Merchants Bancshares Inc · DEF 14A · For 5/24/94

Filed On 4/28/94   ·   SEC File 0-11595   ·   Accession Number 726517-94-33

Definitive Proxy Solicitation Material   ·   Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     1994 Proxy                                            16±    80K 

Document Table of Contents

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MERCHANTS BANCSHARES, INC.                                                      
BURLINGTON, VERMONT                                                             
1994 ANNUAL MEETING OF SHAREHOLDERS                                             
NOTICE OF MEETING                                                               
PROXY STATEMENT                                                                 
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS                                        
To Be Held on May 24, 1994                                                      
To the Shareholders of                                                          
MERCHANTS BANCSHARES, INC.                                          

     Notice is hereby given that the regular Annual Meeting of Shareholders of
Merchants Bancshares, Inc., a Delaware corporation (the ''Company''), will be   
held at the Ramada Inn, 1117 Williston Road, South Burlington, Vermont on Tues- 
day, May 24, 1994, at 4:00 p.m. for the following purposes:                     

 1.        To elect the five individuals listed as nominees in the at-
            tached Proxy Statement to the Board of Directors of the Com-
pany.                                           

     2.        To ratify the appointment of the firm of Arthur Andersen & Co.,
         as independent auditors of the Company for the year 1994.

    3.        To act upon such other matters as may properly come before the
               Annual Meeting of Shareholders or any postponements or adjourn-
ments thereof.                                  

   Pursuant to the Bylaws of the Company, the Board of Directors has fixed
the close of business on April 8, 1994 as the record date for the determination 
of shareholders entitled to notice of and to vote at the Annual Meeting. The    
Bylaws require that the holders of a majority in interest of all stock issued,  
outstanding and entitled to vote be present in person or represented by proxy   
at the Annual Meeting in order to constitute a quorum for the transaction of    
business.                                                                       

BY ORDER OF THE BOARD OF DIRECTORS                                              

Dudley H. Davis               
President         

Burlington, Vermont                                                             
April 21, 1994                                                                  
     YOUR ATTENTION IS INVITED TO THE PROXY STATEMENT WHICH FOLLOWS AND TO THE
ENCLOSED PROXY CARD. IN ORDER THAT YOUR SHARES MAY BE VOTED BY PROXY AS SOLIC-  
ITED BY THE BOARD OF DIRECTORS OF THE COMPANY, PLEASE COMPLETE, DATE AND SIGN   
THE PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT  
YOU PLAN TO ATTEND THE MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE ANY   
PROXY GIVEN BY YOU AND VOTE YOUR SHARES IN PERSON.                              

TABLE OF CONTENTS                                                               
PROXY STATEMENT                                                    Page Numbers 

General Information                                                     1       
Voting Securities                                                       2       
Election of Directors (Proposal 1)                                      3       
Nominees for Directors of the Company                             4 
Directors Continuing in Office                                    6 
Committees of the Board of Directors                              7 
Compensation of Principal Officers                                8 
Summary Compensation Table                                        9 
Pension Plan Table                                                9 
Alternative Pension Plan Disclosure                               10
Compensation Committee Report                                     11
Related Party Transactions with Management                        12
Compensation Committee Interlocks and Insider Participation       12
Performance Graph                                                 13
Ratification of Appointment of Independent Auditors (Proposal 2)        14      
Other Matters                                                           14      
Submission of Shareholder Proposals for 1995 Annual Meeting             14      
Annual Report                                                           14      
Form 10-K Report                                                        15      

PROXY STATEMENT                                                                 
MERCHANTS BANCSHARES, INC.                                                      
123 Church Street                                                               
Burlington, Vermont 05401                                                       

ANNUAL MEETING OF SHAREHOLDERS                                                  
May 24, 1994                                                                    

GENERAL INFORMATION                                                             
    This Proxy Statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Shareholders of Merchants Banc-     
shares, Inc. (the ''Company'') to be held on May 24, 1994 and at any adjourn-   
ments thereof. Shareholders of record at the close of business on April 8,      
1994 will be entitled to vote at the Annual Meeting. This Proxy Statement and   
the accompanying form of proxy are first being mailed or given to holders of    
common stock, par value $0.01 per share, of the Company (the ''Common Stock'')  
on or about April 21, 1994.                                                     

   Proxies in the form enclosed are solicited by the Board of Directors of
the Company. Any such proxy, if received in time for voting and not revoked,    
will be voted at the Annual Meeting in accordance with the instructions of the  
shareholder. If no instructions are given on the proxy, the proxy will be voted 
FOR the election, as directors of the Company, of the nominees named within,    
and FOR the other proposals described within. At present, management knows of   
no additional matters to be presented at the Annual Meeting, but if other mat-  
ters are presented, the persons named in the proxy and acting thereunder will   
vote or refrain from voting in accordance with their best judgment pursuant to  
the discretionary authority conferred by the proxy.                             

