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
COMMUNITY BANCORP.
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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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date Filed:
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April, 2002
Dear Fellow Shareholders:
You are cordially invited to the Annual Meeting of the Shareholders
of Community Bancorp., which will be held at 5:30 P.M. at the Elks Club,
Derby, Vermont, on Tuesday, May 7, 2002. As in prior years, a dinner will
be served following the meeting.
I have enclosed our proxy materials and our Annual Report for 2001
for your review. I encourage you to sign, date and return your proxy card
promptly so that your shares will be represented and can be voted at the
meeting whether or not you are present in person. You may withdraw your
proxy and vote in person at the meeting if you choose to do so.
Thank you for your continued support of Community Bancorp. I look
forward to seeing you at the annual meeting.
Sincerely,
COMMUNITY BANCORP.
/s/ Richard C. White
Richard C. White
President
RCW/cb
Enclosures
COMMUNITY BANCORP.
Derby Road
Route 5
Derby, Vermont 05829
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 7, 2002
The Annual Meeting of Shareholders of Community Bancorp. will be held
at the Elks Club, Derby, Vermont, on Tuesday, May 7, 2002, at 5:30 p.m.,
for the following purposes:
1. To elect three directors to serve until the Annual Meeting of
Shareholders in 2005;
2. To ratify the selection of the independent public accounting
firm of A.M. Peisch & Company, LLP as the Company's external
auditor for the fiscal year ending December 31, 2002; and
3. To transact such other business as may properly be brought
before the meeting.
The close of business on March 12, 2002, has been fixed as the record
date for determining shareholders entitled to notice of, and to vote at,
the Annual Meeting.
By Order of the Board of Directors,
/s/ Chris Bumps
CHRIS BUMPS
Corporate Secretary
Derby, Vermont
April 5, 2002
YOUR PROXY IS ENCLOSED. PLEASE FILL IN, DATE, SIGN AND RETURN YOUR
PROXY PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE WHETHER OR NOT YOU
PLAN TO BE PRESENT AT THE MEETING. YOU MAY STILL VOTE IN PERSON IF YOU
ATTEND THE MEETING. IT IS IMPORTANT THAT YOU RETURN YOUR COMPLETED PROXY
PROMPTLY.
COMMUNITY BANCORP.
Derby Road
Route 5
Derby, Vermont 05829
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 7, 2002
This proxy statement is furnished in connection with the solicitation
of proxies by or on behalf of the Board of Directors of Community Bancorp.
(the "Company") for use at the Annual Meeting of Shareholders to be held on
Tuesday, May 7, 2002, at 5:30 p.m. at the Elks Club in Derby, Vermont or at
any adjournment or adjournments thereof. The proxy statement and
accompanying proxy card are first being sent to shareholders on or about
April 5, 2002.
Proxy cards duly executed and returned by a shareholder will be voted
as directed on the card. If no choice is specified, the proxy will be voted
(1) FOR the election of the three nominees set forth in the proxy; and (2)
FOR ratification of the selection of A.M. Peisch & Company, LLP as the
Company's external auditor for 2002. If other matters are voted upon,
persons named in the proxy and acting thereunder will vote in accordance
with the recommendations of management pursuant to the discretionary
authority conferred in the proxy. Any proxy may be revoked by written
notice to the Corporate Secretary of the Company before it is voted.
Only holders of record of the Company's shares of common stock
outstanding as of the close of business on March 12, 2002, the record date
for the meeting, will be entitled to notice of and to vote at the meeting.
As of the record date, there were 3,563,904 shares of the Company's common
stock issued and outstanding. Each share is entitled to one vote on all
matters presented to the shareholders for vote.
In order to constitute a quorum, shares of common stock representing
a majority of the total voting power of such shares outstanding on the
record date must be present in person or represented by proxy at the annual
meeting. In accordance with Vermont law, the Company intends to count as
present for purposes of determining the presence or absence of a quorum,
shares present in person but not voting and shares for which it has
received proxies but with respect to which holders thereof have withheld
voting authority or abstained from voting. Furthermore, shares represented
by proxies returned by a broker holding such shares in nominee or "street"
name will be counted for purposes of determining whether a quorum exists,
even if such shares are not voted on matters where discretionary voting by
the broker is not allowed under applicable securities industry rules
("broker non-votes").
Directors will be elected by a plurality of the votes cast. Withheld
votes and broker non-votes, if any, are not treated as votes cast and,
therefore, will have no effect on the proposal to elect directors. Approval
of the proposal to ratify the Company's independent accountants, as well as
approval of any other matter that may be brought before the meeting, would
require that more votes are cast in favor, than are cast against the
matter. Abstentions from voting and broker non-votes, if any, are not
treated as votes cast and therefore, would have no effect on the vote to
ratify the Company's independent accountants or to approve any such other
matter.
All expenses of this solicitation will be paid by the Company. This
solicitation of proxies by mail may be followed by a solicitation either in
person, or by letter or telephone by officers of the Company or by officers
or employees of its wholly-owned subsidiary, Community National Bank
(sometimes referred to in this proxy statement as the "Bank"). The Company
has requested banks, brokers and other similar agents or fiduciaries to
forward proxy materials to beneficial owners of stock and, if requested,
will reimburse them for their costs.
SHARE OWNERSHIP INFORMATION
The following table shows the amount of common stock beneficially
owned by all directors, nominees for director and executive officers of the
Company as a group.
Amount & Nature of Beneficial
Ownership of Common Stock
-----------------------------
Sole Voting Shared Voting
& Investment & Investment Percent of
Power Power Class(1)
--------------------------------------------
All Directors, Nominees & Executive
Officers as a Group (12 in number)(2) 371,809 60,240 12.12%
--------------------
Shareholdings are as of March 12, 2002, except for (i) shares held
through the Company's Retirement Savings and Money Purchase Plans,
which are as of December 31, 2001, the date of the most recent
reports of such Plans, and (ii) shares held in an IRA account, which
are as of February 22, 2002.
