Patriot National Bancorp, Inc. Proxy Statement
SCHEDULE
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PATRIOT
NATIONAL BANCORP, INC.
900
Bedford Street
Stamford,
Connecticut 06901
(203)
324-7500
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
To
be held on June 20, 2007
To
the
Shareholders of
Patriot
National Bancorp, Inc.:
The
Annual Meeting of Shareholders of Patriot National Bancorp, Inc. (“Patriot”)
will be held on Wednesday, June 20, 2007, at 9:00 a.m. local time, at The Hyatt
Regency, 1800 East Putnam Avenue, Old Greenwich, Connecticut 06870, for the
following purposes:
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1.
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To
elect nine directors to serve until the next Annual Meeting of
shareholders.
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2.
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To
consider and act upon a proposal to ratify the appointment of McGladrey
& Pullen, LLP as independent auditors for the year ending December
31,
2007.
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3.
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To
transact any other business that may properly come before the Annual
Meeting.
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Shareholders
of record at the close of business on Friday, April 27, 2007 will be entitled
to
vote at the Annual Meeting or at any adjournment of the Annual
Meeting.
Our
Board
hopes that you will attend the meeting. Whether or not you plan to attend,
please complete, date, sign and return the enclosed proxy card in the
accompanying envelope. Your prompt response will greatly facilitate arrangements
for the meeting, and your cooperation will be appreciated.
By
Order
of the Board of Directors
Angelo
De
Caro
Chairman
and Chief Executive Officer
Stamford,
Connecticut
May
7,
2007
PATRIOT
NATIONAL BANCORP, INC.
900
Bedford Street
Stamford,
Connecticut 06901
(203)
324-7500
__________
PROXY
STATEMENT
Our
Board
of Directors is soliciting your proxy with the enclosed proxy card for use
at
the 2007 Annual Meeting of Shareholders of Patriot National Bancorp, Inc. The
Annual Meeting will be held on Wednesday, June 20, 2007 at The Hyatt Regency,
1800 East Putnam Avenue, Old Greenwich, Connecticut 06870. This proxy statement
and accompanying proxy card are first being sent or given to shareholders on
or
about May 7, 2007.
The
Annual Meeting has been called for the following purposes: (i) to elect nine
directors to serve until the next Annual Meeting of shareholders (Proposal
1);
(ii) to ratify the appointment of McGladrey & Pullen, LLP as our independent
auditors for the year ending December 31, 2007 (Proposal 2); and (iii) to
transact any other business that properly comes before the Annual Meeting or
at
any adjournments of the meeting.
GENERAL
INFORMATION ABOUT VOTING
Who
can vote.
You will be entitled to vote your shares of Patriot common stock at the Annual
Meeting if you were a shareholder of record at the close of business on April
27, 2007. As of that date, 4,739,494 shares of common stock were
outstanding and entitled to vote at the Annual Meeting.
In
the
election of directors, you may elect to cumulate your vote. Cumulative voting
will allow you to allocate among the director nominees, as you see fit, the
total number of votes equal to the number of director positions to be filled
multiplied by the number of shares you hold. For example, if you own 100 shares
of stock, and there are nine directors to be elected at the Annual Meeting,
you
may allocate 900 “for” votes (nine times 100) among as few or as many of the
nine nominees to be voted on at the Annual Meeting as you choose.
If
you
choose to cumulate your votes, you will need to submit a proxy card or a ballot
and make an explicit statement of your intent to cumulate your votes, either
by
so indicating in writing on the proxy card or by indicating in writing on your
ballot when voting at the Annual Meeting. If you hold shares beneficially in
street name and wish to cumulate votes, you should contact your broker, trustee
or nominee.
If
you
sign your proxy card with no further instructions, John A. Geoghegan, L. Morris
Glucksman, and Michael F. Intrieri, as proxy holders, may cumulate and cast
your
votes in favor of the election of some or all of the applicable nominees in
their sole discretion, except that none of your votes will be cast for any
nominee as to whom you instruct that your votes be withheld.
Cumulative
voting applies only to the election of directors. For all other matters, each
share of common stock outstanding as of the close of business on the record
date, April 27, 2007, is entitled to one vote. If you sign your proxy card
with
no further instructions with respect to the ratification of the selection of
the
independent auditors, then proxies will be voted in favor of the
proposal.
How
to vote your shares.
You can vote your shares either by attending the Annual Meeting and voting
in
person or by voting by proxy. If you choose to vote by proxy, please
complete, date, sign and return the enclosed proxy card. The proxies named
in the enclosed proxy card will vote your shares as you have instructed.
You may authorize the proxies to vote your shares in favor of the proposals
contained in this proxy statement by simply signing and returning the enclosed
proxy card without indicating how your votes should be cast.
Even
if
you expect to attend the Annual Meeting, please complete and mail your proxy
card in any case in order to assure representation of your shares. If you
attend the meeting, you can always revoke your proxy by voting in person.
No postage is necessary if the proxy card is mailed in the United
States.
Quorum.
A
quorum of shareholders is required in order to transact business at the Annual
Meeting. A majority of the outstanding shares of common stock entitled to
vote must be present at the meeting, either in person or by proxy, to constitute
a quorum.
Number
of votes required.
The number of votes required to approve each of the proposals that are scheduled
to be presented at the meeting is as follows:
Proposal
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Required
Vote
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• Election
of directors
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Under
cumulative voting for directors, the nine nominees receiving the
largest
number of votes will be elected.
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• Ratification
of the Audit Committee’s
selection of independent auditors
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The
affirmative vote of a majority of the votes cast is necessary for
ratification.
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Abstentions
and broker non-votes.
A
broker non-vote occurs when a broker cannot vote a customer’s shares registered
in the broker’s name because the customer did not send the broker instructions
on how to vote on the matter. If the broker does not have instructions
and
is
barred by law or applicable rules from exercising its discretionary voting
authority in the particular matter, then the shares will not be voted on the
matter, resulting in a “broker non-vote.” Abstentions and broker non-votes will
be counted for purposes of determining whether a quorum is present at the Annual
Meeting.
Abstentions
and broker non-votes will not count as votes cast in the election of directors
or in the vote on ratifying the Audit Committee’s selection of independent
auditors. Therefore, abstentions and broker non-votes will have no effect on
the
voting on these matters at the meeting.
Discretionary
voting by proxies on other matters.
Aside from the election of directors and the ratification of the Audit
Committee’s selection of independent auditors, we do not know of any other
proposal that may be presented at the 2007 Annual Meeting. However, if
another matter is properly presented at the meeting, the persons named in the
accompanying proxy card will exercise their discretion in voting on the
matter.
How
you may revoke your proxy.
You may revoke the authority granted by your executed proxy card at any time
before we exercise it by notifying our Corporate Secretary in writing, by
executing a new proxy card bearing a later date and delivering the new executed
proxy card to our Corporate Secretary, or by voting in person at the Annual
Meeting.
Expenses
of solicitation.
We will bear all costs of soliciting proxies. We will request that
brokers, custodians and fiduciaries forward proxy soliciting material to the
beneficial owners of stock held in their names, for which we will reimburse
their out-of-pocket expenses. In addition to solicitations by mail, our
directors, officers and employees, without additional remuneration, may solicit
proxies by telephone and/or personal interviews.
Shareholders
sharing the same surname and address.
In some cases, shareholders holding their shares in a brokerage or bank account
who share the same surname and address and have not given contrary instructions
are receiving only one copy of our annual report and proxy statement. This
practice is designed to reduce duplicate mailings and save significant printing
and postage costs as well as natural resources. If you would like to have
additional copies of our annual report and/or proxy statement sent to you,
please call or write us at our principal executive offices, Attention: Corporate
Secretary, 900 Bedford Street, Stamford, Connecticut 06901, (203) 324-7500.
If
you want to receive separate copies of the proxy statement or annual report
to
shareholders in the future, or if you are receiving multiple copies and would
like to receive only one copy per household, you should contact your bank,
broker or other nominee record holder.
Patriot
National Bancorp, Inc. is the bank holding company for Patriot National Bank,
or
the Bank. A copy of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2006 is being sent with this proxy
statement.
PROPOSAL
1
ELECTION
OF DIRECTORS
Directors;
Nominees
The
Board
of Directors has fixed the number of directors for 2007 at nine. Under our
certificate of incorporation, each director is elected annually by the
shareholders and holds office until the next Annual Meeting of shareholders
and
until his or her successor is elected and qualified, or until his or her earlier
resignation, death or removal. In the election of directors, you may elect
to
cumulate your vote. Cumulative voting means that each share of common stock
is
entitled to one vote multiplied by the number of directors to be elected. All
votes may be cumulated and cast for a single nominee or votes may be distributed
among two or more nominees in the manner selected by the shareholder. If a
shareholder submits a signed proxy with no further instructions, the persons
named in the proxy will distribute the votes among the nominees in his or her
discretion. The nine nominees who receive the largest number of votes will
be
elected as directors. The nine nominees for director are currently serving
as
directors of Patriot and the Bank. Each nominee has consented to being named
in
this proxy statement and to serve if elected. If for any reason a nominee should
become unavailable for election prior to the Annual Meeting, the proxies may
vote for the election of a substitute. We do not presently expect that any
of
the nominees will be unavailable.
Vote
Required
Under
cumulative voting for directors, the nine nominees receiving the largest number
of votes will be elected as directors. Abstention and broker non-votes are
not
considered votes cast and will not affect the outcome of the vote.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS
VOTE FOR THE NINE NOMINEES SET FORTH BELOW.
Biographical
Information
The
following table contains biographical information about the nominees for
election as directors. Information about the number of shares of common stock
beneficially owned by each nominee, directly or indirectly, as of April 30,
2007, appears below under “Security Ownership of Certain Beneficial Owners and
Management.”
There
is
no arrangement or understanding between any director and any other person or
persons pursuant to which such director was or is to be selected as a director
or nominee. There is no family relationship between any director and any of
our
executive officers. Each of the nominees has held the principal occupation
listed for the past five years, except as set forth below.
Name
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Age
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Business
Experience and Other Directorships
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Director
Since
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Angelo
De Caro
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64
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Angelo
De Caro has served as our director since our organization in 1999 and
as our Chairman since his election in 2001. He has also served as
our
Chief Executive Officer since 2001 and as President and Chief Executive
Officer from 1999 to 2001. He has served as a director of the Bank
since
1998, as Chairman of the Board of Directors of the Bank since September
2000, and as Chief Executive Officer of the Bank from June 1999 until
October 2000. Mr. De Caro has been a private investor from 1996
to present. Mr. De Caro was a Senior Financial Officer of
Goldman, Sachs & Co. from 1979 to 1986 and a General Partner of
Goldman, Sachs & Co. from 1986 to 1996. In addition, he served on the
Executive Committees of Goldman Sachs Swiss Private Bank and Goldman
Sachs
Trust Services. He currently serves as a Director of Innovive
Pharmaceuticals, Inc., a biopharmaceutical company headquartered
in New
York City.
