on the conformity of the
Company's financial statements to generally accepted accounting principles. The
Audit Committee's oversight does not provide it with an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or policies, or appropriate internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. Furthermore, the Audit Committee's
considerations and discussions with management and the independent auditors do
not assure that the Company's financial statements are presented in accordance
with generally accepted accounting principles, that the audit of the Company's
financial statements has been carried out in accordance with generally accepted
auditing standards or that the Company's independent auditors are in fact
"independent."
10
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the board has approved,
that the audited consolidated financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2004 for filing with
the Securities and Exchange Commission. The Audit Committee also has approved,
subject to stockholder ratification, the selection of the Company's independent
auditors, for the fiscal year ended December 31, 2005.
Audit Committee of the Board of Directors of
Berkshire Hills Bancorp, Inc.
Thomas R. Dawson, Chair
A. Allen Gray
Peter J. Lafayette
Corydon L. Thurston
11
Executive Compensation
Summary Compensation Table
The following information is furnished for the President and Chief
Executive Officer and all other executive officers of Berkshire Bank who
received a salary and bonus of $100,000 or more during the year ended December
31, 2004.
Long-Term Compensation
Annual Compensation Awards
------------------------------------------ -------------------------
Securities
Other Annual Restricted Underlying All Other
Compensation Stock Awards Options/SARs Compensation
Name and Position Year Salary Bonus (1) ($)(2) (#) (3)
--------------------- ------ -------- -------- ------------ ------------ ------------ ------------
Michael P. Daly........................... 2004 $325,000 $115,000 $ -- $113,400 6,000 $126,539
President and Chief Executive Officer 2003 285,000 85,000 -- 783,466 41,481 75,432
2002 174,894 33,784 -- -- -- 32,512
Wayne F. Patenaude........................ 2004 $170,000 $40,000 $ -- $ 56,700 2,000 $39,047
Senior Vice President and Chief 2003 135,834 42,000 26,567(5) 229,500 25,000 --
Financial Officer (4)
Gayle P. Fawcett.......................... 2004 $165,000 $42,500 $ -- $ 56,700 2,000 $41,738
Senior Vice President 2003 151,888 42,000 -- 331,400 9,652 40,315
2002 118,759 13,487 -- -- -- 24,091
----------
(1) For Mr. Daly and Ms. Fawcett, does not include the aggregate amount of
perquisites and other benefits, which was less than $50,000 or 10% of the
total annual salary and bonus reported.
(2) Reflects 3,000, 1,500 and 1,500 shares granted to Messrs. Daly and
Patenaude and Ms. Fawcett, respectively, under the Berkshire Hills
Bancorp, Inc. 2003 Equity Compensation Plan. The dollar amount set forth
in the table represents the market value of the shares on the date of the
grant. The restricted stock awards vest in three equal annual installments
beginning on the first anniversary of the date of grant. When shares
become vested and are distributed from the trust in which they are held,
the recipient will also receive an amount equal to accumulated cash and
stock dividends (if any) paid with respect thereto, plus earnings thereon.
The number and value of all unvested shares of restricted stock held under
the Berkshire Hills Bancorp, Inc. 2001 Stock-Based Incentive Plan and the
Berkshire Hills Bancorp, Inc. 2003 Equity Compensation Plan that are
allocated to each named executive officer as of December 31, 2004, is as
follows, based on $37.15, the closing price of the Company's common stock
on December 31, 2004:
Number of Value of
Unvested Shares Unvested Shares
----------------- -----------------
Mr. Daly................ 39,700 $1,474,855
Mr. Patenaude........... 9,500 352,925
Ms. Fawcett............. 15,843 588,567
(footnotes continued on the following page)
12
(3) Details of the amounts reported in the "All Other Compensation" column for
2004 are provided in the table below.
Mr. Mr. Ms.
Item Daly Patenaude Fawcett
---- -------- --------- --------
Employer contribution to 401(k) plan ................... $ 14,350 $ 10,137 $ 11,986
Market value of allocations under the employee
stock ownership plan ................................ 30,422 28,910 29,752
Market value of allocations under the supplemental
executive retirement plan ........................... 81,767 -- --
-------- -------- --------
Total ......................................... $126,539 $ 39,047 $ 41,738
======== ======== ========
(4) Mr. Patenaude became an executive officer on February 24, 2003.
Information for the 2002 fiscal year is not disclosed, as Mr. Patenaude
was not an executive officer during that period.
(5) Includes moving expenses of $17,781 and housing expenses of $8,786.
