SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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Filed by a party other than the Registrant [ ]
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14a-6(e)(2))
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[ ] Definitive Additional Materials
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UNION BANKSHARES, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Union Bankshares, Inc.
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Union Bankshares, Inc.
20 Lower Main Street
PO Box 667
Morrisville, VT 05661
(802) 888-6600
April 13, 2007
Dear Shareholder,
The 116th Annual Meeting of the Shareholders of Union Bankshares, Inc. will be
held May 16th at 3:00 p.m. at the offices of Union Bank, located at 20 Lower
Main Street, Morrisville, Vermont. You are cordially invited to attend.
Enclosed with this mailing is a Notice of Annual Meeting, a Proxy Statement and
a Proxy Card for voting your shares. In addition to election of directors, we
are asking shareholders to approve an amendment to the Company's Amended and
Restated Articles of Association to increase the number of authorized shares of
common stock from 5,000,000 to 7,500,000.
Also enclosed is a copy of the Annual Report of Union Bankshares, Inc. and its
wholly-owned subsidiary, Union Bank, for the year ended December 31, 2006. The
report includes a letter to shareholders, audited consolidated financial
statements, summary of financial highlights, management's discussion and
analysis of financial results, and other information about the Company.
Your attendance and vote at the annual meeting are important. We hope you will
join us immediately following the meeting for an informal gathering of
shareholders, directors and bank officers, including a tour of our new
commercial services center and light refreshments.
Sincerely,
/s/ Kenneth D. Gibbons
Kenneth D. Gibbons
President and CEO
Union Bankshares, Inc.
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NOTICE OF
2007 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, MAY 16, 2007
To the Shareholders of
Union Bankshares, Inc.:
The Annual Meeting of Shareholders of Union Bankshares, Inc. will be held at
3:00 p.m., local time, on Wednesday, May 16, 2007, at the banking offices of
Union Bank, 20 Lower Main Street, Morrisville, Vermont, for the following
purposes:
1. To fix the number of directors at eight for the ensuing year and to
elect eight directors (or such lesser number as circumstances may
warrant), all of whom will serve for one year terms and until their
successors are elected and qualified;
2. To approve an amendment to Section 7 of the Company's Amended and
Restated Articles of Association increasing the number of authorized
shares of common stock, $2.00 par value per share, from 5,000,000 to
7,500,000 shares; and
3. To consider and act upon any other business which may properly come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 30, 2007 as the
record date for the determination of shareholders entitled to notice of, and to
vote at, the meeting or any adjournment of the meeting.
By Order of the Board of Directors,
/s/ Robert P. Rollins
Robert P. Rollins Secretary
Morrisville, Vermont
April 13, 2007
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHETHER
OR NOT YOU INTEND TO BE PRESENT AT THE MEETING IN PERSON. SHOULD YOU ATTEND THE
MEETING YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON IF YOU SO DESIRE.
PROXY STATEMENT
TABLE OF CONTENTS
PROXY STATEMENT......................................................... 1
INFORMATION ABOUT THE MEETING........................................... 1
Why have I received these materials?.................................. 1
Who is entitled to vote at the annual meeting?........................ 1
How do I vote my shares at the annual meeting?........................ 1
Can I change my vote after I return my proxy card?.................... 2
Can I vote in person at the meeting instead of voting by proxy?....... 2
What does it mean if I receive more than one proxy card?.............. 2
What is a broker nonvote?............................................. 2
What constitutes a quorum for purposes of the annual meeting?......... 2
What vote is required to approve matters at the annual meeting?....... 3
Do broker nonvotes affect the outcome of shareholder votes?........... 3
How does the Board recommend that I vote my shares?................... 3
How are proxies solicited?............................................ 4
Who pays the expenses for soliciting proxies?......................... 4
SHARE OWNERSHIP INFORMATION............................................. 4
Share Ownership of Management and Principal Holders................... 4
Section 16(a) Beneficial Ownership Reporting Compliance............... 5
PROPOSAL 1: TO ELECT DIRECTORS.......................................... 6
Directors' Compensation............................................... 7
Attendance at Directors' Meetings..................................... 8
Director Independence................................................. 8
Board Committees and Corporate Governance............................. 8
Audit Committee..................................................... 9
Compensation Committee.............................................. 9
Board Nominating Functions.......................................... 9
Shareholder Recommendations for Board Nominations................... 10
Codes of Ethics....................................................... 10
Attendance at Annual Meeting of Shareholders.......................... 11
Communicating with the Board.......................................... 11
Transactions with Management and Directors............................ 11
Compensation Committee Interlocks and Insider Participation........... 11
Vote Required......................................................... 11
AUDIT COMMITTEE REPORT.................................................. 12
COMPENSATION COMMITTEE REPORT........................................... 13
PROPOSAL 2: TO INCREASE THE AUTHORIZED COMMON STOCK..................... 13
Vote Required......................................................... 14
EXECUTIVE OFFICERS...................................................... 15
COMPENSATION DISCUSSION AND ANALYSIS.................................... 15
Introduction.......................................................... 15
Objectives and Philosophy............................................. 16
Compensation Committee Activity....................................... 16
Elements of Compensation.............................................. 17
Executive Compensation................................................ 19
Stock-Based Compensation.............................................. 20
Defined Benefit Pension Plan.......................................... 22
Deferred Compensation................................................. 22
Summary............................................................... 23
INDEPENDENT AUDITORS.................................................... 24
Audit Fees............................................................ 24
Audit Committee Preapproval Guidelines................................ 25
SHAREHOLDER PROPOSALS................................................... 25
OTHER MATTERS........................................................... 25
APPENDIX A.............................................................. A-1
Audit Committee Charter............................................... A-1
UNION BANKSHARES, INC.
20 Lower Main Street
Morrisville, VT 05661
(802) 888-6600
PROXY STATEMENT
Annual Meeting of Shareholders
May 16, 2007
INFORMATION ABOUT THE MEETING
Why have I received these materials?
We are sending this proxy statement and proxy card on behalf of the Board of
Directors to solicit your vote on matters to be voted on at the annual meeting
of the shareholders of Union Bankshares, Inc. (the "Company," "we" or "our") to
be held at 3:00 p.m. local time on Wednesday, May 16, 2007, at the offices of
our subsidiary, Union Bank at 20 Lower Main Street, Morrisville, Vermont. This
proxy statement and proxy card are accompanied by the Company's Annual Report to
Shareholders for the year ended December 31, 2006, which contains the Company's
audited consolidated financial statements. These materials were first sent to
our shareholders on or about April 13, 2007. You are cordially invited to attend
the annual meeting and are asked to vote on the proposals to elect directors and
increase the number of authorized shares of common stock, as described in this
proxy statement.
Who is entitled to vote at the annual meeting?
Only holders of record of the Company's common stock, $2.00 par value per share,
as of the close of business on March 30, 2007 (the record date for the meeting)
will be entitled to vote at the annual meeting. On March 30, 2007, there were
4,530,414 shares of the Company's common stock outstanding, and each such share
is entitled to one vote on each matter presented for vote at the annual meeting.
At this time, the only matters we are aware of that will be presented for vote
at the meeting are the election of directors and the increase in the number of
authorized common shares.
How do I vote my shares at the annual meeting?
If you are a shareholder of record of the Company's common stock, you may
complete and sign the accompanying proxy card and return it in the enclosed
postage paid envelope, or you may deliver it in person to the Corporate
Secretary or the Assistant Corporate Secretary at the offices of Union Bank, 20
Lower Main Street, Morrisville, VT 05661. You are a shareholder of record if you
hold your stock in your own name on the Company's shareholder records maintained
by our transfer agent and wholly owned subsidiary, Union Bank (the "Bank").
"Street name" shareholders of common stock, who wish to vote at the annual
meeting will need to obtain a proxy form from the institution that holds their
shares and follow the instructions on that form. Street name shareholders are
shareholders who hold their common stock indirectly, through a bank, broker or
other nominee.
Can I change my vote after I return my proxy card?
Yes, after you have submitted a proxy, you may change your vote at any time
before the proxy is exercised at the annual meeting.
Shareholders of record may change their vote by submitting a written notice of
revocation or a proxy bearing a later date. You may file a notice of revocation
or request a new proxy by contacting the Assistant Corporate Secretary, JoAnn
Tallman at Union Bank, 20 Lower Main Street, Morrisville, VT 05661, or by
calling her at (802) 888-6600.
"Street name" shareholders who wish to change their vote should contact the
institution that holds their shares and follow the applicable procedures
prescribed by the institution.
Can I vote in person at the meeting instead of voting by proxy?
Yes, a ballot will be available at the annual meeting for shareholders of record
who wish to vote in person. However, we encourage you to complete and return the
enclosed proxy card to be certain that your shares are represented and voted,
even if you should be unable to attend the meeting in person. If you wish, you
may revoke your previously given proxy at the annual meeting and vote by ballot
instead.
If you hold your shares through a bank, broker or other nominee, you must obtain
a legal proxy from the bank, broker or nominee in order to vote your shares in
person at the meeting.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are registered differently
in more than one account (for example, "John Doe" and "J. Doe"). To ensure that
all your shares are voted, you should complete, sign and return all proxy cards.
We encourage you to register all your accounts in the same name and address. You
may do so by contacting Assistant Corporate Secretary JoAnn Tallman at Union
Bank, 20 Lower Main Street, Morrisville, VT 05661, or by calling her at (802)
888-6600.
What is a broker nonvote?
Under stock exchange rules and brokerage industry practices, a broker may
generally vote the shares it holds for customers on routine matters, but
requires voting instructions from the customer on other, nondiscretionary
matters. A broker nonvote occurs when a broker votes less than all of the shares
it holds of record for any reason, including with respect to nondiscretionary
matters where customer instructions have not been received. The "missing" votes
in such a case are broker nonvotes.