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1999 |
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Charles
F. Howell
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58
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Charles
F. Howell has served as our Vice Chairman since 2000 and as our President
since 2001. He has also served as a director and President and Chief
Executive Officer of the Bank since 2000. From 1998 to 2000,
Mr. Howell was a director and President of Summit Bank Connecticut.
He also served as Executive Vice President, Chief Operating Officer
and a
director of each of NSS Bank from 1994 to 1998, and NSS Bancorp from
the
date of formation in 1997 to 1998.
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2000
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Robert
F. O’Connell
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58
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Robert
F. O’Connell has served as our director and Senior Executive Vice
President and Chief Financial Officer since 2001 and as our Executive
Vice
President and Chief Financial Officer from 2000 to 2001. He has also
served as a director and Senior Executive Vice President and Chief
Financial Officer of the Bank since 2001 and as Executive Vice President
and Chief Financial Officer of the Bank from 2000 to 2001. From 1994
to
2000, Mr. O’Connell served as Senior Vice President and Chief
Financial Officer of New Canaan Bank and Trust Company and
Treasurer/Senior Financial Officer of its successor, Summit Bank,
New
Canaan, Connecticut.
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2001
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Philip
W. Wolford
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59
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Philip
W. Wolford has served as our Chief Operating Officer and Secretary
since
June 2000. He has also served as Chief Operating Officer and Secretary
of
the Bank since September 2000. Mr. Wolford was our President and
Secretary from December 1999 until June 2000. He was President, Chief
Executive Officer and Secretary of the Bank from September 1994 until
June
1999 and President and Secretary of the Bank from August 1999 until
September 2000. Mr. Wolford has served as our director since 1999 and
a director of the Bank since 1994.
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1999
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John
J. Ferguson
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67
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John
J. Ferguson has served as a director of us and the Bank since 2001.
He is
a Senior Partner of the law firm of Ferguson, Aufsesser, Hallowell
&
Wrynn, LLP of Greenwich, Connecticut.
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2001
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Brian
A. Fitzgerald
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58
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Brian
A. Fitzgerald has served as a director of us and the Bank since 2005.
He
has also served as the Finance Director and Property Manager at Villa
Maria Education Center in Stamford, Connecticut since 2001. From
1999 to
2001, Mr. Fitzgerald served as the Finance Director and Controller of
Chromacol, a developer of consumables and accessories for chromatography.
Mr. Fitzgerald was chairman of the audit committee of Summit Bank of
Connecticut from 1999 to 2001, chairman of the audit committee of
NSS
Bancorp from 1997 to 1998, and chairman of the audit committee of
NSS Bank
from 1995 to 1997.
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2005
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John
A. Geoghegan
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65
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John
A. Geoghegan has served as a director of us since 1999 and a director
of
the Bank since 1998. He is the Resident Principal (Partner) of the
law
firm of Gellert & Klein, P.C., Purchase, New York and its predecessor
firm. Previously, Mr. Geoghegan was a director of Barclays Bank, N.A.
for over eighteen years.
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1999
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L.
Morris Glucksman
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59
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L.
Morris Glucksman has served as a director of us since 1999 and a
director
of the Bank since 1993. Mr. Glucksman is a practicing attorney in
Stamford, Connecticut.
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1999
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Michael
F. Intrieri
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63
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Michael
F. Intrieri has served as a director of us since 1999 and a director
of
the Bank since 1993. He is the Director of School Activities, the
Career
Center and the University of Connecticut, Storrs, “Prep” Program at
Stamford High School in Stamford, Connecticut. Dr. Intrieri
previously served as the Assistant Principal
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1999
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and Director
of
Alternate High School in the Stamford, Connecticut public school system.
Mr. Intrieri holds an Ed.D. in education and counseling and is a
licensed real estate broker and private investor. |
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CORPORATE
GOVERNANCE AND THE BOARD OF DIRECTORS
Our
business and affairs are managed under the direction of the Board of Directors
in accordance with the Connecticut Business Corporation Act and our certificate
of incorporation and bylaws. Members of the Board are kept informed of our
business through discussions with the Chairman and Chief Executive Officer
and
other officers, by reviewing materials provided to them, and by participating
in
meetings of the Board and its committees. Our corporate governance practices
are
summarized below.
During
2006, our Board of Directors met 12 times. During 2006, each of our directors
attended at least 75% of the meetings of our Board of Directors and at least
75%
of the meetings of the committees of the Board on which each director served.
Director
Attendance at Annual Meetings
We
have a
policy encouraging attendance by members of the Board of Directors at our Annual
Meetings of shareholders. All of our directors attended the 2006 Annual Meeting
of Shareholders.
Independence
of Board of Directors and Members of Its Committees
The
Board
of Directors has a policy that requires a majority of the directors to be
independent within the meaning of applicable laws and regulations and the
listing standards of the NASDAQ Global Market. The Board of Directors has
affirmatively determined that the following nominees for election as directors
at the Annual Meeting, constituting a majority of the nominees, are independent:
John J. Ferguson, Brian A. Fitzgerald, John A. Geoghegan, L. Morris Glucksman
and Michael F. Intrieri. The Board of Directors has also affirmatively
determined that the Audit Committee is comprised entirely of independent
directors within the meaning of applicable laws and regulations, the listing
standards of the NASDAQ Global Market and our corporate guidelines set forth
in
the Audit Committee Charter.
Independence
Standards
The
Board
of Directors examines the independence of the directors annually. For a director
to be considered independent, the Board must determine that the director does
not have any relationship with Patriot or any of our affiliates, either directly
or as a partner, shareholder or officer of an organization that has such a
relationship which, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment in carrying out the responsibilities
of a director.
A
director will not be considered independent if, among other things, the director
has:
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·
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Been
employed by the Bank or its affiliates at any time in the current
year or
during the past three years.
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·
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Accepted
any payments from the Bank or its affiliates in excess of $60,000
during
any period of twelve consecutive months within the preceding three
years
(except for Board services, retirement plan benefits, non-discretionary
compensation or loans made by the Bank in accordance with applicable
banking regulations).
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·
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An
immediate family member who is, or has been in the past three years,
employed by the Bank or its affiliates as an executive
officer.
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·
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Been
a partner, controlling shareholder or an executive officer of any
“for
profit” business to which the Bank made or from which it received,
payments (other than those which arise solely from investments in
the
Bank’s securities) that exceed five percent of the entity’s or the Bank’s
consolidated gross revenues for that year, or $200,000, whichever
is more,
in any of the preceding three
years.
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·
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Been
employed as an executive officer of another entity where any of the
Bank’s
executive officers serve on that entity’s compensation
committee.
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Committees
of the Board of Directors
The
members of the Boards of Directors of Patriot and the Bank devote time and
talent to certain standing and ad
hoc
committees of Patriot and the Bank. Among these committees are the Audit
Committee, Compensation Committee, Executive Committee and the Nominating and
Governance Committee of Patriot’s Board of Directors; and the Asset and
Liability Committee, Loan Committee and Personnel Committee of the Bank’s Board
of Directors. The principal functions and members of each committee are
described below.
The
functions of the Audit Committee include (i) reviewing and recommending policies
regarding internal audit and credit review, (ii) establishing and implementing
policies to comply with applicable regulations, (iii) causing suitable audits
to
be made by auditors engaged by the Audit Committee on our behalf, and (iv)
pre-approving all audit services and permitted non-audit services provided
by
the auditors. The Audit Committee or its Chairman also discusses with the
independent auditors the auditors’ review of our unaudited quarterly financial
statements. The Audit Committee operates under a written charter adopted by
the
Board of Directors, a copy of which is attached as Appendix
A.
The
members of the Audit Committee are Messrs. Ferguson, Fitzgerald and Intrieri,
each of whom is an independent director as defined by NASDAQ rules. The Board
has determined that Mr. Fitzgerald has the professional experience
necessary to qualify as an audit committee financial expert under SEC rules.
During 2006, the Audit Committee met six times. The Report of the Audit
Committee for the year ended December 31, 2006 is set forth below on page
31.
The
Compensation Committee determines executive compensation. The members of the
Compensation Committee are Messrs. Ferguson, Fitzgerald, Geoghegan, Glucksman
and Intrieri. Each of the committee members is an independent director in
accordance with NASDAQ requirements. During 2006, the Compensation Committee
met
three times.
The
Executive Committee exercises, if needed and when the Board of Directors is
not
in session, all powers of the Board of Directors that may lawfully be delegated.
The members of the Executive Committee are Messrs. De Caro, Ferguson, Geoghegan,
Glucksman and Howell. During 2006, Patriot’s Executive Committee did not
meet.
The
principal function of the Nominating and Governance Committee is to consider
and
recommend to the full Board of Directors nominees for directors of Patriot
and
the Bank. The committee is also responsible for reporting and recommending
from
time to time to the Board matters relative to corporate governance. The members
of the Nominating Committee are Messrs. Ferguson, Glucksman and Intrieri. Each
committee member is independent in accordance with NASDAQ requirements. During
2006, the Nominating Committee met once.
The
functions of the Personnel Committee include reviewing and recommending policies
with respect to a comprehensive personnel policy, staffing requirements,
personnel compensation and benefits issues and performance review of certain
identified officer positions. The Personnel Committee also reviews management’s
implementation of established policies and personnel compliance issues. The
members of the Personnel Committee are currently Messrs. De Caro, Fitzgerald,
Geoghegan, Glucksman, Howell, Intrieri, O’Connell and Wolford. During 2006, the
Personnel Committee met once.
The
Asset
and Liability Committee ensures adherence to the investment policies of the
Bank, recommends amendments thereto, exercises authority regarding investments
and liquidity, and exercises, when the Bank’s Board of Directors is not in
session, all other powers of the Board of Directors regarding investment
activities that may lawfully be delegated. The members of the Asset and
Liability Committee are Messrs. De Caro, Fitzgerald, Geoghegan, Glucksman,
Howell, O’Connell and Wolford. During 2006, the Asset and Liability Committee
met five times.