Employment Agreements
Berkshire Bank and Berkshire Hills each maintain an employment agreement
with Mr. Daly, which provides for a two-year term that extends daily unless the
Board of Directors or Mr. Daly gives the other party written notice of
non-renewal. The employment agreements provide for a base salary for Mr. Daly of
$325,000, which is reviewed at least annually. In addition to the base salary,
the employment agreements provide for, among other things, participation in
stock and employee benefit plans and fringe benefits applicable to executive
personnel.
If Mr. Daly dies during the agreement term, the Bank will pay his
beneficiary his base salary, and continue his dependents' medical coverage for
six months. If Mr. Daly becomes disabled and begins to receive benefits under
the long-term disability insurance policy maintained by the Bank, the Bank may
reduce Mr. Daly's base salary by amounts he receives under the disability policy
insurance. If Mr. Daly becomes incapacitated as a result of disability and can
no longer perform his duties, the Bank may terminate the agreement and pay him
severance in the same manner as for involuntary termination, as discussed below.
Upon such termination, Mr. Daly will receive continued medical and life
insurance coverage for two years following his termination of employment.
The employment agreements provide for termination by Berkshire Bank or
Berkshire Hills for cause, as defined in the employment agreements, at any time.
If Berkshire Bank or Berkshire Hills chooses to terminate Mr. Daly's employment
for reasons other than for cause (including his incapacity due to disability as
discussed above), or if he resigns from Berkshire Bank or Berkshire Hills under
specified circumstances that would constitute constructive termination, Mr. Daly
(or, upon his death, his beneficiary) would be entitled to receive an amount
equal to the remaining base salary and incentive compensation payments,
including amounts related to stock-based compensation, due for the remaining
term of the employment agreement and the contributions that would have been made
on his behalf to any employee benefit plans of Berkshire Bank and Berkshire
Hills during the remaining term of the employment agreement. Berkshire Bank and
Berkshire Hills would also continue and/or pay for life, health, dental and
disability coverage for Mr. Daly and his covered dependents until the earliest
of his death, employment with another employer or the end of the remaining term
of the employment agreements. Upon termination of the executive's employment
under these circumstances, the executive must adhere to a one-year
non-competition and non-disclosure restriction.
13
Under the employment agreements, if voluntary (upon circumstances
discussed in the agreements) or involuntary termination follows a change in
control of Berkshire Bank or Berkshire Hills, Mr. Daly (or, upon his death, his
beneficiary) would be entitled to a severance payment equal to the greater of:
(1) the payments due for the remaining term of the agreement; or (2) three times
the average of his annual compensation (as described in the agreements) for the
five preceding taxable years. Berkshire Bank and Berkshire Hills would also
continue Mr. Daly's life, health and disability coverage for thirty-six months.
Even though the Berkshire Bank and Berkshire Hills employment agreements each
provide for a severance payment if a change in control occurs, Mr. Daly would
not receive duplicative payments or benefits under the agreements. Mr. Daly
would also be entitled to receive a tax indemnification payment if payments
under the employment agreements trigger liability under the Internal Revenue
Code for the excise tax applicable to "excess parachute payments." Under
applicable law, the excise tax is triggered by change in control-related
payments that equal or exceed a "base" amount that is three times the
executive's average taxable income over the five years preceding the change in
control. The excise tax equals 20% of the amount of the payment in excess of the
executive's base amount.
Payments to Mr. Daly under the Bank's employment agreement are guaranteed
by Berkshire Hills if payments or benefits are not paid by the Bank. All
reasonable costs and legal fees paid or incurred by Mr. Daly in any dispute or
question of interpretation relating to the employment agreements will be paid by
Berkshire Bank or Berkshire Hills, respectively, if he is successful on the
merits in a legal judgment, arbitration or settlement. The employment agreements
also provide that Berkshire Bank and Berkshire Hills will indemnify Mr. Daly to
the fullest extent legally allowable.
Change in Control Agreements
Berkshire Hills and Berkshire Bank each maintain a change in control
agreement with Mr. Patenaude and Ms. Fawcett. Each change in control agreement
has a term of three years and is renewable annually for an additional year at
the sole discretion of the Boards of Directors of the Bank and Berkshire Hills.
The change in control agreements provide that if involuntary termination, other
than for cause, or voluntary termination (upon the occurrence of circumstances
specified in the agreements) follows a change in control of Berkshire Hills or
Berkshire Bank, Mr. Patenaude and Ms. Fawcett will be entitled to receive a
severance payment equal to three times his or her average annual compensation
(as described in the agreements) for the five most recent taxable years.
