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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o  Preliminary Proxy Statement

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þ  Definitive Proxy Statement

o  Definitive Additional Materials

o  Soliciting Material Pursuant to § 240.14a-12

 

BAR HARBOR BANKSHARES

(Name of Registrant as Specified in Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

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BAR HARBOR BANKSHARES
82 Main Street
Bar Harbor, ME

April 11, 2010

Dear Shareholder:

          The 2010 Annual Meeting of the shareholders of Bar Harbor Bankshares will be held at 11:00 a.m. EDT on Tuesday, May 18, 2010, at the Bar Harbor Club located at 111 West Street in Bar Harbor, Maine. Our directors and officers join me in inviting you to attend this meeting and the reception following.

          Enclosed are the Clerk’s official Notice of Annual Meeting, a Proxy Statement, and the Form of Proxy. Please sign the Form of Proxy and return it in the envelope provided so that your shares will be voted at the Annual Meeting if you are unable to attend. Please also complete the reception postcard and mail it separately from the Form of Proxy if you will be attending the reception.

          We look forward to seeing you on May 18^th. Please join us for the reception even if you are unable to attend the business meeting.

Enclosures

BAR HARBOR BANKSHARES

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 18, 2010

          Notice is hereby given that the Annual Meeting of the Shareholders of Bar Harbor Bankshares will be held at the Bar Harbor Club at 111 West Street in Bar Harbor, Maine, on Tuesday, May 18, 2010, at 11:00 a.m. EDT to consider and act upon the following proposals:

	1.		To elect fourteen (14) persons to serve as directors for a term of one year [Proposal I];
	2.		To set the number of directors for the ensuing year at fourteen (14) [Proposal II];
	3.		To ratify the appointment of KPMG LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2010 [Proposal III]; and
	4.		To transact such other business as may properly come before the Annual Meeting or any adjournment thereof.

Shareholders of record as of the close of business on March 22, 2010, will be entitled to notice of and to vote at the meeting.

          The Board of Directors recommends that you vote “FOR” Proposal I to elect each of the fourteen (14) director-nominees as directors on the Company’s Board of Directors and “FOR” Proposal II to set the number of directors for the ensuing year at fourteen (14).

          The Board of Directors recommends that you vote “FOR” Proposal III to ratify the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the ensuing year.

          The Board of Directors requests that you complete, sign, and date the enclosed Proxy Card and mail it promptly in the enclosed postage-paid envelope. Any proxy that you deliver may be revoked prior to the Annual Meeting, in writing, delivered to the Company, Attention: Marsha C. Sawyer, Clerk, 82 Main Street, Bar Harbor, Maine 04609, stating that your proxy is revoked, or by delivering a subsequently dated proxy. Shareholders of record of the Company’s common stock who attend the Annual Meeting may vote in person, even if they have previously delivered a signed Proxy Card.

Important Notice Regarding the Internet Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on May 18, 2010: This Proxy Statement, along with our Annual Report Form 10-K for the fiscal year ended December 31, 2009 and our 2009 Annual Report, are available free of charge on the Investor Relations section of our website (www.BHBT.com).

BAR HARBOR BANKSHARES
82 Main Street
Bar Harbor, ME

ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, MAY 18, 2010

PROXY STATEMENT

          This Proxy Statement is furnished to the Shareholders of Bar Harbor Bankshares (the “Company”) in connection with the solicitation of proxies on behalf of the Board of Directors for use at the Annual Meeting of Shareholders (the “Meeting”). The Meeting will be held on Tuesday, May 18, 2010, at 11:00 a.m. EDT at the Bar Harbor Club located at 111 West Street in Bar Harbor, Maine. The official Notice of the Annual Meeting of Shareholders accompanies this Statement. A Form of Proxy for use at the meeting and a return envelope for the proxy are enclosed. A Shareholder who executes the Proxy may, prior to its use, revoke it by written instrument, by a subsequently executed Proxy or, if attending the Meeting, by notifying the Clerk or by giving notice at the Meeting. This Proxy Statement and the enclosed Form of Proxy will be mailed to the Shareholders of the Company on or about April 7, 2010.

          Proxies are being solicited by the Board of Directors of the Company, (the “Board”), principally through the mail. The Board of Directors and Management of the Company may also solicit proxies personally, or by telephone, e-mail, or facsimile transmission. The entire expense of solicitation, including costs of preparing, assembling, and mailing the proxy material will be borne by the Company.

          Unless contrary instructions are specified, if the enclosed proxy is executed and returned (and not revoked) prior to the Annual Meeting, the shares of common stock of the Company represented thereby will be voted [1] “FOR” the election of the fourteen (14) persons nominated as directors by the Board of Directors for a term of one year, [2] “FOR” setting the number of directors at fourteen (14), and [3] “FOR” ratification of the appointment of KPMG LLP as the independent registered public accounting firm of the Company for the ensuing year. Except for procedural matters incidental to the conduct of the Annual Meeting, the Board of Directors does not know of any matters other than those described in the Notice of Annual Meeting that are to come before the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons named in the proxy will vote the shares represented by such proxy on such matters as determined by a majority of the Board of Directors.

          Shareholders of record as of the close of business on March 22, 2010, (the “Record Date”) will be entitled to notice of and to vote at the Annual Meeting. Each share of Company common stock issued and outstanding is entitled to one vote upon each matter presented at the Meeting. Only Shareholders of record at the close of business on the Record Date are entitled to vote at the Meeting. The presence at the Meeting, either in person or by proxy, of the holders of not less than a majority of the shares entitled to vote at any meeting will constitute a quorum. If a quorum is present at the Annual Meeting, action may be taken on any matter considered, excepting only the election of directors, by the holders of a majority of the shares present and voting. Directors are elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. The inspector of election will treat abstentions and broker non-votes as shares that are present and entitled to vote for purposes of determining the presence of a quorum, but not for purposes of voting with respect to determining the approval of any matter submitted to the Shareholders for a vote. Shareholders who are present will have an opportunity to vote on each matter properly brought before the Meeting. A broker non-vote occurs when a broker or other nominee holder, such as a bank, submits a proxy representing shares that another person actually owns, and that person has not given voting instructions to the broker or other nominee.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

          As of March 22, 2010, the Company had outstanding 3,774,974 shares of its voting common stock (the “Common Stock”), par value $2.00 per share.

          The following table sets forth information with respect to the beneficial ownership of the Company’s voting Common Stock as of March 22, 2010, by: (i) each person or entity known by the Company to own beneficially more than five percent (5%) of the outstanding Common Stock, (ii) each current director-nominee for

director on the Company’s Board of Directors, (iii) the Company’s named executive officers (as defined on page 27 of this Proxy under the heading “2009 Summary Compensation Table,”) and (iv) all executive officers and directors as a group.

						Amount of
		Title of				Beneficial				Percent
Name of Beneficial Owners		Class				Ownership1				of Class
5% or more beneficial owners
Shufro Rose & Co., LLC 745 Fifth Avenue New York, NY 10151-2600		Common					218,050	2			5.78	%
Directors/Nominees:
Robert C. Carter		Common					2,400	8			*
Thomas A. Colwell		Common					5,633	8			*
Jacquelyn S. Dearborn		Common					2,460	8			*
Peter Dodge		Common					4,760	8			*
Martha T. Dudman		Common					3,718	8			*
Lauri E. Fernald		Common					1,900	8			*
Gregg S. Hannah		Common					1,000	8			*
Clyde H. Lewis		Common					3,881	3,8			*
Joseph M. Murphy (Director and Named Executive Officer)		Common					117,858	8,9			3.12	%
Robert M. Phillips		Common					2,200	4,8			*
Constance C. Shea		Common					1,900	5,8			*
Kenneth E. Smith		Common					1,845	6,8			*
Scott G. Toothaker		Common					2,750	7,8			*
David B. Woodside		Common					1,200	8			*
Named Executive Officers:
Gerald Shencavitz		Common					17,927	9			*
Michael W. Bonsey		Common					13,293	9			*
Gregory W. Dalton		Common					8,980	9			*
Stephen M. Leackfeldt		Common					3,795	9			*
Total Ownership of all directors, named executive officers, and specified Trust shares of the Company as a group (eighteen (18) persons)							228,300	10			6.05	%

Name		401(k) Plan				Exercisable Options
Joseph M. Murphy			27,358				90,000
Gerald Shencavitz			3,027				14,900
Michael W. Bonsey			1,073				9,740
Gregory W. Dalton			2,320				6,660
Stephen M. Leackfeldt			0				3,545

          The Parker Trust was established in 1955 in perpetuity. Bar Harbor Trust Services, the Company’s second tier non-depository trust services Company located in Ellsworth, Maine, is the sole Trustee, with full powers, of this trust benefiting the Mt. Heights Cemetery in Southwest Harbor, Maine.