   A proxy may be revoked at any time prior to its exercise (i) by submit-
ting a written notice, addressed to Susan D. Struble, Secretary, at the princi- 
pal office of the Company, revoking such proxy, or (ii) in open meeting prior   
to the taking of a vote. Any shareholder of the Company entitled to vote at the 
Annual Meeting may attend the Annual Meeting and vote in person on any matter   
presented for a vote to the shareholders of the Company at the Annual Meeting,  
whether or not such shareholder has previously given a proxy.                   

    Solicitation of proxies will be made initially by mail. Proxies may also
be solicited personally, by telephone or by facsimile transmission by the       
directors, officers and other employees of the Company or of the Company's      
subsidiary, The Merchants Bank (the ''Bank''). The Company will bear all costs  
and expenses incurred in connection with this solicitation, including the cost  
of printing and mailing these proxy materials and the expenses, charges and     
fees of brokers, custodians, nominees and other fiduciaries who, at the request 
of the management of the Company, mail material to or otherwise communicate     
with the beneficial owners of the shares of Common Stock of the Company held of 
record by such brokers, custodians, nominees or other fiduciaries.              

Written notice of the results of the voting at the Annual Meeting or
adjournments thereof will not be mailed to shareholders, but will be available  
upon request, without charge.                                                   

The Company maintains its principal executive offices at 123 Church 
Street, Burlington, Vermont 05401, and its telephone number is (802) 658-3400.  

VOTING SECURITIES                                                               

   As of April 8, 1994, the record date for the Annual Meeting, there were
4,242,927 shares of Common Stock of the Company outstanding, with 4,242,594 of  
those shares entitled to vote at the Annual Meeting. Fractional shares are not  
entitled to be voted, but each full share of Common Stock of the Company        
entitles the holder thereof to one vote on all matters properly brought before  
the Annual Meeting. At present, the Common Stock is the only class of capital   
stock of the Company that is issued and outstanding.                            

  The following table provides information regarding persons or organiz-
ations known by the Company to be the beneficial owners of more than five per-  
cent (5.00%) of the outstanding shares of Common Stock of the Company as of     
March 15, 1994.                                                                 

                                                                · Download Table
                        Amount and                                             
                        Nature of                                              
Name of                 Beneficial      Percent of      Notes of               
Beneficial Owner        Ownership (1)   Class           Explanation            
                                                                               

General Educational     852,958 Shares  20.10%            (2)                  
Fund Inc.                                                                      

The Merchants Bank      506,102 Shares  11.93%            (3)                  
401(k) Employee Stock                                                          
Ownership Plan                                                                 

Charles A. Davis        266,975 Shares    6.29%           (4)                  

<FN>                                                                           
Notes of Explanation                                                           

      (1) In accordance with Rule 13d-3 under the Securities Exchange Act of   
1934, shares are shown as beneficially owned if the person named in the table  
has or shares the power to vote or to direct the voting of, or the power to    
dispose or to direct the disposition of, such shares. Inclusion of shares in   
the table does not necessarily mean that the persons named have any economic   
beneficial interest in shares set opposite their respective names.             

      (2) The General Educational Fund, Inc., located at 164 College Street,   
Burlington, Vermont was established in perpetuity in 1918 for the purpose of   
providing financial assistance to full-time students attending institutions of 
higher education. The Board of Trustees of the General Educational Fund, Inc., 
consists of the following individuals, who also serve the Company and/or the   
Bank in the capacities as indicated: Ethan A. Allen, Jr., Senior Vice President
of the Bank; Kathryn T. Boardman, Executive Vice President of the Bank; and    
Susan D. Struble, Director and Executive Vice President of the Bank and Direc- 
tor and Secretary of the Company. The number of shares indicated above does not
include shares of Common Stock of the Company owned by the Trustees indivi-    
dually.                                                                        

      During 1993 the General Educational Fund, Inc., sold 45,089 shares of    
Merchants Bancshares, Inc., common stock to the 401(k) Employee Stock Ownership
Plan, or to individual investors. Prices per share were determined by averaging
the bid and asked valuations per share for five days preceding the date of     
sale.                                                                          
      (3) While participants in the 401(k) Employee Stock Ownership Plan have  
the right to designate how shares allocated to their respective accounts are   
to be voted, the Plan Administration Committee is authorized to determine the  
voting of shares for which no such designation is made by participants. The    
401(k) Employee Stock Ownership Plan is administered at 164 College Street,    
Burlington, VT.                                                                

      (4) Included are shares owned by Charles A. Davis; shares in custody for 
sons, Tucker and Tyler, and the Charles and Marna Davis Foundation. Shares     
owned by his wife Marna Davis are not included. Mr. Davis is a General Partner 
of Goldman Sachs & Co., a New York based investment banking firm located at 85 
Broad Street, New York, New York 10004. Mr. Davis resides at 1165 Fifth Avenue,
New York, New York 10029, and is the son of Dudley H. Davis, President of the  
Bank and the Company.                                                          


       Except as set forth above, to the knowledge of the Company on March 15,
1994 no person was the record or beneficial owner of more than 5% of the out-   
standing shares of Common Stock of the Company. For information relating to     
ownership of Common Stock of the Company by directors and officers of the Com-  
pany, see ''ELECTION OF DIRECTORS'' below.                                      

