-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WZNhu1vXobqen5HL7VcGjvXyhUZVuC2atWuhv8/me5pdwLrxh3hkdJ+/o76wgw/X bUauZihQB50Frn57/brF1A== 0000950123-95-000421.txt : 19950609 0000950123-95-000421.hdr.sgml : 19950609 ACCESSION NUMBER: 0000950123-95-000421 CONFORMED SUBMISSION TYPE: PRE 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950411 FILED AS OF DATE: 19950303 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUFFOLK BANCORP CENTRAL INDEX KEY: 0000754673 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 112708279 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13580 FILM NUMBER: 95518580 BUSINESS ADDRESS: STREET 1: 6 W SECOND ST CITY: RIVERHEAD STATE: NY ZIP: 11901 BUSINESS PHONE: 516725667 MAIL ADDRESS: STREET 1: 6 WEST SECOND STREET CITY: RIVERHEAD STATE: NY ZIP: 11901 PRE 14A 1 PRELIMINARY PROXY MATERIALS 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: /X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission Only / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
SUFFOLK BANCORP - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: 2 SUFFOLK BANCORP 6 West Second Street Riverhead, New York 11901 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS March 15, 1995 To Shareholders of Suffolk Bancorp: Notice is hereby given that the annual meeting of shareholders of Suffolk Bancorp, a New York corporation (the "Company"), will be held at the FOX HILL GOLF & COUNTRY CLUB, Oakleigh Avenue, Baiting Hollow, New York, on Tuesday, April 11, 1995 at 1:00 P.M. for the purpose of considering and voting upon the following matters: 1. The election of four directors to hold office for a term of three years, and one director to hold office for a term of two years, such terms to extend until their successors have been duly elected and qualified. 2. Amending the Certificate of Incorporation to increase the authorized shares of Common Stock from 7,500,000 to 37,500,000 and change the par value for each share of Common Stock from five dollars to one dollar. 3. The approval of the Board of Directors' selection of independent auditors for the year ending December 31, 1995. 4. Any other business which may be properly brought before the meeting or any adjournment thereof. By Order of the Board of Directors DOUGLAS IAN SHAW Corporate Secretary PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS QUICKLY AS POSSIBLE, WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON OR NOT. YOU MAY WITHDRAW YOUR PROXY AT ANY TIME PRIOR TO THE EXERCISE OF THE PROXY AT THE MEETING BY GIVING WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY. 3 SUFFOLK BANCORP 6 West Second Street Riverhead, New York 11901 PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS April 11, 1995 This proxy statement is furnished in connection with the solicitation by the Board of Directors of Suffolk Bancorp, a New York corporation (the "Company"), of proxies to be voted at the annual meeting of shareholders to be held at 1:00 P.M. on Tuesday, April 11, 1995 at the Fox Hill Golf & Country Club, Oakleigh Avenue, Baiting Hollow, New York. This proxy statement and the form of proxy are first being sent to shareholders on March 15, 1995. Any shareholder executing a proxy which is solicited hereby has the power to revoke it. Revocation may be made effective by giving written notice to the Secretary of the Company at any time prior to the exercise of the proxy. Proxies will be solicited by mail. They also may be solicited by directors, officers, and regular employees of the Company as well as those of The Suffolk County National Bank (the "Bank") and Island Computer Corporation of New York which are wholly owned subsidiaries of the Company, personally or by telephone or telegraph, but such persons will receive no additional compensation for such services. Copies of proxy material will be furnished to brokerage houses, fiduciaries, and custodians to be forwarded to the beneficial owners of the Company's common stock. The Company will bear all costs of soliciting proxies. As of March 3, 1995, there were 3,799,674 shares of common stock, $5.00 par value, of the Company outstanding. Only holders of record of such stock at the close of business on March 3, 1995 are entitled to notice of and to vote at the annual meeting. Each shareholder of record on that date is entitled to one vote for each share held. SHAREHOLDER PROPOSALS Shareholder proposals to be considered for inclusion in the proxy statement and considered at the annual meeting must be submitted on a timely basis. Proposals for the 1996 annual shareholders' meeting must be received by the Company at its principal executive offices no later than November 10, 1995. Any such proposals, as well as any questions related thereto, should be directed to the Secretary of the Company. ITEM 1. ELECTION OF DIRECTORS AND INFORMATION WITH RESPECT TO DIRECTORS AND OFFICERS The first item to be acted upon at the meeting of shareholders is the election of four directors, three directors to hold office for three years, and one director to hold office for two years, and until their successors shall have been duly elected and qualified. The By-Laws of the Company provide that the total number of directors may be fixed by resolution of the Board of Directors. At present, the Board has fixed the number of directors at ten which include the two additional directorships created and filled until the annual meeting in 1995 by two directors formerly of Hamptons Bancshares, Inc. The By-Laws further provide that the directors shall be divided into three classes, as nearly equal as possible, with terms of office of each class expiring at the