Share information for the group includes 64,927 shares held
indirectly by four of the members of the group by virtue of their
investment in the Community Bancorp. stock fund under the Company's
Retirement Savings and Money Purchase Plans.
In addition, as of March 12, 2002, 221,379 shares (6.21% of the
Company's issued and outstanding common stock) were held in fiduciary
capacity by the trust department of Community National Bank. It is the
Bank's practice not to vote such shares unless instructions are received
from the beneficial owner.
2
It is expected that prior to the Annual Meeting the Bank will have
completed the transfer of its trust operations to a new trust and
investment management company that it is in the process of organizing,
Community Financial Services Group, LLC ("CFSG"). Management anticipates
that the policy of CFSG with respect to voting shares of Company stock held
in fiduciary capacity will be substantially the same as that of the Bank.
Except as set forth above, the Company is not aware of any
individual, group, corporation or other entity owning beneficially more
than 5% of the Company's outstanding common stock. The Company has no other
authorized class of stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors to file reports of ownership and changes
in ownership with the Securities and Exchange Commission (SEC) and to
furnish the Company with copies of all such reports. The Company has
reviewed the copies of the Section 16 reports filed by the directors and
officers, or written representations from them that no Forms 5 were
required to be filed for 2001. Based solely on such review, the Company
believes that all Section 16 filing requirements applicable to its officers
and directors for 2001 were complied with.
ARTICLE 1
ELECTION OF DIRECTORS
The Articles of Association and the By-laws of the Company provide
for a Board of no fewer than nine and no more than twenty-five directors,
to be divided into three classes, as nearly equal in number as possible,
each class serving for a period of three years. The Board of Directors
currently consists of 10 members and the Board has voted to maintain the
number of directors at 10 for the ensuing year. The directors in the class
whose term will expire at the 2002 Annual Meeting of Shareholders are
Thomas E. Adams, Jacques R. Couture and Richard C. White, and each will
stand for re-election to a three year term at the Annual Meeting.
Unless authority is withheld, proxies solicited hereby will be voted
in favor of the three nominees, to hold office until the 2005 Annual
Meeting of Shareholders or until their successors are elected and qualify.
If for any reason not now known by the Company, any of such nominees should
not be able to serve, proxies will be voted for a substitute nominee or
nominees designated by the Board of Directors, or to fix the number of
directors at fewer than ten, as the directors in their discretion may deem
advisable.
3
The following table sets forth certain information concerning each of
the nominees and other incumbent directors:
Community Bancorp.
Director of Common Stock
Community Beneficially Owned
Principal Bancorp. and Percent of
Name and Age Employment Since (1) Class (2)
------------------------------------------------------------------------------------------------
Nominees to serve (if elected) until 2005 Annual Meeting:
Thomas E. Adams Owner, NPC Realty, Inc. 1986 23,961 (3) .67%
Age 55 Holland, VT
Jacques R. Couture Dairy Farmer/Maple Producer 1992 4,117 (4) .12%
Age 51 Westfield, VT
Richard C. White President, Chief Executive Officer 1983 65,222 (5) 1.83%
Age 56 and Director, Community Bancorp.
and Community National Bank
Derby, VT
Incumbent Directors to serve until 2004 Annual Meeting:
Michael H. Dunn Book Dealer 1998 67,880 (6) 1.90%
Age 60 Derby, VT
Marcel M. Locke Former Proprietor, Parkview Garage 1986 9,172 (7) .26%
Age 63 Orleans, VT
Stephen P. Marsh Vice President, Treasurer and 1998 45,766 (8) 1.28%
Age 54 Director, Community Bancorp.;
Executive Vice President, Chief
Financial Officer and Director,
Community National Bank
Derby, VT
Dale R. Wells President, 1996 5,188 .15%
Age 56 Dale Wells Building Contractor, Inc.
St. Johnsbury, VT
4
Incumbent Directors to serve until 2003 Annual Meeting:
Elwood Duckless Past President, 1987 125,263 (9) 3.51%
Age 61 Newport Electric Co.
Newport, VT
Rosemary M. Lalime Principal Broker and Owner 1985 45,922 1.29%
Age 55 All Seasons Realty
Newport, VT
Anne T. Moore Principal Real Estate Broker 1993 21,597 .61%
Age 58 Taylor Moore Agency Inc.
Derby, VT
(insurance and real estate)
--------------------
Each nominee and incumbent director is also a director of Community
National Bank. The dates indicated in the table reflect only service
on the Board of Directors of the Company and not Community National
Bank.
Except as otherwise indicated in the footnotes to the table, the
named individuals possess sole voting and investment power over the
shares listed. Shareholdings are as of March 12, 2002, except for (i)
shares held by Messrs. Marsh and White indirectly through
participation in the Community Bancorp. stock fund under the
Company's Retirement Savings and Money Purchase Plans, which are as
of December 31, 2001, the date of the most recent reports of such
Plans; and (ii) shares held in Mr. White's IRA, which are as of
February 22, 2002.
Includes 9,975 shares held in an IRA for Mr. Adams' benefit.
Includes (i) 2,244 shares held by Mr. Couture jointly with his wife,
as to which voting and investment power is shared; and (ii) 55 shares
held in a custodial account for Mr. Couture's minor child.
Includes (i) 37,354 shares indirectly owned by Mr. White by virtue of
his participation in the Community Bancorp. stock fund under the
Company's Retirement Savings and Money Purchase Plans; (ii) 4,645
shares held in an IRA for Mr. White's benefit; and (iii) 2,015 shares
held by Mr. White jointly with his wife, as to which voting and
investment power is shared.
Includes 7,880 shares held by a Company of which Mr. Dunn is
President and over which he has sole voting power.
Includes 4,060 shares held by Mr. Locke jointly with his wife, as to
which voting and investment power is shared.