 Section 16(a) of the Securities Exchange Act of 1934 requires the Com
pany's executive officers, directors, and 10% shareholders to file initial re-  
ports of ownership and reports of changes of ownership of the Company's common  
stock with the Securities & Exchange Commisison. Based upon a review of copies  
of such reports received by it or written representations from certain repor-   
ting persons that no other reports were required, the Company believes that,    
during 1993, all Section 16(a) filing requirements applicable to its executive  
officers and directors were complied with.                                      

ELECTION OF DIRECTORS                                                           
(Proposal Number 1)                                                             

     The By-laws of the Company stipulate that the business and affairs of the
Company shall be managed by a Board of Directors, which shall consist of not    
less than nine or more than twenty-one individuals divided into three classes   
as nearly equal in size as possible.                                            

 At a meeting held on February 11, 1994, the Board of Directors of the
Company unanimously voted to fix the number of directors at thirteen, and to    
introduce for adoption at the Annual Meeting the following resolution:          

RESOLVED: That Peter A. Bouyea, Charles A. Davis, Dudley H. Davis,  
Thomas F. Murphy, and Susan D. Struble be elected to serve as Class I directors 
of Merchants Bancshares, Inc., each for a three year term expiring on the date  
of the Annual Meeting of Shareholders in 1997, or until their successors are    
duly elected and qualified in accordance with the By-laws of the Company.       

NOMINEES FOR DIRECTORS OF THE COMPANY                                           
    The following table sets forth the names and addresses of the five nomi-
nees for director of the Company, their principal occupations, ages and periods 
of service as directors of the Company, and information regarding their owner-  
ship of shares of Common Stock of the Company as of March 15, 1994. The Class I 
nominees have each been nominated for a three year term expiring in 1997.       
Information as to beneficial stock ownership is based on data furnished by the  
persons concerning whom such information is given.                              

                                                        · Enlarge/Download Table
                                                                        Director  Amount and               
                                                                        of        Nature of                
        Name and                     Principal                          Company   Beneficial     Percent of
Class   address                 Age  Occupation (1)                     Since     Ownership (2)  Class     

                                                                                                           
I       Peter A. Bouyea         46   President, Bouyea-Fassetts, Inc.   nominee     27,927          *      
        111 South Cove Road          South Burlington, VT                                                  
        Burlington, VT                                                                                     

I       Charles A. Davis        45   General Partner, Goldman           1985      266,975        6.29%     
        1165 Fifth Ave.              Sachs & Co., 85 Broad St.                                             
        New York, NY                 New York, NY                                                          

I       Dudley H. Davis.        72   President & CEO                    1956       60,348 (3)    1.42%     
        Sunset Cliff                 The Merchants Bank and                                                
        Burlington, VT               Merchants Bancshares, Inc.                                            

I       Thomas F. Murphy        51   President, Burlington News         1985       25,604         *        
        5 Driftwood Lane             Agency, Colchester, VT                                                
        Burlington, VT                                                                                     
I       Susan D. Struble        54   Executive Vice President,          1989        9,180         *        
        33 South Bay Circle          Senior Real Estate Loan                                               
        Colchester, VT               Officer, The Merchants                                                
                                     Bank, Secretary of                                                    
                                     Merchants Bancshares, Inc.                                            

<FN>                                                                                                       
NOTES:                                                                                                     
(1) During the past five years, the principal occupation and employment of each                            
Class I director has been in the capacity as set forth above.                                              

(2) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,                               
shares are shown as beneficially owned if the person named in the table has                                
or shares the power to vote or to direct the voting of, or the power to dispose                            
or to direct the disposition of, such shares. Inclusion of shares in the table                             
does not necessarily mean that the persons named have any economic beneficial                              
interest in shares set opposite their respective names.                                                    

(3) Does not include 52,393 shares held in a trust dated September 12, 1987 as                             
to which Mr. Davis has no voting or investment powers.                                                     

The following biographical information is provided for the five nominees as     
indicated above:                                                                

Peter A. Bouyea                                                                 

 While Peter A. Bouyea is a new nominee for director of the Company he has
served as a director of the Bank since 1993. He is President of Bouyea-Fassetts 
Inc., a wholly owned indirect subsidiary of Philip Morris Corporation. He is a  
director of the American Bakeries Cooperative, and the secretary/treasurer, and 
a director of the Ronald McDonald House of Burlington, Vermont.  He is 46 years 
of age, and resides with his wife Linda and family at 111 South Cove Road, Bur- 
lington, Vermont. The Board of Directors has nominated Mr. Bouyea to serve as a 
Class I director for a three-year term expiring on the date of the Annual Mee-  
ting in 1997.                                                                   

Charles A. Davis                                                                

  Charles A. Davis has served as a director of the Company since 1985. He is
a General Partner in Goldman Sachs & Company, 85 Broad Street, New York, New    
York. He is 45 years of age, and resides with his wife Marna, and sons Tucker   
and Tyler, at 1165 Fifth Avenue, New York, New York. The Board of Directors has 
nominated Mr. Davis to serve as a Class I director for a three-year term ex-    
piring on the date of the Annual Meeting in 1997.                               