Election of directors at the annual meeting and an increase in the number of
authorized shares of common stock are considered to be routine matters for
purposes of a broker's discretionary voting authority.
What constitutes a quorum for purposes of the annual meeting?
The presence at the annual meeting in person or by proxy of the holders of a
majority of the outstanding shares of common stock entitled to vote will
constitute a quorum for the transaction of business. Proxies marked as "WITHHOLD
AUTHORITY" on the election of directors or "ABSTAIN" on the proposal to increase
the number of common shares (including proxies containing broker nonvotes) will
be treated as present at the meeting for purposes of determining a quorum but
will not be counted as votes cast.
2
If a matter is considered to be routine (such as an uncontested election of
directors or the proposal to increase the number of common shares), broker
nonvotes are counted for determining a quorum on that matter, since the broker
is entitled to vote those shares under its discretionary authority. On any
matter considered to be nonroutine, broker nonvotes would not be considered
shares entitled to be voted by the broker without voting instructions from the
beneficial owner, and therefore would not be counted in determining a quorum.
What vote is required to approve matters at the annual meeting?
The election of directors at the annual meeting requires the affirmative vote of
a plurality of the votes cast. That means that the nominees who receive the
highest number of vote totals for the number of vacancies to be filled will be
elected as directors. Therefore, a vote to withhold authority for any nominee or
the entire slate will not affect the outcome of the election unless there are
more nominees than there are vacancies to be filled.
In order to be approved, the proposal to increase the number of authorized
common shares, as well as any other matter that may be voted on at the meeting,
would require that more votes be cast in favor of the proposal than against it.
As noted above, management of the Company is not aware at this time of any
matter that may be submitted to vote of the shareholders at the annual meeting
other than the election of directors and an increase in the number of authorized
common shares.
Do broker nonvotes affect the outcome of shareholder votes?
Broker nonvotes are not considered to be "votes cast." Because election of
directors is not the subject of an election contest and is by plurality vote,
and because approval of an increase in the number of authorized shares (and, if
presented, any other matters) will be approved if more votes are cast for than
against, broker nonvotes would not affect the outcome of any such shareholder
vote. On some nonroutine matters, such as certain charter amendments and
mergers, the applicable vote required to approve the matter may be based on a
specified percentage of the outstanding shares. In such a case, broker nonvotes
would have the same effect as a vote against the matter.
How does the Board recommend that I vote my shares?
The Board of Directors recommends that you vote (i) FOR the proposal to set the
number of directors for the ensuing year at eight and to elect the eight
nominees listed in this proxy statement; and (ii) FOR the proposal to amend the
Company's Amended and Restated Articles of Association to increase the number of
authorized shares from 5,000,000 to 7,500,000.
The proxy card gives you the ability to vote FOR, or WITHHOLD AUTHORITY from
voting, as to the entire slate of directors, or as to individual nominee(s) and
to vote FOR, AGAINST or to ABSTAIN from voting on the proposal to increase the
number of authorized common shares. If you vote by proxy, your shares will be
voted in the manner you indicate on the proxy card.
If you sign and return your proxy card but do not specify how you want your
shares to be voted, the persons named as proxy holders on the proxy card will
vote your shares FOR the entire slate of directors, and FOR the increase in the
number of authorized shares, in accordance with the recommendations of the Board
of Directors on any other matters that may be presented for vote of shareholders
at the meeting.
3
How are proxies solicited?
Proxies are being solicited by mail. Proxies may also be solicited by directors,
officers or employees of the Company or Union Bank, in person or by telephone,
facsimile, or electronic transmission. Those individuals will not receive any
additional compensation for such solicitation.
Who pays the expenses for soliciting proxies?
The Company pays the expenses for soliciting proxies for the annual meeting.
These expenses include costs relating to preparation, mailing and returning of
proxies. In addition, we may reimburse banks, brokers or other nominee holders
for their expenses in sending proxy materials to the beneficial owners of our
common stock.
SHARE OWNERSHIP INFORMATION
Share Ownership of Management and Principal Holders
The following table shows the number and percentage of outstanding shares of the
Company's common stock owned beneficially as of March 14, 2007 by:
o each incumbent director and nominee for director of the Company;
o each executive officer named in the 2006 Summary Compensation Table
included elsewhere in this proxy statement ("named executive
officers");
o all of the Company's directors and the named executive officers as a
group; and
o each person (including any "group," as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934), known to the
management of the Company to own beneficially more than 5% of the
Company's outstanding common stock.
Except as otherwise indicated in the footnotes to the table, the named
individuals possess sole voting and investment power over the shares listed.
Shares
Beneficially Percent
Shareholder or Group Owned of Class
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Directors, Nominees and/or Executive Officers
Cynthia D. Borck 7,279(1) .16
Steven J. Bourgeois 1,388(2) .03
Kenneth D. Gibbons 62,944(3) 1.39
Franklin G. Hovey, II 603,928(4)(10) 13.33
Richard C. Marron 4,365(5) .10
Marsha A. Mongeon 1,583(6) .03
Robert P. Rollins 7,133 .16
Richard C. Sargent 594,243(7) 13.12
David S. Silverman 1,375(8) .03
John H. Steel 7,500(9) .17
All Directors, Nominees and Executive Officers
as a Group (10) 1,291,738 28.51
4
Shares
Beneficially Percent
Shareholder or Group Owned of Class
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Other 5% or more Shareholders
Genevieve L. Hovey Trust 422,908(10) 9.33
Susan Hovey Mercia 603,713(10)(11) 13.33
Walter M. Sargent Revocable Trust 379,136(12) 8.37
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(1) Ms. Borck has shared voting and investment power over 102 of the shares
listed. Includes 2,000 shares Ms. Borck has the right to acquire under
presently exercisable incentive stock options.
(2) Mr. Bourgeois has shared voting and investment power over all shares
listed.
(3) Mr. Gibbons has shared voting and investment power over 28,174 of the
shares listed. Includes 9,000 shares Mr. Gibbons has the right to acquire
under presently exercisable incentive stock options and 30,980 shares
pledged as collateral to secure loans from two nonaffiliated banks.
(4) Mr. Hovey, II has shared voting and investment power over 596,534 of the
shares listed, including the 422,908 shares held in the Genevieve L. Hovey
Trust.
(5) Mr. Marron has shared voting and investment power over all but 865 of the
shares listed. Includes 850 shares held in an Individual Retirement
Account (IRA) for the benefit of Mr. Marron's wife, as to which shares he
disclaims beneficial ownership.
(6) Includes 750 shares Ms. Mongeon has the right to acquire under presently
exercisable incentive stock options.
(7) Mr. Sargent has shared voting power over 594,228 of the shares listed. The
total includes 162,000 shares held by the Copley Fund, a charitable trust
of which Mr. Sargent serves as co-trustee. Mr. Sargent does not have any
beneficial interest in the fund and disclaims beneficial ownership of all
162,000 share held by the fund. The total also includes 379,136 shares
held by the Walter M. Sargent Revocable Trust, of which Mr. Sargent and
members of his family are beneficiaries and of which he is a co-trustee.
(8) Includes 450 shares in an IRA for the benefit of Mr. Silverman's wife, as
to which shares he disclaims beneficial ownership. Includes 925 shares Mr.
Silverman has the right to acquire under presently exercisable incentive
stock options.
(9) Mr. Steel's total includes 1,500 shares held as custodian for his minor
children under the Uniform Transfers to Minors Act. Mr. Steel has shared
voting power over 2,000 of the shares listed.
(10) Mr. Hovey, II and his sister, Susan Hovey Mercia, are co-trustees and
beneficiaries of the Genevieve L. Hovey Trust. Mr. Hovey and Ms. Mercia
share voting and investment power over the shares held by the trust and
all such shares are included in the share totals in this table for both
Mr. Hovey, II and Ms. Mercia. Each of them disclaims beneficial interest
in one-half of such shares, in which the other has a pecuniary interest.
(11) Ms. Mercia has shared voting and investment power over 596,533 of the
shares listed, including the 422,908 shares held in the Genevieve L. Hovey
Trust.
(12) All 379,136 shares are included in the share total disclosed elsewhere in
this table as beneficially owned by Richard C. Sargent, who is a
co-trustee of the Trust and of which he and members of his family are
beneficiaries.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and ten percent or more shareholders to file with
the Securities and Exchange Commission ("SEC") reports of their ownership and
changes in ownership of the Company's equity securities and to furnish the
Company with copies of all such reports. Based solely on its review of copies of
Section 16 reports received by it, or on written representations from certain
reporting persons that no filings were required for them, the Company believes
that during 2006 all Section 16(a) filing requirements applicable to its
officers, directors and ten percent or more shareholders were complied with.
5
PROPOSAL 1: TO ELECT DIRECTORS
The Company's Amended and Restated Articles of Association and By-laws provide
for a Board of at least three directors, with the exact number to be fixed by
the shareholders at each annual meeting. The Board of Directors currently
consists of eight individuals and the Board has recommended that the
shareholders again fix the number of directors for the ensuing year at eight, or
such lesser number as circumstances require should any of the nominees be unable
to serve. Each of the incumbent directors will stand for election to a one-year
term.
The table below contains certain biographical information about each of the
incumbent directors standing for re-election to the Board.
