SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BANCORP RHODE ISLAND, 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.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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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 number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(4) Date Filed:
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BANCORPRI
[BANCORP RHODE ISLAND, INC. LOGO]
April 13, 2001
Dear Shareholder:
You are cordially invited to attend the 2001 Annual Meeting of
Shareholders of Bancorp Rhode Island, Inc. to be held at the Courtyard by
Marriott, 32 Exchange Terrace, Providence, Rhode Island 02903, on
Wednesday, May 16, 2001 at 10:00 a.m.
The official Notice of Annual Meeting, Proxy Statement and Proxy are
included with this letter. The matters listed in the Notice of Annual
Meeting are more fully described in the Proxy Statement. I encourage you to
take the time to review the Proxy Statement.
It is important that your shares be represented and voted at the
Annual Meeting. Accordingly, regardless of whether or not you plan to
attend the meeting, please sign and date the enclosed proxy form and return
it in the enclosed postage paid envelope, so that your shares may be
represented at the meeting. If you decide to attend the meeting you may
revoke your proxy and vote your shares yourself.
Thank you for your consideration. I look forward to seeing you.
Very truly yours,
/s/ Malcolm G. Chace
Malcolm G. Chace
Chairman
BANCORP RHODE ISLAND, INC.
One Turks Head Place
Providence, Rhode Island 02903
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Wednesday, May 16, 2001
To the Shareholders of Bancorp Rhode Island, Inc.:
The Annual Meeting of Shareholders of Bancorp Rhode Island, Inc. (the
"Meeting"), a Rhode Island corporation ("the Company"), will be held at the
Courtyard by Marriott, 32 Exchange Terrace, Providence, Rhode Island on
Wednesday, May 16, 2001, at 10:00 a.m. local time, for the following
purposes:
1. To elect four Class II Directors to serve until 2004;
2. To consider and act upon a proposal to ratify the appointment
of KPMG LLP as independent public accountants for the Company;
and
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors of the Company has fixed the close of business
on March 30, 2001 as the record date for the determination of the
Shareholders entitled to receive notice of and to vote at the Meeting or
any adjournment thereof. The stock transfer books will not be closed.
All Shareholders are cordially invited and urged to attend the
Meeting. PLEASE SIGN, DATE AND RETURN THE PROXY EVEN THOUGH YOU PLAN TO
ATTEND THE MEETING. Upon your arrival your proxy will be returned to you if
you desire to revoke it or vote in person. Your attendance in person is
encouraged, but should anything prevent your attendance in person, your
presence by proxy will still allow your shares to be voted.
By Order of the Board of Directors
/s/ Margaret D. Farrell
Margaret D. Farrell, Secretary
April 13, 2001
BANCORP RHODE ISLAND, INC.
One Turks Head Place
Providence, Rhode Island 02903
PROXY STATEMENT
This Proxy Statement is being furnished to the holders of Common
Stock (the "Shareholders") of Bancorp Rhode Island, Inc., a Rhode Island
corporation ("Bancorp") in connection with the solicitation of proxies by
the Board of Directors of Bancorp for the Annual Meeting of Shareholders of
Bancorp (the "Meeting") to be held at the Courtyard by Marriott, 32
Exchange Terrace, Providence, Rhode Island on Wednesday, May 16, 2001 at
10:00 a.m. local time, and at any adjournments and postponements thereof.
This Proxy Statement and the related proxy form are being mailed on or
about April 13, 2001 to holders of record of Bancorp's common stock on
March 30, 2001. As used herein, the "Company" means both Bancorp and Bank
Rhode Island, a Rhode Island financial institution (the "Bank"), the sole
operating subsidiary of Bancorp.
ACTION TO BE TAKEN UNDER THE PROXY
A proxy for use at the Meeting is enclosed. Subject to such
revocation or suspension, the proxy holders will vote all shares
represented by a properly executed proxy received in time for the Meeting
in accordance with the instructions on the proxy. If no instructions are
specified with regard to the matters to be acted upon, the proxy holders
will vote FOR approval of the proposals set forth in the notice of Meeting.
Any proxy may be revoked by any Shareholder who attends the Meeting and
gives oral notice of his or her intention to vote in person, without
compliance with any other formalities. In addition, any proxy given
pursuant to this solicitation may be revoked prior to the Meeting by
delivering an instrument revoking it or a duly executed proxy bearing a
later date to the Secretary of Bancorp. The Secretary of Bancorp is
Margaret D. Farrell, and any revocation should be filed with her c/o
Hinckley, Allen & Snyder LLP, 1500 Fleet Center, Providence, Rhode Island
02903.
A proxy may confer discretionary authority to vote with respect to
any matter to be presented at the Meeting which management does not know of
a reasonable time before the date hereof. Management does not know of any
such matter which may come before the Meeting and which would be required
to be set forth in this Proxy Statement or the related proxy form. If any
other matter is properly presented to the Meeting for action, it is
intended that the persons named in the enclosed form of proxy and acting
thereunder will vote in accordance with their best judgment on such matter.
PERSONS MAKING THE SOLICITATION
The Board of Directors of Bancorp is soliciting these proxies.
Bancorp will bear the expense of preparing, assembling, printing and
mailing this Proxy Statement and the material used in the solicitation of
proxies for the Meeting. Bancorp contemplates that proxies will be
solicited principally through the use of the mail, but officers, directors
and employees of the Company may solicit proxies personally or by
telephone, without receiving special compensation therefor. Although there
is no formal agreement to do so, Bancorp may reimburse banks, brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses in forwarding these proxy materials to their principals. In
addition, Bancorp may utilize the services of individuals or companies not
regularly employed by the Company in connection with the solicitation of
proxies, if management of Bancorp determines that this is advisable.
VOTING SECURITIES
Holders of record of Bancorp's common stock, par value $.01 per share
(the "Common Stock") at the close of business on March 30, 2001 are
entitled to notice of and to vote at the Meeting. Holders of the Common
Stock are entitled to one vote for each share held on the matters properly
presented at the Meeting.
The holders of a majority of the shares entitled to vote, present in
person or represented by proxy, will constitute a quorum for the
transaction of business at the Meeting. A plurality of votes cast is
required to elect the directors. All other proposals to be voted upon at
the Meeting will require the affirmative vote of holders of a majority of
the Common Stock present in person or represented by proxy at the Meeting.
Abstentions are treated as present and entitled to vote and therefore have
the effect of a vote against a matter. A broker non-vote on a matter is
considered not entitled to vote on the matter and thus is not counted in
determining whether a matter requiring approval of a majority of the shares
present and entitled to vote has been approved.