Dudley H. Davis                                                                 

Dudley H. Davis has served as a director of the Bank since 1956, and as 
Chief Executive Officer and President of the Bank since 1968. He has been a     
Director and President of Merchants Bancshares, Inc., since its inception on    
January 27, 1984. He is 72 years of age, and resides at Sunset Cliff, Burling-  
ton, Vermont. The Board of Directors has nominated Mr. Davis to serve as a      
Class I director for a three-year term expiring on the date of the Annual Meet- 
ing in 1997.                                                                    

Thomas F. Murphy                                                                

Thomas F. Murphy has served as a director of the Bank and Company since 
1985. He is President of Burlington News Agency, Inc., Daytona News, Inc.,      
Plattsburgh News Company, and Todd Realty. He is 51 years of age and resides    
with his wife Jane and family at 5 Driftwood Lane, Burlington, Vermont. The     
Board of Directors has nominated Mr. Murphy to serve as a Class I director for  
a three-year term expiring on the date of the Annual Meeting in 1997.           

Susan D. Struble                                                                

Susan D. Struble has served as a director of the Bank and Company since 
1989. She has been employed by The Merchants Bank since 1978 and is an Execu-   
tive Vice President with responsibility for all real estate lending activities. 
She is President of Merchants Properties, Inc., a Director of Queneska Capital  
Corporation, President of the General Educational Fund, Inc., and a Trustee of  
Merchants Bank Foundation, Inc. She is 54 years of age and resides with her     
husband Robert at 33 South Bay Circle, Colchester, Vermont. The Board of Direc- 
tors has nominated Mrs. Struble to serve as a Class I director for a three-year 
term expiring on the date of the Annual Meeting in 1997.                        

   As of March 15, 1994, to the knowledge of the company, the existing and
continuing directors, nominees for director, and principal officers of the com- 
pany and the bank as a group (28 persons) were the beneficial owners of 785,711 
shares of common stock of the company, constituting 18.52% of the outstanding   
number of shares. Mr. Edward W. Haase, Treasurer of the Company and Bank, was   
the beneficial owner of 4,244 shares of common stock of the company, constitu-  
ting .10% of the outstanding number of shares.                                  

     If at the time of the Annual Meeting any of the nominees should be unable
to serve or should decline to serve, the discretionary authority provided in    
the proxies may be exercised to vote for a substitute or substitutes, who would 
be designated by the Board of Directors of the Company, and would be elected to 
the same class or classes as the nominees for whom they are substituted. Nei-   
ther the Bylaws of the Company nor applicable law restrict the nomination of    
other individuals to serve as directors, and any shareholder present at the     
Annual Meeting may nominate another candidate, or candidates, at the Annual     
Meeting.                                                                        

  An affirmative vote of a majority of the shares of Common Stock of the
Company represented in person or by proxy at the Annual Meeting is necessary    
for the election of the individuals named above. There is no cumulative voting  
in elections of directors of the Company. Shares for which authority to vote    
for any nominee is withheld on a proxy will have the effect of negative votes   
as to that nominee. The Board of Directors of the Company recommends that you   
vote ''FOR'' the election of the nominees listed above.                         

                                                        · Enlarge/Download Table
DIRECTORS CONTINUING IN OFFICE                                                                        
CLASS II                                                                                              

The terms of the following Class II incumbent directors will expire on the date                       
of the 1995 Annual Meeting of Shareholders.                                                           

                                                                            Amount and                
                                                               Director of  Nature of                 
       Name and                     Principal                   Company      Beneficial     Percent of
Class  Address                 Age  Occupation (1)              Since        Ownership (2)  Class     

                                                                                                      
II      Jeffrey L. Davis       41  President, J.L. Davis, Inc.  1993           24,563          *      
        Underhill Center, VT       Burlington, VT                                                     

II      Michael G. Furlong     43  Attorney, Sheehey            1991           13,023          *      
        231 Lakewood Parkway       Brue Gray & Furlong, P.C.                                          
        Burlington, VT             Burlington, VT                                                     

II      Raymond C. Pecor, Jr.  54  President                    1978          111,077        2.62%    
        Pine Haven Shore           Lake Champlain                                                     
        Shelburne, VT              Transportation Co.                                                 
                                   Burlington, VT                                                     

II      Patrick S. Robins      55  President                    1974          119,421          *      
        1 Juniper Terrace          McAuliffe, Inc.                                                    
        Burlington, VT             Burlington, VT                                                     

* Shareholdings represent less than 1.00% of class                                                    
<FN>                                                                                                  
NOTES:                                                                                                
(1) During the past five years, the principal occupation and employment of each                       
Class II director has been in the capacity as set forth above.                                        

(2) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,                          
shares are shown as beneficially owned if the person named in the table has or                        
shares the power to vote or to direct the voting of, or the power to dispose or                       
to direct the disposition of, such shares. Inclusion of shares in the table                           
does not necessarily mean that the persons named have any economic beneficial                         
interest in shares set opposite their respective names.                                               

RETIRING DIRECTOR                                                               
Remo R. Pizzagalli, Executive Vice President, Pizzagalli Construction Company   
of South Burlington, VT, resigned as a director on December 31, 1993. Mr.       
Pizzagalli had served as a director of the Company, and the Bank, since 1987.   