5
Includes (i) 29,378 shares held by Mr. Marsh jointly with his wife,
as to which voting and investment power is shared; and (ii) 15,548
shares indirectly owned by Mr. Marsh by virtue of his participation
in the Community Bancorp. stock fund under the Company's Retirement
Savings Plan.
Includes 21,313 shares held in trust for the benefit of Mrs.
Duckless. Mr. Duckless has shared voting and investment power over
the shares held in trust for Mrs. Duckless.
Meeting Attendance and Board Committees
The Company's Board of Directors held four regular meetings and four
special meetings during 2001. Each incumbent director attended at least 75%
of the aggregate of all such meetings. In addition, all of the Company's
directors serve on the Bank's Board of Directors (which meets monthly) and
on various Board committees. Each of the directors attended at least 75% of
the scheduled Bank Board and committee meetings.
The Company's Board of Directors does not have standing executive,
compensation or nominating committees. Compensation Committee functions
were performed in 2001 and prior years by the Bank's compensation committee
(known as its Human Resources Committee). That committee's responsibilities
include reviewing and making recommendations to the Board concerning the
compensation of the Bank's officers and employees. The current members of
the Bank's Human Resources Committee are Thomas Adams, Michael Dunn,
Rosemary Lalime, Stephen Marsh, Dale Wells and Richard White. In addition,
the Bank's Human Resources Officer attends meetings of the Committee but is
not a member and does not vote on matters considered by the Committee. Mr.
White and Mr. Marsh do not vote on matters affecting their own
compensation. The Bank's Human Resources Committee met two times during
2001. A report of the Human Resources Committee regarding executive
compensation is set forth elsewhere in this proxy statement under the
caption "HUMAN RESOURCES COMMITTEE REPORT."
In 2001, the Company's Board of Directors approved the appointment of
an Audit Committee to perform the audit-related functions for the Company
and its subsidiaries which were previously performed at the bank level by
the Bank's Risk Management Committee. The current members of the Audit
Committee are Thomas Adams (Chair), Jacques Couture, Michael Dunn and Anne
Moore. An Audit Committee charter was also adopted by the full Board in
2001, which sets forth the duties and responsibilities of the Committee. A
copy of the committee's charter is attached as Exhibit A to this proxy
statement. Each of the members of the Company's Audit Committee is
independent within the meaning of the listing standards of the National
Association of Securities Dealers (NASD). In order to be considered
independent under those standards, a director must not have (i) been
employed by the Company or any of its affiliates during the past three
years; (ii) accepted any compensation from the Company or its affiliates in
excess of $60,000 during the previous fiscal year, except for compensation
for Board service, and certain retirement and other plan benefits; (iii)
had an immediate family member
6
who during the past three years was an executive officer of the Company or
any of its affiliates; (iv) been a principal of any other for-profit
business to which the Company made or from which it received payments that
exceed the greater of $200,000 or 5% of the other entity's annual
consolidated gross revenues in any of the past three years; or (v) been an
executive officer of any other entity, if any of the Company's executives
serve on that other entity's compensation committee. During 2001 the Bank's
Audit Committee met three times. A report of the Bank's Audit Committee is
set forth elsewhere in this proxy statement under the caption "AUDIT
COMMITTEE REPORT."
Compensation Committee Interlocks and Insider Participation
The Company is not aware of the existence of any interlocking
relationships between the senior management of the Company and that of any
other company.
Transactions with Management
Some of the incumbent directors, nominees and executive officers of
the Company, and some of the corporations and firms with which these
individuals are associated, are customers of Community National Bank in the
ordinary course of business, or have loans outstanding from the Bank, and
it is anticipated that they will continue to be customers of and indebted
to the Bank in the future. All such loans were made in the ordinary course
of business, do not involve more than normal risk of collectibility or
present other unfavorable features, and were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the
same time for comparable Bank transactions with unaffiliated persons,
although directors were generally allowed the lowest interest rate given to
others on comparable loans.
Directors' Fees and Other Compensation
Directors of the Company who are not salaried employees of the Bank
receive an annual retainer of $4,250 for serving on the Board and a fee of
$250 per Board meeting. During 2001, each director of the Company also
served as a director of the Bank. Bank directors who are not salaried
employees of the Bank receive an annual retainer of $4,250, a fee of $250
per Board meeting and a fee of $250 per committee meeting. In addition to
the fees for meetings of the Bank's Board of Directors and its committees,
each Bank director attends at least seven meetings per year of the Bank's
local advisory boards and receives a fee of $250 per meeting, except for
Mr. White and Mr. Marsh, who do not receive any fees for such attendance.
This fee structure is intended to compensate the Bank's directors for
attendance at Board meetings as well as for the time spent by them in
activities directly related to their service on the Board for which they
receive no additional compensation, including but not limited to attendance
at the annual directors' retreat and attendance at educational seminars or
programs on pertinent banking topics.
7
Directors who have served on the Board of the Company and/or the Bank
for at least five years and who are not salaried employees of the Bank are
entitled to receive upon retirement from the Board a lump sum payment of
$1,000 for each year of Board service. For this purpose, service rendered
as a director of the Company and of the Bank is not compensated separately.
The retirement benefits under this arrangement represent a general
unsecured obligation of the Company and no assets of the Company or the
Bank have been segregated to satisfy the Company's obligations under the
arrangement.
From time to time directors perform evaluations of loan collateral
for the Bank and are reimbursed for such services at the rate of $25 per
hour.
Directors' Deferred Compensation Plan
Under the terms of the Company's Deferred Compensation Plan for
Directors, directors of the Company and/or the Bank may elect to defer
current receipt of some or all of their director fees. Deferrals are
credited to a cash account which bears interest at the rate in effect for
the Bank's three-year certificate of deposit, as adjusted from time to
time. Payments are deferred until the participant's retirement, death or
disability, or at an earlier or later date elected by the participant.
Amounts deferred and accumulated interest represent a general unsecured
obligation of the Company and no assets of the Company or the Bank have
been segregated to satisfy the Company's obligations under the Plan.
