UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No.     )
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Enterprise Bancorp, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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ENTERPRISE BANCORP, INC.

 

222 MERRIMACK STREET

LOWELL, MASSACHUSETTS 01852

TELEPHONE: (978) 459-9000

 

March 27, 2008

 

Dear Stockholder:

 

You are cordially invited to attend the 2008 Annual Meeting of stockholders (the “Annual Meeting”) of Enterprise Bancorp, Inc. (the “Company”), the parent holding company of Enterprise Bank and Trust Company, to be held on Tuesday, May 6, 2008, at 4:00 p.m. local time, at the Boston University Conference Center, 72 Tyng Road, Tyngsboro, Massachusetts.

 

The Annual Meeting has been called for the following purposes:

1.                                       To elect five Directors of the Company, each for a three-year term;

2.                                       To ratify the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008; and

3.                                       To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.

The accompanying Proxy Statement of the Company provides information concerning the matters to be voted on at the Annual Meeting. Also enclosed is the Company’s 2007 annual report to stockholders, which contains additional information and results for the year ended December 31, 2007, including the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission.

It is important that your shares be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are requested to either (1) deliver your proxy electronically by following the instructions included with your proxy card, OR (2) deliver your proxy by phone by following the instructions included with your proxy card OR (3) deliver your proxy by mail by completing, dating, signing and returning your proxy card in the enclosed postage paid envelope.

Thank you in advance for returning your proxy. We appreciate your continuing support of the Company.

	Sincerely,
	George L. Duncan
	Chairman of the Board

 

ENTERPRISE BANCORP, INC.

 

222 MERRIMACK STREET

LOWELL, MASSACHUSETTS 01852

TELEPHONE: (978) 459-9000

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

The Annual Stockholders Meeting of Enterprise Bancorp, Inc. will be held at the

BOSTON UNIVERSITY CONFERENCE CENTER

 

72 Tyng Road

 

Tyngsboro, MA 01879

 

on Tuesday, May 6, 2008 at 4:00 p.m.

 

The annual meeting is being held for the following purposes:

 

1.                                       To reelect Kenneth S. Ansin, John R. Clementi, Carole A. Cowan, Arnold S. Lerner and Richard W. Main to serve as Directors of the Company for a three-year term (Proposal One);

2.                                       To ratify the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008 (Proposal Two); and

3.                                       To transact any other business which may properly come before the meeting or any adjournments or postponements thereof.

You may vote at the Annual Meeting if you were a stockholder of record at the close of business on March 10, 2008.

 

In the event there are not sufficient votes to approve any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies by the Company.

 

By Order of the Board of Directors

 

 

Michael A. Spinelli

Secretary

 

222 Merrimack Street

Lowell, Massachusetts 01852

March 27, 2008

 

EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE (1) DELIVER YOUR PROXY ELECTRONICALLY BY FOLLOWING THE INSTRUCTIONS INCLUDED WITH YOUR PROXY CARD OR (2) DELIVER YOUR PROXY BY PHONE BY FOLLOWING THE INSTRUCTIONS INCLUDED WITH YOUR PROXY CARD OR (3) COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.  IF YOU ATTEND THE ANNUAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON, YOU MAY DO SO.

 

 

 

 

 

PROXY STATEMENT

 

ENTERPRISE BANCORP, INC.

 

222 MERRIMACK STREET

LOWELL, MASSACHUSETTS 01852

Telephone: (978) 459-9000

 

ANNUAL MEETING OF STOCKHOLDERS

To Be Held on Tuesday, May 6, 2008

 

GENERAL INFORMATION

 

Introduction

 

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Enterprise Bancorp, Inc. (the “Company”), the parent holding company of Enterprise Bank and Trust Company (the “Bank”), for the 2008 Annual Meeting of stockholders of the Company (the “Annual Meeting”), to be held on Tuesday, May 6, 2008 at 4:00 p.m. local time, at the Boston University Conference Center, 72 Tyng Road, Tyngsboro, Massachusetts and at any adjournments or postponements thereof. This Proxy Statement, the accompanying Notice of Annual Meeting and the accompanying proxy card are first being mailed to stockholders on or about March 27, 2008.

 

The Annual Meeting has been called for the following purposes: (1) to elect five Directors of the Company, each to serve for a three-year term; (2) to ratify the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008; and (3) to transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

 

The Company is a Massachusetts corporation and a registered bank holding company. All of the Company’s material business activities are conducted through the Bank.

 

Record Date

 

The Board of Directors has fixed the close of business on March 10, 2008 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof (the “Record Date”). Only holders of record of the Company’s common stock (the “Common Stock”) at the close of business on the Record Date will be entitled to vote.

 

 

1

 

 

At the close of business on the Record Date, there were 7,955,011 shares of the Common Stock issued and outstanding. The holders of shares of the Common Stock outstanding as of the close of business on the Record Date will be entitled to one vote for each share held of record upon each matter properly submitted to the Annual Meeting or any adjournments or postponements thereof.

 

Proxies

 

You may vote at the annual meeting in person or by proxy.  Proxies may be delivered electronically via the Internet, by phone, or in writing by mail.  If you intend to deliver a proxy electronically or by phone, you may do so by following the instructions included with your proxy card.  If you hold your shares in “street name”, such as in a stock brokerage account or through a bank or other nominee, you need to check your proxy card or contact your broker or nominee to determine whether electronic or telephonic proxy delivery is available to you. If you intend to deliver a proxy by mail, we request that you complete, date, sign and promptly return the accompanying proxy card in the enclosed envelope, which requires no postage if mailed in the United States.

 

If you are delivering a proxy electronically or by phone and you properly follow the instructions included with your proxy card for doing so by no later than the deadline indicated in such instructions or if you are delivering a proxy by mail and you return the enclosed proxy card properly executed to the Company in time to be voted at the Annual Meeting, then the shares represented by your proxy, regardless of the method of delivery,  will be voted in accordance with your voting instructions, unless you subsequently revoke your proxy as further explained below.

 

If you properly deliver your proxy, without including any instructions as to how your proxy should be voted, then your proxy will be voted as follows: (1) FOR the election of Kenneth S. Ansin, John R. Clementi, Carole A. Cowan, Arnold S. Lerner and Richard W. Main, the five nominees of the Board of Directors, as Directors of the Company; (2) FOR the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008; and (3) in such manner as management’s proxy-holders shall decide on such other matters as may properly come before the Annual Meeting or any adjournments or postponements thereof.