Berkshire Bank will also continue their health and welfare benefits coverage for
thirty-six months following termination. Mr. Patenaude and Ms. Fawcett must
comply with a one-year non-competition and non-disclosure provision following
their receipt of severance payments under the agreements.
Although the Berkshire Bank and Berkshire Hills agreements each provide
for severance payments upon termination in connection with a change in control,
Mr. Patenaude and Ms. Fawcett would not receive any duplicative payments. Mr.
Patenaude and Ms. Fawcett would receive tax indemnification if their individual
severance payments trigger liability for the excise tax on excess parachute
payments under the Internal Revenue Code.
14
Other Retirement Arrangements
Berkshire Bank maintains a supplemental retirement arrangement with Mr.
Daly to provide him with an annual retirement benefit at age 62 equal to 70% of
his average compensation, calculated based on the three consecutive years during
which his compensation is the highest. Benefits under the supplemental
retirement arrangement are reduced by the benefits Mr. Daly would receive under
the 401(k) plan and ESOP, and by 50% of his social security benefits.
The supplemental retirement arrangement also provides for a reduced
benefit upon Mr. Daly's early retirement after age 55 but prior to age 62, and
upon his death or disability. If Mr. Daly terminates employment in connection
with a change in control, he would receive an annual benefit equal to the
retirement benefit he would have received if he retired on the date immediately
preceding his termination and had attained age 62, regardless of his actual age
on the termination date. Mr. Daly may elect to receive supplemental retirement
benefits in the form of an annuity with ten annual payments guaranteed, or in an
actuarial equivalent lump sum.
Option Grants in Last Fiscal Year
The following table lists all grants of options to the named executive
officers in 2004 and contains certain information about the potential value of
those options based upon certain assumptions as to the appreciation of the
Company's stock over the life of the option.
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Number of % of Total Appreciation
Securities Options for Options (2)
Underlying Granted to Exercise or ----------------------
Options Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year Per Share Date 5% 10%
------------------------- ---------------- ------------ ----------- ---------------- ---------- ----------
Michael P. Daly ......... 6,000 20.7% $37.80 January 30, 2014 $142,620 $361,440
Wayne F. Patenaude ...... 2,000 6.9 37.80 January 30, 2014 47,540 120,480
Gayle P. Fawcett ........ 2,000 6.9 37.80 January 30, 2014 47,540 120,480
----------
(1) Options become fully exercisable on the second anniversary of the date of
grant; provided, however, that options become immediately exercisable upon
a change in control or if the optionee terminates employment due to death
or disability.
(2) The dollar gains under these columns result from calculations required by
the Securities and Exchange Commission's rules and are not intended to
forecast future price appreciation of the common stock. Options have value
only if the stock price increases above the exercise price shown in the
table during the effective option period. In order for the executive to
realize the potential values set forth in the 5% and 10% columns in the
table, the price per share of the Company's common stock would be
approximately $61.57 and $98.04, respectively, as of the expiration date
of the options.
15
Fiscal Year-End Option Values
The following table provides certain information with respect to the
number and value of shares of Berkshire Hills common stock represented by
outstanding options held by the named executive officers as of December 31,
2004. None of the named executive officers exercised any options during 2004.
Number of Securities Value of Unexercised
Underlying Unexercised In_the_Money Options
Options at Fiscal Year End (#) at Fiscal Year End ($)(1)
-----------------------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ------------- --------------- ------------- ---------------
Michael P. Daly............ 31,319 54,531 $592,859 $805,861
Wayne F. Patenaude......... 5,000 22,000 71,000 284,000
Gayle P. Fawcett........... 11,141 15,859 216,559 239,872
(1) Value of unexercisable in-the-money stock options equals the market value
of shares covered by in-the-money options on December 31, 2004, less the
option exercise price. Options are in-the-money if the market value of
shares covered by the options is greater than the exercise price.
The report of the Compensation Committee and the stock performance graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act or the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
Compensation Committee Report on Executive Compensation
Compensation Committee Report on Executive Compensation. Under the rules
established by the Securities and Exchange Commission, the Company is required
to provide certain data and information about the compensation and benefits
provided to the Company's Chief Executive Officer ("CEO") and the other
executive officers of the Company. The disclosure requirements for the Chief
Executive Officer and other executive officers include the use of tables and a
report explaining the rationale and considerations that led to fundamental
compensation decisions affecting those individuals. In fulfillment of this
requirement, the Company's Compensation Committee, at the direction of the Board
of Directors, has prepared the following report for inclusion in this proxy
statement.