As of the close of business on March 30, 2001, the record date for
the determination of Shareholders entitled to notice of and to vote at the
Meeting, Bancorp had outstanding 3,508,173 shares of Common Stock entitled
to vote. Each share entitles the holder of record to one vote on each
matter submitted to Shareholders of Bancorp.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Bancorp's Articles of Incorporation provide that the Board of
Directors shall be divided into three classes, designated as Class I, Class
II and Class III, and as nearly equal as possible. The Board of Directors
has fixed the number of directors at twelve, of which four are designated
as Class I Directors, four as Class II Directors and four as Class III
Directors. The current Class I Directors serve until the 2003 annual
meeting, Class II directors serve until the Meeting and Class III Directors
serve until the 2002 annual meeting. As each term expires, the directors
elected to each class will serve for a term of three years. Directors serve
until their successors are duly elected and qualified or until the
director's earlier resignation or removal, provided that a director's term
will automatically terminate on the date of the next annual meeting of
shareholders following such director attaining age 72. At the Meeting, four
directors are to be elected to serve until the 2004 annual meeting and
until their successors are duly elected and qualified. All directors of
Bancorp have served in such capacity since Bancorp's formation on February
15, 2000 for the purpose of becoming the holding company of the Bank. The
Directors of Bancorp also serve as directors of the Bank. All nominees are
currently directors of both Bancorp and the Bank.
Unless authority to do so has been withheld or limited in a proxy, it
is the intention of the persons named as proxies to vote the shares to
which the proxy relates FOR the election of the four nominees named below
to the Board of Directors as Class II Directors. If any nominee named below
is not available for election to the Board of Directors at the time of the
Meeting, it is the intention of the persons named as proxies to act to fill
that office by voting the shares to which a proxy relates FOR the election
of such person or persons as may be designated by the Board of Directors
or, in the absence of such designation, in such other manner as the proxies
may in their discretion determine, unless authority to do so has been
withheld or limited in the proxy. The Board of Directors anticipates that
each of the nominees will be available to serve if elected.
The Board of Directors recommends a vote "FOR" the election of the nominees
for election as directors.
The following table sets forth certain information for both the four
nominees for election as Class II Directors (the "Nominees"), and for those
Class I and Class III Directors whose terms expire at the annual meetings
of Bancorp's Shareholders in 2003 and 2002, respectively.
Year First
Business Experience Became
Name Age During Past 5 Years Director*
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NOMINEES FOR CLASS II DIRECTORS (Term to Expire 2004)
John R. Berger 57 Business consultant since 1994. Prior thereto, 1997
Executive Vice President and Director of Mergers
and Acquisitions (1993-94) and Executive Vice
President and Chief Investment Officer (1985-93)
for Shawmut National Corporation.
Karl F. Ericson 67 Business consultant and certified public accountant. 1996
Also, a director of Bacou, USA (personal safety
production products). From 1970 through 1990,
a partner of KPMG LLP.
Margaret D. Farrell 51 Partner of Hinckley, Allen & Snyder LLP (law 1996
firm) since 1981.
Mark R. Feinstein 45 President of Northeast Management Inc. (video 1996
store franchisee) since 1991.
CLASS I DIRECTORS (Term to Expire 2003)
F. James Hodges 61 Chairman of the Board of Hodges Badge Company, 1996
Inc. (commemorative ribbon manufacturer) since
1995, and President and CEO from 1972 through
1994.
Donald J. Reaves 54 Executive Vice President for Finance and 1996
Administration and Chief Financial Officer of
Brown University since 1997, and Senior Vice
President for Finance and Administration and Chief
Financial Officer from 1993 to 1997.
Cheryl W. Snead 42 President and Chief Executive Officer of Banneker 1996
Industries, Inc. (manufacturing, assembly and
packaging and logistics management) since 1991.
John A. Yena 60 President of Johnson & Wales University. 1996
CLASS III DIRECTORS (Term to Expire 2002)
Anthony F. Andrade 53 President of A&H Composition and Printing and 1996
former President of Universal Press Graphics, Inc.
until his retirement in April 1997.
Malcolm G. Chace 66 Chairman of the Board of Bancorp since its formation 1996
and Chairman of the Board of the Bank since 1996.
Vice President of Gammon Corp. Financial Services
since 1986. Chairman of the Board of Mossberg
Industries, Inc. (wire spool and reel manufacturer)
and a director of Berkshire Hathaway, Inc.
Ernest J. Chornyei, Jr. 58 Business Consultant since February 2000. Prior 1996
thereto, Chairman of the Board of Bradford Dyeing
Association, Inc. (textiles) in Westerly, Rhode Island.
Merrill W. Sherman 52 President and Chief Executive Officer of each of 1996
Bancorp and the Bank since each commenced
operation. Also, a director of Providence and
Worcester Railroad Company. From 1993 through
1995 before she became associated with EFC, Inc.
(the Bank's agent in connection with its formation),
she was a member of the law firm of Brown Rudnick
Freed & Gesmer, Ltd.
--------------------
* The dates of directorship reflect the year in which the director
became a director of the Bank.
General Information About Board of Directors
The Bancorp Board of Directors held one meeting during 2000 following
the reorganization of the Bank into a holding company structure on
September 1, 2000 (the "Reorganization"). In addition, the Bank's Board of
Directors held nine meetings during 2000. Both the Bancorp and the Bank
Boards have three standing committees: the Executive Committee, the Audit
Committee and the Compensation Committee. The Bank also has a Directors'
Loan Committee.
The Executive Committees of Bancorp and the Bank did not meet during
2000. The members of both Executive Committees are Malcolm G. Chace
(Chairman), Merrill W. Sherman, Karl F. Ericson, Margaret D. Farrell and F.
James Hodges. Each Executive Committee conducts the affairs and business of
Bancorp or the Bank, as the case may be, between meetings of the respective
Board of Directors, subject to certain limitations set forth in Bancorp's
Articles of Incorporation and the Bank's Agreement to Form.
The Bancorp Compensation Committee met two times in 2000 and the Bank
Compensation Committee met five times during 2000. The members of both
Compensation Committees are F. James Hodges (Chairman), Anthony F. Andrade,
John R. Berger and Donald J. Reaves. The Compensation Committee is
responsible for the review and recommendation of the compensation
arrangements for directors and officers and the award of options under the
Company's Amended and Restated 1996 Incentive and Nonqualified Stock Option
Plan.
The Bancorp Audit Committee met one time in 2000 and the Bank Audit
Committee met four times in 2000. The members of both Audit Committees, all
of whom are independent as defined by the NASDAQ listing standards, are
Karl F. Ericson (Chairman), Ernest J. Chornyei, Jr. and Cheryl W. Snead.