 

The presence of a stockholder at the Annual Meeting will not automatically revoke a stockholder’s proxy. A stockholder may, however, revoke a proxy at any time prior to the voting thereof on any matter (without, however, affecting any vote taken prior to such revocation) by filing with the Secretary of the Company a written notice of revocation, or by delivering to the Company a duly executed proxy bearing a later date, or by properly delivering a proxy electronically or by phone at a later date, or by attending the Annual Meeting and voting in person. All written notices of revocation and other written communications with respect to revocation of proxies in connection with the Annual Meeting should be addressed as follows: Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell, Massachusetts 01852, Attention: Michael A. Spinelli, Secretary.

 

It is not anticipated that any matters other than those set forth in the foregoing proposals (1) and (2) contained in this Proxy Statement will be brought before the Annual Meeting. If any other matters properly come before the Annual Meeting, the persons named as proxies will vote upon such matters in their discretion in accordance with their best judgment.

 

In addition to use of the mails, proxies may be solicited personally or by telephone, fax or e-mail by officers, Directors and employees of the Company, none of whom will be specially compensated for such solicitation activities. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for forwarding solicitation materials to the beneficial owners of shares held of record by such persons, and the Company will reimburse such persons for their reasonable out-of-pocket expenses incurred in that connection. The cost of soliciting proxies will be borne by the Company.

 

 

 

2

 

 

Quorum; Vote Required

 

The presence, in person or by proxy, of at least a majority of the total number of outstanding shares of the Common Stock is necessary to constitute a quorum at the Annual Meeting for the transaction of business. Abstentions and “broker non-votes” (as defined below) will be counted as present for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting.

 

The number of affirmative votes required for approval of the matters to be considered at the Annual Meeting is as follows:

 

·                  A plurality of the affirmative votes cast by shareholders present, in person or by proxy, at the Annual Meeting is required for the election of directors.  “Plurality” means that the nominees receiving the largest number of affirmative votes cast are elected as directors up to the maximum number of directors who are nominated to be elected at the annual meeting.  At the Annual Meeting the maximum number of directors to be elected is five.

 

·                  A majority of affirmative votes cast by shareholders present, in person or by proxy, at the Annual Meeting is required to ratify the appointment of KPMG LLP as our independent registered public accounting firm for 2008.

 

In voting for the election of directors, you may vote “for” all nominees or “withhold” your vote from all nominees or from only certain specified nominees.  Withholding a vote from all or some of the nominees is effectively a vote against such nominee(s), but will not prevent the election of such nominee(s) so long as such nominee(s) receive a plurality of the affirmative votes cast at the Annual Meeting.

 

In voting for the ratification of the appointment of KPMG as our independent registered public accounting firm for 2008, you may vote “for” or “against” such ratification or you may “abstain” from voting on the matter.  Under Massachusetts law, an abstention is not considered a vote cast at a meeting and, consequently, abstentions will have no effect on the voting for this proposal.

 

With respect to either of the matters to be considered at the Annual Meeting, broker non-votes will be disregarded for purposes of determining whether a proposal has been approved.

 

Under existing stock exchange rules, banks, brokers, or other nominees may vote shares held for a customer in street name on matters that are considered to be “routine” even if they have not received voting instructions from their clients.  A broker “non-vote” occurs when a bank, broker, or other nominee has not received voting instructions from a customer and does not vote the customer’s shares either because the matter is not considered routine or because the bank, broker or other nominee does not exercise its prerogative to vote even if the matter is considered routine.

 

The two matters before the meeting this year, namely the election of directors and the ratification of the appointment of the independent registered public accounting firm, are considered “routine” matters, which means that if your shares are held in street name your bank, broker, or other nominee may vote your shares on these matters in its sole discretion if you do not provide timely instructions for voting your shares.

 

The Directors and executive officers of the Company have indicated that they intend to vote all shares of the Common Stock that they are entitled to vote in favor of each of proposals (1) and (2)  presented herein. On the Record Date, the Directors and executive officers of the Company in the aggregate had the right to vote 2,223,541 shares of the Common Stock representing approximately 27.95% of the outstanding shares of the Common Stock as of such date.

 

 

 

3

 

 

2007 Amendment of By-laws

 

On May 1, 2007, pursuant to its authority under the Company’s articles of organization and by-laws, the Board of Directors approved an amendment to the Company’s by-laws.  The purpose of the amendment was to provide the Board of Directors with greater flexibility in setting the time for its regular meeting coinciding with the annual meeting of shareholders, at which the Board of Directors appoints the Company’s officers for the upcoming year.  A copy of the Company’s current Amended and Restated By-laws was filed with the Securities and Exchange Commission on May 7, 2007 as Exhibit 3.2 to the Company’s current report on Form 8-K.  You can access a copy of the by-laws through the SEC’s web site at http://www.sec.gov or you can request a copy from the Company by either directing your request in writing to:  Enterprise Bancorp, Inc, 222 Merrimack Street, Lowell, Massachusetts 01852, Attention:  Michael A. Spinelli, Secretary, or by calling Jim Marcotte directly at (978) 656-5614.

 

PROPOSAL ONE

 

ELECTION OF CLASS OF DIRECTORS

 

The Company’s By-Laws provide that the number of Directors shall be set by a majority vote of the entire Board of Directors. The number of Directors for the Company has been set at 15 through the date of the Annual Meeting.  Under the Company’s Articles of Organization and By-Laws, this number is divided into three classes, as nearly equal in number as possible, with the Directors in each class serving a term of three years and until their respective successors are duly elected and qualified, or until his or her earlier resignation, death or removal. As the term of one class expires, a successor class is elected at the annual meeting of stockholders for that year.

 

Kenneth S. Ansin is on a temporary leave of absence from the Board of Directors, effective January 1, 2008, as he is traveling in order to work on microfinancing research.

 

At the Annual Meeting, there are five Directors to be elected to serve until the 2011 annual meeting of stockholders and until their respective successors are duly elected and qualified, or until his or her earlier resignation, death or removal. The Board of Directors has nominated, upon the recommendation of the Board’s Corporate Governance/Nominating Committee, each of Kenneth S. Ansin, John R. Clementi, Carole A. Cowan, Arnold S. Lerner and Richard W. Main, for election as a Director for a three-year term.