The
Loan
Committee examines, reviews and approves loans, reviews and approves loan
policies, establishes appropriate levels of credit risk, and exercises, when
the
Bank’s Board of Directors is not in session, all other powers of the Board of
Directors regarding extensions of credit that may lawfully be delegated. The
members of the Loan Committee are Messrs. De
Caro,
Fitzgerald, Howell, Intrieri, O’Connell and Wolford. During 2006, the Loan
Committee met 39 times.
Nomination
Process
The
process of reviewing and making recommendations for nominations and appointments
to the Board of Directors is the responsibility of the Nominating and Governance
Committee. Our directors have a critical role in guiding our strategic direction
and in overseeing management. The Nominating Committee will consider candidates
for the Board based upon
several
criteria, including their broad-based business and professional skills and
experiences, concern for the long-term interests of shareholders, and personal
integrity and judgment. Candidates should have reputations, both personal and
professional, consistent with our image and reputation. Directors must have
time
available to devote to Board activities and to enhance their knowledge of the
banking industry. Accordingly, the Board of Directors seeks to attract and
retain highly qualified directors who have sufficient time to attend to their
substantial duties and responsibilities to Patriot, and who are expected to
contribute to an effective Board.
The
Nominating Committee utilizes the following process for identifying and
evaluating nominees to the Board. In the case of incumbent directors, each
year
the Board of Directors informally reviews each director’s overall service to
Patriot during his term, including the number of meetings attended, level of
participation and quality of performance. In the case of new director
candidates, the committee may solicit from existing directors the names of
potential candidates who meet the criteria above, the committee may discuss
candidates suggested by our shareholders and, if deemed appropriate by the
Board
of Directors, or the committee may engage a professional search firm. To date,
the Nominating Committee has not engaged a professional search firm to identify
or evaluate potential nominees, but it retains the right to do so in the future,
if necessary. The Nominating Committee meets to discuss and consider these
candidates’ qualifications and then chooses new candidates by majority vote.
Each of the nominees for director listed above were recommended by the
Nominating Committee in 2007. A copy of the Nominating Committee Charter
was included with Patriot's proxy statement dated May 6, 2005.
Shareholder
Nominations
Under
our
by-laws, nominations for directors may be made by any shareholder of any
outstanding class of our capital stock who delivers notice, along with the
additional information and materials required by our certificate of
incorporation, to our Chief Executive Officer not fewer than 14 days and not
more than 50 days before the Annual Meeting. Shareholders may obtain a copy
of
our certificate of incorporation and by-laws by writing to our Corporate
Secretary, 900 Bedford Street, Stamford, Connecticut 06901.
To
be
considered, the shareholder’s nomination must contain: (i) the name and address
of each proposed nominee; (ii) the principal occupation of each proposed
nominee; (iii) the total number of shares of capital stock of the Corporation
that will be voted for each proposed nominee; (iv) the name and residence
address of the notifying shareholder; and (v) the number of shares of capital
stock of Patriot owned by the notifying shareholder. In addition, the nomination
should include any other information relating to the proposed nominee required
to be included in a proxy statement filed pursuant to the proxy rules of the
SEC
and the nominee’s written consent to serve as a director if
elected.
Communications
with the Board
Interested
parties, including shareholders, wishing to communicate directly with the Board
or any independent directors should send written communications to Angelo De
Caro, Chairman and Chief Executive Officer, Patriot National Bancorp, Inc.,
900
Bedford Street, Stamford, Connecticut 06901. Each communication will be reviewed
by Mr. De Caro who will make appropriate recommendations to the Board of
Directors, which may include discussing the
matter
raised with the Board as a whole, with only the independent directors, and/or
with other members of the senior management team. We believe that this procedure
allows the Board to be responsive to shareholder communications in a timely
and
appropriate manner.
Code
of Conduct
Each
of
our Chief Executive Officer, Chief Financial Officer and Chief Accounting
Officer is required to comply with the Patriot National Bancorp, Inc. Code
of
Conduct for Senior Executive Financial Officers adopted by our Board of
Directors. The Code of Conduct was adopted to deter wrongdoing and promote
honest and ethical conduct; full, fair, accurate and timely disclosure in public
documents; compliance with law; prompt internal reporting of Code violations,
and accountability for adherence to the Code. The Code of Conduct was filed
with
the Securities and Exchange Commission as an exhibit to our Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2004. All of our directors,
officers and employees are also required to comply with a general Code of
Conduct that satisfies the rules set out in Section 406(c) of the
Sarbanes-Oxley Act of 2002. Shareholders may request a copy of either Code,
without charge, by contacting Robert F. O’Connell, Senior Executive Vice
President and Chief Financial Officer, Patriot National Bancorp, Inc., 900
Bedford Street, Stamford, Connecticut 06901 (203) 324-7500.
Director
Compensation
Our
directors who are also executive officers do not receive compensation for
service on the board of directors or any of its committees. Non-employee
directors of the Bank receive $600 for each board meeting in which they
participate and $400 for each committee meeting in which they participate.
In
addition, non-employee directors who serve as the chair of a committee that
meets at least four times in a year receive an additional $2,000 per year.
Non-employee
directors serving on the board receive an annual award of our common stock
at
each year’s annual meeting valued at $10,000 based on the last reported sale
price on the trading day immediately preceding the Annual Meeting. The award
is
prorated for directors serving for less than a full year. We paid fees totaling
$ 113,730 which includes $24,930 in stock to non-employee directors during
the
fiscal year ended December 31, 2006. Directors are not paid separately for
their services on the Board of both Patriot and the Bank.
Director
Compensation
The
following table details the compensation paid to each of our non-management
Directors in 2006.
Name
|
Fees
Earned or
Paid
in Cash
($)
|
Stock
Awards
($)
(1)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan Compensation
($)
|
Change
in
Pension
Value
and
Nonqualified
Deferred
Compensation
Earnings
|
All
Other Compensation
($)
|
Total
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
John
J.
Ferguson
|
10,000
|
4,986
|
-0-
|
-0-
|
-0-
|
-0-
|
14,986
|
Brian
A.
Fitzgerald
|
30,100
|
4,986
|
-0-
|
-0-
|
-0-
|
-0-
|
35,086
|
John
A.
Geoghegan
|
10,500
|
4,986
|
-0-
|
-0-
|
-0-
|
-0-
|
15,486
|
L.
Morris
Glucksman
|
11,300
|
4,986
|
-0-
|
-0-
|
-0-
|
-0-
|
12,286
|
Michael
F.
Intrieri
|
26,900
|
4,986
|
-0-
|
-0-
|
-0-
|
-0-
|
31,886
|
|
(1)
|
These
amounts represent the fair market value of the annual stock grants
to
outside directors based on the closing price of Patriot National's
stock
on the date of the grant. For 2006, the shares granted were determined
by
dividing $5,000 by the closing price on the date of grant, rounded
down to
produce a whole number of shares.
|
SECURITY
OWNERSHIP OF
CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
table
below provides certain information about beneficial ownership of our common
stock as of April 30, 2007 by (i) each person, or group of affiliated persons,
who is known to us to beneficially own more than five percent of our common
stock; (ii) each of our directors; (iii) each of our executive officers
named in the Summary Compensation Table; and (iv) all of our directors and
executive officers as a group.
Except
as
otherwise noted, the persons or entities in this table have sole voting and
investing power with respect to all shares of common stock beneficially owned
by
them, subject to community property laws, where applicable. The address of
each
director and executive officer is care of us at our principal executive
office.
To
our
knowledge, there exists no arrangement that might result in a change in control
of Patriot. However, Angelo De Caro has received authority from the Federal
Reserve Bank of New York to acquire up to 35% of our common stock.
To
compute the percentage ownership of any shareholder in the following table,
the
total number of shares deemed outstanding includes 4,739,494 shares outstanding
on April 30, 2007, plus any shares that a shareholder could acquire upon
exercise of any options that are exercisable within the 60-day period after
April 30, 2007.
|
Shares
of Common Stock Beneficially Owned
|
Beneficial
Owner
|
Shares
|
|
Percent
|
|
|
|
|
5%
Shareholders:
|
|
|
|
|
|
|
|
Harvey
Sandler Revocable Trust
21170
NE 22nd Court
North
Miami Beach, FL 33180
|
379,772
|
(1)
|
8.0%
|
|
|
|
|
Donald
Opatrny
30
East Elm Street
Greenwich,
CT 06830
|
376,850
|
(2)
|
8.0%
|
|
|
|
|
Barry
C. Lewis
177
South Mountain Road
New
City, NY 10956
|
306,652
|
(3)
|
6.5%
|
|
|
|
|
Directors
and Executive Officers
named
in the Summary
Compensation
Table:
|
|
|
|
|
|
|
|
Angelo
De Caro
|
755,000 |
(4)
|
15.9%
|
John
J. Ferguson
|
4,927
|
|
*
|
Brian
A. Fitzgerald
|
3,045
|
|
*
|
John
A. Geoghegan
|
9,312
|
|
*
|
L.
Morris Glucksman
|
66,489 |
(5)
|
1.4%
|
Charles
F. Howell
|
55,000
|
|
1.2%
|
Michael
F. Intrieri
|
56,938 |
(6)
|
1.2%
|
Robert
F. O’Connell
|
27,348
|
|
*
|
Philip
W. Wolford
|
21,673 |
(7)
|
*
|
Martin
Noble
|
1,911
|
|
*
|
Marcus
Zavattaro
|
76,011
|
|
1.6%
|
|
|
|
|
All
directors and executive officers
of
Patriot (13 persons)
|
1,083,003
|
(8)
|
22.7%
|
____________________
* Percentage
is less than 1% of all outstanding shares of common stock.
|
1.
|
Based
on a Schedule 13G/A filed by the Harvey Sandler Revocable Trust with
the
SEC on February 27, 2007. The Harvey Sandler Revocable Trust has
sole
voting and sole dispositive control over all of these shares. Mr.
Sandler
is the sole trustee of the trust.
|
|
2.
|
Based
on a Schedule 13D filed by Mr. Opatrny with the SEC on October 6,
2006.
Mr. Opatrny has sole voting and sole dispositive control over all
of these
shares.
|
|
3.
|
Based
on a Schedule 13G filed by Mr. Lewis with the SEC on January 9, 2007.
Reflects 117,703 shares held in Barry Lewis IRA Rollover Accounts,
of
which Mr. Lewis disclaims beneficial ownership, except to the extent
of his equity interest therein, and 188,949 shares held by the Barry
Lewis
Revocable Living Trust.
|
|
4.
|
Includes
19,000 shares for which Mr. De Caro has sole voting power but in
which he has no direct or indirect pecuniary
interest.
|
|
5.
|
Includes
3,200 shares held by Mr. Glucksman as Trustee for Roslyn Glucksman,
Mr.