Malcolm G. Chace serves as an ex-officio member. The Audit Committee is
responsible for, among other things, recommending to the Board the
selection of independent auditors to conduct the annual audit of the
Company's financial statements, reviewing the scope of the audit plans of
the independent auditor and the Company's internal auditor, reviewing the
scope of the non-audit services provided by the independent auditor and
reviewing the results of the independent and internal auditors' work to
ensure compliance with Company policies, all of which is set forth in
greater detail in the "Report of the Audit Committee," included in this
Proxy Statement. The Bancorp Audit Committee is governed by a written
charter approved by the Board of Directors on October 17, 2000, a copy of
which is attached as Appendix A.
Compensation of Directors
Directors of the Company (other than Ms. Sherman) receive a combined
annual retainer of $7,500, $5,000 for service as a Bancorp director and
$2,500 for service as a Bank director. Directors of the Company receive
$100 for each Bancorp Board meeting attended, as well as $50 for each
Bancorp Committee meeting attended. In addition, directors of the Company
receive $500 for each meeting of the Bank's Executive Committee, Audit
Committee or Compensation Committee attended, and $550 for each Directors'
Loan Committee meeting attended.
Under the Amended and Restated Non-Employee Director Stock Plan (the
"Director Plan") approved by the Bank's shareholders at the 1998 annual
meeting and assumed by Bancorp in connection with the Reorganization, each
non-employee director elected at the 1998 meeting received an option to
purchase 1,500 shares of Common Stock, and each new non-employee director
elected thereafter receives an option to purchase 1,000 shares of Common
Stock as of the date of election to the Board. In addition, annual grants
of options are made as of the date of each annual meeting of Shareholders
to each non-employee director (other than a director who is first elected
at or within six months of the meeting) to purchase 500 shares of Common
Stock. All options have a ten year term and an exercise price equal to the
fair market value on the date of grant. Options may be exercised with cash,
Common Stock, or both. Options vest six months after the grant date, unless
automatically accelerated in the event of death, disability or a change in
control.
COMMON STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of 5% Beneficial Owners
The following table sets forth information as of March 30, 2001,
regarding the beneficial owners of more than 5% of Bancorp's Common Stock:
Amount and Nature of Percent
Name and Address of Beneficial Owner Beneficial Ownership(a) of Class(b)
---------------------------------------------------------------------------------------------------
Malcolm G. Chace(c) 389,333 11.1%
c/o Point Gammon Corporation
One Providence Washington Plaza, Providence, RI 02903
Richard A. Grills(d) 249,995 7.1%
P.O. Box 539, Westerly, RI 02891
Greenwood Partners L.P.(e) 205,684 5.9%
1601 Forum Place, Suite 905, W. Palm Beach, FL 33401
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(a) All information is based upon ownership of record as reflected on the
stock transfer books of Bancorp or as reported on Schedule 13G or
Schedule 13D filed under Rule 13d-1 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
(b) Assumes no conversion of Non-Voting Common Stock by the existing
holder, who also owns 171,523 shares of Common Stock. Presently,
228,477 shares of Non-Voting Common Stock are outstanding, of which
396 shares may be converted by the existing holder.
(c) Includes 384,833 shares held by trusts of which Mr. Chace or his
spouse is a co-trustee and has shared voting and investment power.
Mr. Chace disclaims any economic or beneficial interest in 39,400 of
such shares. Also includes 2,000 shares held by Mr. Chace's spouse
and 2,500 shares that may be acquired pursuant to options which are
presently exercisable. Mr. Chace is a director of Bancorp.
(d) Represents shares of Common Stock held in a trust of which Mr. Grills
is the sole beneficiary.
(e) Arnold Mullen, the general partner of Greenwood Partners, L.P.,
exercises investment and voting power over, and may be deemed to be
the beneficial owner of, the Common Stock held by Greenwood Partners,
L.P. Mr. Mullen owns directly 16,909 shares of Common Stock.
Security Ownership of Directors and Officers
The following tables set forth certain information regarding the
beneficial ownership of Bancorp's Common Stock as of March 30, 2001 by each
director, each executive officer named in the Summary Compensation Table
appearing on page 9 and all directors and executive officers as a group.
Unless otherwise indicated, each person has sole voting and dispositive
power over the shares indicated as owned by such person.
Amount and Nature of Percent
Name of Beneficial Owner Beneficial Ownership(a) of Class(b)
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Anthony F. Andrade(c) 62,500 1.8%
John R. Berger(c) 3,500 *
Malcolm G. Chace(c)(d) 389,333 11.1
Ernest J. Chornyei, Jr.(c)(e) 110,500 3.1
Karl F. Ericson(c) 10,500 *
Margaret D. Farrell(c) 4,500 *
Mark R. Feinstein(c) 16,000 *
F. James Hodges(c)(f) 37,320 1.1
Donald J. Reaves(c) 3,500 *
Merrill W. Sherman(g) 178,775 4.9
Cheryl W. Snead(c) 3,000 *
John A. Yena(c) 7,500 *
James V. DeRentis(h) 7,570 *
Donald C. McQueen(i) 40,510 1.1
Albert R. Rietheimer(j) 42,360 1.2
Directors and executive officers as a group (16 persons)(k) 919,368 24.6%
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* Less than one percent.
(a) If applicable, beneficially owned shares include shares owned by the
spouse, children and certain other relatives of the director or
officer, as well as shares held by trusts of which the person is a
trustee or in which he has a beneficial interest and shares
acquirable pursuant to options which are presently or will become
exercisable within 60 days. All information with respect to
beneficial ownership has been furnished by the respective directors
and officers.
(b) Assumes no conversion of Non-Voting Common Stock by the existing
holder. Presently, 228,477 shares of Non-Voting Common Stock are
outstanding, of which 396 shares may be converted by the existing
holder.
(c) Includes 2,500 shares that may be acquired pursuant to options.
(d) Includes 384,833 shares held by trusts of which Mr. Chace or his
spouse is a co-trustee and has shared voting and investment power.
Mr. Chace disclaims any economic or beneficial interest in 39,400 of
such shares. Also includes 2,000 shares held by Mr. Chace's spouse.
(e) Includes 108,000 shares held by a trust of which Mr. Chornyei is a
beneficiary.
(f) Includes 6,000 shares held by Mr. Hodges' immediate family members.
(g) Includes 130,075 shares that may be acquired pursuant to options.
(h) Includes 7,470 shares that may be acquired pursuant to options.
(i) Includes 33,510 shares that may be acquired pursuant to options.
(j) Includes 34,360 shares that may be acquired pursuant to options.
(k) Includes 234,815 shares that may be acquired pursuant to options.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires executive officers and
directors and persons who beneficially own more than ten percent of
Bancorp's Common Stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (the
"SEC") and any national securities exchange on which Bancorp's securities
are registered. Based solely on a review of the copies of such forms
furnished to Bancorp and written representations from the executive
officers and directors, Bancorp believes that during 2000 its executive
officers, directors and greater than ten percent beneficial owners complied
with all applicable Section 16(a) filing requirements.