Policies and Practices. The Compensation Committee approves the
compensation policies and objectives for all employees of the Company and the
Bank and establishes the compensation for the Chief Executive Officer and other
executives. However, because all of the executive officers of the Company are
also executives of the Bank, the Bank pays their compensation.
The Company's executive compensation program is designed to attract,
retain, motivate and reward the highly qualified individuals required to achieve
the Company's objectives. In determining the appropriate level of compensation,
the Compensation Committee reviewed the total compensation of peer banks within
the industry, with a particular focus on institutions in New England. In
addition, the Compensation Committee periodically retains an outside
compensation consultant to compare the total compensation and components of
compensation for the Company's executive officers with other financial
institutions of similar size and characteristics to ensure that compensation is
consistent and competitive with such other financial institutions and that
compensation serves as an appropriate incentive for individuals to achieve the
Company's objectives.
16
Base salaries are tied to the level of responsibility of each executive
officer and are established to be consistent and competitive with the practices
of comparable financial institutions in the region. All executive officers
participate in the Bank's Incentive Compensation Plan, which provides
performance-based cash payments. Targets are established each year with
individual awards dependent upon Company, department and individual performance.
In addition, executive officers participate in other benefit plans available to
all employees including the 401(k) Plan and the Employee Stock Ownership Plan.
Executive officers may, at the discretion of the Compensation Committee, also
participate in supplemental benefit plans, as well as the Stock-Based Incentive
Plan and the Equity Compensation Plan.
The executive incentive awards paid for 2004 reflect each individual's
level of accomplishment, as based on the preparation of a written performance
review, and the Company's performance, including earnings per share, asset
growth and return on capital. Decisions by the Compensation Committee with
respect to compensation of executive officers are reviewed by the full Board of
Directors.
Compensation of the Chief Executive Officer. The compensation for the CEO
in 2004 was determined in the same manner as that established for all other
executive officers. A written performance review was prepared, which included an
assessment of the CEO's performance against certain individual leadership goals
and financial and growth objectives for the Company. The CEO's base salary and
incentive award reflected the results of such assessment.
Compensation Committee of the Board of Directors of
Berkshire Hills Bancorp, Inc.
Catherine B. Miller, Chair
Lawrence A. Bossidy
Edward G. McCormick
17
Stock Performance Graph
The following graph compares the cumulative total stockholder return on
the Company common stock with the cumulative total return on the American Stock
Exchange Major Market Index and the SNL $1 Billion - $5 Billion Thrift Index.
The graph assumes that $100 was invested at the close of business on June 28,
2000, the initial day of trading of the Company's common stock. Total return
assumes the reinvestment of all dividends.
[LINE GRAPH OMITTED]
Period Ended
---------------------------------------------------------------
6/28/00 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
------- -------- -------- -------- -------- --------
Berkshire Hills Bancorp, Inc..................... $100.00 $128.78 $169.52 $201.25 $314.63 $327.24
The AMEX Major Market Index...................... 100.00 95.91 93.40 81.97 101.70 111.93
The SNL $1 Billion - $5 Billion Thrift Index..... 100.00 130.78 186.45 238.76 358.11 405.85
18
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10% of
any registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
These individuals are required by regulation to furnish the Company with copies
of all Section 16(a) reports they file.
Based solely on its review of the copies of the reports it has received
and written representations provided to the Company from the individuals
required to file the reports, the Company believes that each of its executive
officers and directors has complied with applicable reporting requirements for
transactions in Company common stock during the fiscal year ended December 31,
2004.
Transactions with Management
The Sarbanes-Oxley Act generally prohibits loans by Berkshire Bank to its
executive officers and directors. However, the Sarbanes-Oxley Act contains a
specific exemption from such prohibition for loans by Berkshire Bank to its
executive officers and directors in compliance with federal banking regulations.
Federal banking regulations require that all loans or extensions of credit to
executive officers and directors of insured financial institutions must be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons,
except for loans made under programs generally available to all employees and
must not involve more than the normal risk of repayment or present other
unfavorable features. Berkshire Bank is therefore prohibited from making any new
loans or extensions of credit to executive officers and directors at different
rates or terms than those offered to the general public, except for loans made
pursuant to programs generally available to all employees, and has adopted a
policy to this effect. In addition, loans made to a director or executive
officer in an amount that, when aggregated with the amount of all loans to such
person and his or her related interests, are in excess of the greater of $25,000
or 5% of the Bank's capital and surplus (up to a maximum of $500,000) must be
approved in advance by a majority of the disinterested members of the Board of
Directors.