                                                        · Enlarge/Download Table
CONTINUING CLASS III DIRECTORS                                                                   

The terms of the following Class III incumbent directors will expire on the                      
date of the 1996 Annual Meeting of Shareholders.                                                 

                                                             Director   Amount and               
                                                             of         Nature of                
        Name and                   Principal                 Company    Beneficial     Percent of
Class   Address               Age  Occupation (1)            Since      Ownership (2)  Class     

                                                                                                 
III     Jack DuBrul II        60   President, Automaster      1978        23,015         *       
        Harbour Road               Motor Company                                                 
        Shelburne, VT              Shelburne, VT                                                 

III     Leo O'Brien, Jr.      62   Partner, O'Brien Brothers  1969        17,819         *       
        200 Old Farm Road          Agency (Real Estate)                                          
        So. Burlington, VT         So. Burlington, VT                                            

III     Benjamin F. Schweyer  68   Of Counsel, Eastman        1969        64,253       1.51%     
        41 Brewer Parkway          & Sherrer                                                     
        So. Burlington, VT         Burlington, VT                                                

III     Robert A. Skiff       52   President, Fellow for      1984         2,205         *       
        303 Swift Street           Economic Development,                                         
        So. Burlington, VT         University of Vermont                                         
                                   Burlington, VT                                                

* Shareholdings represent less than 1.00% of class                                               
<FN>                                                                                             
NOTES:                                                                                           
(1) During the past five years, with the exception of Mr. Skiff, the principal                   
occupation and employment of each Class III director has been in the capacity                    
as set forth above. Mr. Skiff stepped down as President of Champlain College                     
on July 1, 1992 after serving in that capacity for the past fifteen years. He                    
is now associated with the University of Vermont, Burlington, VT.                                

(2) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934,                     
shares are shown as beneficially owned if the person named in the table has                      
or shares the power to vote or to direct the voting of, or the power to dispose                  
or to direct the disposition of, such shares. Inclusion of shares in the table                   
does not necessarily mean that the persons named have any economic beneficial                    
interest in shares set opposite their respective names.                                          

Attendance of Directors                                                         
During 1993, twenty-three meetings of the Board of Directors of 
Merchants Bancshares, Inc., were held. The following directors of Merchants     
Bancshares, Inc., attended fewer than seventy-five percent of the meetings of   
the Company: Charles A. Davis, Thomas F. Murphy, Leo O'Brien, Jr., Raymond C.   
Pecor, Jr., and Remo Pizzagalli.                                                

Compensation of Directors                                                       
      The directors of the Company are paid a retainer of $7,000.00 annually
and $500.00 for each of the first six board meetings attended during the fiscal 
year. The directors of the Bank receive a fee of $250.00 for each meeting of    
the board attended, up to a maximum limit of $10,000.00 per year.               

COMMITTEES OF THE BOARD OF DIRECTORS                                            

The Board of Directors of the Bank has designated an Audit, Regulatory Over-    
sight and Implementation, and Compensation Committees whose composition and     
objectives are as described below. The Compensation Committee of the Bank also  
serves in effect as the Compensation Committee of the Company.                  

Audit Committee:                                                                
During 1993 nine meetings of the Audit Committee, consisting of Robert A. Skiff 
Chairman, Thomas F. Murphy, Leo O'Brien, Jr., Raymond C. Pecor, Jr. and Ben-    
jamin F. Schweyer, were held.                                                   

The functions of the audit committee are (i) to serve as the primary means of   
communication between the board of directors and both the independent account-  
ants and the internal auditor, (ii) to assist and make recommendations to the   
board of directors in fulfilling its responsibilities relating to the Bank's    
financial reporting and internal control policies and practices, (iii) to re-   
view with the independent accountants and the internal auditor the scope of the 
annual audit plan, the results of the annual audit and the adequacy of the      
Bank's internal accounting controls, (iv) to make recommendations to the board  
of directors with respect to the selections of independent accountants, (v) to  
review any non-audit services rendered by the independent accountants, (vi) to  
monitor compliance with the Bank's business ethics policies and (vii) to engage 
independent accountants and other professional advisors to conduct such special 
reviews or studies as the committee deems appropriate in fulfilling its         
responsibilities.                                                               

Other areas covered by the Audit Committee on a regular basis are: (i) reviews  
of management's analysis of loan assets, (ii) evaluation of the adequacy of     
loan loss reserves, (iii) regulatory compliance, including reports issued in    
accordance with Section 112 of the Federal Deposit Insurance Corporation Im-    
provement Act, (iv) security and (v) insurance coverages.                       