Served as
Director
Name and Age Since (1) Principal Occupation for Past Five Years
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Cynthia D. Borck, 56 1995 Vice President-Union Bankshares, Inc. and Executive
Vice President-Union Bank Morrisville, VT
Steven J. Bourgeois, 58 2005 Chief Executive Officer and Principal Owner,
Strategic Initiatives for Business LLC St. Albans,
VT (business consulting), 2002--present. Previously,
Regional President, Banknorth-Vermont, Burlington,
VT and President and Chief Executive Officer,
Franklin-Lamoille Bank, St. Albans, VT
Kenneth D. Gibbons, 60 1989 President and Chief Executive Officer- Union
Bankshares, Inc. and Union Bank Morrisville, VT
Franklin G. Hovey, II, 57 1999 President, Hovey Enterprises, Inc. St. Johnsbury, VT
(real estate)
Richard C. Marron, 69 1998 Owner, Town and Country Motor Lodge Stowe, VT
Robert P. Rollins, 68 1983 Retired Insurance Agent; Investments and real estate
holdings Morrisville, VT
Richard C. Sargent, 68 1982 Attorney at Law Richard Sargent Law Office
Morrisville, VT
John H. Steel, 57 2002 Owner, President and Treasurer, Steel Construction,
Inc. Stowe, VT
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(1) Does not include prior service with Union Bank and/or Citizens Savings
Bank and Trust Company ("Citizens") (merged into Union Bank in May, 2003).
Each incumbent director is also a director of Union Bank.
6
Directors' Compensation
Directors fees, committee fees and Advisory Board member fees are determined
annually by the Company's Board of Directors for the Company and Union Bank. The
appropriateness of the fees paid is reviewed on a periodic basis by the
Compensation Committee or the Company Board based on published surveys and
knowledge of other financial institutions' director compensation practices. The
annual increase in the directors fees is normally the same percentage as the
overall wage percentage increase for the Bank's employees.
All directors of the Company receive an annual retainer of $7,375 but do not
receive any fees for attendance at regular or special meetings of the Board.
Directors who serve on the Company's Compensation Committee are paid an annual
retainer of $1,000, while the chair of the committee is paid $1,500. Directors
who serve on the Company's Audit Committee are paid an annual retainer of
$1,000, while the chair is paid $1,500. All members of the Audit Committee are
paid a $50 per meeting fee for regularly scheduled meetings (8 in 2006) and $200
per meeting for unscheduled meetings (0 in 2006).
Each director of the Company also serves as a director of Union Bank.
Nonemployee directors of Union Bank receive an annual retainer of $5,689 and a
per meeting fee of $564. Nonemployee directors of the Bank who serve on the
Bank's Trust Committee (the Bank Board's only committee) receive an annual
retainer of $1,000.
During 2006, Mr. Gibbons and Ms. Borck, who are full-time employees of the Bank,
served as directors of both the Company and Union Bank, and received the annual
retainer fee for serving on the Company's Board. Mr. Gibbons and Ms. Borck were
not separately compensated for their service as directors of Union Bank nor, in
the case of Ms. Borck, for her service as a member of the Bank's Trust
Committee. All Company director fees paid to Mr. Gibbons and Ms. Borck are
disclosed in the summary compensation table and footnotes contained elsewhere in
this proxy statement under the caption "COMPENSATION DISCUSSION AND
ANALYSIS--2006 Summary Compensation Table."
Directors may also serve on one of the Bank's two advisory boards for the St.
Johnsbury, Vermont or Littleton, New Hampshire region. Nonemployee directors who
serve on either of these advisory boards receive a per meeting fee of $250.
Company directors are eligible to participate in the Executive Nonqualified
Excess Plan. The plan is a defined contribution plan designed to provide a means
by which participants may elect to defer receipt of current compensation from
the Company or its subsidiary in order to provide retirement or other benefits
as selected in the individual adoption agreements. There were no nonemployee
directors who chose to participate in the plan during 2006.
One nonemployee director is currently receiving annual payouts under the
Company's old defined benefit Nonqualified Deferred Compensation Plan, which was
frozen for new members in 1998 and frozen for additional deferrals in 2004. The
nonemployee director is entitled to future annual payments. No other nonemployee
directors are participants in the plan. The Company has purchased insurance on
the lives of the participants for the purpose of recouping, in the future, the
benefit payments made under the plan.
7
The Company's nonemployee directors were not eligible to receive any other form
of compensation during 2006. The following table contains the annual cash
compensation paid to the Company's nonemployee directors during 2006:
2006 Director Compensation Table (1)
Change in
Pension Value
and Non-
Non-Equity Qualified
Fees Earned or Stock Option Incentive Plan Deferred
Paid in Cash (2) Awards Awards Compensation Compensation All Other
Name ($) ($) ($) ($) Earnings ($) Compensation ($) Total ($)
---------------------------------------------------------------------------------------------------------------------------------
Steven J. Bourgeois $28,514 $0 $0 $0 $0 $ 0 $ 28,514
Franklin G. Hovey, II $29,164 $0 $0 $0 $0 $ 6,000 (3) $ 35,164
Richard C. Marron $28,564 $0 $0 $0 $0 $ 0 $ 28,564
Robert P. Rollins $30,014 $0 $0 $0 $0 $75,500 (4) $105,514
Richard C. Sargent $28,664 $0 $0 $0 $0 $ 0 $ 28,664
John H. Steel $28,164 $0 $0 $0 $0 $ 0 $ 28,164
--------------------
(1) Table and narrative pertain to nonemployee directors only.
(2) Includes fees paid for service on the Boards of Directors and committees of both the Company and Union Bank.
(3) St. Johnsbury Regional Advisory Board Fees.
(4) Annual benefit payment under the Union Bankshares, Inc. Deferred Compensation Plan.
Attendance at Directors' Meetings
During 2006, the Company's Board of Directors held 12 regular meetings and no
special meetings. All incumbent directors attended at least 92% of the aggregate
of all such meetings and meetings of Board committees of which they were
members. In addition to serving on the Company's Board, all of the Company's
incumbent directors also serve on the Board of Directors of Union Bank, which
meets at least twice monthly.
Director Independence
The Board of Directors has determined that each of the directors, except Mr.
Gibbons and Ms. Borck, who are executive officers of the Company and Union Bank,
are independent within the meaning of American Stock Exchange (AMEX) rules for
listed companies. Under these rules, a director is generally not considered to
be independent if he or she has a material relationship with the listed company
(including an employment relationship) that would interfere with the exercise of
independent judgment.
Board Committees and Corporate Governance
As further described below, the Company's Board of Directors has two standing
committees, the Audit Committee and the Compensation Committee. The Company does
not have a standing nominating committee; rather, all independent directors on
the Board serve the function of such a committee.
8
Audit Committee. The Audit Committee comprises directors Robert Rollins (Chair),
Steven Bourgeois and Richard Marron. AMEX rules for listed companies and
applicable securities laws require that the Company have an Audit Committee
consisting of at least three directors, each of whom is independent. AMEX rules
also require that all members of a listed company's audit committee be able to
read and understand fundamental financial statements, including a company's
balance sheet, income statement and cash flow statement, and require that at
least one member of the committee qualify as "financially sophisticated," based
on past employment experience in finance or accounting, professional accounting
certification or other comparable experience or background. Similarly, SEC rules
require that at least one member of the Audit Committee qualify as a "financial
expert." The Board of Directors, in its discretion, and based on all of the
information available to it, has determined that each of the members of the
Audit Committee is independent under applicable legal standards and that Mr.
Bourgeois, a former community bank President and Chief Executive Officer, is
"financially sophisticated" within the meaning of the AMEX rules and is an
"audit committee financial expert" within the meaning of applicable SEC rules.
The Audit Committee is responsible for selecting the independent auditors and
determining the terms of their engagement, for reviewing the reports of the
Company's internal and external auditors, for monitoring the Company's adherence
to accounting principles generally accepted in the United States of America and
for overseeing the quality and integrity of the accounting, auditing and
financial reporting practices of the Company and its system of internal
controls. In addition, the Audit Committee has established procedures for the
confidential reporting of complaints (including procedures for anonymous
complaints by employees) on matters of accounting, auditing or internal
controls.
During 2006, the Company's Audit Committee met 8 times. A report of the Audit
Committee on its 2006 activities is included elsewhere in this proxy statement
under the caption "AUDIT COMMITTEE REPORT." A copy of the Audit Committee's
charter is attached to this proxy statement as Appendix A.
Compensation Committee. The Compensation Committee comprises directors Richard
Sargent (Chair), Franklin Hovey, II and Robert Rollins. The Board has determined
that each of such directors is independent under applicable AMEX rules for
listed companies. The Compensation Committee evaluates, reviews and makes
decisions or recommendations on executive salary levels, bonuses, stock option
awards and benefit plans. The compensation Committee does not currently operate
under a written charter but expects to develop one during 2007.
During 2006, the Compensation Committee met four times. A report of the
Compensation Committee is set forth elsewhere in this proxy statement under the
caption "COMPENSATION COMMITTEE REPORT."
Board Nominating Functions. In lieu of a separate committee, the functions of a
nominating committee are performed by all of the Company's independent directors
(all directors other than Mr. Gibbons and Ms. Borck, who are executive officers
of the Company and Union Bank). The Board has elected not to establish a
separate nominating committee at this time in order to obtain the widest
possible input on the nominations process from all of the independent,
nonmanagement directors.
The independent directors have adopted a resolution addressing the process for
director nominations, including recommendations by shareholders and minimum
qualifications for director nominees. In accordance with these criteria,
directors and director candidates should possess the following attributes:
9
o Strong personal integrity;
o Previous leadership experience in business or administrative
activities;
o Ability and willingness to contribute to board activities,
committees, and meetings;
o Willingness to apply sound and independent business judgment;
o Loyalty to the Company and concern for its success;
o Awareness of a director's role in the Company's corporate
citizenship and image;
o Willingness to assume fiduciary responsibility;
o Familiarity with the Company's service area; and
o Qualification as an independent director under applicable AMEX rules
for listed companies.