Corporate Governance/Nominating Committee Procedures
General
It is the policy of the Corporate Governance/Nominating Committee of the
Board of Directors of the Company to consider director candidates recommended by
stockholders who appear to be qualified to serve on the Company's Board of
Directors. The Corporate Governance/Nominating Committee may choose not to
consider an unsolicited recommendation if no vacancy exists on the Board of
Directors and the Corporate Governance/Nominating Committee does not perceive a
need to increase the size of the Board of Directors. To avoid the unnecessary
use of the Corporate Governance/Nominating Committee's resources, the Corporate
Governance/Nominating Committee will consider only those director candidates
recommended in accordance with the procedures set forth below.
19
Procedures to be Followed by Stockholders
To submit a recommendation of a director candidate to the Corporate
Governance/Nominating Committee, a stockholder should submit the following
information in writing, addressed to the Chairman of the Corporate
Governance/Nominating Committee, care of the Corporate Secretary, at the main
office of the Company:
1. The name of the person recommended as a director candidate;
2. All information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors
pursuant to Regulation 14A under the Securities Exchange Act of
1934;
3. The written consent of the person being recommended as a director
candidate to being named in the proxy statement as a nominee and to
serving as a director if elected;
4. As to the stockholder making the recommendation, the name and
address of such stockholder as they appear on the Company's books;
provided, however, that if the stockholder is not a registered
holder of the Company's common stock, the stockholder should submit
his or her name and address along with a current written statement
from the record holder of the shares that reflects ownership of the
Company's common stock; and
5. A statement disclosing whether such stockholder is acting with or on
behalf of any other person and, if applicable, the identity of such
person.
In order for a director candidate to be considered for nomination at the
Company's annual meeting of stockholders, the recommendation must be received by
the Corporate Governance/Nominating Committee at least 120 calendar days prior
to the date the Company's proxy statement was released to stockholders in
connection with the previous year's annual meeting, advanced by one year.
Process for Identifying and Evaluating Nominees
The process that the Corporate Governance/Nominating Committee follows to
identify and evaluate individuals to be nominated for election to the Board of
Directors is as follows:
Identification. For purposes of identifying nominees for the Board of
Directors, the Corporate Governance/Nominating Committee relies on personal
contacts of the committee members and other members of the Board of Directors,
as well as its knowledge of members of the communities served by Berkshire Bank.
The Corporate Governance/Nominating Committee will also consider director
candidates recommended by stockholders in accordance with the policy and
procedures set forth above. The Corporate Governance/Nominating Committee has
not previously used an independent search firm to identify nominees.
Evaluation. In evaluating potential nominees, the Corporate
Governance/Nominating Committee determines whether the candidate is eligible and
qualified for service on the Board of Directors by evaluating the candidate
under certain criteria, which are described below. If such individual fulfills
these criteria, the Corporate Governance/Nominating Committee will conduct a
check of the individual's background and interview the candidate to further
assess the qualities of the prospective nominee and the contributions he or she
would make to the Board.
20
Qualifications
The Corporate Governance/Nominating Committee has adopted a set of
criteria that it considers when it selects individuals to be nominated for
election to the Board of Directors. A candidate must meet the eligibility
requirements set forth in the Company's bylaws, which include a residency
requirement, an age limitation and a requirement that the candidate not have
been subject to certain criminal or regulatory actions. A candidate also must
meet any qualification requirements set forth in any Board or committee
governing documents.
If the candidate is deemed eligible for election to the Board of
Directors, the Corporate Governance/Nominating Committee will then evaluate the
following criteria in selecting nominees:
o financial, regulatory and business experience;
o familiarity with and participation in the local community;
o integrity, honesty and reputation in connection with upholding a
position of trust with respect to customers;
o dedication to the Company and its stockholders; and
o independence.
The Committee will also consider any other factors the Corporate
Governance/Nominating Committee deems relevant, including age, diversity, size
of the Board of Directors and regulatory disclosure obligations.
With respect to nominating an existing director for re-election to the
Board of Directors, the Corporate Governance/Nominating Committee will consider
and review an existing director's board and committee attendance and
performance; length of board service; experience, skills and contributions that
the existing director brings to the board; and independence.
Submission of Business Proposals and Stockholder Nominations
The Company must receive proposals that stockholders seek to include in
the proxy statement for the Company's next annual meeting no later than December
1, 2005. If next year's annual meeting is held on a date more than 30 calendar
days from May 5, 2006, a stockholder proposal must be received by a reasonable
time before the Company begins to print and mail its proxy solicitation for such
annual meeting. Any stockholder proposals will be subject to the requirements of
the proxy rules adopted by the Securities and Exchange Commission.