          The Fred & Hattie Lynam Private Foundation formerly known as the Lynam Trust was established in 1942 in perpetuity to benefit Mount Desert Island charities and to provide scholarships to graduates of Mount Desert Island High School. Bar Harbor Trust Services is the sole Trustee, with full powers, and administers the trust with the assistance of an established Grant and Scholarship Committee made up of members of the Bar Harbor Bankshares Board of Directors and community representatives.

          The information provided is based on the records of the Company and on information furnished by the persons listed.

          The Company is not aware of any arrangement that could at a subsequent date result in a change in control of the Company.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

          Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s officers, directors, and persons who own more than ten percent (10%) of a registered class of the Company’s equity securities (collectively “Section 16 Persons”) to file initial reports of ownership and reports of changes of ownership with the U.S. Securities and Exchange Commission (the “Commission”) and the NYSE Amex (formerly the American Stock Exchange or “AMEX” and hereinafter “NYSE Amex”). Section 16 Persons are required by the Commission regulations to furnish the Company with copies of all Section 16(a) forms they file.

          To the Company’s knowledge, based solely on review of such reports provided to the Company and written representations, all reports were filed timely and as required except for:

          On August 26, 2009, Mr. Gregory Dalton sold 1,365 shares for which timely reporting did not occur. On April 1, 2010, a Form 4 was filed reflecting his correct ownership.

DIRECTORS AND EXECUTIVE OFFICERS

Directors and Nominees:

Proposal I — Election of Directors

          At the Annual Meeting of Shareholders, fourteen (14) director-nominees will stand for re-election to serve until the 2010 Annual Meeting of Shareholders and until each director’s successor is elected and qualified. Each director-nominee has consented to serve, and to the use of his or her name in this Proxy. All fourteen (14) of the director-nominees currently serve on the Board of the Company.

          The Board has determined the majority of director-nominees are “independent directors” as required in accordance with applicable laws, regulations, and NYSE Amex listing requirements. The exception is director-nominee Murphy, who serves as President and Chief Executive Officer of the Company. Mr. Murphy does not serve as a voting member of the Audit, Compensation and Human Resources, or Governance Committees.

          Proxies will be voted, unless authority to do so is expressly withheld, in favor of the fourteen (14) director-nominees. The Board of Directors recommends voting “FOR” the election of each nominee as a director of the Company.

Proposal II — Setting the Number of Directors to Fourteen (14)

          The Company’s Board of Directors currently consists of fourteen (14) members. The Board of Directors recommends the number of Company directors for the coming year be set at fourteen (14). The Bylaws of the Company provide for no fewer than nine (9) or more than twenty-seven (27) directors, with directors serving annual terms. The Board of Directors recommends that you vote “FOR” setting the number of directors for the ensuing year at fourteen (14).

          The following table sets forth for each director-nominee for election, their name, age as of March 22, 2010, and positions with the Company or its subsidiaries, Bar Harbor Bank & Trust (“BHBT”) and Bar Harbor Trust Services (“BHTS”).

DIRECTOR-NOMINEES
FOR
RE-ELECTION				Year
Terms to Expire				First		Current
in 2011				Elected		Term to		Position with
Name		Age		Director		Expire		the Company		Positions with Subsidiaries
Peter Dodge		66		20031		2010		Chairperson and		Director, BHBT since 1987.
								Director		Chairperson since May 2009.
Thomas A. Colwell		65		1991		2010		Vice Chairperson		Director, BHBT since 1991.
								and Director		Chairperson from May 2004
										through May, 2009. Vice
										Chairperson since May, 2009.
Robert C. Carter		66		20032		2010		Director		Director, BHBT since 1996.
										Director, BHTS since 2004.
Jacquelyn S. Dearborn		57		2006		2010		Director		Director, BHBT since 2006.
Martha T. Dudman		58		2003		2010		Director		Director, BHBT since 2003.
										Director, BHTS since 2003.
Lauri E. Fernald		48		2005		2010		Director		Director, BHBT since 2005.
Gregg S. Hannah		67		2006		2010		Director		Director, BHBT since 2006.
										Director, BHTS since 2006.
Clyde H. Lewis		65		2005		2010		Director		Director, BHBT since 2005.
Joseph M. Murphy		67		2002		2010		Director		Chairperson and Director, BHBT
								President and Chief		since 2002. Chief Executive
								Executive Officer		Officer, BHBT since 2003.
										President, BHBT since February,
										2005. Director, BHTS since 2002.
Robert M. Phillips		68		20033		2010		Director		Director, BHBT since 1993.
Constance C. Shea		65		2003		2010		Director		Director, BHBT since 2001.
Kenneth E. Smith		56		2004		2010		Director		Director, BHBT since 2004.
										Director, BHTS since 2004.
Scott G. Toothaker		47		2003		2010		Director		Director, BHBT since 2003.
David B. Woodside		58		2003		2010		Director		Director, BHBT since 2003.

Executive Officers:

          Set forth below is a list of the Company’s named executive officers, including their ages as of March 22, 2010, and positions with the Company and its subsidiaries, Bar Harbor Bank & Trust (“BHBT”) and Bar Harbor Trust Services (“BHTS”) as of the Record Date:

Year

First

Elected

Name

Age

As Officer

Position with the Company

Positions with Subsidiaries

Joseph M. Murphy

67

2002

Director, President and Chief Executive Officer

Chairperson and Director, BHBT since 2002. Chief Executive Officer, BHBT since 2003. President, BHBT since February 2005. Director, BHTS since 2002.

Gerald Shencavitz

56

1998

Executive Vice President Chief Financial Officer and Treasurer

Executive Vice President, Chief Financial Officer, and Chief Operating Officer of BHBT since December, 2007. Chief Financial Officer, Senior Vice President, and Chief Operating Officer for BHBT from 2001 through December 2007. Treasurer of BHTS since 2001.

Michael W. Bonsey

45

2001

N/A

Senior Vice President of BHBT since 2001.

Gregory W. Dalton

50

2000

N/A

Senior Vice President of BHBT since 2000.

Stephen M. Leackfeldt

53

2001

N/A

Senior Vice President of BHBT since 2001.

          The Bylaws of the Company provide that the executive officers be elected annually by the Board of Directors and that the President and Chief Executive Officer, Chairperson of the Board, Treasurer, and Clerk shall serve at the pleasure of the Board and until their successors have been chosen and qualified. All other officers serve at the pleasure of the Chief Executive Officer. There are no arrangements or understanding between any of the directors, executive officers, or any other persons pursuant to which the above directors have been selected as directors or any of the above officers have been selected as officers. There are no “family relationships” as defined by the Commission, between any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer.

Business Experience

          The principal occupation and business experience for at least the last five (5) years for each director, nominee, and executive officer is set forth below. None of the organizations discussed below, except for Bar Harbor Bank & Trust and Bar Harbor Trust Services, are affiliated with the Company.

Directors and Nominees:

Robert C. Carter. Mr. Carter resides in Machias, Maine. He presently operates Carter Enterprises, a rental management business also located in Machias, Maine. He is a former game warden for the Maine Department of Inland Fisheries. Mr. Carter previously owned and operated Helen’s Restaurant and Machias Motor Inn for 12 and 20 years, respectively. Mr. Carter’s business experience and first-hand knowledge of the Washington County business community and local issues provides essential guidance to the Company in this unique market.

Thomas A. Colwell. Mr. Colwell resides in Deer Isle, Maine. Mr. Colwell is the former President of Colwell Bros. Inc. (lobster pounding) and retired from that position as of December 31, 2006. He is a director of the Lobster Institute and a past member of the Maine Lobster Pound Association. His knowledge of this specialized industry and the working waterfront provides a unique understanding to the Board of this important segment of business lending for a community bank operating on the coast of Maine.

Jacquelyn S. Dearborn. Mrs. Dearborn resides in Holden, Maine, and has a private mediation practice and works for the Court Alternative Resolution Service serving the Ellsworth and Bangor court systems. Mrs. Dearborn is also employed as Treasurer of the law office of Joel A. Dearborn Sr. Esq., PA located in Brewer, Maine, and is the former President of C. K. Foster, Co., Inc. of Ellsworth, Maine. She has served on various civic and municipal boards such as the Holden Planning Board, SAD 63 Board of Directors and is a present board member of the Woodlawn Museum. Mrs. Dearborn’s association with various boards, committees, and work experiences brings a diverse perspective to the Board.

Peter Dodge. Mr. Dodge resides in Blue Hill, Maine, and is President, Insurance Agent, and majority owner of Peter Dodge Agency d/b/a Merle B. Grindle Agency, John R. Crooker Agency, and The Endicott Agency, providing insurance services from locations in Blue Hill, Bucksport, and Castine, Maine. Mr. Dodge has been part of our Board since 1987 and is the longest serving director who brings a historical, long-term perspective and leadership to the Board. He has served as Chairperson of the Company’s Loan, Audit, and Compensation and Human Resources Committees various times during his tenure, before accepting the position of Chairperson of the Board in May, 2009.