 

Unless authority to do so has been withheld or limited in the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election as a Director of each of the nominees named above. The Board of Directors believes that all of the nominees will stand for election and will serve as a Director if elected. However, if any person nominated by the Board of Directors fails to stand for election or is unable or refuses to accept election, the proxies will be voted for the election of such other person or persons as the Board of Directors may recommend.

 

Information Regarding Nominees

 

The following table sets forth certain information for each of the five nominees for election as Directors at the Annual Meeting. Each individual has been engaged in his or her principal occupation for at least five years, except as otherwise indicated.

 

 

 

4

 

 

 

Nominees

 

(Term to Expire in 2011)

 

Name, Age and Principal Occupation		Director Since (1)
Kenneth S. Ansin (43) Entrepreneur and Private Investor; prior to August 2007, Owner and President of Norwood Fine Cabinetry, a privately held company specializing in kitchen and bath cabinetry		1994
John R. Clementi (58) President, Plastican, Inc., a privately held manufacturer of plastic pails and covers		1998
Carole A. Cowan (65) President, Middlesex Community College		1999
Arnold S. Lerner (78) Retired Radio Station Owner; Vice Chairman of the Company and the Bank; Director, Courier Corporation, a publicly held company specializing in the publishing, printing and sale of books		1988
Richard W. Main (60) President of the Company and President and Chief Lending Officer of the Bank; prior to January 2005, President, Chief Operating Officer and Chief Lending Officer of the Bank		1989

 

(1)   All of the listed Nominees are also Directors of the Bank. The years listed in the foregoing table are the respective years in which each named individual first became a Director of the Company and the Bank.

 

For information regarding the remaining members of the Board of Directors, who will continue to serve after the Annual Meeting, see the listing under the heading “Continuing Directors” at pages 7-8 below.

 

Recommendation of Directors

 

The Board of Directors recommends that the stockholders vote FOR the election of Kenneth S. Ansin, John R. Clementi, Carole A. Cowan, Arnold S. Lerner and Richard W. Main, the five nominees proposed by the Board of Directors, as Directors of the Company to serve until the 2011 annual meeting of stockholders and until their successors are duly elected and qualified.

 

 

5

 

PROPOSAL TWO

 

RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee has appointed KPMG LLP to serve as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2008.

 

The Company is not required to submit the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm to a vote of stockholders. In the event a majority of the votes cast are against the appointment of KPMG LLP, the Audit Committee may consider the vote and the reasons therefor in future decisions on its appointment of the Company’s independent registered public accounting firm.

 

Representatives of KPMG LLP are expected to attend the annual meeting at which time they will have an opportunity to make a statement if they wish to do so and will be available to answer any appropriate questions from stockholders.

 

Audit Fees

 

The aggregate fees billed by KPMG LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements for the year ended December 31, 2007 and the review of the consolidated financial statements included in the Company’s quarterly reports on Form 10-Q as filed with the SEC during the year ended December 31, 2007 were $347,500. The same fees for the year ended December 31, 2006 were $328,000.

 

Audit-Related Fees

 

In addition to the audit fees billed by KPMG LLP, as referred to above, the aggregate fees billed to the Company for audit-related fees for the years ended December 31, 2007 and December 31, 2006 were $0 and $27,000, respectively. The fee paid in 2006 related to audits of the Company’s 401(k) plan, which KPMG did not audit in 2007.

 

Tax Fees

 

The Company paid $24,600 in 2007 and $20,700 in 2006 to KPMG LLP for tax preparation services performed in each of these two years.

 

All Other Fees

 

No additional fees were paid to KPMG LLP in 2007 and 2006.

 

The Audit Committee must approve in advance any audit or permissible non-audit engagement or relationship between the Company and its independent registered public accounting firm. The Audit Committee has delegated to its chairman this approval authority, subject to the requirement that the chairman report the terms of any such engagement or relationship to the full Audit Committee at its next regularly scheduled meeting. All of the services described above, including those described under the headings, “Audit-Related Fees”, “Tax Fees”, and “All Other Fees”, were provided in conformance with such pre-approval requirements. The Audit Committee has determined that providing the services described above under the headings, “Audit-Related Fees”, “Tax Fees”, and “All Other Fees”, is compatible with maintaining the independence of KPMG LLP.

 

 

 

6

 

 

Recommendation of Directors

 

The Board of Directors recommends that the stockholders vote FOR the ratification of the Audit Committee’s appointment of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2008.

 

BOARD OF DIRECTORS

 

In addition to the nominees for election to the Board of Directors set forth above, the Board of Directors is comprised of the individuals listed below whose terms expire at the annual meetings of the Company’s stockholders in 2009 and 2010.  Each individual has been engaged in his or her principal occupation for at least five years, except as otherwise indicated.

 

Continuing Directors

(Term to Expire in 2009)

 

Name, Age and Principal Occupation		Director Since (1)
John P. Clancy, Jr. (50) Chief Executive Officer of the Company and the Bank (and prior to July, 2007, also Chief Investment Officer of the Bank); From January 1, 2005 through December 31, 2006, Executive Vice President and Chief Operating Officer of the Company and Executive Vice President, Chief Operating Officer and Chief Investment Officer of the Bank; from January 1, 2003 through December 31,2004, President and Treasurer of the Company and Executive Vice President, Treasurer and Chief Investment Officer of the Bank (prior to May 2003, also Chief Financial Officer of the Bank)		2003
James F. Conway, III (55) President, Chief Executive Officer and Chairman, Courier Corporation, a publicly held company specializing in the publishing, printing and sale of books		1989
Lucy A. Flynn (54) Vice President Global Marketing Communications, Raytheon Company, a publicly held technology company specializing in defense, homeland security and other government markets		1997
John P. Harrington (65) Energy Consultant for Tennessee Gas Pipeline Company; since May 2007, Assistant Secretary of the Company and the Bank		1989
Nickolas Stavropoulos (50) Executive Vice President, US Gas Distribution, National Grid, a publicly held company focused on the delivery of electricity and natural gas; from June 2004 through August 2007, President, KeySpan Energy Delivery, and Executive Vice President, KeySpan Corporation; prior to June 2004, Executive Vice President, KeySpan Corporation and President, KeySpan Energy New England		2002