The Company's bylaws provide that, in order for a stockholder to make
nominations for the election of directors or proposals for business to be
brought before the annual meeting, a stockholder must deliver notice of such
nominations and/or proposals to the Secretary not less than 90 days before the
date of the annual meeting. However, if less than 100 days' notice or prior
public disclosure of the date of the annual meeting is given to stockholders,
such notice must be received not later than the close of business of the tenth
day following the day on which notice of the date of the annual meeting was
mailed to stockholders or prior public disclosure of the meeting date was made.
A copy of the bylaws may be obtained from the Company.
21
Stockholder Communications
The Company encourages stockholder communications to the Board of
Directors and/or individual directors. All communications from stockholders
should be addressed to Berkshire Hills Bancorp, Inc., 24 North Street,
Pittsfield, Massachusetts 01201. Communications to the Board of Directors should
be in the care of Gerald A. Denmark, Corporate Secretary. Communications to
individual directors should be sent to such director at the Company's address.
Stockholders who wish to communicate with a Committee of the Board should send
their communications to the care of the Chair of the particular committee, with
a copy to Lawrence A. Bossidy, the Chair of the Corporate Governance/Nominating
Committee. It is in the discretion of the Corporate Governance/Nominating
Committee whether any communication sent to the full Board should be brought
before the full Board.
Miscellaneous
The Company will pay the cost of this proxy solicitation. The Company will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy materials to the
beneficial owners of the Company. Additionally, directors, officers and other
employees of the Company may solicit proxies personally or by telephone. None of
these persons will receive additional compensation for these activities.
The Company's Annual Report to Stockholders has been included with this
proxy statement. Any stockholder who has not received a copy of the Annual
Report may obtain a copy by writing to the Corporate Secretary of the Company.
The Annual Report is not to be treated as part of the proxy solicitation
material or as having been incorporated by reference into this proxy statement.
If you and others who share your address own your shares in "street name,"
your broker or other holder of record may be sending only one annual report and
proxy statement to your address. This practice, known as "householding," is
designed to reduce our printing and postage costs. However, if a stockholder
residing at such an address wishes to receive a separate annual report or proxy
statement in the future, he or she should contact the broker or other holder of
record. If you own your shares in "street name" and are receiving multiple
copies of our annual report and proxy statement, you can request householding by
contacting your broker or other holder of record.
Whether or not you plan to attend the annual meeting, please vote by
marking, signing, dating and promptly returning the enclosed proxy card in the
enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gerald A. Denmark
Gerald A. Denmark
Corporate Secretary
Pittsfield, Massachusetts
April 1, 2005
22
REVOCABLE PROXY
BERKSHIRE HILLS BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 5, 2005
10:00 a.m., Local Time
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of Berkshire
Hills Bancorp, Inc. (the "Company"), consisting of Corydon L. Thurston, Edward
G. McCormick, Peter J. Lafayette and Ann H. Trabulsi or any of them, with full
power of substitution in each, to act as proxy for the undersigned, and to vote
all shares of common stock of the Company which the undersigned is entitled to
vote only at the Annual Meeting of Stockholders to be held on May 5, 2005 at
10:00 a.m., local time, at the Crowne Plaza Hotel, One West Street, Pittsfield,
Massachusetts and at any and all adjournments thereof, with all of the powers
the undersigned would possess if personally present at such meeting as follows:
1. The election as directors of all nominees listed (unless the "For
All Except" box is marked and the instructions below are complied
with).
Michael P. Daly, David B. Farrell and Catherine B. Miller
FOR ALL
FOR WITHHOLD EXCEPT
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INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
2. The ratification of the appointment of Wolf & Company, P.C. as
independent auditors of Berkshire Hills Bancorp, Inc. for the fiscal
year ending December 31, 2005.
FOR AGAINST ABSTAIN
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy, properly signed and dated, will be voted
"FOR" each of the proposals listed. If any other business is presented at the
Annual Meeting, including whether or not to adjourn the meeting, this proxy will
be voted by the proxies in their judgment. At the present time, the Board of
Directors knows of no other business to be presented at the Annual Meeting. This
proxy also confers discretionary authority on the Proxy Committee of the Board
of Directors to vote (1) with respect to the election of any person as director,
where the nominees are unable to serve or for good cause will not serve and (2)
matters incident to the conduct of the meeting.
Dated:
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SIGNATURE OF STOCKHOLDER
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SIGNATURE OF CO-HOLDER (IF ANY)
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Annual Meeting of Stockholders, a Proxy
Statement dated April 1, 2005 and an Annual Report to Stockholders.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
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PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
[Berkshire Hills Bancorp, Inc. Letterhead]
Dear ESOP Participant:
On behalf of the Board of Directors of Berkshire Hills Bancorp, Inc. (the
"Company"), I am forwarding you the attached BLUE vote authorization form for
you to convey your voting instructions to First Bankers Trust Services, Inc.