AUDIT COMMITTEE REPORT
Management is responsible for the Company's internal controls and
financial reporting process. The independent accountants are responsible
for performing an audit of the Company's consolidated financial statements
in accordance with generally accepted auditing standards and to issue a
report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes.
The Audit Committee's responsibilities focus on two primary areas:
(1) the adequacy of the Company's internal controls and financial reporting
process and the reliability of the Company's financial statements; and (2)
the independence and performance of the Company's internal auditors and
independent auditors. The Audit Committee meets at least quarterly to, as
appropriate, recommend to the Board an accounting firm to be engaged as the
Company's independent accountants, and review, evaluate, and discuss with
the Company's management and internal and independent auditors the scope of
the audit plan, the results of the audit, the Company's financial
statements (including the Company's quarterly earnings release), disclosure
documents, quarterly reports issued by the Company's internal auditor, the
adequacy and effectiveness of the Company's internal controls and changes
in accounting principles. The Audit Committee regularly meets privately
with both the internal and independent auditors, each of whom has
unrestricted access to the Audit Committee.
In connection with these responsibilities, the Audit Committee
reviewed and discussed the audited financial statements for the fiscal year
ended December 31, 2000 with management and the Company's independent
accountants, KPMG LLP. The Audit Committee also discussed with KPMG LLP the
matters required by Statement on Auditing Standards No. 61. The Audit
Committee received from KPMG LLP written disclosures and the letter
regarding its independence as required by Independence Standards Board
Standard No. 1, wherein KPMG LLP confirms their independence within the
meaning of the SEC and Independence Standards Board Rules and disclosed the
fees charged for professional services in the fiscal year ended December
31, 2000. The Audit Committee discussed this information with KPMG LLP and
also considered the compatibility of non-audit services provided by KPMG
LLP with maintaining its independence.
Based on the review of the audited financial statements and these
various discussions, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K filed with the SEC. The Audit
Committee further recommends the appointment of KPMG LLP as the Company's
independent auditors for the fiscal year ended December 31, 2001, subject
to ratification by the Shareholders at the 2001 Annual Meeting of
Shareholders.
Audit Committee
Karl F. Ericson-Chairman
Ernest J. Chornyei, Jr. Cheryl W. Snead
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by
the Company to its Chief Executive Officer and each of its most highly
compensated executive officers who earned more than $100,000 in salary and
bonus in 2000 (together, the "Named Executive Officers"), for the calendar
years ending December 31, 2000, 1999 and 1998:
Summary Compensation Table
Long Term
Annual Compensation(a) Compensation
------------------------------- ------------
Securities
Underlying All Other
Name and Principal Position Year Salary(b) Bonus(b) Options/SARs Compensation(c)
--------------------------------------------------------------------------------------------------------
Merrill W. Sherman 2000 $260,204 $158,250 29,500 $10,408
(President and CEO of both 1999 249,412 126,800 23,700 9,760
Bancorp and the Bank) 1998 237,519 66,000 20,000 8,905
Albert R. Rietheimer 2000 135,733 55,000 10,300 5,429
(Chief Financial Officer 1999 130,119 46,500 8,300 5,205
and Treasurer of both Bancorp 1998 122,538 33,500 7,500 4,902
and the Bank)
Donald C. McQueen 2000 132,517 55,000 10,300 5,589
(Vice President and Assistant 1999 127,021 50,000 8,300 5,369
Secretary of Bancorp and 1998 118,500 32,500 7,000 4,906
Executive Vice President and
Chief Lending Officer of the
Bank)
James V. DeRentis 2000 102,615 41,500 5,200 4,105
(Senior Vice President-Retail 1999 99,077 25,000 5,200 3,963
Banking and Marketing of the 1998 86,477 12,000 - 3,459
Bank)
--------------------
(a) Any perquisites or other personal benefits received from the Company
by the Named Executive Officer were substantially less than 10% of
the individual's cash compensation.
(b) Includes portion of salary and/or bonus deferred under the 401(k)
Plan and the Nonqualified Deferred Compensation Plan.
(c) Represents the Company's contribution under its 401(k) Plan.
Option/SAR Grants in Last Fiscal Year
The following table provides information on option grants in 2000 to
the Named Executive Officers. The Company does not issue stock appreciation
rights.
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration Grant Date
Name Granted Fiscal Year ($/Sh) Date Value(a)
------------------------------------------------------------------------------------------------
Merrill W. Sherman 29,500(b) 47.46 $10.00 2/15/10 $92,040
Albert R. Rietheimer 10,300(c) 16.53 10.00 2/15/10 32,136
Donald C. McQueen 10,300(c) 16.53 10.00 2/15/10 32,136
James V. DeRentis 5,200(c) 8.35 10.00 2/15/10 16,224
--------------------
(a) Amounts represent the fair value of each option granted and were
estimated as of the date of the grant using the Black-Scholes option-
pricing model with the following weighted average assumptions:
expected volatility of 25%; expected life of 7 years; risk-free
interest rate of 6.71% and Common Stock dividend rate of 4.26%.
(b) All of these options are incentive stock options exercisable in four
equal annual installments commencing on February 15, 2000.
(c) All of these options are incentive stock options exercisable in five
equal annual installments commencing on February 15, 2000.
Aggregated Option/SAR Exercises in Last Fiscal Year and
Year-End Option/SAR Values
The following table sets forth certain information regarding stock
options exercised during 2000 and currently outstanding options held by the
Named Executive Officer as of December 31, 2000:
Number of Securities Value of
Underlying Unexercised Unexercised
Options/SARs at Fiscal In-the-Money
Shares Acquired Value Year End 2000 Option/SARs($)(a)
Name on Exercise Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
--------------------------------------------------------------------------------------------------------------------
Merrill W. Sherman 0 0 105,475/38,975 $237,077/$83,358
Albert R. Rietheimer 0 0 25,840/17,960 55,705/37,033
Donald C. McQueen 0 0 25,180/17,670 54,681/36,753
James V. DeRentis 0 0 3,920/7,480 8,975/17,762
--------------------
(a) Based on the December 29, 2000 closing sale price of the Common Stock
of $12.6875, less the exercise price of the options.
Employment Agreements. The Company has recently entered into revised
employment agreements with Ms. Sherman and Messrs. McQueen, Rietheimer and
DeRentis, which provide that during the term of the contract, their base
salary will not be reduced and they will remain eligible for participation
in the Company's executive compensation and benefit programs.