Glucksman’s wife; 1,000 shares owned solely by Roslyn Glucksman; 5,500
shares held by Mr. Glucksman as Trustee for Rayna Glucksman, Mr.
Glucksman’s daughter; 5,500 shares held by Mr. Glucksman as Trustee for
Janna Glucksman, Mr. Glucksman’s daughter; and 10,800 shares held as
Trustee for other than immediate family members. Also includes 16,000
shares of common stock issuable upon exercise of stock options exercisable
within 60 days after April 30,
2007.
|
|
6.
|
Includes
1,200 shares held in joint tenancy with Karen Intrieri, Mr. Intrieri’s
wife, and 651 shares owned solely by Karen Intrieri; 600 shares held
by
Michael J. Intrieri, Mr. Intrieri’s son, and 1,500 shares owned jointly by
father and son; and 600 shares held by Jason Intrieri, Mr. Intrieri’s son,
and 1,500 shares owned jointly by father and son. Also includes 10,000
shares of common stock issuable upon exercise of stock options exercisable
within 60 days after April 30,
2007.
|
|
7.
|
Includes
84 shares held in joint tenancy with, Regine Vantieghem, Mr. Wolford’s
wife. Also includes 9,000 shares of common stock issuable upon exercise
of
stock options exercisable within 60 days after April 30, 2007. Includes
102 shares owned by his wife over which he disclaims beneficial
ownership.
|
|
8.
|
Includes
35,000 shares of common stock issuable upon exercise of stock options
exercisable within 60 days after April 30,
2007.
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our
directors, our executive officers and anyone owning beneficially more than
ten
percent of our equity securities are required under Section 16(a) of the
Securities Exchange Act of 1934 to file with the SEC reports of their ownership
and changes of their ownership of our common stock. They must also furnish
copies of the reports to us. Based solely on our review of the reports furnished
to us and any written representations that no other reports were required,
we
believe that during 2006, our directors, executive officers and ten percent
beneficial owners complied on a timely basis with all applicable Section 16(a)
filing requirements, except that Mr. Noble made one filing two days late
regarding his settlement of a stock appreciation right.
EXECUTIVE
OFFICERS
The
following table provides information concerning the executive officers of
Patriot and the Bank. Information about Messrs. De Caro, Howell, O’Connell
and Wolford, nominees for director, appears in the table beginning on page
5.
Name
|
Age
|
Business
Experience
|
|
|
|
Michael
A. Capodanno
|
46
|
Michael
A. Capodanno has served as our Senior Vice President and Controller
since
April 2004. He has also served as Senior Vice President and Controller
of
the Bank since April 2004 and as Vice President and Controller of
the Bank
from 2001 to 2004.
|
|
|
|
John
Kantzas
|
71
|
John
Kantzas has served as Executive Vice President and Cashier of the
Bank
since 1994.
|
|
|
|
Martin
G. Noble
|
57
|
Martin
G. Noble has served as Executive Vice President and Senior Loan Officer
of
the Bank since February 1999. From 1996 to 1999, he served as Vice
President and Manager - Risk Management for Cityscape Corporation,
a
mortgage banking company.
|
|
|
|
Marcus
Zavattaro
|
42
|
Marcus
Zavattaro currently serves as Executive Vice President and Sales
Manager
of Mortgage Brokerage. He previously served as Executive Vice President
of
the Bank and the Division Sales Manager of the Bank’s Residential Lending
Group since 2004. From 1999 to 2004, Mr. Zavattaro served as
Executive Vice President of the Bank and President of the Pinnacle
Financial Division of the Bank. From 1994 to 1999, he served as President
of Pinnacle Financial Corp., a mortgage broker.
|
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Our
Compensation Committee determines salaries, incentives and other compensation
for our executive officers. The Compensation Committee of the Board of Directors
consists of five non-employee directors. The members of the Compensation
Committee currently are John A. Geoghegan (Chairman), John J. Ferguson, Brian
A.
Fitzgerald, L. Morris Glucksman and Michael F. Intrieri. All of the Committee
members are “independent” as defined by NASDAQ listing requirements.
The
Compensation Committee has reviewed and discussed with management the
“Compensation Discussion and Analysis” disclosure appearing below in this Proxy
Statement. Based on this review and discussion, the Compensation Committee
recommended to the Board of Directors of Patriot that the Compensation
Discussion and Analysis be included in Patriot’s Annual report on Form 10-K,
which incorporates by reference the disclosure contained in this Proxy
Statement.
April
18,
2007
The
Compensation Committee:
John
A. Geoghegan, Chairman
John
J. Ferguson
Brian
A. Fitzgerald
L.
Morris Glucksman
Michael
F. Intrieri
COMPENSATION
DISCUSSION AND ANALYSIS
The
Compensation Committee of our Board of Directors determines executive
compensation (other than payments or benefits that are generally available
to
all other employees of Patriot). The Compensation Committee considers the
recommendations of Messrs. De Caro and Howell relative to all executive
compensation other than their own.
Objectives
of Patriot’s Compensation Programs
Patriot
does not pay direct cash compensation to its executive officers. However, our
executive officers also serve as executive officers of the Bank and are
compensated by the Bank.
Our
compensation philosophy is to support our strategic goals with effective but
straight forward compensation programs. We believe that simple, cash-based
incentives will serve us and our shareholders best. Incentives are generally
paid in cash as they reflect a “pay as you go” compensation philosophy. We do
not compensate our executives with traditional perquisites such as club
memberships, automobiles or travel allowances. We do not maintain a defined
benefit retirement plan or an employee stock ownership plan. We have not granted
stock options to our executive officers since 1999, or stock equivalent awards
since 2003.
The
compensation programs for executive officers are administered by the
Compensation Committee and are outcome-oriented; designed to attract, retain
and
reward the best employees, further our growth objectives and promote shareholder
value. The Committee believes it provides attractive, market based compensation
programs with performance incentives aligned with shareholder’s interests. The
Committee believes our growth objectives will be enhanced by this
strategy.
The
compensation decisions for executive officers are derived after examining
available survey and other peer information. However, the Committee has
determined that available peer information is inadequate for Patriot’s purposes
for two reasons: (1) the degree to which Patriot focuses on growth is not shared
with many other institutions that would otherwise potentially be peers; and
(2)
the scarcity of like-sized and -minded institutions in the greater New York
area. The Committee does not employ a compensation consultant, but does consult
publicly available compensation information and information provided by its
advisors when making compensation decisions.
Identification
of and Reward Objectives for Each Compensation Program
Compensation
paid to Patriot’s executive officers in 2006 generally consisted of the
following components: Base Salary, short-term cash bonuses paid pursuant to
the
Patriot Annual Bonus Plan, legacy vesting of long-term cash incentive payments
tied to stock performance, and participation in our employee benefit plans.
No
stock options or other equity awards were granted to executive officers in
2006.
The compensation components, described below, apply to all of the Named
Executive Officers except Mr. Zavattaro. His bonus compensation as head of
Retail Mortgage Brokerage is based entirely on certain annual production
criteria relative to his job responsibilities.
Base
Salaries. In
determining base salaries for our executive officers, the Committee attempts
to
ensure that base salaries are competitive with New York area financial
institutions that we consider to be alternative places of employment for our
executive officers. All of the Named Executive Officers receive a base salary,
except Mr. Zavattaro who receives a guaranteed draw against commissions.
Short
Term Bonuses. Bonus
compensation for executive officers generally consists of cash awards from
Patriot’s Annual Cash Bonus Plan (“PACBP”). The PACBP provides for cash bonuses
based solely on performance. Reward objectives are based on Patriot’s annual
“profit” for the year.
Long
Term Cash Incentives.
Patriot
does not currently compensate its executives with long-term awards, equity
or
non-equity. Certain of the executives received in 2006 compensation made under
discontinued long-term incentive programs. The current philosophy is to provide
incentives on a short-term, "pay as you go" basis.
Patriot’s
Reasons for Choosing to Pay Each Compensation Element
The
Compensation Committee believes that it is necessary to offer executive officers
Base Salary and short term bonuses to attract and retain talented individuals
committed to creating long-term franchise and shareholder value. The
Compensation Committee believes that the compensation program it has developed
is consistent with Patriot’s strategic objective to grow its franchise and to
attract and retain talented and committed executive officers.
Patriot’s
Determinations of Amounts of Compensation Paid to
Executives
The
Compensation Committee considers, determines and approves the mix of Base Salary
and short term bonuses payable to the executive officers, and the production
compensation payable to Mr. Zavattaro. The Committee evaluates the performance
of the executive officers relative to the PACBP, and makes awards based on
job
responsibilities and expectations. The Committee additionally takes into account
the evaluation of the performance of executive officers from Messrs. De Caro
and
Howell. The Compensation Committee reviews, but is not conclusively influenced
by, available “peer” and survey data in making these
determinations.
The
Compensation Committee meets at least annually to review and approve the
compensation of the executive officers. The decisions made by the Compensation
Committee as to executive compensation are discretionary. However, a written
performance review is prepared and includes an assessment of performance against
certain goals.
Descriptions
of Each Element of Compensation
Base
Salary
In
2006,
each executive officer received an annual base salary estimated by the Committee
to be competitive with base salaries for comparable positions at financial
institutions similar in size, locale and profile. The actual annual base salary
for each officer was not determined using a formula or based on a certain
percentage of peer medians, but was determined based on each individual’s
particular experience, talents, and responsibilities, with consideration of
the
executive officer’s specific responsibilities relative to our business
objectives. The Committee reviews annual base salaries during the fourth quarter
of each year, and the Committee increased annual base salaries in 2006
principally in line with peer institutions
Patriot’s
Annual Cash Bonus Plan
The
philosophy of the Committee in administering the PACBP is rooted in a “profit
sharing” concept in which designated officers, including our executive officers,
participate. Each officer is assigned a number of points by the Board of
Directors or its Personnel Committee. The points assigned to each officer are
converted into a percentage of the total points assigned to all officers, which
percentage is applied to the available “profit” at year end. For these purposes,
“profit” is defined as the GAAP equivalent of pre-tax net income.
The
annual
cash bonus is determined strictly by application of this formula. All of our
Named Executive Officers participate in the PACBP except Mr.
Zavattaro.