(the "Trustee") on the proposals to be presented at the Annual Meeting of
Stockholders of Berkshire Hills Bancorp, Inc. to be held on May 5, 2005. Also
enclosed is a Notice and Proxy Statement for the Annual Meeting of Stockholders
and a copy of the Company's Annual Report to Stockholders.
As a participant in the Berkshire Bank Employee Stock Ownership Plan (the
"ESOP"), you are entitled to vote all shares of Company common stock allocated
to your account as of March 17, 2005. All allocated shares of Company common
stock will be voted as directed by participants, so long as participant
instructions are received by the Trustee by April 27, 2005. If you do not direct
the Trustee how to vote the shares of Company common stock allocated to your
account, the Trustee will vote your shares in a manner calculated most
accurately to reflect the instructions it receives from other participants,
subject to its fiduciary duties.
To direct the voting of the shares of Company common stock allocated to
your account under the ESOP, please complete and sign the attached BLUE vote
authorization form and return it in the enclosed postage-paid envelope no later
than April 27, 2005. Your vote will not be revealed, directly or indirectly, to
any officer, employee or director of the Company or Berkshire Bank.
Sincerely,
/s/ Michael P. Daly
Michael P. Daly
President and Chief Executive Officer
VOTE AUTHORIZATION FORM
-----------------------
I understand that First Bankers Trust Services, Inc., the Trustee, is the
holder of record and custodian of all shares of Berkshire Hills Bancorp, Inc.
(the "Company") common stock allocated to me under the Berkshire Bank Employee
Stock Ownership Plan. Further, I understand that my voting instructions are
solicited on behalf of the Company's Board of Directors for the Annual Meeting
of Stockholders to be held on May 5, 2005.
Accordingly, please vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
Michael P. Daly, David B. Farrell and Catherine B. Miller
FOR ALL
FOR WITHHOLD EXCEPT
--- -------- -------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Wolf & Company, P.C. as independent
auditors of Berkshire Hills Bancorp, Inc. for the fiscal year ending
December 31, 2005.
FOR AGAINST ABSTAIN
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|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
The Trustee is hereby authorized to vote any shares allocated to me as
indicated above.
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Date Signature
Please date, sign and return this form in the enclosed envelope no later than
April 27, 2005.
[Berkshire Hills Bancorp, Inc. Letterhead]
Dear 401(k) Plan Participant:
On behalf of the Board of Directors of Berkshire Hills Bancorp, Inc. (the
"Company"), I am forwarding to you the attached GREEN vote authorization card
for you to convey your voting instructions to Vanguard Fiduciary Trust Company
(the "Trustee") on the proposals to be presented at the Annual Meeting of
Stockholders of Berkshire Hills Bancorp, Inc. to be held on May 5, 2005. Also
enclosed is a Notice and Proxy Statement for the Annual Meeting of Stockholders
and a copy of the Company's Annual Report to Stockholders.
As a 401(k) Plan participant investing in the Employer Stock Fund, you are
entitled to direct the Trustee as to the voting of common stock credited to your
account as of March 17, 2005. The Trustee will vote all shares of Company common
stock for which no directions are given or for which timely instructions were
not received in a manner calculated to most accurately reflect the instructions
the Trustee received from participants regarding shares of Company common stock
in their 401(k) Plan accounts.
To direct the voting of your shares of Company common stock held in the
Employer Stock Fund, please complete and sign the attached GREEN vote
authorization card and return it in the accompanying postage-paid envelope by
April 27, 2005 to Registrar and Transfer Company, the company that will tabulate
the vote for the Trustee. Your vote will not be revealed, directly or
indirectly, to any officer, employee or director of the Company or Berkshire
Bank.
Sincerely,
/s/ Michael P. Daly
Michael P. Daly
President and Chief Executive Officer
BERKSHIRE HILLS BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
May 5, 2005
10:00 a.m., Local Time
-------------------------------
The undersigned hereby appoints the 401(k) Plan Trustee to vote all shares
of common stock of Berkshire Hills Bancorp, Inc. (the "Company") under the
Berkshire Bank 401(k) Plan that the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held on May 5, 2005 at 10:00 a.m., local
time, at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts and
at any and all adjournments thereof, as follows:
1. The election as directors of all nominees listed (unless the "For
All Except" box is marked and the instructions below are complied
with).