Vote Required
Election of a nominee for director will require a plurality of the
votes cast in the election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 1.
AUDIT COMMITTEE REPORT
During 2001, the Board of Directors of the Company appointed an Audit
Committee consisting of four independent directors. Previously, the Audit
Committee function had been performed at the bank subsidiary level. Also
during 2001 the Company's Audit Committee adopted an Audit Committee
charter, the text of which is attached as Schedule A to this proxy
statement. Among other things, the charter requires that the Audit
Committee consist of at least four directors, each of whom is independent
of the Company, any subsidiary and management. Members are considered
independent if they are not officers or employees of the Company or any
subsidiary and have no relationship that may interfere with the exercise of
their independence from management, the Company, and any subsidiary.
The Audit Committee's primary responsibility is to oversee the
Company's financial reporting process and to report the results of its
activities to the Board. Management is responsible for preparing the
Company's financial statements and the independent auditors are responsible
for auditing those statements.
8
Among the responsibilities of the Audit Committee include
recommending to the Board an accounting firm to be engaged as the Company's
independent accountants. Additionally, and as appropriate, the Audit
Committee reviews and evaluates, discusses and consults with the Company's
management, the Company's internal audit personnel and its independent
accountants, regarding the following matters:
* The plan for, and the independent accountants' report on, the
audit of the Company's financial statements;
* The Company's financial disclosure documents, including all
financial statements and reports filed with the SEC or sent to
shareholders;
* Changes in the Company's accounting practices, principles,
controls or methodologies, or in the Company's financial
statements;
* Significant developments in accounting rules;
* The adequacy of the Company's internal accounting controls, and
its accounting, financial and auditing personnel; and
* The establishment and maintenance of an environment within the
Company that promotes and encourages quality financial reporting,
sound business risk practices and ethical behavior.
The Audit Committee is responsible for recommending to the Board that
the Company's financial statements be included in the Company's annual
report. The Committee took a number of steps in making this recommendation
for 2001. First, the Committee discussed with A.M. Peisch & Company, LLP,
the Company's independent accountants for 2001, those matters A.M. Peisch &
Company, LLP communicated to and discussed with the Committee under
Statement on Auditing Standards No. 61 (Communications with Audit
Committees), including information regarding the scope and results of the
audit. These communications and discussions are intended to assist the
Audit Committee in overseeing the financial reporting and disclosure
process. Second, the Committee discussed A.M. Peisch & Company, LLP's
independence with, and received a letter from, A.M. Peisch & Company, LLP
concerning their independence from the Company and its management as
required under Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees). This discussion and disclosure informed
the Committee of A.M. Peisch & Company, LLP's independence and assisted the
Committee in evaluating such independence. Finally, the Committee reviewed
and discussed the Company's financial statements with the Company's
management.
9
Based on the discussions with A.M. Peisch & Company, LLP, on the
independence discussions, and on the financial statement review, the Audit
Committee recommended to the Board that the financial statements be
included in the Company's 2001 Annual Report on Form 10-K.
Submitted by the Community Bancorp. Audit Committee
Thomas E. Adams (Chair) Michael H. Dunn
Jacques R. Couture Anne T. Moore
HUMAN RESOURCES COMMITTEE REPORT
The Bank's Human Resources Committee reviews and makes
recommendations to the full Board of the Bank on all compensation and
benefits issues relating to the President and Chief Executive Officer
("CEO") and other executives of the Bank. The recommendations relating to
the CEO are formulated at the time of Mr. White's annual performance
evaluation, which usually occurs in June. Mr. White makes recommendations
to the Committee with respect to the compensation of the other executive
officers, which are then acted on by the Committee and recommended to the
full Board.
The Committee and Board believe they have designed a compensation
package for the executive officers that will attract and retain competent
senior management for the Bank and provide for appropriate rewards for both
personal and Bank performance.
To reach these objectives, the Bank provides for a base salary which
is reviewed annually in relation to each individual's performance and a
cash bonus as a short term incentive, the amount of which depends upon the
Bank's performance. (The Bank's Officer Incentive Plan is described
elsewhere in this proxy statement.) The Bank does not currently provide for
long term incentives, such as stock options or similar benefits.
In determining appropriate salary levels, the Committee and the Board
review not only various individual and corporate performance indicators,
but also annual salaries and short term incentives provided by similar
companies to their senior officers. As of July, 2001, when Mr. White's
annual salary was last adjusted, this data was obtained through salary
surveys conducted by Sheehan & Company (Vermont Bankers Association,
Northern New England and New England community banks with assets from $100
million to $249 million); Watson Wyatt & Company (national data, community
banks with assets from $200 million to $500 million), the Bank
Administration Institute (New England community banks with assets of $100
million to $499 million) and the Sheshunoff & Company (national data,
community banks with assets from $100 million to $249 million). These
surveys were completed in 2000, showing 2000 base salaries and total cash
compensation numbers for 1999. Data for 2001 was not yet available to the
Committee as of July, 2001.
10
In Mr. White's case, the Board's annual review process includes
consideration of his self-evaluation covering certain key elements of his
written job description, including strategic planning, establishment and
overall implementation of operating policies, management of shareholder and
community relations and regulatory matters. The Board also undertakes its
own evaluation of Mr. White, reviewing various matters, including
leadership, planning and organization abilities, creativity and problem
solving, CRA (community reinvestment) and compliance.
Mr. White's strong performance in each of these areas resulted in the
adjustment (effective July 1, 2001) of his annual base salary rate from
$137,500 to $142,500, representing a 3.6% increase.
The table below shows Mr. White's cash compensation (base salary and
cash bonus) for 2001 and 2000 in relation to his peers at comparable
companies, as indicated in the following surveys of 2001 executive
compensation:
Mr. White
2001 $168,595
2000 $152,751
Berry Dunn McNeil & Parker
All Northeast $179,235
Sheshunoff & Company $205,349
Bank Administration Institute NE $190,700
Watson Wyatt & Company $209,400
BAI-National $209,400
Average $192,281
The Committee also reviews, and makes recommendations to the full
Board relating to, major personnel policies including compensation and
benefit programs for other officers and staff. The Committee oversees the
administration of all of the Bank's compensation and benefit plans,
including the Bank's Officer Incentive Plan and the Company's 401(k) and
Money Purchase Plans, and reviews the investment performance of plan
trustees.