Long
Term Cash Incentives
The
Named
Executive Officers other than Mr. De Caro and Mr. Zavattaro were awarded long
term cash incentives of varying kinds in prior years. Those programs have been
discontinued. Mr. Howell has received cash based stock appreciation rights
and
restricted stock. Messrs. Noble, O’Connell and Wolford have received cash based
stock appreciation rights. Mr. Wolford also received stock options in 1999
when
the Bank reorganized into a holding company structure. The restricted stock
rights and stock appreciation rights vest over varying terms of years. They
are
designed to retain and motivate our executive officers. They are also designed
to align the financial interests of our executives with those of our
shareholders. The awards are all fully deductible by us for income tax purposes
upon exercise or vesting. We also previously provided stock-based, long-term
incentive compensation to certain executives in the form of options to purchase
common stock and restricted stock awards. Our current compensation philosophy
does not include the award of stock options or equivalents.
Other
In
addition to the compensation paid to executive officers as described above,
executive officers received, along with, and on the same terms as, other
employees, certain benefits pursuant to our 401(k) Plan.
Additional
Executive Officer Compensation Considerations
The
Compensation Committee generally does not adjust salaries for executive officers
during the year, unless it does so to recognize a change in job responsibility
or other unforeseen condition. Similarly, the Compensation Committee generally
does not adjust targets under the PACBP during the year, provided it may adjust
targets in response to tax or accounting changes or adjustments during the
year.
The
Compensation Committee considers the views and recommendations of Messrs.
De Caro and Howell with regard to compensation of the other executive
officers. The Compensation Committee itself makes all decisions on executive
officer compensation.
We
have
entered into employment agreements with Mr. Howell and Mr. Zavattaro, and change
of control agreements with each of Messrs. De Caro, Howell, O’Connell, Noble and
Wolford. Mr. Howell’s employment agreement was entered into effective
January 1, 2007 following the December 31, 2006 expiration of his prior, three
year agreement. We entered into a change of control agreement with Mr. De Caro
in recognition of the importance to us of his continued strategic leadership.
We
entered into, or enhanced the benefits from, change of control agreements with
other executive officers in recognition of their continued importance to us
and
their increased responsibilities as a consequence of our significant growth.
Each change of control agreement contains “single trigger” provisions. This
means that the officer is entitled to change of control compensation if there
is
a change of control of Patriot, even if the officer is offered comparable
employment with and/or remains in the employ of a successor to Patriot.
These
provisions are described elsewhere in this Proxy Statement. The Committee
believes the single trigger provisions are appropriate given our publicly
articulated strategy to grow as an independent company and thereby increase
shareholder value, for the foreseeable future. Each agreement contains a six
month non-competition provision that would be effective if any change of control
payments are made.
The
Compensation Committee considers the effects of tax and accounting treatments
when it determines executive compensation. For example, in 1993, the Internal
Revenue Code was amended to disallow publicly traded companies from receiving
a
tax deduction on compensation paid to executive officers in excess of
$1 million (Section 162(m) of the Code), unless, among other things, the
compensation meets the requirements for performance-based compensation. In
structuring Patriot’s compensation programs and in determining executive
compensation, the Committee takes into consideration the deductibility limit
for
compensation. The Committee reserves the right, however, in the exercise of
its
business judgment, to establish appropriate compensation levels for executive
officers that may exceed the limits on tax deductibility established under
Section 162(m) of the Code. Also, payments under the change of control
agreements for the Named Executive Officers are capped based on Section 280G
of
the Code. If the proposed payments under the agreements would exceed the Section
280G limit on such payments and thereby would impose an excise tax on the
officer, the payments would be reduced to an amount that would avoid such
additional tax.
COMPENSATION
OF
EXECUTIVE
OFFICERS AND DIRECTORS
Annual
Compensation
The
following Summary Compensation Table sets forth certain information with respect
to the compensation of our principal executive officer, principal financial
officer and three most highly compensated executive officers during 2006. Each
individual listed in the table below may be referred to as a Named Executive
Officer or NEO. The material terms of each officer’s employment agreements are
disclosed below following the Summary Compensation Table. No options or other
equity-based awards were made, repriced or otherwise modified during 2006 for
the Named Executive Officers. The percentage of salary and cash bonus payments
to total compensation for all NEO’s in 2006 is high. This is typical for Patriot
as its straight forward executive compensation program emphasizes cash salary
and incentives as the principal compensation components for executives.
Name
and Principal
Position
|
|
Year
|
|
Salary
($)
(1)
|
|
Bonus
($)(2)
|
|
Stock
Awards
($)(3)
|
|
Option
Awards
($)
(4)
|
|
Non-
Equity
Incentive
Plan
Compen-
sation
($)
|
Change
in Pension Value and Nonquali-fied
Deferred Compen-sation
Earnings($)
|
All
Other Compen
-sation
($) (5)
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
|
|
Angelo
De Caro
Chairman
and Chief
Executive
Officer
|
|
|
2006
|
|
|
232,692
|
|
|
128,268
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
360,960
|
|
|
Charles
F. Howell
President
of Patriot and
CEO
of the Bank
|
|
|
2006
|
|
|
262,308
|
|
|
128,268
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
72,064
|
|
|
462,640
|
|
|
Robert
F. O’Connell
Senior
Executive Vice
President,
Chief
Financial
Officer
|
|
|
2006
|
|
|
206,400
|
|
|
128,268
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
6,600
|
|
|
341,268
|
|
|
Marcus
Zavattaro
Executive
Vice
President
of the Bank
|
|
|
2006
|
|
|
180,000
|
|
|
224,335
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
6,600
|
|
|
410,935
|
|
|
Martin
G. Noble
Executive
Vice
President
of the Bank
|
|
|
2006
|
|
|
167,308
|
|
|
104,325
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
-0-
|
|
|
57,384
|
|
|
329,017
|
|
(1) |
In
addition to the base salaries, amounts disclosed in this column
include
amounts deferred under the Patriot National Bank 401(k) Plan. Base
salaries are reviewed on an annual basis and may be increased in
the
future. Current annual salaries are as follows: Mr. De Caro $275,000,
Mr.
Howell $ 275,000; Mr. O’Connell $220,000; Mr. Zavattaro $180,000
(guaranteed draw against commissions); and Mr. Noble
$180,000. |
(2) |
Amounts
represent the dollar value of cash bonuses earned under the Patriot
Annual
Cash Bonus Plan, with the exception of Mr. Zavattaro whose bonus
amount
represents commissions earned in excess of a guaranteed draw and
additional compensation based on the revenue generated by his direct
reports. |
(3) |
Patriot
made no stock awards to executives in 2006, nor did Patriot incur
compensation expense during 2006 for prior stock awards under SFAS
123R.
|
(4) |
Patriot
did not grant any stock options to executive officers in 2006,
nor did
Patriot incur compensation expense during 2006 for prior stock
awards
under SFAS 123R. |
(5) |
Includes
employer contributions allocated under the 401(k) plan for the
2006 plan
year of $6,600 each for Messrs. Howell, O’Connell, Zavattaro and Noble,
respectively. Includes cash payments made to Mr. Howell in settlement
of
restricted stock award of $65,464 and Mr. Noble upon the exercise
of stock
appreciation rights of $50,784.
|
Grants
of Plan-Based Awards
No
grants
of plan-based awards were made to the NEO's in 2006.
Employment
and Change of Control Agreements
Patriot
and the Bank entered into a three-year employment agreement with Charles F.
Howell, effective January 1, 2007, pursuant to which Mr. Howell serves as
President and Chief Executive Officer of the Bank and as President of Patriot
until December 31, 2009. Mr. Howell’s base salary is $275,000 for the
first year, $290,000 for the second year and $310,000 for the third year.
Mr. Howell is entitled to receive annual discretionary cash bonuses in
amounts to be determined by the board of directors.
If
Mr. Howell’s employment is terminated for cause (as defined in the
agreement) or because of his death or disability, all unvested restricted stock
awards and options will be forfeited. Mr. Howell was issued stock grants
under an earlier employment agreement and may participate in future option
grants if made by us. In the event that Mr. Howell’s employment terminates
for any other reason, including termination following a change of control (as
defined in the agreement), all restricted stock awards and options will vest
immediately.
In
the
event of the early termination of the agreement with Mr. Howell for any
reason other than cause, he would be entitled to receive a lump sum payment
equal to the greater of the aggregate salary payments that would be made to
him
for the remaining term of the agreement or 18 months of his stipulated base
salary at the time of termination.
Patriot
and the Bank entered into an employment agreement with Robert F. O’Connell,
dated November 3, 2003, pursuant to which Mr. O’Connell serves as
Chief Financial Officer and Senior Executive Vice President of the Bank until
December 31, 2007. Mr. O’Connell’s base salary is currently $220,000,
and is subject to review and increase by the board of directors each year.
If
Mr. O’Connell’s employment terminates without cause (as defined in the
agreement), Mr. O’Connell would be entitled to a lump sum payment equal to
the aggregate salary payments (based on the rate then in effect) for the balance
of the employment period.
The
Bank
entered into an employment agreement, dated January 1, 2007, with Marcus
Zavattaro pursuant to which Mr. Zavattaro serves as Executive Vice
President of the Bank, Sales Manager of Retail Brokerage until December 31,
2007. Mr. Zavattaro is entitled to receive guaranteed draws against
commissions of $180,000 plus commissions depending upon his production as
described in the agreement as well as additional compensation based upon the
revenue generated by his direct reports.
may
receive lump sum cash payments equal to 2.5 times the greater of their annual
salary or compensation, as applicable, and Mr. Noble and Mr. Wolford may receive
payments equal to two times the greater of their annual salary or compensation.
Payments under each of the agreements is capped so as not to exceed the limits
of Section 280G of the Internal Revenue Code. The exercise of rights under
a
change of control agreement by any executive officer will not result in adverse
tax consequences to us under Section 280G of the Internal Revenue Code of
1986, as amended.
Potential
Payments Upon Termination or Change in Control
Patriot
and/or the Bank has entered into certain agreements and maintains certain plans
that will require the payment of compensation to Named Executive Officers in
the
event of a termination of employment or a change in control of Patriot. Those
agreements are described above under the caption “Employment and Change in
Control Agreements.” The amount of compensation payable to each Named Executive
Officer in each situation is listed in the tables below. The disclosures assume
a payment event having occurred on December 31, 2006 as if the January 1, 2007
agreements described above had been in effect on that date.