In reviewing the composition of the Board and potential Board nominees, the
directors are also mindful of the requirement that at least a majority of the
directors must be independent under AMEX criteria for listed companies, and of
the requirement under SEC rules and AMEX listed company criteria that at least
one member of the Audit Committee must have the qualifications and skills
necessary to be considered an "audit committee financial expert."
Shareholder Recommendations for Board Nominations.
Shareholders of record wishing to recommend individuals to the independent
directors for consideration as possible director nominees should submit the
following information, in writing, at least ninety days before the annual
meeting of shareholders: the name, address and share ownership of the
shareholder making the recommendation; the proposed nominee's name, address,
biographical information and number of shares beneficially owned (if available);
and any other information that the recommending shareholder believes may be
pertinent to assist in evaluating the nominee. The information should be
delivered in person to the Assistant Corporate Secretary, JoAnn Tallman, at the
main office of Union Bank, 20 Lower Main Street, Morrisville, Vermont, or mailed
to: Chairman, Union Bankshares, Inc., P.O. Box 1346, Morrisville, VT 05661. The
independent directors will use the same criteria to evaluate an individual
recommended by a shareholder as they do other potential nominees. The
recommending shareholder will be notified of the action taken on his or her
recommendation.
Any beneficial owner of shares who is not a shareholder of record who wishes to
recommend a person for consideration as a board nominee must make appropriate
arrangements with such owner's (record) nominee holder to submit the
recommendation through such nominee.
During the course of evaluating a potential nominee, the independent directors
may contact him or her for additional background and other information as they
deem advisable, and may choose to interview the potential nominee in an effort
to determine his or her qualifications under the specified criteria, as well as
their understanding of director responsibilities. The independent directors will
then determine if they will recommend the nominee to the shareholders. No person
will be nominated unless he or she consents in writing to the nomination and to
being named in the Company's proxy statement and agrees to serve, if elected.
Codes of Ethics
The Board expects all of its directors, officers and employees to maintain the
highest standards of professionalism and business ethics. All directors,
officers and employees are required to adhere to the Company's Code of Ethics,
which is contained in the Union Bank Employee Handbook. That Code of Ethics is
filed with the SEC as exhibit 14.2 to the Company's 2006 Annual Report on Form
10-K. In addition, President and CEO Kenneth Gibbons and Vice President,
Treasurer and CFO Marsha Mongeon
10
are subject to a separate Code of Ethics for Senior Financial Officers and the
Chief Executive Officer. That Code of Ethics is filed with the SEC as exhibit
14.1 to the Company's 2005 Annual Report on Form 10-K. The Company's Annual
Reports on Form 10-K and other periodic reports are available on the SEC's
website at www.sec.gov.
Attendance at Annual Meeting of Shareholders
The Board of Directors has adopted a policy stating that incumbent directors and
nominees are expected to attend the Annual Meeting of Shareholders, absent
exigent circumstances, such as illness, family emergencies and unavoidable
business travel. Last year, all eight incumbent directors attended the annual
meeting.
Communicating with the Board
Shareholders who wish to do so may communicate in writing with the Board of
Directors, its committees, or individual directors regarding matters relating to
the Company's business operations, financial condition or corporate governance.
Any such communication should be addressed to the Board of Directors, or Board
committee or individual director, as applicable, c/o Union Bankshares, Inc.,
P.O. Box 1346, Morrisville, VT 05661. The correspondence will be forwarded to
the addressee for review and response, as appropriate in the circumstances.
Transactions with Management and Directors
Some of the incumbent directors and executive officers of the Company, and some
of the corporations and firms with which these individuals are associated, are
customers of Union Bank in the ordinary course of business, or have loans
outstanding from such bank, and it is anticipated that they will continue to do
business with Union Bank in the future. All loans to such persons or entities
were made in the ordinary course of business, do not involve more than normal
risk of collectibility or present other unfavorable features, and were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the same time for comparable transactions by Union Bank with
unaffiliated persons, although directors were generally allowed the lowest
interest rate given to others on comparable loans.
Compensation Committee Interlocks and Insider Participation
The Company is not aware of the existence of any interlocking relationships
between the senior management of the Company and that of any other company.
Vote Required
Unless authority is withheld, proxies solicited hereby will be voted to fix the
number of directors at eight and in favor of each of the eight nominees listed
above to serve a one-year term expiring at the 2008 annual meeting of
shareholders, or until their successors are elected and qualify. If for any
reason not now known by the Company any of such nominees should not be able to
serve, proxies will be voted for a substitute nominee or nominees designated by
the Board of Directors, or will be voted to fix the number of directors at fewer
than eight and for fewer than eight nominees, as the Board may deem advisable in
its discretion.
11
Election of directors is by a plurality of the votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of Directors
("Board"), a copy of which is included as an appendix to this proxy statement,
the Audit Committee of Union Bankshares, Inc. (the "Company") assists the board
in fulfilling its responsibility for oversight of the quality and integrity of
the accounting, auditing and financial reporting practices of the Company.
The Audit Committee consists of Mr. Rollins (Chair), Mr. Marron and Mr.
Bourgeois. The Board of Directors has determined that Mr. Bourgeois is an audit
committee financial expert as defined by the SEC and that all members of the
Audit Committee are independent within the meaning of AMEX listing standards and
SEC regulations.
The Audit Committee's responsibility is one of oversight. Members of the Audit
Committee rely on the information provided and the representations made to them
by management and the independent auditor. Management has primary responsibility
for establishing and maintaining appropriate internal controls over financial
reporting, and for the Company's financial statements and periodic reports filed
with the SEC. To aid management in the discharge of these responsibilities, the
Company has a Disclosure Control Committee of which Mr. Bourgeois is a member.
The independent auditor is responsible for auditing the financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(PCAOB), and for issuing an opinion thereon. In 2006, the Company was not
subject to Section 404 of the Sarbanes-Oxley Act of 2002 governing internal
controls, but expects to fall under these provisions in 2007. In anticipation of
reporting under Section 404, management has discussed compliance requirements
and the time frame for adherence to the Act with the Audit Committee and the
Company's independent auditors.
The Audit Committee has reviewed and discussed the Company's December 31, 2006
audited consolidated financial statements with management and with the Company's
independent auditors. Specifically, the Committee has discussed with the
independent auditors the matters required under Statement on Auditing Standards
("SAS") No. 61 "Communications with Audit Committees", as amended. The Audit
Committee has received the written disclosures from the independent auditors
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), and has discussed with the independent
auditors their independence. The Committee has determined that the services
performed by UHY LLP, are compatible with maintaining that firm's independence
in connection with serving as the Company's independent auditors. A description
of the fees billed to the Company for the services of the independent auditors
for 2006 reporting is included in the proxy statement under the caption
"INDEPENDENT AUDITORS."
Relying on the reviews and discussions referred to above, the Audit Committee
recommended to the Board of Directors, and the Board has approved, that the
audited consolidated financial statements be included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2006 for filing with the
SEC.
12
The Committee has approved the selection of UHY LLP as the Company's independent
auditors for 2007.
Submitted by the Union Bankshares, Inc. Audit Committee
Robert P. Rollins (Chair)
Steven J. Bourgeois
Richard C. Marron
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the
Compensation Discussion and Analysis that is included below. Based on this
review and these discussions, the Compensation Committee recommended to the
Board of Directors that the Compensation Discussion and Analysis be included in
this definitive Proxy Statement and that it be incorporated by reference into
the Company's Annual Report on Form 10-K for the year ended December 31, 2006.
Submitted by the Union Bankshares, Inc. Compensation Committee
Richard C. Sargent (Chair)
Franklin G. Hovey, II
Robert P. Rollins
Pursuant to the rules and regulations of the SEC, neither the foregoing Audit
Committee Report nor the Compensation Committee Report shall be deemed to be
filed with the SEC for purposes of the Securities Exchange Act of 1934, nor
shall any such material be deemed to be incorporated by reference in any past or
future filing by the Company under the Securities Exchange Act of 1934 or the
Securities Act of 1933, as amended.
PROPOSAL 2: TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors voted on March 21, 2007 to recommend a proposed increase
in the Company's authorized common stock, $2.00 par value per share, from
5,000,000 to 7,500,000 shares. The Board believes that the additional shares
will provide the Company with desirable corporate and strategic flexibility by
ensuring the prompt availability of shares for issuance should the opportunity
or need arise in the future. Additional uses for the authorized shares could
include, for example, stock dividends and splits, raising additional capital,
making future acquisitions of banks, branches or banking related businesses or
assets, attracting or retaining valuable employees through stock options and
other stock-based compensation arrangements, and issuing stock in connection
with dividend reinvestment or stock purchase plans, should such plans be adopted
in the future. Corporate opportunities may arise from time to time that require
prompt action, and the Board believes that the delay and expense of obtaining
shareholder approval of an increase in authorized shares could in some
circumstances be detrimental to the interests of the Company and its
shareholders.
At this time the Company has no commitments, plans, agreements or undertakings
obligating it to issue any shares to anyone, except that 61,525 shares remain
reserved for future issuance under the Company's 1998 Incentive Stock Option
Plan. However, because the Incentive Stock Option Plan expires in 2008 and
options for only 16,075 shares are currently outstanding, it is unlikely that
all, or even most, of the remaining shares will actually be issued pursuant to
the plan.
13
Under Vermont law, the Board of Directors generally may issue authorized but
unissued shares of common stock without shareholder approval. However, depending
on the circumstances of a particular issuance, shareholder approval may be
required by applicable law, AMEX rules or the Company's Amended and Restated
Articles of Association or By-laws then in effect. Even if shareholder approval
were not otherwise required, the Board in its discretion might nevertheless deem
it advisable to seek shareholder approval in connection with a particular stock
issuance or transaction involving a stock issuance.