Martha T. Dudman. Ms. Dudman resides in Northeast Harbor, Maine, and is a fundraising consultant and published author. She is past President and General Manager of Dudman Communications Corporation, operating a group of radio stations in Ellsworth and Bangor, Maine. She previously served as Senior Counsel with Gary Friedmann & Associates, providing consulting service to nonprofits throughout the State of Maine. She has extensive experience in business management, public relations, marketing and sales. Ms. Dudman is a member of the Maine Women’s Forum and has been awarded membership in the Deborah Morton Society, recognizing women of high distinction in their careers and public service and whose leadership in civic, cultural, and social causes has been exceptional. She is currently Chairperson of the Northeast Harbor Library.

Lauri E. Fernald. Ms. Fernald resides in Mount Desert, Maine, and is a Funeral Director, Assistant Treasurer, and an owner in Jordan-Fernald headquartered in Mount Desert, Maine. She is also Managing Partner of Jordan Family Properties L.L.C and L.E. Fernald LLC, operating as real estate holding companies. Ms. Fernald serves on the finance committee of Hospice of Hancock County, is a board member of Hospice Regatta of Maine and the Maine Coast Healthcare Foundation of Ellsworth.

Gregg S. Hannah. Mr. Hannah resides in Surry, Maine, and formerly served as Secretary and Treasurer of Hannah & Associates Inc., a marketing consulting firm. He is a past Associate Professor of Business Management at Nichols College in Dudley, Massachusetts. Mr. Hannah was employed in a professional investment capacity from 1973 to 1987. His investment experience is valuable to his assigned role as a member of the Trust Committee. Mr. Hannah

is currently a Trustee and member of the Executive Committee of the Woodlawn Museum and is a member of the Finance Committee of George Stevens Academy.

Clyde H. Lewis. Mr. Lewis resides in Sullivan, Maine, and is Vice President, General Manager, and an owner of Morrison Chevrolet Inc., of Ellsworth, Maine. He is presently a member of the Executive Board of the Downeast Family YMCA. He has served as President of the Ellsworth Chamber of Commerce, is a Past Master of the Lygonia Masonic Lodge, and a member of the Anah Temple and Hancock County Shrine Clubs. His knowledge of and contacts with residents and customers from the large geographic area surrounding Ellsworth brings unique market intelligence to the Board.

Joseph M. Murphy. Mr. Murphy resides in Mount Desert, Maine, and is President and Chief Executive Officer of Bar Harbor Bankshares and Bar Harbor Bank & Trust. Mr. Murphy has over 34 years of banking experience at the executive level with community banks in Connecticut (Centerbank), Delaware (WSFS Bank) and Maine (BHB). He has served as Chairperson of the Maine Banker’s Association. He currently serves as a board member of Friends of Acadia and the Maine Sea Coast Mission.

Robert M. Phillips. Mr. Phillips resides in Sullivan, Maine, and is a former consultant for Cherryfield Foods, Maine Wild Blueberry, and Oxford Foods, food processors with locations in Washington County, Maine. Mr. Phillips serves as a consultant for the Wild Blueberry Association of North America and the Maine Wild Blueberry Commission, is a Maine Trustee of the Eastern States Exposition (“the BIG E”), is on the Technology Board of the Maine Technology Institute, and is an advisor to the Food Science Department of the University of Maine. Mr. Phillips is also the project manager of a house currently being built for Habitat for Humanity. Mr. Phillip’s expert knowledge gained by his employment in the wild blueberry industry has been an important resource to the Board for this important agricultural business segment of DownEast Maine.

Constance C. Shea. Mrs. Shea resides in Mount Desert, Maine, and is a Real Estate Broker and a former owner in Sylvia Shea Inc. d/b/a Lynam Real Estate Agency, Bar Harbor, Maine. Mrs. Shea is also the owner of a commercial real estate property located in Bar Harbor, Maine. Mrs. Shea has been involved with the real estate brokerage business since 1989. Her perspective of year round and seasonal real estate markets provides valuable insights into real estate trends in our major markets, especially Mount Desert Island, which is important to the activities on the Loan Committee.

Kenneth E. Smith. Mr. Smith resides in Bar Harbor, Maine, and has been owner and Innkeeper of Manor House Inn since 2003 and former owner of Wonder View Inn, both lodging facilities located in Bar Harbor, Maine. The hospitality industry is a critical segment of the local economy and the Bank’s commercial loan portfolio. Mr. Smith’s 35 years of experience and expertise in the field are highly valued by the Board. Mr. Smith has served as Chairperson of the Bar Harbor Town Council and is a member of the Anah Temple Shrine.

Scott G. Toothaker. Mr. Toothaker resides in Ellsworth, Maine, and is a Principal and Vice President of Melanson Heath & Co., PC, a CPA firm with an office located in Ellsworth, Maine, which specializes in professional services to small businesses and entrepreneurs throughout New England. He holds a MBA from the University of Maine and a MST from Bentley College. As a practicing CPA, Mr. Toothaker serves as Chairperson of the Audit Committee.

David B. Woodside. Mr. Woodside resides in Bar Harbor, Maine, and is President and General Manager of The Acadia Corporation, a locally owned company operating restaurants and retail shops located in Acadia National Park and Bar Harbor, Maine. Since receiving his BS degree in Business Administration from the University of Maine, Mr. Woodside has been employed by Acadia Corporation for 34 years. In addition to serving numerous local non-profit organizations, Mr. Woodside serves as Vice Chairperson of the National Park Hospitality Association, representing the diverse companies providing visitor hospitality services in National Parks across the country. His in-depth knowledge of the retail industry and its impact on the tourist segment of the local economy, as well as his involvement with tourism on the national level provides significant expertise to the Board.

Executive Officers:

Joseph M. Murphy. For a summary of Mr. Murphy’s business experience, refer to the “Directors and Nominees” section immediately above.

Gerald Shencavitz. Mr. Shencavitz resides in Mount Desert, Maine, and has served as Executive Vice President, Chief Financial Officer, and Treasurer of the Company since December, 2007. Prior to his promotion in December 2007 to Executive Vice President, he served as Chief Financial Officer and Treasurer of the Company since June 2001. Mr. Shencavitz has served as Executive Vice President, Chief Financial Officer, and Chief Operating Officer of Bar Harbor Bank & Trust since his promotion in December, 2007. He was Chief Financial Officer, Senior Vice President and Chief Operating Officer of Bar Harbor Bank & Trust between June 2001 and December, 2007. Mr. Shencavitz serves as Treasurer of Bar Harbor Trust Services, an office he has held since 2001. Mr. Shencavitz has also served as a member of the Federal Home Loan Bank of Boston’s Advisory Panel since 2007.

Michael W. Bonsey. Mr. Bonsey resides in Bar Harbor, Maine, and has served as Senior Vice President of Credit Administration of Bar Harbor Bank & Trust since December, 2001. Mr. Bonsey served as Vice President of Credit Administration from 2000 through December, 2001. Mr. Bonsey is the Chairperson of the Mount Desert Island Hospital’s Finance Committee and is a past president of Bar Harbor Rotary.

Gregory W. Dalton. Mr. Dalton resides in Mount Desert, Maine, and has served as Senior Vice President of Business Banking of Bar Harbor Bank & Trust since 2000. He is also an owner in both the Bar Harbor Jam Co. and its real estate holding companies, Blueberry Partners LLC and Triangle Development LLC located in Bar Harbor, Maine.

Stephen M. Leackfeldt. Mr. Leackfeldt resides in Harrington, Maine, and has served as Senior Vice President of Retail Banking and Consumer Lending of Bar Harbor Bank & Trust since 2001. He is also the owner of State Cinemas located in Calais, Maine.

CORPORATE GOVERNANCE

Board of Directors:

          A Board of Directors comprised of fourteen (14) members managed the Company during 2009. A majority of the Board of Directors meets the independence standards established by NYSE Amex. The Board has determined that all the named director-nominees listed in this Proxy, with the exception of Mr. Murphy, meet applicable independence standards established by NYSE Amex. The Board of Directors of the Company held a total of twelve (12) regular meetings, three (3) special meetings, one (1) special shareholder meeting, and one (1) annual meeting during 2009. The Bylaws of the Company provide for a minimum of quarterly meetings. Each director attended at least 75% of the total number of board and committee meetings that he or she was eligible to attend. The Board encourages, but does not require, each director to attend its Annual Meeting. All of the Board’s members attended the 2009 Annual Meeting.

Change in Composition of the Board of Directors:

          Peter Dodge accepted the role as Chairperson of the Board at the Annual Director’s meeting immediately following the Annual Meeting on May 19, 2009. Thomas Colwell stepped down from the Chairperson’s position on that date and assumed the role of the newly created Vice Chairperson.