 

 

7

 

 

(Term to expire in 2010)

 

Name, Age and Principal Occupation		Director Since (1)
Nancy L. Donahue (77) Philanthropist and Chair of the Merrimack Repertory Theatre		1988
George L. Duncan (67) Chairman of the Company and the Bank since their inception; prior to January 2007, also Chief Executive Officer of the Company and the Bank since inception		1988
Eric W. Hanson (64) Chairman of the Board, D.J. Reardon Company, Inc., a privately held distributorship of Anheuser-Busch beverages and affiliated brands		1991
Carol L. Reid (60) Financial Executive; prior to September 2005, Vice President, Corporate Controller and Chief Accounting Officer of Avid Technology, Inc., a publicly held company specializing in digital media creation tools for film, audio, animation, games and broadcast		2006
Michael A. Spinelli (75) Founder, Global Tourism Solutions, an international tourism consulting firm for emerging nations; Secretary of the Company and the Bank		1988

(1)          All of the Directors are also Directors of the Bank. The years listed in the foregoing tables are the respective years in which each named individual first became a Director of the Company and the Bank.

 

Independence of Board of Directors

 

                The Board of Directors has determined that every individual who served as a Director during the year ended December 31, 2007 is “independent” of the Company’s management on the basis of the independence standards contained in Rule 4200(a)(15) of the Marketplace Rules of The NASDAQ Stock Market, except for Messrs. Duncan, Main and Clancy, who are all current employees of the Company.

 

                With respect to each of the Company’s independent Directors, there were no transactions, relationships or arrangements that have not been disclosed in this Proxy Statement under the heading “Transactions with Certain Related Persons” at page 29 below, which were considered by the Board of Directors pursuant to the independence standards referred to in the preceding paragraph in the course of the Board’s determining that each such Director meets the definition of independence.

 

Meetings of Board of Directors and Committees of Enterprise Bancorp, Inc. and Enterprise Bank and Trust Company

 

There were nine joint meetings of the Company’s (i.e., Enterprise Bancorp, Inc.) Board of Directors and the Bank’s (i.e., Enterprise Bank and Trust Company) Board of Directors during the calendar year ended December 31, 2007. During such period, each Director attended more than 75% in the aggregate of the total number of meetings of the Board of Directors and of each of the committees of the Board of Directors on which he or she served, excluding Mr. Stavropoulos.

 

 

8

 

 

The Company’s Board of Directors maintains five standing committees; an executive committee, an audit committee, an asset-liability committee, a compensation committee, and a corporate governance/nominating committee.

 

The Bank’s Board of Directors has an executive committee, an audit committee, an asset-liability committee, a compensation committee, a corporate governance/nominating committee, a marketing and business development committee, a banking technology steering committee, an investment advisory group committee and a loan committee.

 

Executive Committee. The executive committee is authorized to manage and transact the business of the Company and the Bank. In addition, loans over certain amounts must be approved by the executive committee.

 

Audit Committee.  The audit committee is directly responsible for the appointment, compensation and oversight of the work of the Company’s independent registered public accounting firm.  Among other responsibilities, the audit committee also oversees and reviews all internal audit examinations and reports of the Company and the Bank, and reviews all audit reports of the Company prepared by the Company’s independent registered public accounting firm and all reports of examination of the Company and of the Bank prepared by regulatory authorities. The audit committee held three executive sessions during 2007 with the Company’s independent registered public accounting firm, KPMG LLP.

 

Asset-Liability Committee (ALCO). The asset-liability committee is responsible for Board oversight of the Company’s  and the Bank’s management of interest rate risk, capital adequacy and liquidity. Through the Company’s and Bank’s asset-liability and investment policies, the committee monitors, evaluates and controls interest rate risk, as a whole and within certain tolerance levels, while ensuring adequate liquidity and adequate capital.

 

Compensation Committee (Compensation). The compensation committee is responsible for establishing the Company’s executive compensation standards and overseeing the administration of the Company’s compensation and benefits programs, including its equity compensation programs.  The committee is also responsible for overseeing the administration of the employee benefit and compensation programs of the Bank.

 

Corporate Governance/Nominating Committee (CGNC). The corporate governance/nominating committee is responsible for developing and recommending to the Board the corporate governance principles applicable to the overall governance of the Company and of the Bank. The corporate governance/nominating committee’s specific responsibilities include developing and recommending to the Board independence standards for Board members, evaluating the performance of the Board and its various committees, recommending to the Board the appointment of individual directors to the Board’s various committees, recommending to the Board the director nominees for election at the Company’s annual meeting of shareholders, developing and recommending criteria for the selection of new directors and reviewing and making recommendations on shareholder proposals.

 

Marketing and Business Development Committee (Marketing). The marketing and business development committee reviews the Bank’s marketing and business development activities.

 

Banking Technology Steering Committee (Technology). The banking technology steering committee is responsible for overseeing the technology related functions of the Bank with particular attention to operational risk management.

 

Investment Advisory Group Committee (IAG). The investment advisory group committee is responsible for overseeing the Bank’s trust and investment management activities, including administering trust policy and reviewing trust accounts.

 

Loan Committee. The loan committee reviews and considers loans proposed for charge-off, as well as loans on the Watch Asset list and other problem loans. The committee also reviews and considers various reports on the

 

 

 

9

 

 

commercial loan portfolio and certain larger commercial relationships, with a particular focus on larger construction lending relationships.

 

The following table provides 2007 membership by current Directors and meeting information for each of the standing committees of the Company and the Bank:

 

Executive (1)

Audit

Compensation

ALCO (1)

Marketing

Technology

IAG (1)

Loan

CGNC

Ansin

X*

X

X

Clancy

X

X (2)

X*

X

X

X

Clementi

X

X

X*

X

Conway

X

X*

X

Cowan

X

X

X

X*

X

Donahue

X

X

X

X

Duncan

X

X

X

X

Flynn

X

X

X

Hanson

X

X

X*

Harrington

X

X

X

X

X

Lerner

X

X

X

X

X*

Main

X*

X

X

X

X

Reid

X**

X

X

X

Spinelli

X

X

X

X

Stavropoulos

X*

X

Total Meetings Held in 2007

9 mtgs

8 mtgs

7 mtgs

4 mtgs

3 mtgs

4 mtgs

6 mtgs

6 mtgs

5 mtgs

 

*indicates Committee Chairperson

 

**indicates Committee Vice Chairperson

 

(1)                                  Up to three additional members are chosen to serve on a three-month rotating basis from among the remaining members of the Board of Directors.