Although the Board has no present intention of doing so, shares of authorized
and unissued common stock could be issued in one or more transactions that would
make removal of the Board and management, or takeover of the Company more
difficult. For example, additional shares could be issued to dilute the stock
ownership of a person seeking to obtain control of the Company or could be
privately placed with purchasers who would support the Company's Board in
opposing a hostile takeover attempt. The availability of shares for issuance
under these circumstances could have the effect of deterring an offer for the
Company at a substantial premium over the prevailing trading price of the
Company's common stock. The Company's Amended and Restated Articles of
Association and By-laws currently contain provisions that may have such an
effect, including provisions requiring a 67% vote of shareholders to approve
certain mergers, consolidations and other business combinations.
The additional authorized shares of the Company's common stock, if and when
issued, will have all of the rights and privileges that the presently
outstanding shares of such common stock possess. All outstanding shares would
continue to have one vote per share on all matters to be voted on by the
shareholders, including the election of directors. The Company does not have any
other authorized class of capital stock.
Shareholders do not have dissenters' rights of appraisal in connection with the
proposed amendment.
The full text of the proposed amendment to the Company's Articles is as follows:
To amend Section 7 of the Amended and Restated Articles of Association of Union
Bankshares, Inc. to read in full as follows:
7. Capital Stock. The aggregate number of shares the Corporation shall have
the authority to issue shall be seven million five hundred thousand
(7,500,000) having a par value of two dollars ($2.00) per share.
Vote Required
Approval of the proposed increase in the Company's authorized common stock will
require that more votes are cast "FOR" the proposal than "AGAINST" it.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
14
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the executive
officers of the Company:
Position(s) with the Company and Subsidiary
Name and Age and Occupation for the Past Five Years (1)
--------------------------------------------------------------------------------
Kenneth D. Gibbons, 60 President, Chief Executive Officer and Director, Union
Bankshares, Inc. and Union Bank Morrisville, VT
Cynthia D. Borck, 56 Vice President and Director, Union Bankshares, Inc. and
Executive Vice President and Director, Union Bank
Morrisville, VT
Marsha A. Mongeon, 51 Vice President, Treasurer and Chief Financial Officer,
Union Bankshares, Inc. and Senior Vice President and
Treasurer, Union Bank, Morrisville, VT
David S. Silverman, 46 Senior Vice President, Union Bank, Morrisville, VT
--------------------
(1) Certain of the named officers also held the following positions with
Citizens, prior to its merger with Union Bank in May, 2003: Mr. Gibbons,
Director (1999-2003) and Interim President (February-May, 2003); Ms.
Borck, Director (1999-2003); and Ms. Mongeon, Assistant Treasurer
(2002-2003).
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
The Compensation Committee's primary purpose is to assist the Board in
discharging the Board's responsibilities relating to the compensation and
benefits of the Company's Named Executive Officers ("NEOs") and other officers
and employees of the Bank and the Company. It evaluates and recommends to the
Board appropriate policies and decisions relative to officer benefits, bonus,
incentive compensation, severance, and equity-based or other compensation plans.
It also oversees preparation of executive compensation disclosures for inclusion
in the Company's proxy statement. The Compensation Committee may solicit input
from various members of management or outside sources but the responsibility and
authority to make recommendations to the Board remains with the Committee. The
following discussion and analysis briefly describe the philosophy, strategy and
major details of the Company's approach to compensating key executives. You will
also find a narrative disclosure and tables containing detailed information
concerning compensation earned or paid to our NEOs for the year ended, December
31, 2006.
During 2006, the Company did not have any employees at the holding company
level, however the NEOs received compensation in their capacity as employees of
the Company's subsidiary, Union Bank. The Committee's recommendations on
compensation of the NEOs, other than stock-based compensation and directors
fees, were, therefore, implemented by the Board of Directors of Union Bank,
rather than
15
the Company. However, during 2006, the same individuals served as directors of
both companies. In referring to "the Board" throughout the Compensation
Discussion and Analysis, we utilize the term to refer to both the Board of
Directors of Union Bank as well as the Company.
Objectives and Philosophy
We believe that, in order to manage and grow a well run financial services
organization, it is necessary to establish compensation programs and related
opportunities that are attractive, motivating and rewarding to executives,
management and high quality staff. In a highly competitive community banking
marketplace, excellent leadership is essential.
Our executive officers are expected to manage the business of the Company in a
manner that promotes profitability and favorable growth for the benefit of our
shareholders. To that end, we believe that:
o Our executives should have compensation opportunities at levels that
are competitive with peer institutions;
o Total compensation should include "at risk" components that reflect
annual and longer-term performance results;
o Stock-based compensation should form a component of total
compensation as a means of financially linking senior management to
the long-term performance of the Company and aligning their
interests with those of shareholders; and
o We need to create an environment in which we can attract and retain
officers and senior members of management through competitive total
compensation packages.
We believe that the weighting of compensation elements should vary somewhat
within the Management group in order to reflect the role of each executive and
his or her ability to influence performance.
Compensation Committee Activity
In 2006, the Compensation Committee met four times and took the actions listed
below:
o Reviewed Company and individual performance in order to determine
appropriate recommendations to the Board regarding annual salary
increases and cash bonuses;
o Relative to compensation for our NEO's, reviewed current peer data
from an independent survey of financial institutions within Vermont
as well as of similar asset size in northern New England;
o Reviewed revised proxy requirements for 2007 with regards to
Executive and Director compensation;
o Reviewed the Company's Nonqualified Deferred Compensation Plan for
amendment to comply with Section 409A of the Internal Revenue Code.
As a result of the Internal Revenue Service's (IRS) delay in
adoption of final regulations, amendment of the plan has been
delayed until year-end 2007;
o Worked with Management and Principal Financial Group to design and
recommend to the Board the adoption of the Company's Executive
Nonqualified Excess Plan; and
o Made recommendations to the Board regarding the grant of stock
options including recommendations as to designation of grantees and
the number of options awarded to each grantee.
16
Elements of Compensation
The Company uses the following primary elements of compensation and benefits to
recruit, retain and reward its key executives:
o Salary-The salary is to pay for the qualifications, experience,
responsibility and marketability of the position consistent with
market practices. Salary ranges are reviewed and approved annually
for all positions by the Board of Directors. Management recommends
an overall target percentage increase for all employees to the Board
of Directors. Individual NEO's pay within the range is determined by
the Compensation Committee and approved by the Board of Directors
taking into consideration individual performance, job proficiency
and contributions to the Company over a period of years. The
Compensation Committee also considers the recommendations of the
President and Executive Vice President of the Bank with regard to
other executive officers.
o Bonus-Cash bonuses are part of the Company's incentive plan.
Annually, the Board of Directors determines a cash bonus percentage
to be paid to all employees, including NEOs, in November of each
year. In addition, the Board has ordinarily paid to the Chief
Executive Officer each year, after the first two quarters of
operations, a discretionary cash bonus based on Union Bank's net
income for such period. In each of the last four years, certain of
the NEOs have received discretionary cash bonuses in January in
amounts determined by the Board of Union Bank, upon recommendation
of the Compensation Committee and/or the Chief Executive Officer.
All of these discretionary payments have been a matter of Board
practice and are not embodied in any formal written plan. The Union
Bank Board may, in its discretion and at any time, discontinue some
or all of these bonus payment practices or modify them in any way,
including changing the manner in which bonuses are calculated or
time or manner of payment, and changing the persons or categories of
persons to whom the bonuses are paid. Discretionary cash bonuses
paid to the Company's NEOs during 2006 are shown in the 2006 Summary
Compensation Table.
o Stock-Based Compensation-We believe that the opportunity for stock
ownership is an important part of an executive's overall
compensation package and helps tie the executive's interests to
those of the shareholders. The Company has not established stock
ownership guidelines for NEOs, but encourages that ownership. We
have also historically looked to stock options to satisfy our
long-term incentive award objectives for those senior officers and
other key employees of the Company or the Bank who are in a position
to contribute significantly to the Company's profitability. Grants
of stock options have been determined on a discretionary basis with
a recommendation for awards made by the Compensation Committee to
the full Board of Directors. The Company has normally made these
awards in December of each year in conjunction with the review of
anticipated results for the current fiscal year. The Company has
not, nor do we plan to, time the award of the stock options to
coincide with the release of favorable or unfavorable information
about the Company. See "Stock-Based Compensation" section for
further specific details regarding the current plan.
o Nonqualified Deferred Compensation Plans and Other Retirement
Plans-Consistent with the Company's desire to provide a competitive
compensation package and for all employees to maintain the standard
of living in retirement they have built during their working career,
the Company maintains a defined benefit pension plan, a 401(k) plan
and two nonqualified deferred compensation plans.
17
Union Bank maintains a noncontributory defined benefit plan which
covers all eligible employees of the Bank. The plan is
nondiscriminatory and nonconvertible and is designed to provide a
stream of benefits upon retirement. See "Pension Benefits" section
for further details.
Union Bank maintains a contributory, tax-qualified Employee Savings
(401(k)) and Profit Sharing Plan covering all employees who meet
certain eligibility requirements. Participants may elect to
contribute up to the IRS maximum dollar amount limitations of their
eligible compensation to their 401(k) plan account on a tax deferred
basis. The plan provides for matching contributions by Union Bank,
in the sole discretion of the Bank's Board of Directors. During
2006, Union Bank made a discretionary 401(k) matching contribution
of fifty cents for every dollar of compensation deferred by the
participant, up to 6% of each participant's eligible compensation.