Ms. Sherman's agreement provides for an initial three year term
expiring December 18, 2003, which automatically renews for successive three
year terms on each successive one year anniversary unless either party has
given the other party written notice of election not to extend the term at
least 90 days prior to any anniversary date. In the event Ms. Sherman's
employment is terminated by the Company without cause or Ms. Sherman
terminates her employment for "Good Reason," the Company must pay her a
lump sum severance payment equal to 2.99 times the sum of (i) her annual
base salary as in effect at the time of termination and (ii) an amount
equal to the average executive cash bonus earned by Ms. Sherman in the two
full fiscal years immediately preceding the year in which termination
occurs, and continue to pay for all medical and life insurance coverage for
36 months. Ms. Sherman is also allowed continued use of the automobile
provided to her in her agreement (with an option to purchase). In addition,
any options which are exercisable on the date of termination shall not
terminate until the earlier of their expiration or three years after the
date of termination. "Good Reason" is defined in Ms. Sherman's agreement as
(i) a significant reduction in the nature or scope of her duties,
responsibilities, authority and powers; (ii) any requirement that she
perform her duties at a location more than 50 miles from where she
currently performs her duties; or (iii) failure of the Company either to
renew the agreement or enter into a new agreement on terms not less
favorable than those existing immediately prior to such nonrenewal (other
than a reduction of fringe benefits required by law or applicable to all
employees generally).
In the event of a "Terminating Event" within one year of a "Change in
Control," Ms. Sherman is entitled to receive as severance an amount equal
to 2.99 times the sum of (i) her annual base salary in effect at the time
of the Change in Control plus (ii) the amount of the largest annual bonus
paid to Ms. Sherman in the three years preceding the Change in Control,
payable in a lump sum. In addition, Ms. Sherman is entitled to receive
continuing medical and life insurance benefits and use of the automobile
provided to her in the agreement (with an option to purchase), for three
years. All options vest upon a Change in Control and remain exercisable for
such three-year period. A "Terminating Event" for this purpose means either
(a) termination of employment for any reason other than for cause or (b)
resignation, death or disability following (i) a Takeover Transaction or
(ii) a Change in Control resulting from a new Board supermajority, in
either case, prior to the first anniversary of the Takeover Transaction or
Change in Control.
The agreements with Messrs. McQueen, Rietheimer and DeRentis provide
for an initial two year term expiring December 18, 2002, which
automatically renews for successive two year terms on each successive one
year anniversary unless either party has given the other party written
notice of election not to renew at least 90 days prior to any anniversary
date. If the Company terminates the employment relationship without cause
or the executive terminates his employment for "Good Reason", the executive
would be entitled to continuance of his base salary and all medical and
life insurance coverage for 18 months following the date of termination.
Messrs. DeRentis and McQueen forfeit their severance payments in the
event that within one year of the date of termination they accept certain
types of positions as specified in their agreements. "Good Reason" is
defined in the agreements of Messrs. Rietheimer, McQueen and DeRentis as
the Company's failure to renew the agreement on any anniversary date or
enter into a new employment agreement on substantially similar terms.
The agreements with Messrs. McQueen, Rietheimer and DeRentis provide
that in the event of a "Terminating Event" within one year of a Change in
Control, the executive is entitled to receive a severance benefit equal to
two times the sum of (i) his annual base salary in effect at the time of
the Change of Control, and (ii) an amount equal to the average executive
cash bonus earned by the executive in the two full fiscal years preceding
the Change in Control, payable in a lump sum. In addition, each executive
shall continue to receive medical and life insurance coverage for the 24
months commencing on the date of the Terminating Event. A "Terminating
Event" means for this purpose either (a) termination of employment for any
reason other than death, disability or for cause or (b) resignation
following (i) a significant reduction in the nature or scope of the
executive's duties, responsibilities, authority and powers from those
exercised prior to the Change in Control; (ii) a greater than 10% reduction
in the executive's annual base salary or fringe benefits (other than
across-the-board salary reductions or changes in fringe benefit plans);
(iii) a requirement that the executive perform duties at a location more
than 50 miles from the location where such duties were performed prior to
the Change in Control; or (iv) failure of any successor of the Company to
continue the executive's employment on substantially similar employment
terms.
If payments under any of the agreements following a Change in Control
are subject to the "golden parachute" excise tax, the Company will make a
"gross-up" payment sufficient to ensure that the net after-tax amount
retained by the executive (taking into account all taxes, including those
on the gross-up payment) is the same as if such excise tax had not applied.
For purposes of all of the agreements, a "Change in Control" will be
deemed to have occurred if: (1) the Company effectuates a Takeover
Transaction; or (2) the Company commences substantive negotiations with a
third party with respect to a Takeover Transaction, if within 12 months of
the commencement of such negotiations, the Company enters into a definitive
agreement with respect to a Takeover Transaction with any party with which
negotiations were originally commenced; or (3) any election of directors of
the Company (whether by the directors then in office or by the shareholders
at a meeting or by written consent) where a majority of the directors in
office following such election are individuals who were not nominated by a
vote of two-thirds of the members of the Board of Directors immediately
preceding such election; or (4) the Company effectuates a complete
liquidation of Bancorp or the Bank.
A "Takeover Transaction" for this purpose means a (i) reorganization,
merger, acquisition or consolidation of Bancorp or the Bank with, or an
acquisition of Bancorp or the Bank or all or substantially all of Bancorp's
or the Bank's assets by, any other bank or corporation, in which the
individuals and entities who were the "beneficial owners" (as defined in
Rule 13d-3 under the Exchange Act) immediately prior to such
reorganization, merger, acquisition or consolidation, do not, following
such reorganization, merger, acquisition or consolidation, beneficially own
more than 50% of the voting power of the corporation resulting from the
reorganization, merger, acquisition or consolidation, (ii) the issuance of
additional shares of Bancorp or the Bank if the individuals or entities who
were the beneficial owners of the outstanding voting securities of Bancorp
or the Bank immediately prior to such issuance do not, following such
issuance, beneficially own securities representing more than 50% of the
voting power of Bancorp or the Bank or (iii) when any person or entity or
group of persons or entities (other than Bancorp or any trustee or other
fiduciary holding securities under an employee benefit plan of Bancorp)
either related or acting in concert becomes the beneficial owner of
securities of Bancorp representing more than 30% of the voting power of all
outstanding shares of voting securities of Bancorp, other than a person who
was already a 30% beneficial owner as of the date on which the executive's
employment with the Company commenced.
401(k) Retirement Plan. The Company maintains a 401(k) Plan which
qualifies as a tax-exempt plan and trust under sections 401 and 501 of the
Internal Revenue Code of 1986, as amended. Generally, Company employees who
were employed by the Company on March 22, 1996 or who are at least 21 years
of age and have completed at least one year of service with the Company,
are eligible to participate in the 401(k) Plan. Under the 401(k) Plan the
Company will make matching contributions of up to 4% of an employee's
compensation. These contributions are vested monthly.