 

(2)                                  Mr. Clancy is serving as Chairperson of the Asset-Liability Committee during Mr. Ansin’s leave of absence.

 

DIRECTOR COMPENSATION

 

All members of the Board of Directors are Directors of the Company and of the Bank.  All compensation paid to the Directors for their service as members of the Board of Directors is paid through the Bank. The Bank pays $350 to Directors for attendance at Board of Directors meetings, executive committee meetings and audit committee meetings.  The Bank pays $250 to Directors for attendance at all other committee meetings.  The Bank also pays retainers to certain Directors as detailed in the following table:

 

 

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(1)          Retainers are paid in equal monthly installments.

 

(2)          Retainers are paid in equal quarterly installments.

 

(3)          The annual retainer paid to members of the Executive Committee is based on the actual number of Executive Committee meetings held.  Members are paid a retainer of $200 per meeting or $1,800 annually based on the Company’s current practice of holding nine meeting per year.

 

Directors who are also full-time salaried officers of the Bank are not paid for attending Board of Directors or committee meetings and do not receive retainers of any kind for their services in any capacity as Directors.

 

For the year 2007, Directors had the right to make an irrevocable election (by December 31, 2006) to receive shares of Common Stock in lieu of receiving an elected portion of cash fees. The number of shares issued to Directors pursuant to this election was based on the value of the Common Stock at January 3, 2007, based on the average of the high and low trade prices of the Common Stock on the NASDAQ Global Market on that date.  For the year 2007, the Company issued a total of 10,739 shares of Common Stock to nine Directors at a per share issuance price of $15.40.  These shares were issued in January 2008.  For the year 2008, Directors have the same option to receive shares of Common Stock in lieu of cash fees at a per share issuance price of $12.875, which reflects the value of the Common Stock at January 2, 2008, based on the average of the high and low trade prices of the Common Stock on the NASDAQ Global Market on that date.

 

The Company believes that giving Directors the option to receive stock in lieu of cash fees further aligns Directors’ interests with those of the Company’s shareholders.

 

 

 

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The following table details the total compensation paid to each Director for the year ended December 31, 2007.

 

 

(1)          All Directors, excluding Messrs. Hanson, Lerner and Spinelli, elected to receive all or a portion of their total Director compensation in shares of Common Stock, which were issued in January 2008.

 

During 2007, none of the above listed Directors received any stock awards, option awards or non-equity incentive plan compensation, nor did they have pensions or nonqualified deferred compensation earnings.  None of the above-listed Directors held any outstanding stock options as of December 31, 2007.

 

INFORMATION REGARDING EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES

 

Set forth below is certain information regarding the executive officers of the Company (including the Bank), other than those executive officers who are also Directors of the Company and for whom such information has been provided above.  Each individual named below has held his position for at least five years, except as otherwise indicated.

 

Name		Age		Position
Robert R. Gilman		63		Executive Vice President, Administration, and Commercial Lender of the Bank
Stephen J. Irish		53		Executive Vice President and Chief Information Officer of the Bank; prior to January 1, 2005, also Chief Operations Officer of the Bank
James A. Marcotte		50		Executive Vice President, Chief Financial Officer and Treasurer of the Company and the Bank; prior to January 1, 2005, Senior Vice President and Chief Financial Officer of the Company and the Bank

 

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

Objectives and Design

 

The Company’s core compensation philosophy provides that total annual compensation levels should: (1) be competitive relative to those found in other commercial banking organizations of comparable asset size and performance; (2) reflect individual responsibilities, performance, and contributions to the Company; and (3) provide incentive to achieve business and financial objectives.  The Company believes that this compensation philosophy is necessary to attract, motivate and retain highly qualified executives who are essential to achieving the financial goals set by the Board of Directors and sustaining long-term value for shareholders.

 

Consistent with this philosophy, the Compensation Committee regularly obtains information regarding compensation levels in the Company’s industry through various sources, including compensation surveys conducted by banking industry associations and independent compensation consultants.  The Company also regularly reviews the responsibilities and ongoing contributions of executive officers to the Company.  Elements of compensation are established with the goal of rewarding the executive officers for the attainment of both individual and organizational short- and long-term goals.  The Company generally attempts to set total attainable compensation for each individual at or above the midpoint range of peer compensation subject to individual and Company financial performance.

 

In August 2007, the Company revised the Compensation Committee Charter to further align executive compensation review and process with evolving best practices.  Under the revised Compensation Committee Charter, the Compensation Committee reviews the performance of the Chairman and Chief Executive Officer and recommends any necessary changes in their compensation to the Board of Directors for review and approval.  In addition, the Chief Executive Officer of the Company evaluates the performance of the remaining executive officers and recommends compensation adjustments to the Compensation Committee.  The Committee reviews the Chief Executive Officer’s recommendations and recommends executive compensation adjustments to the Board of Directors for approval.

 

The Company at least annually assesses total compensation paid to its executive officers.  As part of this process, the Compensation Committee assesses and evaluates the elements of total compensation, as paid to executive officers as a group and/or to individual executives, and determines if any modifications are advisable.

 

Elements and Rationale

 

                Executive compensation may include the following components in addition to an executive’s base salary:  incentive cash compensation, long-term equity compensation, supplemental retirement benefit, supplemental life insurance benefit, income protection following a change in control or other termination and perquisites, including club memberships and automobiles.  Each of these components is reviewed and approved by the Compensation Committee and the Board of Directors on at least an annual basis.  The Company believes that by using a combination of these elements it is best able to find an effective balance in motivating each executive to achieve long-term and short-term goals, thereby enhancing long-term shareholder value.  In establishing the components of compensation for each individual executive officer, the Compensation Committee considers the performance of the individual, the executive’s designation or role within the organization and the cost to the Company of the various components of compensation to be provided.