The
following table describes the potential payments upon termination or a change
in
control of Patriot for Angelo De Caro:
Executive
Benefits and
Payments
Upon Termination
|
Voluntary
Termination
|
Normal
Retirement
|
Involuntary
Not
for Cause Termination
|
For
Cause Termination
|
Involuntary
or
Good
Reason Termination
(CIC)
|
Death
or
Disability
(1)
|
|
|
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
Cash
|
$
0
|
$
0
|
$
0
|
$
0
|
$
902,400
|
$
0
|
Non-Cash
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Benefits
and Perquisites:
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Total:
|
$
0
|
$
0
|
$
0
|
$
0
|
$
902,400
|
$
0
|
The
following table describes the potential payments upon termination or a change
in
control of Patriot for Charles F. Howell:
Executive
Benefits and
Payments
Upon Termination
|
Voluntary
Termination
|
Normal
Retirement
|
Involuntary
Not
for Cause Termination
|
For
Cause Termination
|
Involuntary
or
Good
Reason Termination
(CIC)
|
Death
or
Disability
(1)
|
|
|
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
Cash
|
$
0
|
$
0
|
$
825,000
|
$
0
|
$
976,440
|
$
137,500
|
Non-Cash
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Benefits
and Perquisites:
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Total:
|
$
0
|
$
0
|
$
825,000
|
$
0
|
$
976,440
|
$
137,500
|
The
following table describes the potential payments upon termination or a change
in
control of Patriot for Robert F. O’Connell:
Executive
Benefits and
Payments
Upon Termination
|
Voluntary
Termination
|
Normal
Retirement
|
Involuntary
Not
for Cause Termination
|
For
Cause Termination
|
Involuntary
or
Good
Reason Termination
(CIC)
|
Death
or
Disability
(1)
|
|
|
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
Cash
|
$
0
|
$
0
|
$
220,000
|
$
0
|
$
836,670
|
$
110,000
|
Non-Cash
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Benefits
and Perquisites:
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Total:
|
$
0
|
$
0
|
$220,000
|
$
0
|
$
836,670
|
$
110,000
|
The
following table describes the potential payments upon termination or a change
in
control of Patriot for Marcus Zavattaro:
Executive
Benefits and
Payments
Upon Termination
|
Voluntary
Termination
|
Normal
Retirement
|
Involuntary
Not
for Cause Termination
|
For
Cause Termination
|
Involuntary
or
Good
Reason Termination
(CIC)
|
Death
or
Disability
(1)
|
|
|
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
Cash
|
$
0
|
$
0
|
$
180,000
|
$
0
|
$
0
|
$
0
|
Non-Cash
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Benefits
and Perquisites:
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Total:
|
$
0
|
$
0
|
$
180,000
|
$
0
|
$
0
|
$
0
|
The
following table describes the potential payments upon termination or a change
in
control of Patriot for Martin G. Noble:
Executive
Benefits and
Payments
Upon Termination
|
Voluntary
Termination
|
Normal
Retirement
|
Involuntary
Not
for Cause Termination
|
For
Cause Termination
|
Involuntary
or
Good
Reason Termination
(CIC)
|
Death
or
Disability
(1)
|
|
|
|
|
|
|
|
Compensation:
|
|
|
|
|
|
|
Cash
|
$
0
|
$
0
|
$
0
|
$
0
|
$
543,266
|
$
0
|
Non-Cash
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Benefits
and Perquisites:
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
$
0
|
Total:
|
$
0
|
$
0
|
$
0
|
$
0
|
$
543,266
|
$
0
|
(1)
all
fulltime employees receive a $50,000 life insurance benefit.
401(k)
Plan
The
Bank
maintains a tax-qualified 401(k) Plan under Section 401(a) of the Internal
Revenue Code with a cash or deferred arrangement under Section 401(k) of the
Internal Revenue Code. Employees become eligible to make salary reduction
contributions to the 401(k) Plan and to receive any matching or discretionary
contributions made to the 401(k) Plan by the Bank on the first day of the
semiannual period coinciding with or next following the date that the employee
has attained 21 years of age and completed at least 1,000 hours of service
in a
period of six to 12 consecutive calendar months.
Under
the
401(k) Plan, participants may elect to have the Bank contribute a portion of
their compensation each year, subject to certain limitations imposed by the
Internal Revenue
Code.
The
401(k) Plan permits the Bank to make discretionary matching and additional
discretionary contributions to the 401(k) Plan. Participants in the 401(k)
Plan
may direct the investment of their accounts in several types of investment
funds.
Participants
are always 100% vested in their elective deferrals, matching and discretionary
matching contributions and related earnings under the 401(k) Plan. Participants
become vested in any discretionary contributions and related earnings in 50%
increments, beginning with the completion of one year of service and ending
with
the completion of two years of service. Participants also become 100% vested
in
any discretionary contributions and related earnings upon the attainment of
normal retirement age (age 65). Participants are permitted to receive a
distribution from the 401(k) Plan only in the form of a lump sum payment.
2001
Stock Appreciation Rights Plan
In
2001,
we adopted the Patriot National Bancorp, Inc. 2001 Stock Appreciation
Rights Plan. Under the terms of the plan, we may grant stock appreciation
rights, or SARs, to our officers that entitle them to receive upon exercise,
in
cash or shares of common stock, the appreciation in the value of the common
stock from the date of grant. Each award vests at the rate of 20% per year
from
the date of grant. Any unexercised rights will expire ten years from the date
of
grant. As of December 31, 2006, there were 12,000 SARs issued and outstanding.
Subject
to the terms of the plan, the Board of Directors may grant an SAR to any
eligible participant. An SAR entitles the participant to surrender to Patriot
any then exercisable portion of the SAR in exchange for that number of shares
of
common stock having an aggregate fair market value on the date of surrender
equal to the product of (a) the excess of the fair market value of a share
of
common stock on the date of surrender over the exercise price established by
the
Board, which shall not be less than the fair market value of a share of common
stock on the date the SAR was granted, and (b) the number of shares of common
stock subject to such SAR. In lieu of payment in shares of common stock, payment
may be made in cash or partly in shares and partly in cash, as determined by
the
Board.
Our
current compensation philosophy does not include the awarding of
SARs.
Stock
Option Plan
In
connection with our holding company reorganization in 1999, we adopted the
Bank’s stock option plan. Under this plan, an aggregate of 110,000 shares were
available for issuance thereunder, all of which have been awarded. As of
December 31, 2006, options to purchase 65,000 shares remained unexercised.
There
are no shares available for future grant under this plan.
Relative
to Both Stock Plans:
Effect
of a Change in Control.
In the
event of a change in control, each outstanding ISO, stock option and SAR will
become fully vested and, in the case of vested stock options and SARs will
become immediately exercisable.
Stock
Options.
There
are generally no federal income tax consequences either to the optionee or
to us
upon the grant of an option. On the exercise of an incentive stock option
(“ISO”) during employment or within three months thereafter, the optionee will
not recognize any income and we will not be entitled to a deduction, although
the excess of the fair market value of the shares on the date of exercise over
the option price is includible in the optionee’s alternative minimum taxable
income, which may give rise to alternative minimum tax liability for the
optionee. Generally, if the optionee disposes of shares acquired upon exercise
of an ISO within two years of the date of grant or one year of the date of
exercise, the optionee will recognize ordinary income, and we will be entitled
to a deduction, equal to the excess of the fair market value of the shares
on
the date of exercise over the option price (limited generally to the gain on
the
sale). The balance of any gain or loss will be treated as a capital gain or
loss
to the optionee. If the shares are disposed of after the two-year and one-year
periods mentioned above, we will not be entitled to any deduction, and the
entire gain or loss for the optionee will be treated as a capital gain or
loss.
On
exercise of a non-qualified stock option (“NQSO”), the excess of the
date-of-exercise fair market value of the shares acquired over the option price
will generally be taxable to the optionee as ordinary income and deductible
by
us, if we properly withhold taxes in respect of the exercise. The disposition
of
shares acquired upon the exercise of a NQSO will generally result in a capital
gain or loss for the optionee, but will have no tax consequences for us.
Restricted
Stock.
A
participant who has been awarded restricted stock under the plan and does not
make an election under Section 83(b) of the Internal Revenue Code will not
recognize taxable income at the time of the award. At the time any transfer
or
forfeiture restrictions applicable to the restricted stock lapse, the recipient
will recognize ordinary income and we will be entitled to a corresponding
deduction equal to the fair market value of the stock at such time. Any dividend
paid to the recipient on the restricted stock at or prior to such time will
be
ordinary compensation income to the recipient and deductible as such by us.
The
Board
may prohibit participants from making an election under Section 83(b) of the
Code. If a participant is permitted to make such an election and does so, he
or
she will recognize ordinary income at the time of the award and we will be
entitled to a corresponding deduction equal to the fair market value of the
stock at such time. Any dividends subsequently paid to the recipient on the
restricted stock will be dividend income to the recipient and not deductible
by
us. If the recipient makes a Section 83(b) election, there are no federal income
tax consequences either to the recipient or us at the time any applicable
transfer or forfeiture restrictions lapse.
Generally,
an employee will not recognize any taxable income upon the grant of an SAR.
At
the time the employee receives the common stock or cash for the SAR, the fair
market value of shares of common stock or the amount of any cash received
generally is taxable to the employee as ordinary income, taxable as
compensation. Subject to the discussion under “Certain Tax Code Limitations on
Deductibility” below, we will be entitled to a deduction for federal income tax
purposes at the same time and in the same amount that an employee recognizes
ordinary income from SARs under the Plan.
Certain
Tax Code Limitations on Deductibility.
Section
162(m) of the Code generally limits the deduction for certain compensation
in
excess of $1 million per year paid by a publicly-traded corporation to its
chief
executive officer and the four other most highly compensated executive officers.
Certain types of compensation, including compensation based on performance
goals, are excluded from the Section 162(m) deduction limitation if certain
requirements are satisfied.
Requirements
Regarding “Deferred Compensation.”
Certain
awards under the plan may constitute “deferred compensation” within the meaning
of Section 409A of the Code, a recently enacted provision governing
“non-qualified deferred compensation plans.” Failure to comply with the
requirements of the provisions of the Code regarding participant deferral
elections and the timing of payment distributions could result in the affected
participants being required to recognize ordinary income for tax purposes
earlier than the times otherwise applicable as described in the above discussion
and to pay substantial penalties.
The
following tables present information about stock awards made to the Named
Executive Officers:
Outstanding
Equity Awards at Fiscal Year-End
|
Option
Awards (1)
|
Stock
Awards (1)
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
Equity
Incentive Plan Awards Number of Securities Underlying Unexercised
Unearned
Options
(#)
(1)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
(2)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)(3)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)(2)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
Angelo
De
Caro
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Charles
F. Howell
|
12,500
|
2,500
|
-0-
|
-0-
|
-0-
|
1,135
|
30,021
|
-0-
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Robert
F. O’Connell
|
6,000
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Marcus
Zavattaro
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
|
|
|
|
|
|
|
|
|
Martin
G.