The Committee comprises four non-employee directors plus the CEO and
the Chief Financial Officer ("CFO"). Neither the CEO nor the CFO
participates in recommendations or decisions pertaining to their own salary
and benefits although CEO White does participate in recommendations and
decisions regarding the CFO's compensation.
Community National Bank Human Resources Committee
Thomas E. Adams Rosemary M. Lalime
Michael H. Dunn Dale R. Wells
Stephen P. Marsh Richard C. White
11
Pursuant to the rules and regulations of the Securities and Exchange
Commission, neither the foregoing Audit Committee Report, the foregoing
Human Resources Committee Report nor the material set forth below under the
caption "STOCK PERFORMANCE GRAPH" shall be deemed to be filed with the SEC
for purposes of the Securities Exchange Act of 1934, nor shall either of
such Reports or such other material be deemed to be incorporated by
reference in any past or future filing by the Company under the Securities
Exchange Act of 1934 or the Securities Act of 1933, as amended.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
(stock price appreciation plus reinvested dividends) on the Company's
common stock with the cumulative total return of the NASDAQ Composite Index
and the NASDAQ Bank Stock Index for the five years ended December 31, 2001.
Both indices are unmanaged indices maintained by NASDAQ.
Comparative Five-Year Stock Performance*
Community Nasdaq Nasdaq
Bancorp. Composite Banks
--------- --------- ------
December 1996 100.0 100.0 100.0
March 1997 108.49 94.63 97.09
June 1997 113.57 114.66 110.6
September 1997 121.46 131.9 134.35
December 1997 135.75 121.64 120.72
March 1998 166.66 137.14 145.58
June 1998 160.46 146.76 161.31
September 1998 171.3 124.89 154.39
December 1998 148.25 169.84 220.65
March 1999 169.07 190.65 213.41
June 1999 165.3 208.06 227.65
September 1999 140.34 212.71 205.2
December 1999 134.66 315.2 206.19
March 2000 128.1 345.3 186.59
June 2000 138.08 307.21 182.55
September 2000 148.08 284.49 216.89
December 2000 161.22 191.36 236.45
March 2001 177.59 142.54 229.59
June 2001 188.16 167.28 256.75
September 2001 214.54 116.09 251.12
December 2001 235.07 151.07 260.27
* The graph assumes (i) an initial investment of $100 at the end of 1996
and (ii) reinvestment of dividends during the periods indicated.
12
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
executive officers of the Company.
Position(s) with the Company and Subsidiaries
Name and Age and Occupation for the Past Five Years
---------------------------------------------------------------------------
Richard C. White, 56 President, Chief Executive Officer and Director,
Community Bancorp. and Community National Bank
Stephen P. Marsh, 54 Vice President, Treasurer and Director, Community
Bancorp.; and Executive Vice President, CFO and
Director, Community National Bank
Rosemary M. Rowe, 60 Vice President, Community Bancorp.; and Senior Vice
President, Community National Bank
Alan A. Wing, 57 Vice President, Community Bancorp.; and Senior Vice
President, Community National Bank
13
EXECUTIVE COMPENSATION
The officers of the Company did not receive any compensation for
services rendered to the Company in 2001 and prior years, but did receive
compensation for services rendered in their capacities as officers of the
Bank.
The following table shows annual compensation for services rendered
in all capacities to the Company and its subsidiary during each of the
preceding three years paid to each executive officer of the Company whose
total salary and bonus in 2001 exceeded $100,000.
Summary Compensation Table
Annual Compensation
Name and
Principal All Other
Position Year Salary (1) Bonus (2) Compensation (3)
-------- ---- ---------- --------- ----------------
Richard C. White, 2001 $141,948 $26,647 $26,668
President, CEO & Director of the Company 2000 133,870 18,881 22,456
and the Bank 1999 125,659 17,735 23,876
Stephen P. Marsh, 2001 92,386 16,654 21,839
Vice President, Treasurer & Director of the 2000 86,107 15,105 20,272
Company; Executive Vice President, CFO 1999 80,283 14,188 18,920
& Director of the Bank
--------------------
Includes voluntary salary deferrals pursuant to the Company's
Retirement Savings (401(k)) Plan, as follows: (i) for Mr. White,
2001, $8,332; 2000, $7,544; and 1999, $7,124; and (ii) for Mr. Marsh,
2001, $5,420; 2000, $5,030; and 1999, $4,997.
All bonuses were paid under the Bank's Officer Incentive Plan
(described below) in the year indicated, for services rendered in the
prior year. Bonuses for services rendered in 2001 will be calculated
and paid in the second quarter of 2002.
Includes the following for Mr. White: (i) discretionary contributions
made by the Company for Mr. White's account under the Company's
Retirement Savings Plan, described below, as follows: 2001, $12,892;
2000, $9,977; and 1999, $11,192; (ii) matching employer contributions
made under the Retirement Savings Plan for his account, as follows:
2001, $4,166; 2000, $3,772; and 1999, $3,562; and (iii) contributions
made under the Company's Money Purchase Plan, as follows: 2001,
$9,610; 2000, $8,707; and 1999, $8,122. Includes the following for
Mr. Marsh (i) discretionary contributions made by the Company for Mr.
Marsh's account under the Company's Retirement Savings Plan,
described below, as follows: 2001, $12,914; 2000, $11,988; and 1999,
$11,218; (ii) matching employer contributions made under the
Retirement Savings Plan for his account, as follows: 2001, $2,710;
2000, $2,515; and 1999, $2,348; and (iii) contributions made under
the Company's Money Purchase Plan, as follows: 2001, $6,215; 2000,
$5,769; and 1999, $5,354.