 

 

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                Base Salary

 

The Company has periodically engaged Pearl Meyer & Partners to review the cash elements of the Company’s executive compensation and provide regional and national bank benchmarking on overall total compensation.  Based upon these comprehensive salary reviews and competitive assessments performed by Pearl Meyer & Partners, and a review of individual executive’s responsibilities and performance, as well as a consideration of the various components of compensation provided to the individual executives, the 2007 annual base salary for Mr. Duncan was $203,900, Mr. Clancy was $275,000, Mr. Main was $193,920, Mr. Marcotte was $180,500, and Mr. Gilman was $166,880.

 

In early 2008, the Company engaged the same consulting firm to conduct an updated competitive market review of the Company’s executive annual cash compensation program.  Based upon this competitive assessment, as well as a review of individual executive’s breadth of responsibilities, performance, and contributions, and a review of overall total compensation, the Compensation Committee recommended, and the Board of Directors approved, an increase in Mr. Marcotte’s and Mr. Clancy’s base salaries to $187,720 and $350,000, respectively, effective March 31, 2008.  The base salaries of Messrs. Duncan, Main and Gilman have been maintained at their 2007 levels after also considering the amounts charged to expense by the Company in 2007 in connection with these executives’ supplemental retirement plan as further described below.  The Compensation Committee may further consider for recommendation to the Board of Directors adjustments to base salaries or other components of total compensation of the executives officers later in the year.

 

               Incentive Compensation

 

In 2007, the Company replaced its previous non-equity incentive compensation plans with a bank-wide incentive compensation program.  The purpose of the 2007 incentive compensation program was to align each employee’s interests with the short-term and long-term strategic goals of the Company.  Under this program, all employees, including executive officers, were eligible to receive an annual incentive bonus based upon the attainment of various predetermined financial performance goals, which varied in part with the different functional areas of the Company.  Under the program, potential incentive payouts were a percentage of an employee’s 2007 earnings, subject to achieving minimum performance targets before any payments were earned.  The amount of an individual employee’s potential bonus under the program was determined not only on the basis of the individual’s role or responsibility within the Company, but also, if there was a payout, it could be adjusted positively or negatively based upon the individual’s performance. The target incentive payout for executive officers was 35% of 2007 base wages, exclusive of bonus, individual or referral incentive payments, with a range from no payout to a maximum payout of 52.5% of 2007 base wages.  Key financial performance goals for executives under the program in 2007 were:  (1) net income growth (50% weighting) and (2) other growth factors, such as growth in loans, deposits and investment management assets (50% weighting).

 

Incentive cash compensation to the executive officers for 2007 was calculated using the predetermined financial goals set forth in the incentive program and a review of the officers’ individual performances.  Based upon the achievement of a combined 25% of the overall targeted bonus level, executives earned incentive payments equal to 8.75% of their respective 2007 base wages, which are included in the Summary Compensation Table at Page 19 below as the amounts shown for 2007 under the heading “Non-Equity Incentive Plan Compensation”.

 

 

 

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                Long-Term Equity Compensation

 

The Company aligns the interests of the Company’s executives with the long-term interests of stockholders through the granting of stock options and restricted stock at fair market value.  In connection with its compensation program, the Company evaluates the issuance of option grants to employees on an annual basis. Options to executive officers have been considered and granted at the same time that options are granted for all employees during the first quarter of each year. In addition, dependent upon an individual’s position and level of responsibility and the recommendation of executive management, the Compensation Committee grants selected newly hired officers stock options on the date of hire. Stock options are granted to executives both to reward performance and as a retention tool. The total number of options granted is determined after considering various factors such as overhang and run rate, which are both measurements of potential dilution.  The number of options granted to individual employees, including executives, is also based upon various factors, but is primarily based upon an employee’s level of responsibility and individual performance and contribution.  Stock option grants to all employees are recommended by executive management and are subject to the approval of the Compensation Committee.  In addition to the recommendation of executive management and Compensation Committee approval, under the revised Compensation Committee Charter, all options granted to executive officers must also be approved by the Board of Directors.  In all cases, the exercise price of the option is established based on the market price of the Company’s stock on the date that the option is granted.

 

On March 7, 2007, the Company granted a total of 124,100 options to employees at an exercise price of $16.50 per share, which reflected the market price of the Company’s common stock on the date of grant, of which 13,000 were granted to Mr. Duncan, 13,000 to Mr. Clancy, 6,500 to Mr. Main, 4,000 to Mr. Gilman and 4,000 to Mr. Marcotte.

 

On March 18, 2008, the Company granted a total of 131,000 options to employees at an exercise price of $12.75 per share, which reflected the market price of the Company’s common stock on the date of grant.  Of the 131,000 options granted, the Board approved grants of 10,000 to Mr. Duncan, 10,000 to Mr. Clancy, 7,500 to Mr. Main, 3,500 to Mr. Marcotte, and 3,500 to Mr. Gilman.  The Company engaged Pearl Meyer & Partners to review the number of options granted to each of the executive officers.  The number of options granted to the executives are considered to be consistent with the Company’s philosophy of maintaining broad-based employee participation in the Company’s equity compensation program and to be within competitive ranges for executive management based upon the current business environment.

 

The Company may also grant restricted stock and other forms of equity awards under the terms of its existing equity incentive plans, although no restricted stock grants or any other forms of equity award were made in 2007.

 

                Supplemental Retirement Benefit and Supplemental Life Insurance Benefit

 

The Company believes that providing supplemental retirement and supplemental life insurance benefits provide a long-term retention tool for employees in management positions as well as providing a reward component to the executive.

 

The Bank is party to salary continuation and supplemental life insurance agreements with each of Messrs. Duncan, Main and Gilman.  The Bank entered into these agreements in 2005 as part of a restructuring of the Bank’s supplemental retirement programs for these executives, which was necessitated by changes in the tax treatment and compliance requirements applicable to supplemental retirement programs of the type originally put into place by the Bank.  The original programs were first implemented by the Bank for both retention and reward purposes and reflected the critical role that these executives played in the founding of the Bank and the development of its business.  The terms of these salary continuation agreements, and the annual amounts payable to the executives

 

 

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thereunder, are described further at page 26 below.  The annual expense incurred by the Company in maintaining this supplemental retirement benefit for each executive equals the annual increase of the present value of the accumulated benefit to be paid to the executive.  This amount is included for each of the executives in the Summary Compensation Table at page 19 below under the heading “Change in Pension Value and Nonqualified Deferred Compensation Earnings”.