Noble
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
(1) All
awards shown above are settled in cash. The value in Column h is based on
Patriot's closing price on December 29, 2006.
Option
Exercises and Stock Vested
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of Shares
Acquired
on Exercise
(#)
|
Value
Realized on
Exercise
($)
|
Number
of Shares
Acquired
on Vesting
(#)
(1)
|
Value
Realized on
Vesting
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Angelo
De Caro
|
-0-
|
-0-
|
-0-
|
-0-
|
Charles
F. Howell
|
-0-
|
-0-
|
-0-
|
-0-
|
Robert
F. O’Connell
|
-0-
|
-0-
|
-0-
|
-0-
|
Marcus
Zavattaro
|
-0-
|
-0-
|
-0-
|
-0-
|
Martin
G. Noble
|
-0-
|
-0-
|
-0-
|
-0-
|
(1) None
of
the NEO’s has been awarded stock options, and no restricted stock vested in
2006.
Pension
Benefits
Patriot
does not maintain a defined benefit pension plan, or any supplemental executive
retirement plans.
Retirement
Plan
Non-Qualified
Deferred Compensation
Patriot
does not maintain any defined contribution or other plan that provides for
the
deferral of compensation on a basis that is not tax-qualified.
Transactions
with Management and Others
In
the
ordinary course of business, the Bank has made loans to officers and directors
(including loans to members of their immediate families and loans to companies
of which a director owns 10% or more). The total amount of loans to officers
and
directors outstanding as of December 31, 2006 was $51,181. In the opinion of
management, all of such loans were made in the ordinary course of business
of
the Bank on substantially the same terms, including interest rates and
collateral requirements, as those then prevailing for comparable transactions
with other persons and do not involve more than the normal risk of
collectibility or present other unfavorable features.
We
have
entered into two lease agreements with one of our directors, L. Morris
Glucksman, Esq., pursuant to which Mr. Glucksman leases from us approximately
1,100 square feet of space in the building at 900 Bedford Street and 150 square
feet of space in our building at 838 High Ridge Road, each at per square foot
rental rates not to exceed the rental rates paid by us from time to time. The
Bedford Street lease has expired but Mr. Glucksman continues to occupy the
space
on a month-to-month basis at the same rent. The High Ridge Road agreement is
revocable at any time.
We
have
entered into a 10 year lease agreement with Michael J. Intrieri and Jason
Intrieri, the sons of our director, Dr. Michael Intrieri, for a small parking
lot located near our main office at 47-49 Hoyt Street, Stamford Connecticut.
Payments over the 10 year term begin at $21,000 per year and increase to $24,000
per year. From time to time, we may have employees who are related to our
directors or executive officers. Dr. Intrieri’s adult son, Michael J. Intrieri,
is employed by us in a non-executive officer position.
Information
about transactions involving related persons is assessed by our independent
directors. Related persons include our directors and executive officers as well
as immediate family members of directors and officers. If the independent
directors approve or ratify a material transaction involving a related person,
then the transaction would be disclosed in accordance with the SEC rules. If
the
related person is a director, or a family member of a director, then that
director would not participate in those discussions.
REPORT
OF THE AUDIT COMMITTEE
The
Audit
Committee operates pursuant to a written charter, as amended by the Board of
Directors on April 18, 2007, a copy of which is attached as Appendix
A
to this
proxy statement.
The
Board
of Directors, in its business judgment, has determined that each member of
the
Audit Committee is independent, as required by the applicable listing standards
of The Nasdaq Stock Market, Inc. The Board of Directors has determined that
Mr.
Fitzgerald has the professional experience necessary to qualify as an audit
committee financial expert within the meaning of the rules of the Securities
and
Exchange Commission.
In
performing its function, the Audit Committee has:
|
·
|
Reviewed
and discussed our audited financial statements as of and for the
year
ended December 31, 2006 with management and with McGladrey & Pullen,
LLP, our independent auditors for 2006;
|
|
·
|
Discussed
with our independent auditors the matters required to be discussed
by
Statement on Auditing Standards No. 61 (Communication with Audit
Committees), as currently in effect; and
|
|
·
|
Received
the written disclosures and the letter from the independent auditors
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as currently in effect, and has
discussed with the independent auditors the independent auditors’
independence. The Audit Committee has considered whether the provision
of
non-audit services by the independent auditors to us is compatible
with
maintaining the auditors’ independence and has discussed with McGladrey
& Pullen, LLP their independence.
|
Based
on
the foregoing review and discussions, the Audit Committee recommended to the
Board of Directors that our audited financial statements be included in our
Annual Report on Form 10-K for the year ended December 31, 2006 for filing
with
the Securities and Exchange Commission.
Audit
Committee
Brian
A.
Fitzgerald, Chairman
John
J.
Ferguson
Michael
F. Intrieri
April
18,
2007
THE
REPORT OF THE AUDIT COMMITTEE SHALL NOT BE DEEMED INCORPORATED BY REFERENCE
INTO
ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT
OF
1934, AS AMENDED, EXCEPT TO THE EXTENT THAT WE SPECIFICALLY INCORPORATE IT
BY
REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED TO BE FILED UNDER SUCH
ACTS.
PROPOSAL
2
RATIFICATION
OF SELECTION OF INDEPENDENT AUDITORS
Our
Audit
Committee has selected McGladrey & Pullen, LLP, independent auditors, to
audit the books, records and accounts of Patriot for the year ending December
31, 2007. In accordance with a resolution of the Board of Directors, this
selection is being presented to the shareholders for ratification at the Annual
Meeting.
A
representative of McGladrey & Pullen, LLP will be present at the Annual
Meeting and will be provided the opportunity to make a statement and to respond
to appropriate questions that may be asked by shareholders.
If
the
shareholders do not ratify the selection of McGladrey & Pullen, LLP, the
selection of independent auditors will be reconsidered by the Audit
Committee.
Vote
Required
In
order
to be adopted, the ratification of the selection of McGladrey & Pullen, LLP
must be approved by the affirmative vote of a majority of the votes cast by
holders of record of the common stock. Abstentions and broker non-votes are
not
considered votes cast and will not affect the outcome of the vote.
Relationship
with Independent Auditors
McGladrey
& Pullen, LLP has served as independent auditors of us and the Bank since
1994 and is considered to be well-qualified. We have been advised by McGladrey
& Pullen, LLP that it has no direct financial interest or any material
indirect financial interest in us other than that arising from the firm’s
employment as independent auditors.
McGladrey
& Pullen, LLP performs both audit and non-audit professional services for us
and on our behalf. During 2006, the audit services included an audit of our
consolidated financial statements and a review of certain filings with the
Securities and Exchange Commission. All professional services rendered by
McGladrey & Pullen, LLP during 2006 were furnished at customary rates and
terms.
Audit
Fees
During
the period covering the
fiscal year ended December 31, 2006, McGladrey & Pullen, LLP performed the
following audit and audit related professional services and RSM McGladrey,
Inc.
performed the following tax related professional services:
|
|
2006
|
|
2005
|
|
|
|
|
|
|
|
Audit
Fees consist of fees for professional services rendered for the audit
of
the consolidated financial statements and review of financial statements
included in quarterly reports on Form 10-QSB and services connected
with statutory and regulatory filings or engagements.
|
|
$
|
304,923
|
|
$
|
221,237
|
|
|
|
|
|
|
|
|
|
Audit-Related
Fees are fees principally for professional services rendered for
the audit
of the FHLB Qualified Collateral Report.
|
|
|
3,500
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
Tax
Fees consist of fees for tax return preparation, planning and tax
advice.
|
|
|
23,142
|
|
|
20,172
|
|
|
|
|
|
|
|
|
|
All
Other Fees
|
|
|
--
|
|
|
--
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
331,565
|
|
$
|
244,409
|
|
Policy
on Audit Committee Pre-Approval of Audit and Non-Audit
Services
The
Audit
Committee’s policy is to pre-approve all audit and non-audit services provided
by the independent auditors. These services may include audit services,
audit-related services, tax services and other services. Pre-approval is
generally provided for up to one year and any pre-approval is detailed as to
the
particular service or category of services and is generally subject to a
specific budget. The Audit Committee has delegated pre-approval authority to
its
chair when expedition of services is necessary. The chair is required to report
any decisions to pre-approve such services to the full Audit Committee at its
next meeting. The independent auditors and management are required to
periodically report to the full Audit Committee regarding the extent of services
provided by the independent auditors in accordance with this pre-approval,
and
the fees for the services performed to date. The Audit Committee approved all
of
the fees set forth in the table above.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” PROPOSAL
2.
SHAREHOLDER
PROPOSALS
Any
shareholder who intends to present a proposal at the 2008 Annual Meeting is
advised that, in order for such proposal to be included in the Board of
Directors’ proxy material for such meeting, the proposal must be received by us
at our principal executive office no later than January 6, 2008, directed to
Angelo De Caro, Chairman and Chief Executive Officer, Patriot National Bancorp,
Inc., 900 Bedford Street, Stamford, Connecticut 06901.
If
any
shareholder proposes to make any proposal at the 2008 Annual Meeting which
proposal will not be included in Patriot’s proxy statement for such meeting, the
proposal must be received by March 21, 2008, to be considered timely for
purposes of Rule 14a-4(c) under the Exchange Act. The form of proxy distributed
by the Board of Directors for the meeting will confer discretionary authority
to
vote on any such proposal not received by that date. If any such proposal is
received by such date, the proxy statement for the meeting will provide advice
on the nature of the matter and how we intend to exercise our discretion to
vote
on each such matter.
OTHER
MATTERS
As
of the
date of this proxy statement, the Board of Directors knows of no other matters
to be voted upon at the Annual Meeting. Because we did not receive advance
notice of any shareholder proposal in accordance with the time limit specified
in Rule 14a-4(c) under the Exchange Act, we will have discretionary authority
to
vote on any shareholder proposal presented at the Annual Meeting. If any other
matters properly come before the Annual Meeting, it is the intention of the
persons named in the enclosed proxy to vote said proxy in accordance with their
judgment on such matters.
ANNUAL
REPORT ON FORM 10-K
A
copy of
our Annual Report on Form 10-K for the fiscal year ended December 31, 2006
accompanies this proxy statement. Upon
written request, we will provide without charge to each person entitled to
vote
at the Annual Meeting one copy of our Annual Report on Form 10-K for the
year ended December 31, 2006, including the financial statements and schedules.
Written requests must be directed to:
Robert
F. O’Connell
Senior
Executive Vice President and Chief Financial Officer
Patriot
National Bancorp, Inc.