14
Except for the use of vehicles owned by the Bank by certain officers,
no director or executive officer received any special personal benefits
during 2001. In policy and practice, the Bank does not provide special
personal benefits to directors or officers.
Retirement Savings Plan
Employees who are age 21 or over and who have completed at least one
year of service (as defined in the plan) are eligible to participate in the
Community Bancorp. and Designated Subsidiaries' Retirement Savings Plan
(the "Plan"). The Plan contains features of a so-called 401(k) plan which
permit participants to make voluntary compensation deferrals on a tax-
deferred basis of up to 15% of their pre-tax compensation. For 2002 the
Plan limits the maximum annual deferral to $11,000 per participant. This
maximum is adjusted annually for inflation by the Internal Revenue Service.
The Company will make a discretionary matching contribution to the account
of participants equal to a percentage of the amount deferred. The matching
contribution percentage is established from time to time by the Company in
its sole discretion. The matching contribution percentage for 2002 has been
set at 50% of the amount deferred for deferrals of up to 5% of
compensation. Deferrals in excess of 5% of compensation are not matched by
the Company.
Participants are at all times fully vested in any rollover
contributions from other plans and in their own compensation deferrals.
Vesting in any discretionary employer contribution and in any matching
employer contribution begins after three years of service, with full
vesting upon seven years of service. Participants may direct the investment
of their Plan account among several funds maintained by the Plan trustee,
including a Community Bancorp. stock fund. Distribution of Plan accounts is
generally deferred until the participant's death, disability or retirement,
except in cases of financial hardship (as defined in the Plan). Benefits
are subject to income tax upon distribution and certain early withdrawals
may be subject to an additional 10% penalty tax. Distribution of Plan
benefits may be in the form of an annuity, a lump sum in cash, or in
certain circumstances, common stock of the Company.
In addition to voluntary compensation deferrals and matching employer
contributions, the Company in 2001 made an annual discretionary profit
sharing contribution for the account of the four executive officers. The
amount of the contribution is determined annually based on a calculation of
the maximum allowable deductible contribution that the Company is permitted
to make on behalf of the executives, but subject to the annual contribution
limitations of Section 415 of the Internal Revenue Code. The amount of the
contribution made to Mr. White's and Mr. Marsh's account for each of the
preceding three years is disclosed in the footnotes to the summary
compensation table set forth above.
15
Money Purchase Plan
In 1999 the Company established a Money Purchase Plan for the benefit
of eligible employees. Eligibility requirements for participation in the
plan are the same as described above for the Retirement Savings Plan. The
Company makes an annual money purchase plan contribution equal to 5.7% of
the participants' annual compensation. Participants may direct the
investment of their plan accounts among the same investment choices as are
available under the Retirement Savings Plan. Vesting in the employer
contribution begins after three years of service, with full vesting upon
seven years of service. Contributions to a participant's account and any
investment gains or income on such contributions are not taxable until
distribution. Distribution of benefits is generally deferred until the
participant's death, disability or retirement, except in cases of financial
hardship. Benefits are subject to income tax upon distribution and certain
early withdrawals may be subject to a 10% penalty tax. Contributions made
to the account of Messrs. White and Marsh under the Money Purchase Plan
during the preceding three years are shown in the footnotes to the summary
compensation table.
Officer Incentive Plan
The Bank maintains an Officer Incentive Plan (the "Plan") for its
executive officers and vice presidents. Each executive officer or vice
president having at least one year of service is eligible to participate in
the Plan. Under the Plan, two separate incentive pools are established, one
for the four executive officers and another for all non-executive officer
vice presidents.
Executive Officers. The incentive bonus pool for executive officers
is determined by the Bank's annual rating issued by IDC Financial
Publishing, Inc., an industry-wide recognized ranking service, under the
following formula:
Percent of
IDC Rating After-Tax Earnings
-------------------------------------------------
Below Average 0
Average 1.00%
Excellent 2.75%
Superior 4.50%
Top 3 in State and Superior 6.00%
The incentive pool determined under the above formula is allocated
among the four executive officers based on fixed percentages. Messrs. White
and Marsh were entitled to 40% and 25%, respectively, of the incentive pool
for 2000. Incentive payments made to Messrs. White and Marsh during the
preceding three years are shown in the summary compensation table. The
applicable percentages of after-tax earnings and the percentage allocation
of the incentive pool among the executive officers are
16
reviewed periodically by the Human Resources Committee and the Bank's Board
of Directors and may be modified in the Board's discretion.
Because the amount of the incentive pool for executive officers
depends on the Bank's annual rating by IDC Financial Publishing, Inc.,
which is not issued until the second quarter of the following year, 2001
bonus information for such officers was not yet available as of the date of
preparation of this proxy statement.
Vice Presidents. The incentive pool for Vice Presidents (other than
executive officers) is determined under the following schedule:
After-Tax Return
on Average Assets Percent of Salary
---------------- -----------------
less than 1.00% 0
1.00% to 1.49% 8% of salary
1.50% and over 10% of salary
Several Vice Presidents are eligible to receive individual incentive
awards based upon the attainment of specific performance goals. These
individual incentives are in lieu of incentive payments under the Officer
Incentive Plan and may exceed the amount of the bonuses otherwise payable
under such Plan. Vice Presidents who do not meet the individual performance
incentives remain eligible to receive an incentive payout under the above
Officer Incentive Plan formula.
Distributions under the Plan to Vice Presidents (other than executive
officers) are ordinarily payable in January for services rendered during
the preceding fiscal year.
Although the Board of Directors of the Bank presently intends to
maintain an officer incentive plan, it may revise or replace the Plan at
any time with a new one. As a matter of policy, the Board views incentive
compensation as an important component of officer compensation since it
appropriately links the Bank's performance with the compensation of those
employees in the best position to contribute significantly to the Bank's
profitability.