Discretionary matching contributions made for the account of the
Company's NEOs are included in the 2006 Summary Compensation Table
and footnotes. Although the plan also contains a discretionary
profit sharing component, to date Union Bank has not elected to make
a profit sharing contribution under the plan.
Because of regulatory limitations relating to both the Company's
Defined Benefit Pension and Employee Savings (401k) Plans on the
amount of deferrals or benefits our executives can make to or
receive from the plans, the Company has invited certain NEOs to
participate in a nonqualified deferred compensation plan since 1990.
Refer to "Deferred Compensation" section for further details.
o Other Benefits and Perquisites-We believe that certain personal
benefits and perquisites can be effective elements of a compensation
package, because they can permit and encourage executives to perform
their duties better and generate business for the Company. We also
believe that these benefits are important to a comprehensive view of
the Company's total compensation and benefit program. All the
Company's full-time employees, including the NEOs, participate in
the same comprehensive benefit program which is intended to provide
financial and well-being protection to our employees and their
families. The benefits currently include health, dental, life,
accidental death and disability insurances as well as paid time off
for illness, personal needs and vacation. The Company also provides
a company car and all related expenses to Mr. Gibbons and Mr.
Silverman in order to assist them in visiting clients and offices
throughout our market area.
There are no employment agreements or change in control contracts for any of the
NEOs. The Company has no individuals with nonperformance based compensation paid
in excess of Section 162(m) of the Internal Revenue Code which limits tax
deductibility of individual compensation exceeding $1 million in any taxable
year. The Company has not adopted a policy that enables recovery of incentive
awards in the event of misstated or restated financial results. However, Section
304 of Sarbanes-Oxley does provide some ability to recover incentive awards in
certain circumstances. If the Company is required to restate its financial
statements due to noncompliance with any financial reporting requirements as a
result of misconduct, the CEO and CFO must reimburse the Company for (1) any
bonus or other incentive - or equity-based compensation received during the 12
months following the first public issuance of the noncomplying document, and (2)
any profits realized from the sale of securities of the Company during those 12
months.
18
Executive Compensation
The following table sets forth for 2006 the total remuneration for services in
all capacities awarded to, earned by, or paid to the Company's President and
Chief Executive Officer, its Chief Financial Officer, and our two other NEOs:
2006 Summary Compensation Table
Change in
Pension Value
and
Nonqualified
Non-Equity Deferred
Stock Options Incentive Plan Compensation
Awards Awards Compensation Earnings All Other Total
Name and Principal Position Salary Bonus ($) ($)(1) ($) ($)(4) Compensation ($)
------------------------------------------------------------------------------------------------------------------------------------
Kenneth D. Gibbons (2)(3) $213,147 $35,264 $0 $5,600 $0 $98,666 $12,990 $365,667
President, Chief Executive
Officer and Director of the
Company and Union Bank
Cynthia D. Borck (2)(3) $118,945 $ 6,978 $0 $2,100 $0 $78,668 $11,156 $217,847
Vice President and Director
of the Company and
Executive Vice President and
Director, Union Bank
Marsha A. Mongeon (2) $113,000 $ 6,787 $0 $ 700 $0 $36,078 $ 3,594 $160,159
Vice President, Treasurer
and Chief Financial Officer
of the Company and Senior
Vice President and Treasurer,
Union Bank
David S. Silverman (2) $107,000 $ 6,570 $0 $ 700 $0 $20,338 $ 3,414 $138,022
Senior Vice President,
Union Bank
--------------------
(1) Represents the weighted average grant date fair value of the 2006 Option Awards using $2.80 per share, calculated using the
Black-Scholes model and assumptions which is the same as the SFAS 123R value recognized for financial statement reporting
purposes. See Note 19 to the Company's 2006 financial statements.
(2) Company match on 401K plan is included in All Other Compensation.
(3) Company director's fees of $7,375 are included in All Other Compensation.
(4) Aggregate earnings for 2006 on the Nonqualified Deferred Compensation Plans was $33,543 for Mr. Gibbons, $16,614 for Ms. Borck
and $1,483 for Ms. Mongeon. These earnings are available to the individuals as part of a stream of 15 annual payments which
Mr. Gibbons and Ms. Borck are currently eligible to commence receiving upon request. The remainder represents the increase in
the present value of the accumulated benefit from the Defined Benefit Pension plan that is not available to participants until
retirement and then only as a stream of payments.
19
Stock-Based Compensation
Union Bankshares, Inc. 1998 Incentive Stock Option Plan, adopted by the Board
and approved by the shareholders, is designed to link senior management
compensation more closely to corporate performance and increases in shareholder
value, and to assist the Company in attracting, retaining and motivating
executive management. The Compensation Committee administers the Plan. Only
those senior officers and other key employees of the Company or the Bank who are
in a position to contribute significantly to profitability and who are
recommended by the Compensation Committee and designated by the Board, are
eligible to participate.
Awards under the plan consist of options to purchase shares of the Company's
common stock at a fixed price, at least equal to 100% of the fair market value
of the shares on the day the option is granted. The options may be exercised for
a period of time established by the Board at the time of the grant, but no
longer than ten years from the date of option grant. The optionholder may pay
for the option shares with either cash or other shares of the Company's common
stock (valued at their fair market value), including shares withheld upon
exercise of the option.
The options granted are subject to a one year vesting period before they become
exercisable. All outstanding grants expire five years after the date of grant or
four years after they become exercisable. All outstanding grants are subject to
early termination following the optionholder's termination of employment during
the option period.
Options granted under the plan contain various provisions and limitations
intended to qualify them as incentive stock options under federal income tax
laws. Generally, the optionholder will not recognize gain at the time the option
is granted or exercised, but only upon later sale of the shares received upon
exercise. The total number of shares of the Company's common stock that could be
awarded under the plan is 75,000, subject to standard adjustments in the case of
stock dividends, stock splits, recapitalization and similar changes in the
Company's capitalization. To date, the Board has awarded options for the
purchase of 29,550 shares, leaving 45,450 shares available for future option
grants.
In assessing the grant date values shown in the 2006 Summary Compensation Table
above, readers should keep in mind that no matter what theoretical value is
placed on a stock option on the date of grant, its ultimate value will be
dependent on the market value of the Company's stock at a future date and that
value will in large part depend, in turn, on the efforts of the Company's
management team.
There were no option awards exercised in 2006 and the Company does not make any
stock awards. The following table contains information about stock option grants
made to our NEOs during 2006:
20
2006 Grants of Plan-Based Awards Table
All Other
All Other Option
Stock Awards: Exercise or
Estimated Future Payouts Under Estimated Future Payouts Under Awards: Number of Base Price
Nonequity Incentive Plan Awards Equity Incentive Plan Awards Number of Securities of Options
------------------------------- ------------------------------ Shares of Underlying Awards
Threshold Target Maximum Threshold Target Maximum Stock or Options ($/Share)
Name Grant Date ($) ($) ($) ($) ($) ($) Units (#) (#)(1) (2)
------------------------------------------------------------------------------------------------------------------------------------
Kenneth D. Gibbons 12/20/2006 $0 $0 $0 $0 $0 $0 0 2,000 $22.50
Cynthia D. Borck 12/20/2006 $0 $0 $0 $0 $0 $0 0 750 $22.50
Marsha A. Mongeon 12/20/2006 $0 $0 $0 $0 $0 $0 0 250 $22.50
David S. Silverman 12/20/2006 $0 $0 $0 $0 $0 $0 0 250 $22.50
--------------------
(1) All options vest on December 19, 2007
(2) Represents the closing price of the Company's common stock on the date of grant as reported on AMEX.
The following table sets forth certain information under our stock-based
compensation plan regarding options held by our NEOs that remained unexercised
at December 31, 2006:
Outstanding Equity Awards at December 31, 2006
Option Awards Stock Awards
----------------------------------------------------------------------------------------------------------------
Equity
Incentive
Plan
Equity Awards:
Incentive Market or
Equity Plan Payout
Incentive Number Awards: Value of
Number of Number of Plan Awards: of Shares Market Number of Unearned
Securities Securities Number of or Units Value of Unearned Shares,
Underlying Underlying Securities of Stock Shares or Shares, Units Units or
Unexercised Unexercised Underlying Option that Have Units of or Other Other Rights
Options - Options - Unexercised Exercise Option Not Stock That Rights That That Have
Exercisable Unexercisable Unearned Price ($) Expiration Vested Have Not Have Not Not
Name (#) (#)(1) Options (#) (2) Date (#) Vested ($) Vested (#) Vested ($)
------------------------------------------------------------------------------------------------------------------------------------
Kenneth D. Gibbons 3,000 0 0 $15.67 12/8/2007 0 $0 0 $0
2,000 0 0 $25.30 12/16/2008 0 $0 0 $0
2,000 0 0 $26.60 1/1/2009 0 $0 0 $0
2,000 0 0 $23.30 12/22/2010 0 $0 0 $0
0 2,000 0 $22.50 12/19/2011 0 $0 0 $0
Total 9,000 2,000
Cynthia D. Borck 500 0 0 $25.30 12/16/2008 0 $0 0 $0
750 0 0 $26.60 1/1/2009 0 $0 0 $0
750 0 0 $23.30 12/22/2010 0 $0 0 $0
0 750 0 $22.50 12/19/2011 0 $0 0 $0
Total 2,000 750
Marsha A. Mongeon 250 0 0 $25.30 12/16/2008 0 $0 0 $0
250 0 0 $26.60 1/1/2009 0 $0 0 $0
250 0 0 $23.30 12/22/2010 0 $0 0 $0
0 250 0 $22.50 12/19/2011 0 $0 0 $0
Total 750 250
David S. Silverman 175 0 0 $15.67 12/8/2007 0 $0 0 $0
250 0 0 $25.30 12/16/2008 0 $0 0 $0
250 0 0 $26.60 1/1/2009 0 $0 0 $0
250 0 0 $23.30 12/22/2010 0 $0 0 $0
0 250 0 $22.50 12/19/2011 0 $0 0 $0
Total 925 250
--------------------
(1) Vesting date for all unexercisable options is December 19, 2007.