900
Bedford Street
Stamford,
Connecticut 06901
Copies
of the Annual Report on Form 10-K will not include the exhibits thereto, but
will include a list describing the exhibits not included, copies of which also
will be available at a cost of one dollar per page.
Angelo
De
Caro
Chairman
and Chief Executive Officer
Stamford,
Connecticut
May
7,
2007
Patriot
National Bancorp, Inc
Audit
Committee Charter
Approved:
April 20, 2007
AUDIT
COMMITTEE CHARTER
Purpose
The
purpose of the Audit Committee is to provide oversight and act as a liaison
to
the Board of Directors of Patriot National Bancorp, Inc. and Patriot
National
Bank (together referred to as the “Company”) regarding audit issues. The
Committee engages the independent auditors, reviews the arrangement and
scope of
the audit, considers comments made by the independent auditors regarding
internal accounting controls, oversees the internal auditing function,
review
internal accounting procedures and controls with the Company’s financial
staff.
In
discharging it 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 the authority to engage
independent
counsel and other advisers as it determines necessary to carry out its
duties.
Each
member of the Committee shall be entitled to rely on (i) the integrity
of those
persons and organizations within and outside the Company from which it
receives
information and (ii) the accuracy of the financial and other information
provided to the Committee by such persons and organizations absent actual
knowledge to the contrary. In addition, the evaluation of the Company’s
financial statements by the Committee is not of the same scope as, and
does not
involve the extent of detail as, audits performed by the independent
auditor,
nor does the Committee’s evaluation substitute for the responsibilities of the
Company’s management for preparing, or the independent auditor for auditing,
the
financial statements.
Responsibilities
of Audit Committee
·
|
Review
the adequacy of the Company’s system of internal
control
|
·
|
Review
the activities, organizational structure and qualifications of
the
internal audit function. Meet with the internal auditor at least
quarterly.
|
·
|
Annually
review the independent auditors’ proposed audit scope and
approach
|
·
|
Conduct
a postaudit review of the consolidated financial statement and
audit
findings. Including any significant suggestions for improvement
provided
to management by the independent
auditors
|
·
|
Review
the performance of the independent
auditors
|
·
|
Review
and approve the independent auditors’ fee
arrangements
|
·
|
Review
management’s monitoring of compliance with the Company’s Code of Ethics
|
·
|
If
necessary, institute special investigations and, if appropriate,
hire
special counsel or experts to
assist
|
·
|
Perform
other oversight functions as requested by the
Board
|
AUDIT
COMMITTEE
CHARTER
Reporting
Responsibilities
·
|
The
members of the Committee shall be appointed by the Board and
the Committee
reports to the Board.
|
·
|
Maintain
lines of communication with management, the independent auditors
and the
internal auditor(s) (including private
meetings).
|
·
|
Shall
review and discuss with management the policies and guidelines
for risk
assessment and management.
|
Audit
Committee Membership
Membership
to the Audit Committee will be in accordance with Nasdaq’s independent directors
and audit committee standards. There will be a minimum of three independent
directors, including the chairman. A member shall be considered “independent”
and qualified for membership as long as he or she does not accept any
consulting, advisory, or other compensatory fee from the Company, is not
an
affiliated person of the Company or its subsidiaries, and meets the independence
requirements of the law, SEC regulations and the NASDAQ Global Market listing
standards. All Committee members shall be financially literate and at least
one
member shall be an “audit committee financial expert” as defined by SEC
regulations.
Meetings
A
majority of the Committee shall constitute a quorum. Generally, the Committee
will meet at least quarterly and will submit a report of their meeting
at the
next scheduled Board of Director’s meeting. These meetings should include
management, the internal auditors, independent auditors (when deemed
appropriate) and others, as necessary, and cover topics such as:
·
|
The
scope of the internal audit department’s activities, their annual internal
audit plan and follow-up on any completed internal audit
reports
|
·
|
Plans
for addressing possible conflict of interest
situations
|
·
|
Review
of management’s procedures for monitoring compliance with Company policies
|
·
|
Any
material litigation and matters that have an impact on the financial
statements
|
Before
the commencement of the annual audit, the committee should meet with the
independent auditors and management and review:
·
|
The
audit approach and scope of
examination
|
·
|
Any
significant planned changes in the Company’s accounting principles,
policies and practices
|
·
|
Recent
developments in accounting principles, reporting practices, and
regulatory
policies that may have a significant effect on the Company’s financial
statements.
|
·
|
Special
areas needing attention
|
AUDIT
COMMITTEE CHARTER
As
soon
as possible after the annual audit, the committee should meet with the
independent auditors and management and review:
·
|
The
consolidated financial statements to be included in the annual
report and
in other publicly filed documents
|
·
|
The
independent auditors’ findings, including significant resolved or
unresolved problems and any written response by management to
these
comments.
|
·
|
The
independent auditors’ comments on internal controls, as well as
management’s response to these
comments
|
·
|
The
financial reporting process, including interim financial
reporting
|
Annually,
the Committee has the responsibility to retain and/or terminate the Company’s
independent auditors (subject, if applicable, to shareholder ratification).
The
Committee shall have the sole authority to approve and/or per-approve all
audit
engagement fee and terms, as well as all significant non-audit engagement
with
the independent auditor.
At
least
annually, the Committee shall obtain and review a report by the independent
auditors describing:
|
·
|
The
accounting firm’s internal quality control
procedures.
|
|
·
|
Any
material issues raised by the most recent internal quality control
review,
or peer review, of the firm, or by any inquiry or investigation
by
governmental or professional authorities, within the preceding
five years,
respecting one or more independent audits carried out by the
firm, and any
steps taken to deal with such
issues.
|
|
·
|
All
relationships between the independent auditor and the Company
(to assess
the auditor’s independence).
|
The
Committee shall review, prior to the release or filing there of, any document
containing the Company’s financial statements, including the interim financial
reports and filings with the SEC or other regulators.
Internal
Audit Function
Internal
auditors play an important role in the financial reporting process. To
be most
effective, the internal audit department should have the support of both
management and
the
Board
of Directors (through its Audit Committee).
Internal
auditing activities of particular emphasis will include:
·
|
Reviewing
compliance with Company policies and procedures at all
levels
|
·
|
Reviewing
operations to evaluate the effectiveness of the internal control
systems,
including controls over computerized
systems
|
·
|
Evaluating
the effectiveness of management’s proposed actions to correct internal
control deficiencies
|
·
|
Recommending
operational improvements, which have the potential to increase
profits
|
·
|
Evaluating
the effectiveness of the physical protection of assets and the
security of
data
|
·
|
Verifying
account balances
|
·
|
Making
special examination into such areas as illegal payment, defalcations
or
conflicts of interests
|
·
|
Working
with independent auditors
|
It
is
important that the Audit Committee have contact with internal auditors.
The head
internal auditor should attend all audit committee meetings. The Audit
Committee
will oversee the internal audit function and its activities by approving
annually:
·
|
Written
job descriptions for internal
auditors
|
·
|
The
internal audit plan, which includes the manner in which it plans
its
activities and a list of projects
planned
|
·
|
A
report on the internal audit activities for the year (or by quarter)
which
includes a list of projects completed, projects in process and
selected
audit findings
|
·
|
A
description of the progress for ensuring that management takes
the
appropriate corrective of action on the suggestions made in the
internal
audit reports
|
·
|
An
analysis of open audit findings, categorized by age and
significance
|
·
|
Reports
on planned changes in the internal audit
function
|
REVOCABLE
PROXY
PATRIOT
NATIONAL
BANCORP,
INC.
|
|
|
|
|
|
S PLEASE
MARK VOTES AS IN THIS
EXAMPLE |
|
£
For
All Nominees Except:
|
|
|
|
PROXY
SOLICITED ON BEHALF OF
BOARD
OF DIRECTORS FOR ANNUAL
MEETING
OF SHAREHOLDERS TO BE
HELD
JUNE 20, 2007
|
|
INSTRUCTION:
To withhold authority to vote for any individual nominee(s), mark
“For All
Nominees Except” and write that nominee’s name(s) in the space provided
below:
|
|
|
|
The
undersigned hereby appoints John A.
Geoghegan,
L. Morris Glucksman, Michael F.
Intrieri
and each of them, as proxies for the
undersigned
with full powers of substitution to
vote
all shares of the Common Stock, par
value
$2.00 per share (the “Common Stock”),
of
Patriot National Bancorp, Inc. which the
undersigned
may be entitled to vote at the
Annual
Meeting of Shareholders of Patriot to
be
held at The Hyatt Regency, 1800 East
Putnam
Avenue, Old Greenwich, Connecticut
06870,
at 9:00 a.m., on June 20, 2007 or any
adjournment
thereof as follows:
|
|
___________________________
2.
Proposal to ratify the appointment of
McGladrey
& Pullen, LLP as independent
auditors
for the year ending December 31,
2007.
For Against
Abstain
|
|
|
|
1.
Election of directors. Proposal to elect the
persons
listed below as directors of Patriot.
|
|
In
their discretion the proxies are authorized to
vote
upon such other business as may properly
come
before the Annual Meeting of
Shareholders
or any adjournment thereof.
To
help our preparations for the meeting,
please
check here if you plan to attend. £
|
|
|
|
For
All
Withhold
Authority
Nominees
From
All Nominees £ £ |
|
|
|
|
|
Angelo
De Caro, John J. Ferguson, Brian A.
Fitzgerald,
John A. Geoghegan, L. Morris
Glucksman,
Charles F. Howell, Michael F.
Intrieri,
Robert F. O’Connell and Philip W.
Wolford
|
|
|
The
undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement.
Please
be
sure to sign and date this Proxy in the box below.
_____________________
Date:
________________________
Shareholder
sign above
________________________ Date:
____________________________
Co-holder
(if any) sign above
|
Detach
above card, sign, date and mail in postage paid envelope provided
PATRIOT
NATIONAL BANCORP, INC.
PLEASE
ACT PROMPTLY
MARK,
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
THIS
PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE
SHAREHOLDER. IF NO DIRECTION IS SPECIFIED, THIS PROXY WILL BE VOTED “FOR” THE
ELECTION OF ALL NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSAL 2. THE VOTES
ENTITLED TO BE CAST BY THE SHAREHOLDER WILL BE DIVIDED AMONG THE NOMINEES FOR
WHOM THE PROXIES ARE AUTHORIZED TO VOTE IN SUCH MANNER AS MAY BE DETERMINED
BY
THE PROXIES. Please sign exactly as your name(s) appear(s) hereon. When signing
as attorney, executor, administrator, trustee, guardian or for a corporation,
please give your full title as such. If shares are owned jointly, both owners
should sign.