Supplemental Retirement Plan
The Board of Directors has adopted a Supplemental Retirement Plan for
Messrs. White and Marsh and the other executive officers of the Bank to
replace estimated benefits lost as a result of the previous termination of
the Bank's defined benefit pension plan. The plan is intended to provide an
annual benefit at retirement approximating 75% of the average annual bonus
received by the officer during the years prior to retirement. It is
estimated that this benefit, combined with the projected
17
benefits under the Bank's 401(k) plan, will be approximately equal to the
benefit that would have been provided to the executive officers under the
terminated defined benefit pension plan. Benefit payments are funded by
annual contributions to a special purpose trust.
ARTICLE 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of A.M. Peisch &
Company, LLP to continue as independent public accountants for the Company
for the fiscal year ending December 31, 2002, subject to ratification of
the appointment by the Company's shareholders. A.M. Peisch & Company, LLP
were first appointed as independent public accountants of the Company for
the 1985 fiscal year. Unless otherwise indicated, properly executed proxies
will be voted in favor of ratifying the appointment of A.M. Peisch &
Company, LLP as the Company's independent certified public accountants for
the fiscal year ending December 31, 2002. No determination has been made as
to what action the Board of Directors will take if the shareholders do not
ratify the appointment.
A representative of A.M. Peisch & Company, LLP be present at the
Annual Meeting. He will be given an opportunity to make a statement if he
so desires and will be available to respond to appropriate questions.
Audit Fees
The aggregate amount of the fees billed by A.M. Peisch & Company, LLP
for its audit of our annual financial statements for 2001 and for its
reviews of our unaudited interim financial statements included in reports
filed by us under the Exchange Act during that year was $103,145.
Financial Information Systems Design and Implementation
During 2001, we did not pay any fees to A.M. Peisch & Company, LLP
for financial information systems design and implementation services.
All Other Fees
The aggregate amount of fees billed by A.M. Peisch & Company, LLP for
all other services rendered to us during 2001 was $24,841. Of that total,
$17,675 was paid for services relating to tax consultation and tax return
preparation and $7,166 was paid for accounting and consulting services
relating to the formation by the Company of its new trust and investment
management company affiliate, Community Financial Services Group, LLC.
18
In evaluating whether to appoint A.M. Peisch & Company, LLP to
perform the audit of the Company's financial statements for the year ending
December 31, 2002, the Board of Directors and the Audit Committee
considered whether the provision of non-audit services by A.M. Peisch &
Company, LLP in 2001 was compatible with their independence from the
Company.
Upon recommendation of the Audit Committee, the Board has decided to
solicit proposals from various accounting firms to serve as the Company's
external auditors for 2003. The Board is satisfied with the professional
competence and standing of A.M. Peisch & Company, LLP and does not have any
disagreements with them regarding the Company's accounting practices or
policies. Accordingly, A.M. Peisch & Company, LLP will be included in the
accounting firms invited to submit a proposal for external auditing
services for 2003.
Vote Required
Ratification of the selection of the Company's independent
accountants for the ensuing year will require that more votes be cast "for"
than "against" the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ARTICLE 2.
ANNUAL REPORT
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 2001, including consolidated financial statements and the
report of A.M. Peisch & Company thereon, accompanies this proxy statement.
SHAREHOLDER PROPOSALS
Under the rules and regulations of the Securities and Exchange
Commission, the Company will be permitted to use its discretionary
authority conferred in the proxy card for the annual meeting to vote on a
shareholder proposal or director nominee even if the proposal or nominee
has not been discussed in the Company's proxy statement, unless the
shareholder-proponent has given timely notice to the Company of his or her
intention to present the proposal or nominee for vote at the meeting.
Assuming timely notice has been given, the proxies will only be voted on
the matter pursuant to the grant of discretionary authority if the Company
has described the proposal in the proxy statement and indicated how the
persons named as proxies intend to vote on the matter. In order to be
considered timely for consideration at the 2003 annual meeting, the
shareholder-proponent must furnish written notice to the Company of the
proposal or nominee no later than February 20, 2003.
19
If a shareholder seeks to have his or her proposal included in the
Company's proxy materials for the 2003 annual meeting, the notification
deadline is earlier than noted in the preceding paragraph. In order to be
included in the proxy material for the 2003 annual meeting, shareholder
proposals must be submitted in writing to the Secretary of the Company not
later than December 7, 2002, and must comply in all respects with
applicable rules and regulations of the Securities and Exchange Commission
relating to such inclusion. Any such proposal will be omitted from or
included in the proxy material at the discretion of the Board of Directors
of the Company, subject to such rules and regulations.
OTHER MATTERS
As of the date of this proxy statement, the Board of Directors knows
of no business that may come before the 2002 Annual Meeting except as set
forth above. If any other matters should properly come before the meeting,
it is expected that proxies will be voted on such matters in accordance
with the recommendations of management.
20
EXHIBIT A
COMMUNITY BANCORP.
AUDIT COMMITTEE CHARTER
1. ORGANIZATION
This charter governs the operations of the Audit Committee of the
Board of Directors of Community Bancorp. The Committee shall review and
reassess the charter at least annually and obtain the approval of the Board
of Directors. The Committee shall be comprised of at least four Directors
appointed by the Board of Directors. All of the members of the Committee
shall be independent of management, Community Bancorp. and any subsidiary
thereof. Generally, members of the Committee shall be considered
independent if they are not officers or employees of Community Bancorp. or
any subsidiary thereof and have no other relationship that may interfere
with the exercise of their independence from management, Community Bancorp.
and any subsidiary thereof.
2. STATEMENT OF POLICY
The Audit Committee shall provide assistance to the Board of
Directors in fulfilling its oversight responsibility to the stockholders,
potential stockholders and the investment community relating to corporate
accounting, reporting practices of the Company and its subsidiaries and the
quality and integrity of the financial reports of the Company. In so doing,
the Committee is responsible for maintaining free and open communication
between the committee and independent auditors and the internal auditor and
management of the Company and subsidiaries. In discharging its oversight
role, the Committee is empowered to investigate any matter brought to its
attention with full access to all books, records, facilities, and personnel
of the Company and subsidiaries and the power to retain outside counsel or
other experts for this purpose.