Regulatory Oversight and Implementation Committee:                              
    During 1993, fifteen meetings of the Regulatory Oversight and Imple-
mentation Committee, consisting of directors Raymond C. Pecor, Jr., chairman,   
Michael G. Furlong, Jeffrey L. Davis, Thomas F. Murphy and Jack DuBrul II,      
were held.                                                                      
       The committee's primary function is to direct the overall thrust of the
Company's efforts in responding to regulatory concerns and to monitor progress  
in meeting goals. Specifically, the comittee's duties include the establishment 
of goals to respond to the regulatory concerns, identify specific tasks, set    
priorities and timetables, provide resources needed (including outside consult- 
ing and legal needs), monitor progress, review the reporting and evaluate       
management's performance in the response process. Additional responsibilities   
include the monitoring of costs of compliance and the reporting of the activi-  
ties to the full Board.                                                         

Compensation Committee:                                                         

    During 1993 the Committee held one meeting. Since December 23, 1992, the
Committee has consisted of the following independent members of the Board of    
Directors: Jack DuBrul II, Chairman, Michael G. Furlong, and Richard H.         
Wadhams.                                                                        

                                                                · Download Table
COMPENSATION OF PRINCIPAL OFFICERS                                             

      The following table sets forth aggregate cash compensation paid by the   
Bank over the past three calendar years to the three most highly compensated   
principal officers of the Company or the Bank whose salary and bonus for 1993  
exceeded $100,000.                                                             
Summary Compensation Table                                                     

                                        Annual Compensation                    
Name and                                                          All Other    
Principal Position              Year    Salary (1)      Bonus     Compensation 
                                                                               
Dudley H. Davis                 1993    $311,336  (2)   $  5,076  $119,397  (3)
President and Director          1992    $290,704  (2)   $ 10,398  $119,844  (3)
of the Company and Bank         1991    $284,816  (2)   $  2,027  $113,176  (3)

Susan D. Struble                1993    $128,896  (2)   $  5,380  $114,367  (4)
Executive Vice President,       1992    $125,885  (2)   $  9,300  $114,474  (4)
Director of the Company         1991    $117,817  (2)   $  6,754  $114,503  (4)
and Bank and Senior Real                                                       
Estate Loan Officer                                                            

Edward W. Haase                 1993    $196,933  (2)   $  5,109  $113,680  (5)
Senior Vice President,          1992    $195,745  (2)   $  5,815  $113,821  (5)
Treasurer and Controller        1991    $190,962  (2)   $  2,700  $114,163  (5)
<FN>                                                                           
Notes of Explanation:                                                          
(1) Includes Director's fees as received from the Bank, the Company, and for   
Mr. Davis, the Merchants Trust Company, a wholly owned Bank subsidiary. Payment
of a portion of these fees were deferred at the election of Mr. Davis and Mrs. 
Struble.                                                                       
(2) Payment in the amount of $26,000 represents director's fees paid during    
1993, but which were earned for previous years of service.                     
(3) Includes Mr. Davis' 401(k) ESOP employer contributions for 1993 of $7,375; 
$2,749 in premiums paid on split-dollar life insurance for 1993; and $109,273  
allocated pursuant to the terms of the Executive Salary Continuation Plan, a   
description of which is contained under "Alternative Pension Plan Disclosure." 
(4) Includes Mrs. Struble's 401(k) ESOP employer contributions for 1993 of     
$4,027; and $340 in group term life insurance premiums.                        
(5) Includes Mr. Haase's 401(k) ESOP employer contributions for 1993 of $3,584;
and $96 in group term life insurance premiums.                                 
                                                                · Download Table
                                Pension Plan Table                             

                                        Estimated Annual Retirement Benefit    
                                        for Specified Years of Credited Service

Annual Compensation       20               30              40                  
                                                                               
$50,000                $15,516          $23,274         $25,774                
$75,000                $25,412          $38,118         $41,868                
$100,000               $35,412          $53,118         $58,118                
$125,000               $45,412          $68,118         $74,368                
$150,000               $55,412          $83,118         $90,618                
$175,000               $65,412          $98,118        $106,868                
$200,000               $75,412         $113,118        $115,641                
$225,000               $85,412         $115,641        $115,641                
$250,000               $89,748         $115,641        $115,641                
$275,000               $89,748         $115,641        $115,641                
$300,000               $89,748         $115,641        $115,641                
$325,000               $89,748         $115,641        $115,641                

  The above table shows the estimated annual retirement benefits payable
upon retirement to persons in a specified compensation and years of credited    
service classification. The assumptions are: that they retire at age 65 during  
1994; that each member's final average compensation is equal to his or her      
annual compensation amounts provided that, if annual compensation exceeds       
$235,840 for illustration purposes the final average compensation has been set  
equal to $235,840; and that they elect a straight life annuity form of payment. 
The retirement benefits listed in the table take into consideration the Social  
Security offset amount which is based on the law in effect on January 1, 1994   
and assumes an employee earned the annual compensation listed on the table for  
the calendar year 1993. The maximum annual benefit limitations as set forth in  
the plan and under Section 415 of the Internal Revenue Service Code have also   
been accounted for in the table.                                                

    The compensation used to determine the estimated pension benefits due to
the officers listed in the Summary Compensation Table is that disclosed in the  
''Salary'' column of that table and is equal to base salary earned for 1993     
(subject to the maximum annual benefit limitations under Section 415 of the IRS 
code). As of December 31, 1993, the credited years of service for Mr. Davis,    
Ms. Struble and Mr. Haase are 47.5, 15.5 and 8, respectively.                   
ALTERNATIVE PENSION PLAN DISCLOSURE                                             

   The Company adopted an Executive Salary Continuation Plan in 1986 which
provides for a monthly benefit payable for 15 years to the officers named in    
the Summary Compensation Table, upon each officer's normal retirement date at   
age 65 (age 73 in the case of Mr. Davis). The plan employs a step-vesting       
schedule which begins at age 55. The monthly benefits payable at age 65 (age 73 
for Mr. Davis) for a period of 15 years for Mr. Davis, Ms. Struble and Mr.      
Haase are: $9,106, $4,479 and $5,122, respectively.                             