(2) Represents the closing price of the Company's common stock on the date of grant as reported on AMEX.
21
Defined Benefit Pension Plan
The Union Bank Defined Benefit Pension Plan covers all eligible employees of the
Bank. Employees are eligible who are not classified as "summer" or "temporary"
and who have completed more than 1,000 hours of service in a consecutive
twelve-month period. The plan is noncontributory, nondiscriminatory and
nonconvertible. An employee generally becomes 100% vested in the plan after 7
years. The plan is designed to provide retirement benefits to all eligible
employees and in certain instances would also provide a disability benefit.
Benefits begin on retirement after age 65, although early retirement may be
taken after age 55, with an actuarially reduced benefit. Mr. Gibbons and Ms.
Borck are both eligible for early retirement and their monthly life annuity
payments if they had retired on December 31, 2006 would have been $5,692 and
$2,441, respectively. Benefit calculations disregard any years of service over
20 and are subject to the limitations under the Internal Revenue Code on the
amount of compensation that may be considered in such calculations ($220,000 for
2006) and on the amount of the annual benefit payable under the plan ($175,000
for 2006). Covered compensation for purposes of the benefit calculations
includes salary and cash bonuses, but not other forms of compensation. Employees
choose the form of annuity payout at the point of retirement or disability and
do not have the option of a lump-sum payout.
The following table details the number of years of credited service and the
present value of accumulated benefits for each of the NEOs:
Pension Benefits as of December 31, 2006
Number of
Years of Present Value of Payments
Credited Accumulated During Last
Name Plan Name Service (#) Benefit ($) Fiscal Year ($)
------------------------------------------------------------------------------------------------------
Kenneth D. Gibbons Union Bank Defined Benefit 20.000 (1) $701,179 $0
Pension Plan
Cynthia D. Borck Union Bank Defined Benefit 19.249 $380,715 $0
Pension Plan
Marsha A. Mongeon Union Bank Defined Benefit 17.305 $221,464 $0
Pension Plan
David S. Silverman Union Bank Defined Benefit 20.000 (2) $140,585 $0
Pension Plan
--------------------
(1) Actual years of service are 22.862.
(2) Actual years of service are 20.407.
Deferred Compensation
Union Bankshares, Inc. and Union Bank sponsor two nonqualified deferred
compensation plans for Directors and certain key officers. Promised benefits
under the plans are general unsecured obligations of the Company and/or the
Bank. No assets of the Company have been segregated to meet its obligations
under the plans. However, the Company has purchased life insurance and mutual
funds to fund substantially all of the benefit payments under the plans. As of
December 31, 2006, all named executive officers except David Silverman are
participants in at least one of the plans.
22
The Company's Nonqualified Deferred Compensation Plan is a defined benefit plan
which was frozen in 1998 to new participants and in 2004 to additional
deferrals. The Board will re-evaluate the plan during 2007 in light of the
newly-issued final IRS regulations under Section 409A of the IRS Code, which was
added by the federal American Jobs Creation Act of 2004. Prior to 2005, current
participants could defer compensation (salary, bonus, or director fees) that
would otherwise have been currently payable. Deferred compensation benefits
payable are calculated based on the amount deferred, earnings on deferrals and
the length of the deferral period. Benefits are generally payable over a 15 year
period upon attainment of a certain age, separation from service, or death.
Payment in a lump sum is possible in some circumstances.
The Company's Executive Nonqualified Excess Plan was adopted in 2006. The plan
is a defined contribution plan to provide a means for participants to elect to
defer receipt of current compensation from the Company or the Bank in order to
provide retirement or other benefits as selected in the individual adoption
agreements. Participants may select among designated reference investments
consisting of investment funds, with the performance of the participant's
account mirroring the selected reference investment. Distributions are made only
upon a qualifying distribution event, which may include a separation from
service, death, disability or unforeseeable emergency, or (in the case of
distributions from an in-service withdrawal account or education funding
account) upon a date specified in the participant's deferral election form. The
plan is intended to comply with provisions of Section 409A of the Internal
Revenue Code.
The following table provides information about 2006 contributions, earnings, and
other information in respect to the Company's deferred compensation plans for
each of the NEOs:
2006 Nonqualified Deferred Compensation
Aggregate
Executive Registrant Aggregate Earnings Aggregate Balance at
Contributions in Contributions in 2006 Withdrawals/ December 31,
Name 2006 ($) in 2006 ($) ($) (1) Distributions ($) 2006 ($)
------------------------------------------------------------------------------------------------------------------
Kenneth D. Gibbons $ 3,688 (2) $0 $33,543 $0 $321,422
Cynthia D. Borck $ 3,688 (2) $0 $16,614 $0 $186,791
Marsha A. Mongeon $ 0 $0 $ 1,483 $0 $ 29,254
David S. Silverman $ 0 $0 $ 0 $0 $ 0
--------------------
(1) All aggregate earnings in 2006 are included in the 2006 Summary Compensation Table column "Change in Pension
Value and Nonqualified Deferred Compensation Earnings".
(2) Deferred Union Bankshares, Inc. director's fees are included in the 2006 Summary Compensation Table column
"All Other Compensation".
Summary
The Committee has reviewed and discussed the Company's December 31, 2006
Compensation Discussion and Analysis with management. Specifically, the
Committee has reviewed with management:
o The Company's compensation philosophy, including objectives of the
compensation programs, what the programs are designed to reward,
each element of the programs, and why the Company chooses each
element of compensation;
23
o How the Company chooses the value and amount for each element of
compensation;
o How each individual element fits into the larger total compensation
program, objectives and the decisions made regarding other
compensation elements;
o Changes to executive compensation since the end of 2005; and
o The balance of long-term and short-term compensation within the
context of aligning projected retirement income with pre-retirement
annual compensation.
INDEPENDENT AUDITORS
The independent registered accounting firm of UHY LLP ("UHY") has served as the
Company's independent auditor since its first appointment by the Audit Committee
on November 17, 2004, and the Audit Committee has selected UHY as the Company's
independent auditor for 2007.
A representative of UHY will be present at the annual meeting and will be given
the opportunity to make a statement if he/she so desires and will be available
to respond to appropriate questions.
Through the date of this proxy statement filing, UHY had a continuing
relationship with UHY Advisors NY, Inc. ("Advisors") from which it leased
auditing staff who were full time, permanent employees of Advisors and through
which UHY's partners provide nonaudit services. UHY has only a few full time
employees. Therefore, few, if any, of the audit services performed were provided
by permanent full time employees of UHY. UHY manages and supervises the audit
services and audit staff, and is exclusively responsible for the opinion
rendered in connection with its examination.
Audit Fees
Aggregate fees billed for professional services rendered to the Company by UHY
and/or Advisors for the years ended December 31, 2006 and 2005, were as follows:
Services Provided 2006 2005
------------------------------------------
Audit $ 84,750 $71,750
Audit Related 15,316 11,350
Tax 8,850 10,810
All Other 0 0
-------------------
Total $108,916 $93,910
The Audit fees for each of the two years shown in the table were for the audits
of the annual consolidated financial statements of the Company included in the
Company's annual report on Form 10-K and review of quarterly financial
statements included in the Company's quarterly reports on Form 10-Q, filed with
the SEC.
The Audit Related fees for each of the two years shown in the table were for
assurance and related services relating to Union Bank's trust operations. Audit
related fees for 2006 and 2005 also include fees paid for assistance relating to
implementation of various provisions of the Sarbanes-Oxley Act of 2002 and
attendance at shareholder and disclosure control committee meetings.
Tax fees for each of the two years shown in the table were for services related
to tax compliance, including the preparation of tax returns, review of
estimates, consulting and tax planning, and tax advice.
24
Audit Committee Preapproval Guidelines
All audit and nonaudit services provided by UHY or Advisors during the preceding
two fiscal years were approved in advance by the Audit Committee. The Audit
Committee has adopted Preapproval Guidelines relating to the provision of audit
and nonaudit services by the Company's external auditors. Under these
Guidelines, the Audit Committee preapproves both the type of services to be
provided by the external auditor and the estimated fees related to these
services. During the approval process, the Audit Committee considers the impact
of the types of services and the related fees on the independence of the
auditor. The services and fees must be compatible with the maintenance of the
auditor's independence, including compliance with SEC rules and regulations.
In order to ensure timely review and approval, the Committee has delegated to
the Chair of the Committee the authority to amend or modify the list of
preapproved services and fees, subject to prompt reporting to the full Committee
of action taken pursuant to such delegated authority.
SHAREHOLDER PROPOSALS
Under SEC rules, management of the Company will be permitted to use its
discretionary authority conferred in the proxy card for the annual meeting to
vote on a shareholder proposal even if the proposal has not been discussed in
the Company's proxy statement, unless the shareholder-proponent has given timely
notice to the Company of his or her intention to present the proposal at the
meeting. In order to be considered timely for consideration at the 2008 annual
meeting, the shareholder-proponent must have furnished written notice to the
Company of the proposal no later than March 4, 2008.
If a shareholder seeks to have his or her proposal included in the Company's
proxy materials for the annual meeting, the notification deadline is earlier
than noted in the preceding paragraph. In order to be eligible for inclusion in
the Company's proxy material for the 2008 annual meeting, shareholder proposals
must be submitted in writing to the Secretary of the Company no later than
December 18, 2007 and must comply in all respects with applicable SEC rules
relating to such inclusion. Any such proposal will be omitted from or included
in the proxy material at the discretion of the Board of Directors, subject to
such SEC rules.