Michael P. Daly, David B. Farrell and Catherine B. Miller
FOR ALL
FOR WITHHOLD EXCEPT
--- -------- -------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name on the line provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Wolf & Company, P.C. as
independent auditors of Berkshire Hills Bancorp, Inc. for the fiscal
year ending December 31, 2005.
FOR AGAINST ABSTAIN
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|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
Date:
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Participant sign above
The above signed acknowledges receipt from the Company prior to the
execution of this vote instruction card of a Notice of Annual Meeting of
Stockholders, a Proxy Statement dated April 1, 2005 and an Annual Report to
Stockholders.
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS VOTING INSTRUCTION
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
[Berkshire Hills Bancorp, Inc. Letterhead]
Dear Stock Award Recipient:
On behalf of the Board of Directors of Berkshire Hills Bancorp, Inc. (the
"Company"), I am forwarding you the attached YELLOW vote authorization form for
you to convey your voting instructions to First Bankers Trust Services, Inc.
(the "Trustee") on the proposals to be presented at the Annual Meeting of
Stockholders of Berkshire Hills Bancorp, Inc. to be held on May 5, 2005. Also
enclosed is a Notice and Proxy Statement for the Annual Meeting of Stockholders
and a copy of the Company's Annual Report to Stockholders.
You are entitled to vote all unvested shares of restricted Company common
stock awarded to you under the Berkshire Hills Bancorp, Inc. 2001 Stock-Based
Incentive Plan and/or 2003 Equity Compensation Plan (collectively referred to as
the "Incentive Plan") that are unvested as of March 17, 2005. The Incentive Plan
Trustee will vote these shares of Company common stock held in the Incentive
Plan Trust in accordance with instructions it receives from you and other Stock
Award Recipients.
To direct the voting of the unvested shares of Company common stock
awarded to you under the Incentive Plan, you must complete and sign the attached
YELLOW vote authorization form and return it in the enclosed postage-paid
envelope no later than April 27, 2005.
Sincerely,
/s/ Michael P. Daly
Michael P. Daly
President and Chief Executive Officer
VOTE AUTHORIZATION FORM
-----------------------
I understand that First Bankers Trust Services, Inc., the Trustee, is the
holder of record and custodian of all unvested restricted shares of Berkshire
Hills Bancorp, Inc. (the "Company") common stock awarded to me under the
Berkshire Hills Bancorp, Inc. 2001 Stock-Based Incentive Plan and/or 2003 Equity
Compensation Plan (collectively referred to as the "Incentive Plan"). Further, I
understand that my voting instructions are solicited on behalf of the Company's
Board of Directors for the Annual Meeting of Stockholders to be held on May 5,
2005.
Accordingly, please vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
Michael P. Daly, David B. Farrell and Catherine B. Miller
FOR ALL
FOR VOTE WITHHELD EXCEPT
--- ------------- -------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Wolf & Company, P.C. as independent
auditors of Berkshire Hills Bancorp, Inc. for the fiscal year ending
December 31, 2005.
FOR AGAINST ABSTAIN
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|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
The Incentive Plan Trustee is hereby authorized to vote any unvested
shares awarded to me as indicated above.
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Date Signature
Please date, sign and return this form in the enclosed envelope no later than
April 27, 2005.
VOTE AUTHORIZATION FORM
-----------------------
I understand that First Bankers Trust Services, Inc., the Trustee, is the
holder of record and custodian of all shares of Berkshire Hills Bancorp, Inc.
(the "Company") common stock allocated to me under the Berkshire Bank
Supplemental Executive Retirement Plan. Further, I understand that my voting
instructions are solicited on behalf of the Company's Board of Directors for the
Annual Meeting of Stockholders to be held on May 5, 2005.
Accordingly, please vote my shares as follows:
1. The election as directors of all nominees listed (unless the "For All
Except" box is marked and the instructions below are complied with).
Michael P. Daly, David B. Farrell and Catherine B. Miller
FOR ALL
FOR WITHHOLD EXCEPT
--- -------- -------
|_| |_| |_|
INSTRUCTION: To withhold your vote for any individual nominee, mark "FOR ALL
EXCEPT" and write that nominee's name in the space provided below.
--------------------------------------------------------------------------------
2. The ratification of the appointment of Wolf & Company, P.C. as independent
auditors of Berkshire Hills Bancorp, Inc. for the fiscal year ending
December 31, 2005.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
The Trustee is hereby authorized to vote any shares allocated to me as
indicated above.
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Date Signature
Please date, sign and return this form in the enclosed envelope no later than
April 27, 2005.