Board Leadership Structure and Risk Oversight:

          The leadership structure of the Company is guided by its Governance Committee. The Company’s Governance Committee nominates individuals to serve as members of the Company’s Board of Directors, including any management Directors. All Directors of the Company are considered “independent” Directors, except for the Chief Executive Officer of the Company. The Chairperson of the Board of Directors, as well as the Vice Chairperson of the Board, are both independent Directors. Management directors do not serve as Chairs of any Board Committees. The Governance Committee nominates the Chairperson and Vice Chairperson roles for election by the entire Board of Directors. The independent Directors meet in executive session directly after Board meetings periodically to ensure that there is adequate oversight of Company management and to ensure that there is ample time to assess the Company’s activities separate from management. The Governance Committee believes this leadership structure is prudent and provides sufficient segregation and independence.

          The Board of Directors provides oversight to the management of the Company’s risk profile, including but not limited to internal controls over financial reporting, credit risk, interest rate risk, liquidity risk, operational risk, reputational risk and compliance risk. The Board of Directors monitors and manages these risks through the activities of specialized Board Committees in conjunction with management, internal audit, the independent registered public accounting firm, and other independent advisors. Some of the more significant risks and the Board’s oversight of those risks are described below.

          The Board manages credit risk through the Director’s Loan Committee, which operates at the BHBT level and meets at least monthly. This committee sets loan policy, establishes credit authorities, and approves all extensions of credit over $1,000,000. This committee regularly reviews credit trends, delinquencies, non-performing loans and authorizes charge offs.

          The Asset and Liability Committee (ALCO), staffed by the entire senior management team and chaired by the Chief Financial Officer assists in the management of interest rate risk. This committee meets on a regular basis to review market interest rate trends and product pricing strategies. On a quarterly basis, ALCO meets with its asset and liability planning consultant, Darling Consulting Group, to review current trends, possible interest rate or liquidity risks in the balance sheet and to review prospective strategies over typically a two-year horizon using their proprietary modeling services. The Chairperson of the Board attends these quarterly meetings and the findings and recommendations are reported to the full Board by the consultants at its next scheduled meeting. The Company’s balance sheet position and risk mitigation strategies are reviewed by internal audit, using an outsourced specialist from M & M Consulting and by KPMG, the Company’s independent registered public accounting firm.

          The Board manages incentive compensation risk through its Compensation and Human Resources Committee. This committee has engaged Pearl Meyer & Company as compensation consultants to provide this committee with both competitive market data and research into compensation best practices to guide the decisions of this committee. To mitigate the inherent risks of incenting behaviors potentially adverse to the Company and its stakeholders, the committee has met twice during the year with the Chairperson of the Audit Committee who has been charged by the Board to ensure that incentive plans for senior officers and others do not encourage excessive risk-taking.

          The Company’s Audit Committee meets quarterly and receives reports from its independent registered public accounting firm, the independent loan review consultants, and the Company’s internal audit function. The senior auditor conducts an annual risk-based audit program and provides audit findings quarterly.

          The Board of Directors has required and management has chartered an internal Enterprise Risk Management committee, chaired by the Chief Financial Officer, and attended by several key operational officers, the senior internal auditor and the compliance officer. This committee is charged with surfacing emerging risks and identifying accountabilities for managing such risks.

          The Company believes that its risk management activities and procedures provide sufficient information to management and the Board of Directors to assist them in properly and adequately evaluating the Company’s compliance with its risk management programs and policies. There can be no assurance that the Board’s risk oversight structure has identified and addressed every potential material risk and there may be additional risks that could arise in the Company’s business. Both known and unknown risks could result in potentially material financial and/or business losses despite the Board’s efforts to oversee risk.

Committees

          The Board of Directors has a standing Executive Committee, Audit Committee, Governance Committee, and Compensation and Human Resources Committee.

          Executive Committee

          The Bylaws of the Company provide that after each Annual Meeting of Shareholders, the Board shall designate from among its members an Executive Committee with the authority to exercise all the powers of the Board of Directors in regard to ordinary operations of the business of the Company when the Board is not in session, subject to any specific vote of the Board. The Executive Committee for 2009 included directors Dodge, Colwell,

Dudman, Murphy, Phillips, Shea, Toothaker, and Woodside. Mr. Woodside joined the Executive Committee in May 2009. Mr. Colwell served as Chairperson through May, 2009 when he assumed the responsibilities of the newly created Vice Chairperson position. Peter Dodge has served as Chairperson since May of 2009. The Executive Committee held one (1) meeting in 2009.

          Audit Committee

          The members of the Audit Committee included directors Toothaker, Dearborn, Dudman, Fernald, Hannah, and Woodside. Mr. Smith was a member of the Committee through May 2009 when he was succeeded by Mrs. Dearborn. Mr. Toothaker serves as Chairperson of the Committee. The Audit Committee met five (5) times during 2009. See “Appendix A” for a Report of Audit Committee. The Audit Committee has a written charter, a copy of which is attached to this Proxy Statement and labeled “Appendix B”. The Audit Committee Charter may be viewed on the Company’s general website under the Investor Relations section at www.BHBT.com.

          The Company’s Board has determined that the Audit Committee is composed of independent directors, in accordance with applicable NYSE Amex listing requirements and Rule 10A-3(b)(1) under the Exchange Act. The Audit Committee operates under a written charter, which has been adopted by the Audit Committee and the Company Board. Audit Committee members do not accept any consulting, advisory, or other compensatory fees (except directors fees) and are not affiliated with the Company (except as a director) or any of its subsidiaries. The Board of Directors has determined that the Company has at least one “audit committee financial expert” serving on its Audit Committee. Mr. Scott G. Toothaker, CPA, meets the criteria for an “audit committee financial expert” and is “independent” within the meaning of the rules adopted by the NYSE Amex pursuant to the Sarbanes-Oxley Act of 2002.

          The Audit Committee has the sole authority to appoint and replace the independent registered public accounting firm. The Audit Committee is responsible for the compensation and oversight of the Independent Registered Public Accounting Firm and this firm reports directly to the Audit Committee. The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to (i) the financial information to be provided to shareholders and the Commission; (ii) the review of quarterly financial statements; (iii) the system of financial controls management has established; and (iv) the internal audit, external audit, and loan review processes.

          Governance Committee

          The Governance Committee for 2009 was comprised of directors Shea, Dodge, Colwell, Carter, and Lewis. Mrs. Dearborn and Ms Fernald participated as Committee members through May 2009 when they were succeeded by Mr. Dodge and Mr. Lewis. The Governance Committee met four (4) times during 2009. Mrs. Shea served as Chairperson of the Committee. The Company Board of Directors has determined that each member of the Governance Committee is independent for purposes of NYSE Amex listing standards.

          The Governance Committee’s responsibilities include screening director candidates, recommending nominees to the full Board of Directors (including the slate of returning directors) to be elected each year, making recommendations concerning the size and composition of the Board of Directors, recommending Committee structure and membership, and sponsoring new director orientation and education. The Governance Committee has a written charter, which may be viewed on the Company’s general website under the Investor Relations section at www.BHBT.com.

          The Governance Committee expects to identify nominees to serve as directors of the Company primarily by accepting and considering the suggestions and nominee recommendations made by directors, management, and shareholders. To date the Governance Committee has not engaged any third parties to assist it in identifying candidates for the Board of Directors. The Governance Committee considers among other things the background, business and professional experience (including any requisite financial expertise or other special qualifications), current employment, community service, and other board service of its director-nominees, as well as racial, ethnic, and gender diversity of the Board as a whole. The Governance Committee generally considers a candidate’s qualifications in light of these broad criteria as well as an assessment as to whether the candidate can make decisions on behalf of or while representing the Company in a manner consistent with its stated business goals and objectives. The Governance Committee will also consider the candidate’s “independent” status in accordance with applicable regulations and listing standards. The Governance Committee will consider nominees recommended by

shareholders. Any shareholder wishing to nominate a candidate for director must follow the procedures for submission of proposals set forth in the section of this Proxy Statement entitled “Nominations by Shareholders.”

          Compensation and Human Resources Committee

          The Compensation and Human Resources Committee reviews and considers recommendations from management, consultants, and directors concerning executive compensation policies, employee benefit plans, and salary administration programs, including reviewing annually the performance, total compensation, and recommended adjustments for all executive officers the Company’s and its subsidiaries. The deliberations of the Compensation and Human Resources Committee are reported to the Board of Directors for review and approval. The Compensation and Human Resources Committee has a written charter, which may be viewed on the Company’s general website under the Investor Relations section at www.BHBT.com.

          The Compensation and Human Resources Committee is comprised of Company directors Phillips, Colwell, Dearborn, Dodge, and Fernald. Mrs. Shea served on the Committee until May of 2009. Mr. Phillips serves as Chairperson of the Committee. The Company’s and Bank’s President and Chief Executive Officer, Mr. Murphy, serves on the Committee in a non-voting, ex-officio capacity, as does the Bank’s Senior Vice President of Human Resources, Mrs. Marsha C. Sawyer. All voting members of the Compensation and Human Resource Committee are independent for purposes of NYSE Amex listing standards. The Compensation and Human Resources Committee met five (5) times during 2009.