Nonqualified Deferred Compensation Plan. The Company maintains a
nonqualified deferred compensation plan under which certain participants
may contribute the amounts they are precluded from contributing to the
Company's 401(k) Plan because of the qualified plan limitations, and
additional compensation deferrals which may be advantageous for personal
income tax or other planning reasons. In addition, under the deferred
compensation plan participants receive an amount of employer matching
contributions that they have lost under the Company's 401(k) Plan as a
result of the nondiscrimination rules applicable to qualified plans. All
amounts contributed by the participant and by the Company under the plan
are immediately vested. Any excess contributions which cannot be
contributed under the 401(k) Plan and which would otherwise be returned to
the participant at the end of the year, plus the amount of any supplemental
deferrals the participant may choose to make, and any matching
contributions provided for under the plan are credited to a deferred
compensation account (a bookkeeping account) which is credited with
interest at a rate equal to the greater of the Baa1 30-year corporate bond
index, or the Company's projected rate of return on average earning assets
as reflected in its budget for such year.
Participants are entitled to receive a distribution of their account
upon retirement, death, disability or termination of employment except that
any amounts attributable to employer contributions under the nonqualified
plan are subject to forfeiture if the participant is terminated for fraud,
dishonesty or willful violation of any law that is committed in connection
with the participant's employment. A participant is eligible to withdraw
amounts credited to the deferred compensation account in the event of
unforeseeable financial hardship.
The amount deferred under the plan is not includible in the income of
the participant until paid and, correspondingly, the Company is not
entitled to a deduction for any liabilities established under the plan
until the amount credited to the participant's deferred compensation
account is paid to him or her.
The amount credited to the deferred compensation account is not
funded or otherwise set aside or secure from the creditors of the Company
and the participant is subject to the risk that deferred compensation may
not be paid in the event of the Company's insolvency or the Company is
otherwise unable to satisfy the obligation. The plan permits (but does not
require) the Company to establish a grantor trust for the purpose of
funding the plan. If such a trust were created, the corpus of the trust
would, under current federal income tax regulations, have to be available
to creditors of the Company in the event of insolvency or bankruptcy in
order to prevent adverse income tax consequences to the participant.
Supplemental Employee Retirement Plan. The Company has adopted a
Supplemental Executive Retirement Plan ("SERP") for certain of its senior
executives under which participants designated by the Board are entitled to
an annual retirement benefit. Currently, Ms. Sherman and Messrs.
Rietheimer, McQueen and DeRentis are the only participants in the SERP. The
annual retirement benefit under the SERP is $150,000 for Ms. Sherman,
$50,000 for Messrs. Rietheimer and McQueen and $35,000 for Mr. DeRentis and
is payable upon the later of the executive attaining age 65 or the
executive's retirement. A surviving spouse will be entitled to an annual
benefit equal to 50% of the participant's benefit. Ms. Sherman's benefit is
fully vested while the benefit for Messrs. Rietheimer, McQueen and DeRentis
vests after five years of service (including service with the Bank and the
Bank's predecessor EFC, Inc.). In addition, the benefit will vest
immediately upon death or in the event of a Change in Control. The SERP is
unfunded but provides that upon the Change in Control, the Company must
deposit funds in a trust equal to the present value of all accrued benefits
provided under the SERP and thereafter make annual additional deposits to
reflect any increases in the accrued benefits. All benefits are forfeited
in the event that the executive's employment is terminated on account of a
criminal act of fraud, misappropriation, embezzlement or a felony which
involves property of the Company.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board (the "Committee") is composed
entirely of non-employee directors. From time to time Ms. Sherman meets
with the Committee to review the compensation program and make
recommendations for executives reporting to her. The Committee is charged
with the broad responsibility of seeing that officers and key management
personnel are effectively compensated in a manner which is internally
equitable and externally competitive. The Committee utilizes a consultant
to assist it in its review and evaluation of the Company's compensation
program for executives and other senior management.
Executive Compensation Philosophy. The Company's executive
compensation philosophy seeks to link executive compensation with the
value, objectives, business strategy, management initiatives and financial
performance of the Company. The overall objectives of the program are to
attract and retain highly qualified individuals in key executive positions,
to motivate executives to achieve goals inherent in the Company's business
strategy, and to link executives' and Shareholders' interests. The Company
also seeks to achieve a balance in the compensation paid to a particular
individual and the compensation paid to other executives both inside the
Company and at comparable corporations.
Base Salary. Base salaries for executive officers are substantially
dependent upon the base salaries paid for comparable positions at similar
corporations, the responsibilities of the position held, and the experience
level of the particular executive officer. The Committee sets the base
salary for executives by reviewing compensation for competitive positions
in the market and the historical compensation levels of the executives. In
2000, as part of the overall review of the Company's executive compensation
program, salaries of the Company's executives were increased, effective
January 1, 2001, in light of market data, as well as to reflect promotions
and increased responsibilities. The Committee generally sought, through
these increases, to place such salaries at the median of the survey group.
Cash Bonus Policy. Under the cash bonus policy adopted by the Company
in 1998, and revised in 2000, executive officers of the Company are
eligible to receive bonuses of up to 40% (60% in the case of the Chief
Executive Officer) of their base salaries. In 2000, as part of the overall
review of the Company's executive compensation program, the Committee
recommended, and the Board approved, increasing the maximum bonus
opportunity of the Chief Executive Officer from 50% to 60% of base salary.
All bonuses for executive officers are determined at the discretion of the
Committee, which annually establishes specific financial goals and
performance criteria for each executive officer.
Stock Options. Total compensation at the senior executive level also
includes long-term incentives afforded by stock options granted under the
Amended and Restated 1996 Incentive and Nonqualified Stock Option Plan. The
objectives of the program are to align executive and Shareholder long-term
interests by creating a strong and direct link between executive pay and
total Shareholder return, and to enable executives to develop and maintain
a significant, long-term stock ownership position in Bancorp's Common
Stock. Annual grants of stock options reflect the executive's position with
the Company and his or her contributions to the Company and are set at
levels to be competitive with other comparable companies with similar
performance. Options are granted at fair market value and have three to
four year vesting schedules to encourage key employees to continue in the
employ of the Company.