Compensation Committee Report:                                                  
       In 1993 the Compensation Committee of the Board of Directors (the "Com-
mittee") was composed of three non-employee directors: Jack DuBrul II, Chair-   
man, Michael G. Furlong and Richard H. Wadhams. Mr. Furlong resigned from the   
Committee effective December 31, 1993; a successor will be named by the Board   
of Directors in 1994.                                                           
    The Committee is responsible for setting and administering executive
officer salaries and long-term incentive plans that govern the compensation     
paid to all senior managers of the Bank. In addition, the Committee recommends  
to the full Board the general compensation levels of the Bank and is respon-    
sible for reviewing performance appraisals of all senior managers.              
      The following report describes the policies of the Committee regarding
compensation paid to the named officers during 1993.                            
      The key factor used by the Committee in determining its recommendation
to the Board was its subjective assessment of management's overall ability and  
dedication to enhancing the long-term value of the Bank, not based on any       
specific or objective criteria.                                                 
      Based upon the Committee's recommendations, the Board approved a merit
pool equal to 3.5% of aggregate salaries, to be awarded to Bank employees based 
on subjective individual performance evaluations. Applying subjective criteria, 
the Chief Executive Officer reviewed the individual performance of each execu-  
tive officer (other than himself) and submitted his recommendations as to the   
allocation of this pool to the Committee for consideration and presentation to  
the entire Board.                                                               
     Generally, compensation for the Chief Executive Officer is based upon
qualitative factors using subjective criteria as reflected by the Bank's        
profitability, and individual performance. The CEO's salary for 1993 was frozen 
at his request for the third consecutive year. During 1993 bonus awards were    
paid to the three named executive officers under a profit sharing plan which    
encompassed virtually all employees of the Bank. Under the plan, all eligible   
full-time employees received one week's salary as a bonus. In addition, the CEO 
was allowed a discretionary "pool" from which to pay out bonuses to individuals 
who, in his judgement, using subjective criteria, deserved additional compensa- 
tion based upon their individual performance during the year. The CEO did not   
share in the discretionary bonus pool.                                          
       The Compensation Committee has not yet had occasion to adopt any policy
on the new tax law disallowing deductions on annual compensation in excess of   
$1 million for certain executives of public companies. The Company believes     
that compensation expected to be paid during 1994 will be below the compensa-   
tion limitation.                                                                

                                        Jack DuBrul II, Chairman
                                  Michael G. Furlong
                                  Richard H. Wadhams

Related Party Transactions                                                      
   As described below under "Compensation Committee Interlocks and Insider
Participation," the Bank engages in banking transactions with directors and     
officers of the Company, and with their associates, and also obtained, and      
anticipates obtaining in fiscal 1994, legal services from a law firm of which   
Michael G. Furlong, a director of the Company and the Bank, is a director, as   
well as obtaining automobiles and related services from a company affiliated    
with Jack DuBrul II, a director of the Company and the Bank.                    
      During 1993 the Bank purchased office supplies and equipment on a com-
petitive bid basis from McAuliffe, Inc., valued at $658,932. Patrick S. Robins, 
who is President of McAuliffe, Inc., is a Class II director of the Company and  
the Bank.                                                                       

Compensation Committee Interlocks and Insider Participation                     
    During 1993, the Compensation Committee included Jack DuBrul II, Michael
G. Furlong and Richard H. Wadhams.                                              
    During 1993, the Bank purchased automobiles and automotive services on a
competitive basis from Automaster, Inc., valued at $98,905. Jack A. DuBrul II,  
who is President of Automaster, Inc., is a Class III director of the Company    
and the Bank. Mr. DuBrul is chairman of the Compensation Committee.             
       The bank obtained legal services during 1993, and anticipates obtaining
such services during 1994, from the firm of Sheehey, Brue, Gray & Furlong, P.C. 
of which Michael G. Furlong is a partner. Fees paid to this firm by the Bank    
for services and expenses in 1993 aggregated $123,834.                          