3. MEETINGS
The Committee shall meet at least four times a year and as many
additional times as the Committee deems necessary. The Committee will meet
in separate executive sessions with the independent auditors at least once
each year and at other times when considered appropriate. The Committee
shall maintain minutes or other records of its meetings and other
activities.
A-1
4. RESPONSIBILITIES AND PROCESSES
(a) General
The primary responsibility of the Audit Committee is to oversee the
Company's financial reporting process on behalf of the Board of Directors
and report the results of its activities to the Board. Management is
responsible for preparing the Company's financial statements, and the
independent auditors are responsible for auditing those financial
statements. The Committee in carrying out its responsibilities believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and circumstances. The Committee should take the
appropriate actions to set the overall corporate "tone" for quality
financial reporting, sound business risk practices, and ethical behavior.
(b) Independence of Auditors
The Committee shall have a clear understanding with management and
the independent auditors that the independent auditors are ultimately
accountable to the Board and the Audit Committee, as representatives of
Company's stockholders. The Committee shall have the ultimate authority and
responsibility to evaluate and, where applicable, replace the independent
auditors. The Committee shall discuss with the auditors their independence
from management of the Company and shall receive from the auditors, at
least annually, a formal written statement delineating all relationships
between the auditors and the Company consistent with the Independence
Standards Board Standard 1. Annually, the Committee shall review and
recommend to the Board the selection of the Company's independent auditors.
(c) Financial Reporting Process
The Committee shall discuss with the internal auditor and the
independent auditors the overall scope and plans for their respective
audits, including the adequacy of staffing. Also, the Committee shall
discuss with management, the internal auditor, and the independent auditors
the adequacy and effectiveness of the accounting and financial controls.
Further, the Committee shall meet separately with the internal auditor and
the independent auditors, with and without management present, to discuss
the results of their examinations.
A-2
(d) Reports Review
The Committee shall review the interim financial statements with
management prior to the filing of the Company's Quarterly Report on Form
10-Q (or prior to the press release of results, if possible). Also, the
Committee shall discuss the results of the quarterly review and any other
matters required to be communicated to the Committee by the independent
auditors under generally accepted auditing standards. The chair of the
Committee may represent the entire Committee for the purposes of this
review.
The Committee shall review with management and the independent
auditors the financial statements to be included in the Company's Annual
Report on Form 10-K, including their judgment about the quality, not just
acceptability, of accounting principles, the reasonableness of significant
judgments, and the clarity of the disclosures in the financial statements.
Also, the Committee shall discuss the results of the annual audit and any
other matters required to be communicated to the Committee by the
independent auditors under generally accepted auditing standards.
If deemed appropriate after review and discussion, the Committee will
recommend to the Board that the financial statements be included in the
Company's Annual Report on Form 10-K.
5. PROXY STATEMENT REPORT
After preparation by management, the Committee shall approve the
committee report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement. This
charter will be included as an appendix to the proxy statement at least
once every three years.
A-3
PROXY COMMUNITY BANCORP.
Proxy for Annual Meeting of Shareholders
May 7, 2002
The undersigned hereby appoints Robert Darby, Leonard Lippens and Joseph
Queenin, and each of them individually, as his or her lawful agents and
proxies with full power of substitution in each, to vote all of the common
stock of Community Bancorp. that the undersigned is (are) entitled to vote
at the Annual Meeting of Shareholders to be held at the Elks Club, Derby,
Vermont, on Tuesday, May 7, 2002 at 5:30 p.m. and at any adjournment
thereof.
1. ELECTION OF THREE DIRECTORS (Class expiring in 2005)
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY to
(except as marked to the contrary) vote for all nominees
listed below
To serve until the Annual Meeting in 2005: THOMAS E. ADAMS, JACQUES R.
COUTURE and RICHARD C. WHITE.
(INSTRUCTION: To withhold authority to vote for any individual nominee
while voting in favor of the others, strike a line through the nominee's
name in the list above.)
2. TO RATIFY THE SELECTION OF THE INDEPENDENT PUBLIC ACCOUNTING FIRM OF
A.M. PEISCH & COMPANY, LLP AS THE COMPANY'S EXTERNAL AUDITORS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2002.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the persons named above are authorized to act upon
such other business as may properly come before the meeting or any
adjournment thereof. If any such business is presented, it is the intention
of the proxies to vote the shares represented hereby in accordance with the
recommendations of management.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholders. If this Proxy is properly executed
but no direction is made, this Proxy will be voted FOR Items 1 and 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED.
Dated: __________________________, 2002
_______________________________________
Signature(s) of Shareholder(s)
_______________________________________
Signature(s) of Shareholder(s)
Please sign exactly as name is printed
on this proxy. When signing as
attorney, executor, administrator,
trustee, guardian, officer, or in any
other representative capacity, please
so indicate. All joint owners should
sign.
NOT A PROXY COMMUNITY BANCORP.
ANNUAL MEETING OF SHAREHOLDERS
May 7, 2002
DINNER RESERVATION
Immediately following the Annual Meeting to be held at the Elks Club in
Derby, Vermont, on Tuesday, May 7, 2002, at 5:30 p.m., a dinner will be
served for all registered shareholders. Please indicate below whether you
plan to attend the dinner.
I/We ____ will ____ will not attend the dinner. If stock is held jointly,
indicate the number attending the dinner. [ ] One [ ] Two
If you are voting by proxy, please complete and return this card, along
with your fully-executed proxy card, in the enclosed postage paid envelope.
You should also complete and return this dinner reservation card in the
enclosed postage paid envelope even if you plan to vote your shares in
person rather than by proxy.
Dated: __________________________, 2002
_______________________________________
Signature(s)
_______________________________________
Signature(s)