Compensation of Chief Executive Officer. In January 1998, the Company
entered into a three-year employment agreement with Ms. Sherman, which was
subsequently amended in July 1999 and most recently amended in December
2000. The most recent employment agreement provides Ms. Sherman with a base
salary of $263,700 until December 31, 2000 and provides Ms. Sherman with an
annual base salary of $314,400 commencing on January 1, 2001, subject to
annual adjustment thereafter, plus a cash bonus under the Company's cash
bonus policy described above. Ms. Sherman's base salary was established
based upon comparisons with comparable corporations after review of market
data provided by the Committee's compensation consultant. The substantial
increase in Ms. Sherman's base salary to be effective January 1, 2001 is
intended to bring her salary in line with the median for chief executives
of comparable institutions. The Committee awarded a bonus of $158,250 in
2000, representing 100% of Ms. Sherman's maximum bonus opportunity, in
recognition of the strong financial performance of the Company during 2000
and Ms. Sherman's contribution to the Company's growth and profitability.
The Committee also recommended, and the Board approved, increasing the
annual retirement benefit payable to Ms. Sherman under the SERP from
$100,000 to $150,000, to address a significant deficiency in the Chief
Executive Officer's retirement benefit as compared with the market. Ms.
Sherman also received options to acquire 29,500 shares of Common Stock. The
Committee believes that the long-term compensation and retirement benefits
provided the Chief Executive Officer continue to be below market for
competitive positions and expects to augment Ms. Sherman's compensation in
these areas in 2001.
Compliance with Internal Revenue Code Section 162(m). Section 162(m)
of the Internal Revenue Code generally disallows a tax deduction to public
companies for compensation over $1 million paid to a company's chief
executive officer and the four other most highly compensated executive
officers at year end. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The
Committee's policy is to preserve corporate tax deductions by qualifying
compensation paid over $1 million to Named Executive Officers as
performance-based compensation. Nevertheless, maintaining tax deductibility
is but one consideration among many (and is not the most important
consideration) in the design of the compensation program for senior
executives. The Committee may, from time to time, conclude that
compensation arrangements are in the best interest of the Company and its
Shareholders despite the fact that such arrangements might not, in whole or
in part, qualify for tax deductibility.
Conclusion. The Committee believes that, except for the deficiencies
in the Chief Executive Officer's compensation detailed above, which the
Committee intends to address in 2001, the compensation program for
executives is competitive and that the program effectively ties executive
compensation to the Company's performance and Bancorp's resultant stock
price performance.
Compensation Committee
F. James Hodges-Chairman
Anthony F. Andrade John R. Berger Donald J. Reaves
Notwithstanding anything to the contrary set forth in any of
Bancorp's previous filings under the Exchange Act that might incorporate
future filings, including this Proxy Statement, in whole or in part, the
foregoing Compensation Committee Report on Executive Compensation and the
following Performance Graph shall not be deemed incorporated by reference
into any such filing.
PERFORMANCE GRAPH
The following graph shows changes in the value of $100 invested at
month-end when the Bank was formed in March 1996 through December 31, 2000,
in Bancorp's Common Stock (the Bank converted to Bancorp, a bank holding
company, on September 1, 2000), the S&P 500 Stock Index, and the SNL
Securities L.C. New England Bank Index. The investment values are based on
share price appreciation plus dividends paid in cash, assuming that
dividends were reinvested on the date on which they were paid. Prior to
July 31, 1997, the Common Stock could be traded only in minimum blocks of
10,000 shares. There were no trades in the Common Stock prior to August
1997.
Bancorp Rhode Island, Inc. (BARI) vs. The Five Year Total Return
for the KBW New England Bank Index, the SNL Securities L.C.
New England Bank Index and S&P 500 Index(a)
[GRAPH]
3/22/96(c) 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
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BARI $100.00 $100.00 $110.00 $108.75 $ 99.64 $132.90
S&P 500 Index $100.00 $115.72 $154.34 $198.40 $240.15 $218.27
KBW New England Bank Index $100.00 $137.84 $237.97 $218.99 $194.35 -
SNL New England Bank Index $100.00 $131.51 $209.35 $229.09 $214.15 $282.42
--------------------
(a) The values of the respective indexes have changed from those stated
in the Proxy Statement for the 2000 Annual Meeting of Shareholders as
the initial investment date used in this Proxy Statement is March 22,
1996 whereas the initial investment used in the 2000 Proxy Statement
was March 31, 1996. The reported difference is not material.
(b) Bancorp ceased using the Keefe, Bruyette & Woods, Inc. New England
Bank Index as of December 31, 1999 as such Index has been
discontinued.
(c) The initial investment date for the KBW New England Bank Index is
March 31, 1996 rather than March 22, 1996.
The Board of Directors and its Compensation Committee recognize that
the market price of stock is influenced by many factors, only one of which
is issuer performance. Bancorp's stock price may also be influenced by
market perception, Bancorp in particular and the financial services
industry in general, economic conditions, fluctuating interest rates, and
government regulation and supervision. The stock price performance shown in
the graph is not necessarily indicative of future price performance.
TRANSACTIONS WITH MANAGEMENT
The Company has extended loans to certain of its officers, directors,
and principal shareholders, including their immediate families and
affiliated companies ("related parties"). Loans outstanding to related
parties aggregated $6.4 million at December 31, 2000. Loans to related
parties are made in the ordinary course of business under normal credit
terms, including interest rates and collateral, prevailing at the time of
origination for comparable transactions with other persons, and do not
represent more than normal credit risk.
The law firm of Hinckley, Allen & Snyder LLP, of which Margaret D.
Farrell (a director and Secretary of the Company) is a partner, provides
legal services to the Company.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee of the Board of Directors,
the Board has appointed KPMG LLP as independent public accountants for the
2001 fiscal year and hereby requests Shareholders to ratify such
appointment. The following is a description of the fees billed to the
Company by KPMG LLP during fiscal 2000:
Audit Fees. Aggregate fees billed by KPMG LLP for professional
services rendered for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2000 and the reviews of
interim financial statements included in the Company's Quarterly Reports on
Form 10-Q for such year were $127,000.
Financial Information Systems Design and Implementation Fees. No fees
were billed by KPMG LLP for financial information systems design and
implementation services during 2000.
All Other Fees. The aggregate fees billed by KPMG LLP for services
rendered during 2000, other than the services described above, were
$84,000. These services were principally for tax returns and tax estimates,
internal audit network security co-sourcing and internet security. The
Audit Committee has determined that the provision of such services is
compatible with maintaining KPMG LLP's independence.
The Board of Directors recommends a vote FOR the ratification of the
appointment of KPMG LLP as independent public accountants.
Representatives of KPMG LLP will be present at the Meeting and will
have an opportunity to make a statement if they so desire and to respond to
appropriate questions from Shareholders.
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of any matters to come before the
Meeting other than those stated in the Proxy Statement. In the event that
other matters properly come before the Meeting or any adjournment thereof,
it is intended that the persons named in the accompanying proxy and acting
thereunder will vote in accordance with their best judgment.