Performance Graph                                                               
     A comparison of five year cumulative total return to shareholders of Mer-
chants Bancshares, Inc., to a group of bank holding companies selected by the   
Company, and to the NASDAQ market index is indicated below. Data is shown both  
in tabular format and in the following graph. The peer group of bank holding    
companies consists of the following: Arrow Financial Corporation (AROW);        
Chittenden Corporation (CNDN); Eastern Bancorp, Inc., (VFBK); Evergreen Corpo-  
ration (EVGN); and Vermont Financial Services Corporation (VFSC). These are     
five of the six large financial institutions with which the Bank believes it    
competes most directly for market share.                                        

                                                                · Download Table
FIVE YEAR COMPARISON OF CUMULATIVE TOTAL RETURN                                   
AMONG MERCHANTS BANCSHARES, INC.,                                                 
NASDAQ MARKET INDEX AND PEER GROUP INDEX                                          

ASSUMES $100 INVESTED ON DEC. 31, 1988                                            
WITH ALL DIVIDENDS REINVESTED                                                     
FISCAL YEAR ENDING DEC. 31, 1993                                                  

                                Table                                             
                        Fiscal Year Ending                                        

Company                         1988     1989     1990     1991    1992      1993 
                                                                                  
Merchants Bancshares, Inc.    $100.00  $106.41  $ 76.68  $104.47  $142.54  $114.58
Peer Group                     100.00    92.80    57.06    65.67    95.21   124.24
Broad Market                   100.00   112.89    91.57   117.56   118.71   142.40


RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS                             
(Proposal Number 2)                                                             

     The Board of Directors of the Company has selected Arthur Andersen & Co.,
independent certified public accountants, to audit the books, records and       
accounts of the Company and the Bank for the year ending December 31, 1994.     
Arthur Andersen & Co. has served as independent auditors for the Bank and Com-  
pany since 1974, and has no direct financial interest in the Company or the     
Bank.                                                                           

     Representatives of Arthur Andersen & Co., are not scheduled to be present
at the Annual Meeting of Shareholders.                                          

 Ratification of the appointment of Arthur Andersen & Co., as the Com-
pany's independent accountants for the 1994 calendar year will require the      
affirmative vote of a majority of the shares of Common Stock represented in     
person or by proxy at the Annual Meeting. Abstentions and broker non-votes will 
have the effect of negative votes on this matter.                               

     The Board of Directors recommends that stockholders vote ''FOR'' ratific-
ation of the appointment of Arthur Andersen & Co., as the Company's independent 
accountants for the 1994 calendar year.                                         

OTHER MATTERS                                                                   

     The Board of Directors of the Company know of no additional matters which
are likely to be presented for action at the Annual Meeting other than the      
three proposals specifically set forth in the Notice and referred to herein. If 
any other matter properly comes before the Annual Meeting for action, it is in- 
tended that the persons named in the accompanying proxy and acting thereunder   
will vote or refrain from voting in accordance with their best judgment pur-    
suant to the discretionary authority conferred by the proxy.                    

SUBMISSION OF SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING                     

    Shareholders who desire to submit proposals for the consideration of the
Company's shareholders at its Annual Meeting of Shareholders in 1995, scheduled 
to be held on Tuesday, April 25, 1995, will be required, pursuant to a rule of  
the Securities and Exchange Commission, to deliver the proposal to the Company  
on or prior to December 23, 1994. Please forward any shareholder proposals to   
the Secretary of the Company at the address indicated below.                    

ANNUAL REPORT                                                                   

    A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 1993, which includes financial statements, has been mailed to all  
shareholders with this Proxy Statement. The Annual Report is not to be regarded 
as proxy soliciting material. Additional copies of the Annual Report may be     
obtained by shareholders of the Company without charge on written request to    
the Secretary of the Company at the address indicated below.                    

ANNUAL DISCLOSURE STATEMENT                                                     

  Pursuant to 12 CFR 350 of FDIC Rules & Regulations, a copy of The Mer-
chants Bank's Annual Disclosure Statement may be obtained without charge by     
contacting the person indicated below. The Annual Disclosure Statement presents 
the Bank's financial condition, and results of operation for the fiscal years   
ended 1992 and 1993.                                                            

The Merchants Bank                                                              
F.G. Smith, SVP & Compliance Officer                                            
123 Church Street                                                               
Burlington, Vermont 05401                                                       
Tel. (802) 658-3400                                                             

FORM 10-K REPORT                                                                

 A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, as filed with the Securities and Exchange Commission, may be 
obtained without charge by any shareholder of the Company on written request to 
the Secretary of the Company at the address indicated below.                    

By Order of the Board of Directors                                              

Susan D. Struble                                                                

Secretary                                                                       
Merchants Bancshares, Inc.                                                      

123 Church Street                                                               
Burlington, Vermont 05401                                                       

April 21, 1994                                                                  

Mailing Address:                                                                
Merchants Bancshares, Inc.                                                      
123 Church Street                                                               
Burlington, Vermont 05401                                                       

Date: April 21, 1994                                                            

Dates Referenced Herein   and   Documents Incorporated By Reference

This DEF 14A Filing		Date		Other Filings
		7/1/92
		12/23/92
		12/31/93		10-K, NT 10-K
		1/1/94
		2/11/94
		3/15/94
		4/8/94
		4/21/94
Filed On / Filed As Of		4/28/94
For The Period Ended		5/24/94
		12/23/94
		12/31/94		10-K, 11-K
		4/25/95		DEF 14A
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