Ivy Leaguer leaves key post at NBT Bancorp of Norwich

CNY Business Journal (1994-95), Apr 17, 1995 by Grossman, Naomi

Shareholders of the bank had other reasons to be disappointed with the banks' performance under Butare. Net income for the bank in 1994 declined to $6.5 million after taxes, which is 23.5 percent less than for 1993. Forsythe points out that the recent restructuring at the bank, which cost NBT $2.3 million before taxes, is what caused the net income to drop. Butare closed branches in Wilmington and Utica. Severance payments were made to the employees who were laid off, and the terms of Butare's contract had to be filled.

"We believe that the restructuring will pay off in 1995," says Doorey. But there were those who were not willing to wait for that to happen. In 1994, an anonymous group calling itself "Concerned Stockholders" sent out a series of letters to all the company's stockholders detailing what it said was the company's poor performance during Butare's tenure. The letters also criticized his 1993 annual salary of $341,000, which the group felt was excessive for a bank of its size. "From 1989 to 1993, NBT's salaries and employee benefits... increased 41.3 percent and other operating expenses...increased 216.9 percent, with little or no growth in the company's assets," read a letter dated October 10. The letters also listed those officers and managers whose positions were terminated or who left while Butare was in office and noted that many of the senior managers of NBT were commuting from other cities.

"At one time, both home-office managers and branch managers were expected to live in the communities where they worked," stated a letter dated March 17.

The letters also implored stockholders not to allow Butare to be reelected as a director of NBT. "When you receive your...annual meeting package (annual report, proxy statement, and proxy card), take the proxy card," the same letter read, "and mark on it that you withhold your vote for Mr. Butare for reelection as a director of NBT. Return it immediately."

The ominous tone of the letters was heightened by the writers' fear of retaliation. Anonymity was crucial, they wrote, because many of them still had relations with the bank, either by being current or retired employees or by having outstanding loans at the bank.

It is unclear whether the decision not to renew Butare's contract was due to the "Concerned Stockholders," but they got what they wanted. According to a press release in December 1994, Butare decided to leave his position with NBT to "pursue other interests." He now spends time in Arizona. The board honored Butare's "evergreen" contract in the form of two-years' compensation, which amounts to $823,000, rather than have him continue in his position.

He also exercised options to purchase 123,798 shares of the company which he promptly sold to the bank, netting a profit of $585,000.

Doorey says that the bank's decision to buy Butare's shares was for "normal corporate purposes" and not part of an agreement in Butare's original contract. The bank took the unusual step of granting Butare a two-year option to purchase another 123,798 shares of stock at current market value of $16.19. Butare also received options to buy an additional 25,935 shares at $16.90. These were replacements for others that he allowed to expire.