          Further information regarding the Compensation and Human Resources Committee can be found below in this Proxy Statement beginning under the caption “Role of the Compensation Committee.” The Compensation Committee report appears at page 25 of this Proxy Statement.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

COMPENSATION OF EXECUTIVE OFFICERS

Compensation Discussion and Analysis

          In the paragraphs that follow, we will provide an overview and analysis of our compensation program and policies, the material compensation decisions we have made under those programs and policies with respect to our named executive officers, and the material factors that we considered in making those decisions. Later in this Proxy Statement under the heading, “Executive Compensation” is a series of tables containing specific information about the compensation earned or paid to the named executive officers, whom we refer to as our “NEOs”.

          The discussion below is intended to aid understanding the detailed information provided in those tables and put that information into context within the overall compensation program.

Named Executive Officers

          As used in this Proxy Statement, the term “named executive officers” or “NEOs” includes: (i) the Company’s Chief Executive Officer (“CEO”), Joseph M. Murphy and Chief Financial Officer (“CFO”), Gerald Shencavitz, and (ii) the Company’s three (3) other most highly compensated policy making, executive officers who earned more than $100,000 in total compensation during the Company’s last fiscal year. In 2009, the other three NEOs were Senior Vice Presidents: Michael W. Bonsey, Gregory W. Dalton and Stephen M. Leackfeldt.

Objectives of the Company’s Compensation Program

          The objective of the Company’s compensation program is to attract, retain, motivate, and reward NEOs and other executives who contribute to our financial and operational success, which ultimately builds value for our shareholders. We believe that, in order to do this effectively, our program must:

•

provide our NEOs with total compensation opportunities at levels that are competitive for comparable positions at companies and banks with whom we compete for talent;

	•		directly link a significant portion of total compensation to the Company’s achievement of performance goals in a way that proportionally rewards higher performance levels;
	•		provide significant upside opportunities for exceptional individual performance, which can result in differentiated compensation among NEOs based on performance; and
	•		closely align our NEOs’ interest with those of our shareholders by making stock-based incentives an element of our executive’s compensation over time.

Role of the Compensation Committee

          The Compensation and Human Resources Committee (the “Committee”) oversees regulatory compliance for all Company compensation and benefit plans and administers the Company’s executive compensation programs. The Committee recommends these programs to the Company’s Board of Directors for approval at least annually and more frequently, if circumstances warrant. These programs are intended to provide a variety of competitive compensation components including base salaries, traditional benefits, annual cash performance incentives, and retirement programs. In addition, the Company has sought to align the long-term interests of its executives, including the NEOs, with those of the shareholders by providing share-based incentives in the form of stock option grants. The composition of the components may vary from year to year based on individual performance, the Company’s business plan, market conditions, or other factors.

Market and Comparative Data

          The Committee approves and recommends to the Board compensation programs it believes meets the Company’s ongoing need to attract, motivate, and retain talented and qualified executives who have the ability to make a major contribution to the leadership and success of the Company. The Committee regularly reviews industry-standard compensation survey information provided by the Company’s compensation consulting firm, Pearl Meyer & Partners. Pearl Meyer & Partners is retained by the Committee and does not provide any other consulting services to the Company or its subsidiaries. Pearl Meyer & Partners draws salary information from its own proprietary data base and public filings detailing compensation programs. In addition, the Committee reviews comparative salary and benefit information gleaned from public filings of a peer group the Company established for compensation comparison (the “Company Peer Group”). The Committee felt it was important to expand its Compensation Peer Group to financial institutions outside of Maine to incorporate a larger selection of publicly-traded financial institutions and provide a representation of the geographical area that may be considered for recruitment purposes. With the assistance of Pearl Meyer & Partners, the Company redefined its 2009 Compensation Peer Group to the companies listed below. The Committee believes these Company Peer Group filings disclose compensation programs of similarly situated executives in comparable institutions throughout Maine and the Northeast region and they are a useful comparative tool for the Committee in establishing executive compensation programs and individual criteria for its executives including the NEOs. The Peer Group information is used as a guide in establishing reasonableness in the Company’s compensation program.

(This space intentionally left blank)

          Financial performance statistics for the Company’s Compensation Peer Group is shown for the nine months ended September 30, 2009 and then annualized. The statistical information was provided to Pearl Meyer & Partners by SNL Financial. For 2009, the Company Compensation Peer Group was comprised of the following institutions.

														RETURN
										EPS				ON								NET
						AVERAGE				GROWTH				AVERAGE				EFFICIENCY				INTEREST
				TICKER		ASSETS				ONE YEAR				EQUITY				RATIO				MARGIN
PEER BANK		STATE		SYMBOL		($)				(%)				(%)				(%)				(%)
Alliance Financial Corp		NY		ALNC			1,456,276				(11.83	)			7.92				63.13				3.51
Arrow Financial Corp		NY		AROW			1,836,283				7.80				16.73				57.31				3.78
Bancorp Rhode Island, Inc.		RI		BARI			1,569,880				(69.13	)			4.06				67.27				3.18
Bridge Bancorp, Inc.		NY		BDGE			854,546				(.93	)			15.59				57.25				4.79
Camden National Corp		ME		CAC			2,272,746				231.88				13.44				49.67				3.54
Canandaigua National Corp		NY		CNND.OB			1,590,355				2.98				13.85				62.22				4.00
Chemung Financial Corp.		NY		CHMG.OB			968,638				(42.11	)			6.23				71.24				3.90
Enterprise Bancorp Inc.		MA		EBTC			1,287,427				(8.70	)			7.34				72.41				4.22
Financial Institutions Inc.		NY		FISI			2,138,205				N/M				6.22				66.46				4.02
First Bancorp Inc.		ME		FNLC			1.331,842				(13.27	)			9.48				41.22				3.64
Hampden Bancorp Inc.		MA		HBNK			566,243				N/M				(.67	)			83.05				3.18
Hingham Inst.		MA		HIFS			913,866				28.30				12.41				47.96				3.20
LSB Corp		MA		LSBX			806,953				N/M				6.54				62.65				2.53
Legacy Bancorp Inc.		MA		LEGC			953,546				N/M				(4.22	)			83.21				3.13
Merchants Bancshares Inc.		VT		MBVT			1,405,994				(2.74	)			13.93				65.64				3.80
New England Bancshares, Inc		CT		NEBS			672,242				N/M				.36				79.92				2.90
NH Thrift Bancshares, Inc.		NH		NHTB			902,944				14.93				7.65				64.12				2.27
Northeast Bancorp		ME		NBN			604,431				533.33				4.11				80.37				3.05
Westfield Financial Inc.		MA		WFD			1,261,637				(40.0	)			1.81				69.25				3.06
The Wilber Corp		NY		GIW			916,137				27.50				10.47				72.63				3.49
50th Percentile							1,115,138				(.93	)			7.50				66.05				3.50
Bar Harbor Bankshares		ME		BHB			1,060,707				25.84				13.13				48.80				3.44
Percentile Rank BHB to Peers							50	%			73	%			75	%			90	%			45	%

          The Committee did not target the elements of its compensation program at any specific level or percentile within the Peer Group, but used the information as a whole and the 50th percentile as a way to determine the competitiveness and reasonableness of the Company’s pay practices. Rather than rely on a specific formula-based model, the Committee believes that retaining discretion to also assess the overall performance of NEOs gives the Committee the ability to more accurately reflect individual contributions that cannot be absolutely quantified. The Committee also considers the senior incentive program tailored to provide more emphasis on incentive compensation for the NEO group as an important component of the Company’s overall compensation program.

          The Committee used detailed compensation information disclosed in the most recent proxy filings available for competitive reference along with market salary survey information provided by Pearl Meyer & Partners. Limited Peer Group proxy information is available for the position held by Mr. Bonsey. The Committee further referenced salary survey information and guidance provided by Pearl Meyer & Partners in its process to establish compensation levels for this group.

          2009 compensation and comparative market salary information is detailed below:

														BHB
														2009
														Total
		BHB				Base				Base				Cash				Cash Compen-				Cash
		2009 Base				Salaries				Salaries				Compen-				sation				Compensation
		Salary				Source A1				Source B2				sation				Source A1				Source B2
		($)				($)				($)				($)				($)				($)
Joseph M. Murphy							292,000				276,000								294,000				291,000
			314,520				350,000				337,000				365,354				371,000				364,000
							370,000				374,000								470,000				461,000
Gerald Shencavitz							174,000				162,000								190,000				177,000
			200,100				206,000				196,000				260,130				220,000				211,000
							223,000				219,000								256,000				246,000
Michael W. Bonsey											121,000												121,000
			121,000				N/A				135,000				145,694				N/A				135,000
											192,000												222,000
Gregory W. Dalton							165,000				134,000								177,000				149,000
			136,500				171,000				146,000				162,610				190,000				157,000
							188,000				162,000								212,000				181,000
Stephen M. Leackfeldt							142,000				122,000								155,000				134,000
			131,000	3			150,000				146,000				156,428				163,000				158,000
							170,000				170,000								202,000				198,000

          The Committee also considers the relative scarcity of senior banking executive candidates in its immediate market area and the difficulties of recruiting out-of-market candidates to work in rural Maine. The Committee does not use any formal, fixed, or indexed criteria for establishing compensation levels for any of its NEOs within market identified ranges. The Committee believes over time, the growth in total compensation provided to its executive officers should be more heavily weighted towards incentive compensation opportunities directly tied to corporate performance with less emphasis upon growth in base salaries.