 

The supplemental life insurance benefits that are payable to Messrs. Duncan, Main and Gilman are included in the amounts shown as payable in the event of death in the table at page 26 below and are specifically referenced in footnote (4) to the table.

 

During 2006, the Company initiated a supplemental life insurance benefit plan for a number of its employees in management positions.  Under this plan, the Company has provided supplemental life insurance benefits to the employees, subject to certain restrictions.  Mr. Clancy and Mr. Marcotte participate in this plan and the amounts of their supplemental life insurance benefits are included in the amounts shown as payable in the event of death in the table at page 26 below and are specifically referenced in footnote (4) to the table.

 

                Income Protection

 

In addition to the above noted elements of compensation, Messrs. Duncan, Main and Clancy have employment agreements with the Company (which include non-competition restrictions) and Mr. Gilman has entered into a change in control/noncompetition agreement with the Company.  These agreements provide the employee protection in the event of a change in control of the Company by allowing the employee to terminate his employment and receive predefined payments.  The employment agreements with Messrs. Duncan, Main and Clancy also provide for payments of various amounts in other situations in which the executive’s employment is terminated.  The Company believes these agreements are an important tool in retaining key executives while providing protection to the Company by restricting the executive’s ability to compete in the Company’s marketplace if he were to leave prior to any change in control.  These agreements are described on pages 23 - 25 below and the amounts payable thereunder following a change in control of the Company or other termination of the executive’s employment are included in the table at page 26 below.  The Company feels the non-competition protection afforded by these agreements is critical in the Company’s competitive marketplace and believes the payment amounts are aligned with industry norms and are limited by automatic “cutback” provisions that ensure payments will not exceed the limits specified under Section 280G of the Internal Revenue Code.

 

                Perquisites

 

In addition to their participation in the Company’s general employee benefit plans, as described in footnote (4) of the Summary Compensation Table at pages 19 - 20 below, the Company also provides company-owned vehicles for the use of Messrs. Duncan, Main and Clancy and the Company pays dues related to club memberships for business development purposes for Messrs. Duncan and Main.  The Compensation Committee believes that the cost of these additional perquisites is modest for the size of the Company and that providing them is consistent with maintaining a competitive total compensation and benefits package for senior management.

 

2007 Executive Compensation Program

 

In determining total 2007 compensation (including base salary, total incentive compensation levels, long-term equity compensation, supplemental retirement benefits and other perquisites), the Compensation Committee reviewed compensation data for other commercial banking organizations of similar size, including the data provided by Pearl Meyer & Partners.  Specific executive positions were matched as closely as possible with positions from other banking organizations with similar functional responsibilities to assist in the evaluation of compensation.

 

 

 

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The non-equity incentive compensation that was paid to the Company’s executive officers in 2007, as described above, was based upon the Company achieving net income growth of 7%. Executive officers did not earn incentive payouts based upon other growth targets, such as growth in loans, deposits and investment management assets, as minimum target levels were not reached with respect to these other performance criteria.

 

Other than adoption of the bank-wide incentive program, there were no significant changes to the compensation elements for the Company’s executive officers in 2007.  Total compensation earned by the Company’s executive officers in 2007 reflected an increase as compared to 2006 due to (1) an increase in base salaries for Messrs. Clancy, Gilman and Marcotte, (2) the earning of an incentive payout based upon the Company’s attainment of net income growth, whereas in 2006 no bonus was earned because minimum performance targets were not reached, (3) the value of previously granted stock options that was required to be recognized in 2007 in accordance with generally accepted accounting principles, and (4) with respect to Messrs. Duncan, Main and Gilman, the increase in 2007 in the value of the accumulated benefit attributable to the executive’s supplemental retirement plan.

 

The Company believes that its 2007 executive compensation program successfully linked executive compensation to the Company’s financial performance.

 

COMPENSATION COMMITTEE MATTERS

 

Role of the Compensation Committee

 

The Compensation Committee of the Board of Directors is comprised entirely of independent members of the Board of Directors. It is the responsibility of the Compensation Committee to review the performance of the Chairman and Chief Executive Officer and recommend any necessary changes in their compensation to the Board of Directors for review and approval.  The Company’s Chief Executive Officer evaluates the performance of the remaining executive officers and recommends compensation adjustments to the Compensation Committee.  The Committee reviews the Chief Executive Officer’s recommendations and recommends executive compensation adjustments to the Board of Directors for approval. During 2007, the Board of Directors approved all recommendations presented by the Compensation Committee.

 

                The Compensation Committee has the authority to retain or obtain advice from independent advisors as it deems necessary to perform its role.  During 2007, the Committee obtained the services of Pearl Meyer & Partners which are discussed in further detail in the Company’s Compensation Discussion and Analysis at pages 13-17 above.

 

The Compensation Committee operates under a written charter, a copy of which can be found on the Company’ s website (www.enterprisebanking.com).

 

Compensation Committee Report

 

The Compensation Committee has reviewed and discussed the Company’s Compensation Discussion and Analysis contained at pages 13-17 above (the “CD&A”) with management and based on this review and discussion the Compensation Committee has recommended to the Board of Directors that the CD&A be included in this Proxy Statement.

 

James F. Conway III (Chairperson)

John R. Clementi

Carole A. Cowan

Eric W. Hanson

Arnold S. Lerner

 

 

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Compensation Committee Interlocks and Insider Participation

 

                The Directors listed above under the heading “Compensation Committee Report” at page  17 constitute all of the individuals who served as members of the Compensation Committee during the year ended December 31, 2007.  None of these Directors was an officer or employee of the Company at any time during such period or has ever been an officer of the Company.  None of these Directors has had any relationship with the Company that would require disclosure in this Proxy Statement under the heading “Transactions with Certain Related Persons” at pages 29 - 30 below under applicable SEC rules.

 

                As described in further detail under the heading “Transactions with Certain Related Persons” at pages 29 - 30 below, the members of the Compensation Committee, as well as businesses and other entities with which they may be affiliated, are customers of the Bank and/or have entered into loan transactions with the Bank in the ordinary course of business.