ANNUAL REPORT AND FORM 10-K
The 2000 Annual Report of Bancorp was mailed to Shareholders with
this Proxy Statement. Upon request, Bancorp will furnish without charge a
copy of Bancorp's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, including financial statements, but without exhibits, a
copy of which has been filed with the SEC. It may be obtained by writing to
Stephen M. Turgeon, Corporate Communications, Bancorp Rhode Island, Inc.,
One Turks Head Place, Providence, Rhode Island 02903.
SHAREHOLDER PROPOSALS FOR 2002
Bancorp's next annual meeting is scheduled to be held on May 15,
2002. A Shareholder who wants to have a qualified proposal considered for
inclusion in the Proxy Statement for the Company's 2002 annual meeting of
Shareholders must notify the Secretary of Bancorp not later than December
14, 2001. Shareholder proposals that are to be considered at the 2002
annual meeting but not requested to be included in the Proxy Statement must
be submitted no later than March 18, 2002 and no earlier than December 14,
2001.
Appendix A
BANCORP RHODE ISLAND, INC.
AUDIT COMMITTEE CHARTER
STATEMENT OF PURPOSE
The Audit Committee of the Board of Directors was established for the
purpose of evaluating the adequacy, effectiveness, and efficiency of the
corporation's system of internal control and quality of ongoing operations,
and to participate in monitoring the integrity of the corporation's
financial reporting process. The duties of the Committee are to be
performed in accordance with the regulations and guidelines for
implementing the Federal Deposit Insurance Corporation Improvement Act.
ORGANIZATION
The Audit Committee shall be composed of three independent outside
directors and the Chairman of the Board serving as ex-officio member. No
inside director nor large customer of the corporation or its bank
subsidiary shall be allowed to serve on the Audit Committee. At least one
member of the Committee shall have banking or related financial expertise.
RESPONSIBILITY
The Audit Committee is responsible to the Board of Directors and the
Committee Chairman will report on the Committee's activities quarterly.
AUTHORITY
1. The Committee is empowered to have access to all records, personnel
and physical properties for the accomplishment of its purpose.
2. The Committee has authority over the appointment, performance
evaluation and removal of the Chief Auditor.
3. The Committee has authority to recommend to the Board of Directors
the appointment of independent public accountants and approve the
fees and other significant compensation to be paid to them. The
independent public accountant is ultimately accountable to the Board
of Directors and the Audit Committee, as representatives of the
shareholders.
4. The Chairman of the Audit Committee has authority to call Committee
meetings, to preside at such meetings, and to make assignments to
Committee members.
5. The Committee Chairman may be delegated other responsibilities as
approved by the Board of Directors.
SCOPE OF ACTIVITIES
1. The Audit Committee shall review and reassess the adequacy of this
Charter periodically and recommend any proposed changes to the Board
of Directors for approval.
2. The Audit Committee shall approve the annual internal audit plan,
review audit risk assessment, review internal audit reports, evaluate
findings and recommendations to management, and report the results of
internal audit engagements to the Board of Directors.
3. The Audit Committee shall recommend annually to the Board of
Directors the appointment of the independent public accountants,
shall review the audit plan, and shall receive their report. This
will include the review of audit adjustments recommended, the
adequacy of internal controls, and management's disposition of
identified material weaknesses and reportable conditions.
4. The Audit Committee will follow-up on independent public accountants'
and internal auditors' findings of non-compliance with existing
policies.
5. The Audit Committee will review the corporation's quarterly financial
results. If necessary, the Audit Committee Chairman may represent the
entire Committee for purposes of this review.
6. The Audit Committee should consider the independent public
accountant's judgments about the quality and appropriateness of the
corporation's accounting principles as applied in its financial
reporting.
7. Annually, the Audit Committee will prepare a report for the annual
proxy that states whether the Committee has reviewed and discussed
the audited financial statements with management, discussed with the
independent public accountants the matters required by Statement on
Auditing Standard No. 61 (Communication with Audit Committees), and
received and discussed with the independent public accountants the
matters required by Independence Standards Board No. 1 (Independence
Discussions with Audit Committees). The report must also state
whether, based on the procedures performed, the members of the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in the corporation's annual report
on Form 10-K.
8. The Audit Committee will review in detail the reports of examination
issued by federal regulatory agencies as well as management's
responses thereto and will follow-up to ensure compliance as
necessary.
9. The Audit Committee will use its best efforts to keep current on
developments in the financial services and banking industries,
accounting pronouncements issued by the Financial Accounting
Standards Board, regulations implemented by federal and state
regulatory agencies, and other entities which may impact areas under
Audit Committee oversight in order to plan for and ensure compliance.
10. The Audit Committee Chairman will report to the Board of Directors
quarterly summarizing the Committee's activities during the quarter
and outlining significant results and findings.
REVOCABLE PROXY
BANCORP RHODE ISLAND, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
Proxy Solicited on Behalf of the Board of Directors
for Annual Meeting of
Shareholders to be held May 16, 2001
The undersigned hereby authorizes and appoints Malcolm G. Chace,
Merrill W. Sherman and Albert R. Rietheimer, and each of them, as proxies
with full power of substitution in each, to vote all shares of Common
Stock, par value $.01 per share, of Bancorp Rhode Island, Inc. (the
"Company") held of record on March 30, 2001 by the undersigned at the
Annual Meeting of Shareholders to be held at 10:00 a.m. local time, on
Wednesday, May 16, 2001, at the Courtyard by Marriott, 32 Exchange Terrace,
Providence, Rhode Island, and at any adjournments or postponements thereof,
on all matters that may properly come before said meeting.
THE DIRECTORS RECOMMEND A VOTE FOR EACH PROPOSAL.
PROPOSAL 1--Election of four Class II Directors, with terms expiring in 2004:
[ ] For [ ] Withhold [ ] For All Except
John R. Berger
Karl F. Ericson
Margaret D. Farrell
Mark R. Feinstein
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.
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PROPOSAL 2--Ratify the appointment of KPMG LLP as independent public
accountants for the Company.
[ ] For [ ] Against [ ] Abstain
This proxy when properly executed will be voted (i) as directed above, or,
in the absence of such direction, this proxy will be voted FOR the
specified nominees in Proposal 1 and FOR Proposal 2 and (ii) in accordance
with the judgment of the proxies upon other matters that may properly come
before said meeting or any adjournments or postponements thereof.
This Proxy must be signed exactly as the name of the
Shareholder(s) appears on this card.
Executors, administrators, trustees, etc. should give full title as such.
If the signatory is a corporation, please sign full corporate name by duly
authorized officer.
Please be sure to sign and date --------------------------
this Proxy in the box blow. Date |
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| |
| |
|---Shareholder sign above----Co-holder (if any) sign above---|
Detach above card, sign, date and mail in postage paid envelope provided.
BANCORP RHODE ISLAND, INC.
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PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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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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