Role of Management in Establishing Compensation

          On an annual basis Mrs. Marsha C. Sawyer, the Senior Vice President of Human Resources, with the oversight of the Chief Executive Officer, provides the Committee with general information on executive officer compensation, including the NEOs. The Committee then reviews, discusses, and considers this information and any recommendations. The Chief Executive Officer and the Senior Vice President of Human Resources generally attend Committee meetings but were not present for the executive sessions or for any discussion of their own compensation. Mrs. Sawyer assists in the administration of all executive compensation programs, prepares Committee and Board meeting materials and performs work as requested by the Committee, including working directly with the Company’s Compensation Consultant in preparation of peer analyses for the Committee’s consideration. Mr. Murphy, the Company’s President and Chief Executive Officer, attends portions of the Committee’s meetings and makes recommendations on base salary, annual incentives, and equity compensation for executive officers who report to him. The Committee has the discretion to accept, reject, or modify the CEO’s recommendations. No changes occurred in 2009 with respect to the participation by management in the compensation process.

Compensation Consultants

          The Committee has occasionally utilized, and expects to utilize in the future, various outside consultants, actuaries, and employment attorneys to assist it in developing and implementing the essential components of the Company’s compensation program, including its stock option program, Supplemental Executive Retirement Plan (“SERP”), and incentive compensation arrangements.

          During 2009, Committee Chair, Robert Phillips attended a multi-day conference sponsored by Bank Director Magazine, NASDAQ, and Institutional Shareholder Services specifically targeted at Bank Executive & Board Compensation best practices. In January, 2008, the Committee, under authority granted by its Charter, engaged Pearl Meyer & Partners to assist in a total review of the Company’s executive officer and director compensation packages. During 2008, Pearl Meyer’s engagement included:

	•		A comprehensive and competitive review of the Company’s total compensation arrangements including base salaries, equity and retirement programs for the Company’s CEO and its senior executives including the NEOs;
	•		A comprehensive review of the Company’s compensation program for its directors;
	•		Recommendations for an expanded, appropriate Peer Company comparison group for compensation purposes;
	•		Assisting in the establishment of an appropriate compensation mix and pay for performance plan based on the Company’s size, geographic location, and unique characteristics;
	•		Developing a short-term, annual cash incentive plan for its executives, including NEOs with thresholds, targets, and stretch goals tied to the Company’s strategic and long-term financial plans; and
	•		Assist with the development of an equity incentive plan to encourage decision-making with the long-term interests of the Company in mind by executives including the NEOs.

          The Committee continues to review and implement portions of Pearl Meyer & Partner’s 2008 recommendations. In addition Pearl Meyer & Partners provided the following services in 2009:

	•		Provided oversight and testing of the Company’s proposed Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2009 for reasonableness prior to submitting it for a shareholder vote in May 2009
	•		Provided a competitive assessment of total compensation, by component and in aggregate for the Compensation Committee’s review
	•		Provided current market-based total compensation guidelines to assist in establishing appropriate 2010 compensation levels for the Company’s NEOs; and
	•		Performed a pay-performance analysis and peer group performance comparison for the CEO position

Compensation Plan Components

          The Company’s executive compensation program applicable to the NEOs is comprised of the following primary components: (a) base salaries and benefits, (b) annual incentive cash compensation programs, (c) long-term incentives in the form of stock option grants, and (d) retirement benefits:

	(a)		Base Salary and Benefits. The executive compensation program provides base salaries and benefits, which include health and life insurance programs, a 401(k) retirement program, and vacation awards to compensate executive officers for the performance of core duties and responsibilities associated with their positions. The Committee reviews base salaries annually in the context of the comparative industry information, as described above. The Committee also considers the specific contributions of the individual executive officer and the officer’s opportunity for professional growth, as well as market factors, when it sets and adjusts base salaries. In addition, the Committee considers the prevailing economic climate, the overall performance of the Company, and its most current business plan.
			Upon performance evaluations and the advice and market salary data supplied by Pearl Meyer &

Partners, the Committee made performance and market adjustments resulting in the 2009 base salaries for NEOs as follows:

		2008 Base				2009 Base				2009
Named Executive		Salary				Salary				Increase				Percentage
Joseph M. Murphy1 President and CEO of Bar Harbor Bankshares and		$	273,946			$	314,520			$	40,574				14.81	%
Bar Harbor Bank & Trust
Gerald Shencavitz1 EVP, CFO and Treasurer of Bar Harbor Bankshares		$	174,000			$	200,100			$	26,100				15.00	%
and EVP, CFO, and COO of Bar Harbor Bank & Trust
Michael W. Bonsey SVP, Credit Administration of Bar Harbor Bank &		$	116,000			$	121,000			$	5,000				4.31	%
Trust
Gregory W. Dalton SVP, Business Banking of Bar Harbor Bank & Trust		$	132,000			$	136,500			$	4,500				3.41	%
Stephen M. Leackfeldt2		$	116,000			$	121,000			$	5,000				4.31	%
SVP, Retail Banking of Bar Harbor Bank & Trust		$	121,000			$	131,000	1		$	10,000				8.26	%

(This space is intentionally left blank)

(b)		Short-term, Annual Incentive Cash Compensation Program. During 2009, nine senior managers including NEOs, Messrs. Murphy, Shencavitz, Bonsey, Dalton, and Leackfeldt participated in an annual cash incentive compensation plan developed under the guidance of Pearl Meyer & Partners. The philosophy of the Compensation Committee was to set competitive, reasonable base salaries and allow for the potential of meaningful incentives tied to the Company’s short-term initiatives to optimize profitability, growth, excellence in individual performance, and to promote teamwork among its participants. This plan was approved by the Company’s Board of Directors for 2009 and is detailed below:
		Incentive Payout Opportunity
		Each participant had a target incentive opportunity based on their role. The target incentive reflected a percentage of base salary determined to be consistent with competitive market practices. Actual awards varied based on achievement of specific goals. The opportunity reflects a range of potential awards. Actual awards ranged from 0% (for not achieving minimal performance) to 150% of target (for exceptional performance). The table below summarizes the incentive ranges for the 2009 plan year.

2009 Short-Term Incentive Targets
						Threshold								Stretch
						(50% of Target				Target				(150% of Target
Role		Below Threshold				Percentage)				(100%)				Percentage)
CEO/President			0	%			12.50	%			25.00	%			37.50	%
EVP			0	%			10.00	%			20.00	%			30.00	%
SVP			0	%			7.50	%			15.00	%			22.50	%

Incentive Plan Measures

		Each participant had predefined performance goals used to determine their short-term incentive award. There were two performance categories: BHB Team and Individual. BHB Team performance was reflected by common goals for all participants. Individual goals reflected each participant’s individual contributions based on their role. The specific allocations of goals were weighted to reflect the focus and contribution for each position in the Company.
		The table below provided the guidelines for the allocation of participant’s incentives for each performance component.

Position		BHB/Team Performance				Individual Performance
CEO/President (Murphy)			75	%			25	%
EVP (Shencavitz)			65	%			35	%
SVP — Line (Dalton)			30	%			70	%
SVP — Staff (Bonsey and Leackfeldt)			50	%			50	%

		BHB Performance
		BHB Team performance goals for 2009 were increased Net Income to Common Shareholders and a decreased Efficiency Ratio. The table below shows the specific performance goals at Threshold, Target (budget or improvement over prior year measurements) and Stretch for each of the NEO’s during 2009.