OTHER MATTERS
As of the date of this proxy statement, management knows of no business expected
to be presented for action at the annual meeting, except as set forth above. If,
however, any other business should properly come before the meeting, the persons
named in the enclosed proxy form will vote in accordance with the
recommendations of management.
Union Bankshares, Inc.
Morrisville, Vermont
25
APPENDIX A
Union Bankshares, Inc.
Audit Committee Charter
PURPOSE
The Audit Committee (Committee) shall assist the Board of Directors (Board) with
its oversight of (i) the integrity of the Company's financial statements, (ii)
the Company's compliance with legal and regulatory requirements, (iii) the
independent auditor's qualifications and independence, and (iv) the performance
of the Company's internal audit function and independent auditors.
Although the Committee has the oversight responsibilities and powers set forth
in this Charter, it does not have a duty to prepare financial statements, to
conduct audits, or determine that the Company's financial statements and
disclosures are complete and accurate and in accordance with Generally Accepted
Accounting Principles (GAAP) or laws and regulations. Those are the duties and
responsibilities of management and the independent auditors.
COMPOSITION
The Committee shall consist of at least three directors appointed annually by a
resolution passed by a majority of the Board and each of whom shall satisfy the
independence and qualification requirements established by the Securities and
Exchange Commission (SEC) and the American Stock Exchange (AMEX). All members
should be financially sophisticated and at least one member of the Committee
shall qualify as a "financial expert" as defined by the SEC. The Committee shall
meet at least quarterly or more frequently as necessary, shall keep minutes of
its proceedings, and shall report regularly to the Board of Directors.
DUTIES AND RESPONSIBILITIES
In carrying out its purposes, the Committee shall have the following duties,
responsibilities and authority:
Financial Reporting
o Annually, review and ratify the Disclosure Control Committee Charter.
o Prior to release, review and approve the quarterly press release on
earnings.
o Review with management and the independent auditor the Company's Form 10-K
prior to filing with the SEC, including the annual financial statements
and disclosures contained therein, as well as any certification, report,
opinion or review rendered by management or the independent auditor in
connection with the foregoing.
o Review Company's proposed quarterly report on Form 10-Q prior to filing
with the SEC but after review of the Disclosure Control Committee, legal
counsel and independent auditor, including the financial statements and
disclosures contained therein, as well as any certification, report,
opinion or review rendered by management or the independent auditor in
connection with the preparation and certification of the foregoing.
A-1
o Review current reports (Form 8-K) to be filed with the SEC.
o Submit the report that is required of the Committee by the rules of the
SEC to be included in the Company's annual proxy statement.
o Prior to filing the Company's annual report with the SEC, review with the
independent auditor (i) critical accounting and financial reporting
policies and practices used by the Company; (ii) alternative treatments of
financial information as permitted by Generally Accepted Accounting
principles (GAAP) that have been discussed with the management of the
Company, including the ramifications of such alternative treatments and
the proper disclosure thereof, as well as any treatment of such financial
information that may have been preferred by the independent auditors and
(iii) other material written communications between the independent
auditor and management.
o Meet separately, at least annually, or more frequently as appropriate,
with management, the internal auditor, and the external auditor.
The Independent Auditor
o Appoint, compensate and oversee the work of the independent auditor for
the Company in connection with the preparation and issuance of any audit
report or related work including a review of the proposed scope of such
work; and review and resolve any disputes between management and the
independent auditor. The Committee shall also have the authority to
terminate the engagement of the independent auditor as it deems necessary
or appropriate. The independent auditor shall report directly to the Audit
Committee.
o Serve as the channel of communication between the independent auditor and
the Board.
o Review the qualifications and performance of the independent auditor, and
evaluate the independence of the independent auditor, including any
potential conflicts of interest that may exist between the Company and the
independent auditor. The Committee shall obtain annually a written
statement from the independent auditor consistent with Independence
Standards Board Standard 1 disclosing all relationships with, and services
provided to, the Company by the independent auditor and/or its affiliates.
The Committee will discuss such relationships with the independent auditor
and take appropriate actions where needed.
o Review the policies governing the hiring of individuals who are or have
been a part of the independent audit engagement team.
o Review any significant written communication between the management of the
Company and the independent auditor including, without limitation, the
independent auditor's observation on internal control matters, management
letters, and schedule of unadjusted differences, if any, or any other
audit problems or difficulties as well as management's response.
o Preapprove any nonaudit services performed on behalf of the Company by the
independent auditor that are not prohibited by law or regulation and
ensure that such services are properly disclosed by the Company.
A-2
Internal Audit
o Oversee the selection of the internal auditor and review his/her
performance and compensation annually. The internal auditor shall report
functionally to the Committee and administratively to the Chief Executive
Officer.
o Oversee the internal audit department's staffing, training, and budget.
o Annually review and approve the internal audit plan and any material
changes to audit methodology.
o Review significant findings of the internal audit department, and
management's responses to those findings, including the risk attributed to
unresolved issues.
Internal Controls and Procedures
o Annually review with management and the independent auditor, the basis for
disclosures made in the annual report to stockholders regarding the
control environment of the Company.
o At least annually consider, in consultation with management, the
independent auditor, and the internal auditor, the adequacy of the
Company's internal controls including the resolution of identified
material weaknesses and reportable conditions, if any.
o Review deficiencies, if any, identified by management in the design and
operation of internal controls which may be referred to in the Chief
Executive Officer and Chief Financial Officer certifications required by
the Sarbanes-Oxley Act of 2002.
o Periodically, as appropriate, review policies and procedures with respect
to risk assessment and risk management.
Other Duties
o Establish and ensure that procedures are in place for (i) the receipt,
retention and treatment of complaints received by the Company from any
source, either internally or externally, in connection with any
accounting, internal accounting controls, or audit matters, and (ii) the
submission by employees of the Company, on a confidential and anonymous
basis, of communications involving any employee concerns regarding
questionable accounting or auditing matters.
o Review any related party transactions in accordance with Union Bankshares,
Inc. Related Person Transactions Approval Policy.
o Annually review the adequacy of this Charter and recommend any proposed
changes to the Board for approval.
o The Committee shall have such other duties as the Board may delegate to
the Committee from time to time.
A-3
RESOURCES AND AUTHORITY
The Committee shall also have the authority to direct an investigation into any
matter related to the Company's business and affairs. The Committee may also
retain without approval from the Board or management its own outside counsel and
any other advisors that the Committee deems necessary in connection with
carrying out its duties. This does not preclude advice from internal counsel or
the Company's' outside counsel. The Committee shall determine, in its sole
discretion, the level of funding to compensate the independent auditor and any
counsel or advisor employed by the Committee and the Company shall be obligated
to make such funding available.
A-4
PLEASE DETACH HERE
PROXY
UNION BANKSHARES, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 2007
The undersigned hereby appoints JoAnn A. Tallman and Marsha A. Mongeon, and each
of them individually, as his or her lawful agents and proxies with full power of
substitution in each, to vote all of the common stock of Union Bankshares, Inc.
that the undersigned is (are) entitled to vote at the Annual Meeting of the
Shareholders to be held at the offices of Union Bank, 20 Lower Main Street,
Morrisville, Vermont on Wednesday, May 16, 2007, at 3:00 p.m., local time, and
at any adjournment thereof.
1. TO FIX THE NUMBER OF DIRECTORS AT EIGHT (OR SUCH LESSER NUMBER AS
CIRCUMSTANCES MAY WARRANT) FOR THE ENSUING YEAR AND TO ELECT THE NOMINEES
LISTED BELOW. (All terms expire at the next annual meeting.)
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY AS
(Except as noted below) TO ALL NOMINEES
Cynthia D. Borck Franklin G. Hovey, II Richard C. Sargent
Steven J. Bourgeois Richard C. Marron John H. Steel
Kenneth D. Gibbons Robert P. Rollins
INSTRUCTION: To withhold authority to vote for any individual nominees
while voting in favor of the others, strike a line through the nominee's name in
the list above.
2. TO AMEND SECTION 7 OF THE COMPANY'S AMENDED AND RESTATED ARTICLES OF
ASSOCIATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
5,000,000 TO 7,500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the persons named as Proxies are authorized to vote upon
such other business as may properly come before the meeting. If any such
business is presented, it is the intention of the proxies to vote the shares
represented hereby in accordance with the recommendations of management.
(continued, and to be signed on other side)
Union Bankshares, Inc.
20 Lower Main Street
PO Box 667
Morrisville, VT 05661
-----------------------------------
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PLEASE DETACH HERE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND MAY BE REVOKED AT ANY TIME
BEFORE IT IS EXERCISED. THE BOARD RECOMMENDS A VOTE "FOR" ARTICLES 1 AND 2.
SHARES WILL BE VOTED AS SPECIFIED. IF THE PROXY IS SIGNED AND DATED, BUT NO
VOTING SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
IN FAVOR OF ARTICLES 1 AND 2.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY CARD IN
THE SPACE PROVIDED AND RETURN IT IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU
EXPECT TO ATTEND THE MEETING IN PERSON.
_____ I/we plan to attend in person. (Number of persons attending: _____)
_____ I/we do not plan to attend in person.
Dated:__________________________, 2007
Please sign exactly as your name(s)
appear(s) on this proxy card. If shares
are held jointly, both holders should
sign. When signing as attorney,
executor, administrator, trustee,
guardian, or representative capacity,
please give full title as such. If a
corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership or
entity, please sign in partnership or
entity name by authorized person.
----------------------------------------
Signature
----------------------------------------
Signature if held jointly