 

EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth the compensation paid by the Company (through the Bank) for services rendered in all capacities during the years ended December 31, 2007 and December 31, 2006, to the Chief Executive Officer, the Chief Financial Officer and each of the three other most highly compensated executive officers of the Bank (the “Named Executive Officers”).  The Company does not employ any persons, other than through the Bank.

 

 

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SUMMARY COMPENSATION TABLE

 

 

(1)          For Mr. Clancy, the value of the stock awards is based on the accounting expense recognized by the Company in 2007 and 2006 with respect to a grant of restricted stock in 2005.  The expense is recognized over the vesting period of the restricted stock.  For additional information regarding the valuation of these stock awards, refer to footnote 9 on pages 79-83 of the Company’s Annual Report on Form 10-K.  For information on vesting, refer to the table “Outstanding Equity Awards at Fiscal Year-End” and the associated footnote 2 at pages 22-23 below.

 

(2)          The value of the option awards is based on the accounting expense recognized by the Company in 2007 and 2006 with respect to options previously granted in 2004, 2005 and 2007.  The expense is recognized over the vesting period of the option.  For assumptions used in calculating the value of option awards, refer to footnote 9 on pages 79-83 of the Company’s Annual Report on Form 10-K.  For information on vesting, refer to the table “Outstanding Equity Awards at Fiscal Year-End” and the associated footnote 1 at pages 22-23 below.

 

 

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(3)          For each of Messrs. Duncan, Main, and Gilman, this amount is equal to the increase in 2007 and 2006 of the present value of the accumulated benefit attributable to the executive’s supplemental retirement plan.

 

(4)          For each of the named executive officers, these amounts include the annual matching contributions by the Bank to the Bank’s 401(k) plan, which equaled $6,098 in 2007 and $6,661 in 2006 for Mr. Duncan, $5,819 in 2007 and $5,317 in 2006 for Mr. Main, $7,750 in 2007 and $6,213 in 2006 for Mr. Clancy, $5,011 in 2007 and $4,708 in 2006 for Mr. Gilman, and $5,346 in 2007 and 6,295 in 2006 for Mr. Marcotte.  For each of the named executive officers, these amounts also include the amount of life insurance premiums paid in 2007 and 2006 on term and supplemental policies, which equaled $25,150 and 22,177, respectively for Mr. Duncan, $6,898 and $5,382, respectively for Mr. Main, $1,872 and $467, respectively for Mr. Clancy, $4,055 and $3,688, respectively for Mr. Gilman and $769 and $593, respectively for Mr. Marcotte.

 

For Messrs. Duncan, Main and Clancy, this amount also includes the amount attributed to the personal use of Bank owned automobiles in the amount of $4,983 in 2007 and $1,773 in 2006 for Mr. Duncan, $3,619 in 2007 and $2,840 in 2006 for Mr. Main and $4,426 in 2007 and $4,908 in 2006 for Mr. Clancy.

 

For each of Messrs. Duncan and Main, this amount also includes the amount paid to a local club on the executive’s behalf for business development purposes in the amount of $3,903 in 2007 and $3,591 in 2006 for Mr. Duncan and $7,853 in 2007 and $7,282 in 2006 for Mr. Main.

 

GRANTS OF PLAN - BASED AWARDS

 

                The following table sets forth information concerning individual grants of stock options and non-equity incentive plan awards made during 2007 to each of the Named Executive Officers.

 

						Estimated Future Payouts Under Non- Equity Incentive Plan Awards (1)									Option Awards: Number of Securities Underlying			Exercise or Base Price of Option Awards			Grant Date Fair Value
Name			Grant Date			Threshold ($)			Target ($)			Maximum ($)			Options (#)			($/Sh) (2)			of Option Awards (3)
George L. Duncan			3/7/07												13,000			$16.50			$47,970
			5/4/07			$0			$71,365			$107,088
Richard W. Main			3/7/07												6,500			$16.50			$23,985
			5/4/07			$0			$67,872			$101,847
John P. Clancy, Jr.			3/7/07												13,000			$16.50			$47,970
			5/4/07			$0			$96,250			$144,430
Robert R. Gilman			3/7/07												4,000			$16.50			$14,760
			5/4/07			$0			$58,408			$87,645
James A. Marcotte			3/7/07												4,000			$16.50			$14,760
			5/4/07			$0			$63,175			$94,799

 

 

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(1)                                   The non-equity incentive plan awards were both granted and earned in 2007, and the payments with respect to such awards are reflected in the Summary Compensation Table under the heading Non-Equity Plan Compensation at page 19 above.  Non-equity incentive plan awards were in the amount of $17,841 for Mr. Duncan, $16,968 for Mr. Main, $24,062 for Mr. Clancy, $14,602 for Mr. Gilman and $15,794 for Mr. Marcotte.

 

(2)                                   The exercise price of all stock options granted to employees in 2007, including those granted to Named Executive Officers and reflected in this table, equals the average of the high and low trade prices of the Common Stock on the NASDAQ Global Market on the date of grant as required under the Company’s 2003 Stock Incentive Plan.

 

(3)                                   For assumptions used in calculating the grant date fair value of option awards, refer to footnote 9 on pages 79 - 83 of the Company’s Annual Report on Form 10-K.

 

OPTION EXERCISES AND STOCK VESTED

 

The following table  sets forth information concerning the exercise of stock options and the vesting of stock awards for each of the Named Executive Officers during the year ended December 31, 2007:

 

			Option Awards							Stock Awards
Name			Number of Shares Acquired on Exercise (#)			Value Realized Upon Exercise ($) (1)				Number of Shares Acquired on Vesting (#)			Value Realized on Vesting ($) (2)
George L. Duncan			38,000			$	367,580			—			—
Richard W. Main			11,000			$	122,100			—			—
John P. Clancy, Jr.			11,000			$	112,760			3,500			$	48,825
Robert R. Gilman			—			$	—			—			—
James A. Marcotte			—			$	—			—			—

 

(1)                                  The value realized upon exercise calculations in the third column from the left above are based upon the difference between the value of the Common Stock on the option exercise date and the per share exercise price of the options.  The value on the exercise date was based on the closing market price of the stock on the NASDAQ Global Market on the exercise date.

 

(2)                                  The value realized on vesting calculation in the far right column is based upon the value of the Common Stock on the vesting date of the restricted stock.  The value on the vesting date was based on the closing market price of the stock on the NASDAQ Global Market on the vesting date.

 

 

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