Joseph M. Murphy
President and CEO

Base Salary		$	314,520			Base Salary				$	314,520			Base Salary				$	314,520
Incentive Threshold (%)			12.50	%		Incentive Target (%)					25.00	%		Incentive Stretch (%)					37.50	%
Incentive Threshold ($)		$	39,315			Incentive Target ($)				$	78,629			Incentive Stretch ($)				$	117,944

																		Payment Range
Incentive Measures		Threshold				Target				Stretch				Weight				Threshold				Target				Stretch
Net Income to Common Shareholders ($Millions)			7,691				7,848				8,633				55.00	%			6.88	%			13.76	%			20.64	%
Efficiency Ratio			60.80	%			59.90	%			58.90	%			20.00	%			2.50	%			5.00	%			7.50	%
Past Dues		200bps				170bps				140bps					8.33	%			1.04	%			2.08	%			3.12	%
Charge offs		35bps				30bps				20bps					8.33	%			1.04	%			2.08	%			3.12	%
NPL+OREO		125bps				100bps				75bps					8.34	%			1.04	%			2.08	%			3.12	%
TOTALS															100.00	%			12.50	%			25.00	%			37.50	%

Gerald Shencavitz
EVP and CFO

Base Salary		$	200,100			Base Salary				$	200,100			Base Salary				$	200,100
Incentive Threshold (%)			10.00	%		Incentive Target (%)					20.00	%		Incentive Stretch (%)					30.00	%
Incentive Threshold ($)		$	20,010			Incentive Target ($)				$	40,020			Incentive Stretch ($)				$	60,030

																		Payment Range
Incentive Measures		Threshold				Target				Stretch				Weight				Threshold				Target				Stretch
Net Income to Common Shareholders ($Millions)			7,691				7,848				8,633				45.00	%			4.50	%			9.00	%			13.50	%
Efficiency Ratio			60.80	%			59.90	%			58.90	%			20.00	%			2.00	%			4.00	%			6.00	%
Invest. Income			16,624				16,964				18,660				12.50	%			1.25	%			2.50	%			3.75	%
Yield against Peer		48th				50th				75th					12.50	%			1.25	%			2.50	%			3.75	%
Project Leadership			2				3				5				10.00	%			1.00	%			2.00	%			3.00	%
TOTALS															100.00	%			10.00	%			20.00	%			30.00	%

Michael W. Bonsey
Senior Vice President

Base Salary		$	121,000			Base Salary				$	121,000			Base Salary				$	121,000
Incentive Threshold (%)			7.50	%		Incentive Target (%)					15.00	%		Incentive Stretch (%)					22.50	%
Incentive Threshold ($)		$	9,075			Incentive Target ($)				$	18,150			Incentive Stretch ($)				$	27,225

																		Payment Range
Incentive Measures		Threshold				Target				Stretch				Weight				Threshold				Target				Stretch
Net Income to Common Shareholders ($Millions)			7,691				7,848				8,633				30.00	%			2.25	%			4.50	%			6.75	%
Efficiency Ratio			60.80	%			59.90	%			58.90	%			20.00	%			1.50	%			3.00	%			4.50	%
Commercial Loans			322,739				329,325				362,258				15.00	%			1.13	%			2.25	%			3.38	%
Consumer Loans			305,572				311,808				342,989				10.00	%			0.75	%			1.50	%			2.25	%
Past Dues		200bps				170bps				140bps					8.34	%			0.63	%			1.25	%			1.88	%
Charge offs		35bps				30bps				20bps					8.33	%			0.62	%			1.25	%			1.87	%
NPL+OREO		125bps				100bps				75bps					8.33	%			0.62	%			1.25	%			1.87	%
TOTALS															100.00	%			7.50	%			15.00	%			22.50	%

Gregory W. Dalton
Senior Vice President

Base Salary		$	136,500			Base Salary				$	136,500			Base Salary				$	136,500
Incentive Threshold (%)			7.50	%		Incentive Target (%)					15.00	%		Incentive Stretch (%)					22.50	%
Incentive Threshold ($)		$	10,238			Incentive Target ($)				$	20,475			Incentive Stretch ($)				$	30,713

																		Payment Range
Incentive Measures		Threshold				Target				Stretch				Weight				Threshold				Target				Stretch
Net Income to Common Shareholders ($Millions)			7,691				7,848				8,633				20.00	%			1.50	%			3.00	%			4.50	%
Efficiency Ratio			60.80	%			59.90	%			58.90	%			10.00	%			0.75	%			1.50	%			2.25	%
Commercial Loans			322,739				329,325				362,258				35.00	%			2.62	%			5.25	%			7.87	%
Non Personal Deposits			150,582				153,655				169,021				15.00	%			1.13	%			2.25	%			3.38	%
Past Dues		200bps				170bps				140bps					6.67	%			0.50	%			1.00	%			1.50	%
Charge offs		35bps				30bps				20bps					6.67	%			0.50	%			1.00	%			1.50	%
NPL+OREO		125bps				100bps				75bps					6.66	%			0.50	%			1.00	%			1.50	%
TOTALS															100.00	%			7.50	%			15.00	%			22.50	%

Stephen M. Leackfeldt
Senior Vice President

Base Salary		$	126,000			Base Salary				$	126,000			Base Salary				$	126,000
Incentive Threshold (%)			7.50	%		Incentive Target (%)					15.00	%		Incentive Stretch (%)					22.50	%
Incentive Threshold ($)		$	9,450			Incentive Target ($)				$	18,900			Incentive Stretch ($)				$	28,349

																		Payment Range
Incentive Measures		Threshold				Target				Stretch				Weight				Threshold				Target				Stretch
Net Income to Common Shareholders ($Millions)			7,691				7,848				8,633				30.00	%			2.25	%			4.50	%			6.75	%
Efficiency Ratio			60.80	%			59.90	%			58.90	%			20.00	%			1.50	%			3.00	%			4.50	%
Personal Deposits			259,341				264,634				291,097				10.00	%			0.75	%			1.50	%			2.25	%
Deposit Margin			1.87				1.83				1.79				10.00	%			0.75	%			1.50	%			2.25	%
Consumer Loans			305,572				311,808				342,989				10.00	%			0.75	%			1.50	%			2.25	%
Past Dues		200bps				170bps				140bps					6.67	%			0.50	%			1.00	%			1.50	%
Charge offs		35bps				30bps				20bps					6.67	%			0.50	%			1.00	%			1.50	%
NPL+OREO		125bps				100bps				75bps					6.66	%			0.50	%			1.00	%			1.50	%
TOTALS															100.00	%			7.50	%			15.00	%			22.50	%

Plan Trigger

In order for the Annual Incentive Plan to ‘activate’ or turn on, the Company needed to achieve at least $7,691 in 2009 Net Income to Common Shareholders. If BHB did not meet this level, the plan would not pay out any awards for the year, regardless of performance on other goals.

The Company achieved Net Income to Common Shareholders of $9,316 or a 20.49% increase over 2008.

2009 Incentive Payment Summary

																		Credit				Loan and
		Percentage				Total				Net				Efficiency				Asset				Deposit				Individual
Named		Of Base				Payout				Income				Ratio				Quality				Growth				Goals
Executive		(%)				($)				($)				($)				($)				($)				($)
Joseph M. Murphy			35.75				112,4401	1			64,870				23,589				23,981				N/A				N/A
Gerald Shencavitz			30.00				60,030				27,014				12,006				N/A				N/A				21,010	2
Michael W. Bonsey			20.41				24,694				8,168				5,445				5,535				5,546				N/A
Gregory W. Dalton			19.13				26,110				6,143				3,071				4,995				11,901				N/A
Stephen M. Leackfeldt			20.18				25,428				8,505				5,670				4,611				3,807				2,835	3
Totals							248,702				114,700				49,781				39,122				21,254				23,845

Details of the above payments disclosed into Threshold, Target, and Stretch categories can be found on page 31.

(c)		Equity Plans. Since adopting its Stock Option Plan in 2000, the Company has provided its officers and managers, including its NEOs, with a share-based compensation component in the form of stock options. This compensation component is used to align the interest of the Company’s participating officers and managers, particularly its executive officers, with those of its Shareholders over a long-term horizon and to serve as a retention tool. The Company grants options upon date of hire or promotion for qualified individuals, and from time to time for special recognition. The Company awards all grants at the closing market price of the business day of the enabling vote by the Company’s Board of Directors. The Board of Directors also sets the vesting schedule, which is typically over a period of three to seven years. The Company made larger than normal base salary adjustments for several of its NEOs based on market data and therefore, did not feel it was necessary to grant stock options to these senior executives in 2009. As such, no grant have been made under the Bar Harbor Bankshares and Subsidiaries Equity Incentive Plan of 2009 approved by shareholders at the May, 2009 Annual Meeting
(d)		Benefits, Retirement and Post-Termination Compensation Elements. The Company provides for all employees meeting minimum age and service requirements a 401(k) plan. In addition, the Company provides a nonqualified, noncontributory, defined-benefit plan, (“SERP”) for certain highly compensated officers. Currently, the Chief Executive Officer and Executive Vice President/Chief Financial Officer are the only two NEOs that participate in the SERP. The Company’s 401(k) plan has imbedded regulatory ceilings that limit the two most senior executives from deferring amounts sufficient to provide for a reasonable, final average salary retirement benefit. The Company utilizes its

SERP plan as a vehicle to assist in funding the Chief Executive Officer’s and Executive Vice President/Chief Financial Officer’s total retirement program.

		The Company also maintains Change in Control Agreements for NEOs Murphy, Shencavitz, Bonsey, and Dalton. No payments were eligible to be paid under these agreements in 2009 because such payments were prohibited due to the Company’s 2009 participation in the U.S. Treasury’s Capital Purchase Program. In future years these payments will not be prohibited due to the Company’s repayment of preferred stock under the Capital Purchase Program.
		The agreements were in effect for the 2009 reporting year and provided for the payment of their salary and other specified benefits for a period of twelve to twenty-four months in the event of both a change of control of the Company and subsequent termination (or constructive termination) within set timeframes after a control, unless such termination was for cause. These specific payments and timeframes were established under the advice of a compensation consultant and employment attorney as representative of similar type agreements in the industry.
		The Committee believes that the Company’s SERP plan and Change in Control Agreements are necessary to provide a competitive total compensation plan to attract and retain the employment of NEOs that are a party to the agreements.

Other Compensation and Benefits

          In addition to the foregoing, all executive officers of the Company are entitled to participate in certain group health, dental, and term life insurance benefits. In accordance with Company policy, all such benefits are generally available to employees of the Company and its subsidiaries.

Stock Ownership Guidelines

          While many of the Company’s executive officers hold Company stock, the Company does not have specific guidelines regarding stock ownership for its NEOs.

Compliance with Internal Revenue Code Section 409A

          Section 409A of the Internal Revenue Code was enacted in 2005 and provides that if a service provider is entitled to nonqualified deferred compensation benefits that are subject to Section 409A, and such benefits do not comply with Section 409A, the service provider would be subject to adverse tax treatment, including accelerated income recognition and a potential 20% tax penalty. The Company has modified its affected compensation plans to comply with the Section 409A tax provisions because the Company’s NEOs meet the definition of a service provider under Section 409A.

Participation in the U.S. Treasury’s Capital Purchase Program

          Capital Purchase Program Participation

          In January 2009, the Company issued and sold preferred stock and a warrant to purchase common stock for an aggregate purchase price of $18,751,000 to the U.S. Treasury under the Capital Purchase Program. The Company redeemed all of the preferred stock from Treasury in February 2010 while the warrants held by Treasury currently remain outstanding. Under the terms of the purchase agreement, for as long as the Treasury held the preferred stock acquired under the purchase agreement, the Company was required to ensure that its compensation, bonus, incentive, and other benefit plans, arrangements and agreements, including change of control severance and employment agreements, with respect to its senior executive officers, as such term is defined in the Emergency Economic Stabilization Act of 2008 (the “EESA”), comply with Section 111 (b) of the EESA and applicable guidance and regulations promulgated by Treasury. Each such officer consented to and waived any claims against the U.S. Treasury or the Company with respect to any amendments or modifications to their compensation or benefits required for the Company to so comply. However, the limitations imposed during 2009 on payments are no longer applicable to the Company by reason of its repurchase of the preferred stock held by the U.S. Treasury in 2010.

          The American Recovery and Reinvestment Act of 2009 (“ARRA”), enacted on February 17, 2009, materially amended Section 111 of EESA. Regulations interpreting Section 111 of EESA, as amended by ARRA, were published in the Federal Register on June 15, 2009 (“Interim Final Rules”). Under EESA as amended by ARRA, the following restrictions and obligations applied with respect to the Company’s NEOs for as long as the U.S. Treasury held any Company preferred stock acquired under the purchase agreement (the “TARP Period”).

	•		Limitation on Bonuses. The Company could not pay or accrue any bonus, retention award or incentive compensation (including its regular annual incentive compensation) to its most highly compensated employee (i.e., Mr. Murphy) during the portion of 2009 following the Interim Final Rules released June 15, 2009. The Company has not issued restricted stock, but if it had done so further restrictions would have been placed on this compensation item.
	•		Claw back provision. The Company was required to provide for the recovery of any incentive or bonus payments paid during the TARP Period to senior executive officers and the next twenty most highly compensated employees which are based on financial criteria later proven to be materially inaccurate. Accordingly, the Company has amended or modified each applicable incentive or other benefit plan to so provide. Each of the senior executive officers consented to and waived any claims against Treasury or the Company with respect to such amendments and modifications.
	•		Prohibition on Change of Control Agreements. The Company was prohibited from making certain payments under Change of Control Agreements to its NEOs or other top five most highly compensated employees during the TARP Period (i.e., any payments of severance or due to a change in control).
	•		Assuring that Compensation Programs Do Not Incent Unnecessary Risks. The Compensation Committee was required to review the Company’s compensation programs to ensure that the compensation programs do not encourage NEOs to take unnecessary and excessive risks that threaten the Company’s value.

          Policy on Internal Revenue Code Section 162(m)

          The Company intends for all incentive compensation paid to the NEOs to be fully deductible for federal income tax purposes. Section 162(m) of the Code disallows publicly-traded companies from receiving a tax deduction on compensation paid to executive officers in excess of $1 million unless, among other things, the compensation meets the requirements for performance-based compensation. In structuring the compensation programs and in determining executive compensation, the Committee takes into consideration the deductibility limit for compensation and the performance-based requirements of Section 162(m). To date, none of the compensation paid to any executive offers have exceeded this limit on deductibility.

          As a result of the Company’s participation in the Capital Purchase Program the deduction limit for remuneration paid to the senior executive officers during calendar years 2009 and 2010, will be $500,000 instead of $1 million, and must be computed without regard to “performance-based” compensation and certain deferrals of income.

          Compensation Committee Report

          The Compensation Committee has reviewed the Compensation Discussion and Analysis included in this proxy statement and has discussed it with members of management. Based on such review and discussion, the Compensation Committee recommended to the Board of Director members that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K and this Proxy Statement.

          Risk Assessment Certification Pursuant to EESA. In accordance with the Emergency Economic Stabilization Act of 2008 (the “EESA”), as amended, the Compensation Committee certifies that (1) it has reviewed with senior risk official the compensation plans applicable to the Company’s “senior executive officers” (“SEOs”, as such term is defined pursuant to the Section 111 of the EESA) and has made reasonable efforts to ensure that such arrangements do not encourage the senior executive officers to take unnecessary and excessive risks that threaten the value of the Company and its subsidiaries, and (2) it has reviewed with the designated senior risk official the

employee compensation plans and has made all reasonable efforts to limit any unnecessary risks the plans pose to the Company; and (3) it has reviewed the employee compensation plans to eliminate any features of these plans that would encourage the manipulation of reported earnings of the Company and its subsidiaries to enhance the compensation of any employee. The Compensation Committee met twice in 2009 for this specific purpose. For more detail on the Committee’s conclusions in these matters, please refer to the Compensation Discussion and Analysis beginning on page 14 of this Proxy Statement.

Robert M. Phillips, Chair
Thomas A. Colwell
Jacquelyn S. Dearborn
Peter Dodge
Lauri E. Fernald

(This space intentionally left blank)

EXECUTIVE COMPENSATION

2009 Summary Compensation Table

          The following table discloses compensation for the years ended December 31, 2009, 2008 and 2007, received by the Company’s principal executive officer, principal financial officer, and three other most highly compensated executive officers (the “NEOs”). The Company, or the subsidiary by which he was employed, paid compensation for each named executive officer.

																										Change in
																						Non-				Pension Value
																						Equity				and
																						Incentive				Nonqualified
																						Plan				Deferred				All Other
														Stock				Option				Compen-				Compensation				Compen-
Name and Principal						Salary1				Bonus				Awards				Awards2				sation				Earnings4				sation5				Total
Position		Year				($)				($)				($)				($)				($)				($)				($)				($)
(a)		(b)				(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
Joseph M. Murphy			2009				314,520				0				0				0				50,834	3			246,095				22,466				633,915
President and CEO of			2008				273,946				0				0				0				57,968				222,690				21,579				576,183
Bar Harbor Bankshares			2007				258,440				0				0				0				32,305				201,145				20,999				512,889
and Bar Harbor Bank & Trust
Gerald Shencavitz			2009				200,100				0				0				0				60,030				62,883				11,945				334,958
EVP, CFO and			2008				174,000				0				0				0				39,907				56,966				9,724				280,597
Treasurer of Bar			2007				153,351				0				0				35,147				19,169				51,518				7,807				266,992
Harbor Bankshares and EVP, CFO, and COO of Bar Harbor Bank & Trust
Michael W. Bonsey			2009				121,000				0				0				0				24,694				0				5,974				151,668
SVP, Credit			2008				116,000				0				0				0				15,533				0				5,017				136,550
Administration of Bar			2007				104,000				0				0				12,802				13,004				0				4,563				134,369
Harbor Bank & Trust
Gregory W. Dalton			2009				136,500				0				0				0				26,110				0				7,632				170,242
SVP, Business Banking			2008				132,000				7,536	6			0				0				22,157				0				4,980				166,673
of Bar Harbor Bank &			2007				111,343				0				0				12,802				13,918				0				5,092				143,155
Trust
Stephen M. Leackfeldt			2009				126,000	7			0				0				0				25,428				0				5,888				157,316
SVP, Retail Banking			2008				116,000				0				0				0				13,681				0				5,601				135,282
of Bar Harbor Bank &			2007				111,680				0				0				12,802				13,960				0				5,386				143,828
Trust