end of consecutive years. All proxies which are received by the Board of Directors conferring authority to so vote in the election of directors will be voted FOR the three nominees listed below. All proxies received will be voted in accordance with specific instructions contained therein. In the event any nominee declines or is unable to serve, it is intended that the proxies will be voted for a successor nominee designated by the Board of Directors. Each of the three nominees has consented to being named in this proxy statement and to serve if elected, and the Board of Directors knows of no reason to believe that any nominee will decline or be unable to serve, if elected. The other six members of the Board of Directors, who are listed below, are presently expected to continue to serve on the Board until their respective terms expire. -1- 4 The following information is provided with respect to the nominees for directors to be elected at this annual meeting of shareholders and the directors of the Company whose terms of office continue after this annual meeting of shareholders of the Company. NOMINEES FOR DIRECTOR AND DIRECTORS CONTINUING IN OFFICE
Shares of Common Stock Position Served As Present Owned and Offices Business Experience Director Term Beneficially at % of Name 1/ Age With Company During Past 5 Years 2/ Since Expires 3/3/95 4/ Class =================================================================================================================================== NOMINEES FOR A TERM OF THREE YEARS: Edgar F. Goodale 41 Director President, Riverhead 1989 1995 4,723 0.12% Building Supply, Inc. J. Douglas Stark 63 Director President, Stark Mobile Homes, 1984 1995 38,205 1.00% Inc. (manufactured housing community) Howard M. Finkelstein 64 Director Partner, Smith, Finkelstein, 1984 1995 26,294 0.69% Lundberg, Isler, and Yakaboski (attorneys and general counsel for the Bank) John J. Raynor 46 Director President, John J. Raynor P.E. & 1994 1995 3,968 0.10% L.S., P.C. (civil engineering/surveying) NOMINEE FOR A TERM OF TWO YEARS: Bruce Collins 64 Director Superintendent of Public Works 1994 1995 6,139 0.16% Village of East Hampton, New York DIRECTORS CONTINUING IN OFFICE: Joseph A. Deerkoski 60 Director President, See Neefus, Inc. 1987 1996 16,986 0.45% (general insurance) Edward J. Merz 63 President, President and Chief Executive 1984 1996 11,961 0.31% Chief Executive Officer, The Suffolk County Officer and National Bank; Chairman & Director, Director Island Computer Corporation of New York, Inc. 3/ Hallock Luce 3rd 73 Director Vice President, Lupton & Luce, Inc. 1984 1997 47,292 1.24% (general insurance) Raymond A. Mazgulski 71 Chairman and Chairman, The Suffolk County 1984 1997 8,007 0.21% Director National Bank Peter Van de Wetering 63 Director President, Van de Wetering 1985 1997 19,009 0.50% Greenhouses (wholesale nursery) ===================================================================================================================================
1/ All of the nominees and all of the directors continuing in office are also directors of the Bank. Of the nominees and directors continuing in office, only Edward J. Merz has been, within the Company's last fiscal year, an executive officer of the Company. 2/ The business experience of each director during the past five years was that typical of a person engaged in the principal occupations for that period listed for each. Each of the directors has held the same or another executive position with the same employer during the past five years. 3/ Island Computer Corporation of New York, Inc. is a bank service corporation wholly owned by Suffolk Bancorp which supplies computer services to banks. Its Board of Directors is non-salaried and consists of directors of Suffolk Bancorp and officers of The Suffolk County National Bank. 4/ Included are the following shares in which directors disclaim beneficial ownership: Joseph A. Deerkoski - 3,580 shares owned by Patricia B. Deerkoski, wife; Howard M. Finkelstein - 5,331 shares owned by Deonne C. Finkelstein, wife; J. Douglas Stark - 8,164 shares owned by Michele Stark, daughter, and 8,164 shares owned by Tracy Stark, daughter. -2- 5 The primary business of the Company is the operation of The Suffolk County National Bank. The directors of the Company met thirteen times during the fiscal year ended December 31, 1994, and its Audit Committee met three times. The Board of The Suffolk County National Bank met thirteen times, and its Personnel Committee met seven times in 1994. No director attended fewer than 75 percent of the meetings of the Board of the Company and its committees, or of the Bank and its committees. The Boards of the Company and the Bank have standing Audit and Personnel Committees composed as follows: The Audit Committee consists of Messrs. J. Douglas Stark, Hallock Luce 3rd, John J. Raynor. This committee reviews the internal audit controls and procedures and the financial affairs of the Company and the Bank, and reports the results to the Board. Additionally, the committee reviews the certified examination prepared by the independent auditors who also provide certain tax preparation services. The Personnel Committee consists of Messrs. Hallock Luce 3rd, J. Douglas Stark, Joseph A. Deerkoski, and Howard M. Finkelstein. This committee, at least annually, reviews salaries, benefits and employment policies of the Company and the Bank and makes recommendations to the Board. The Company does not have a Nominating Committee. COMPENSATION REPORT OF THE PERSONNEL COMMITTEE The Company's Personnel Committee serves as its Compensation Committee. It consists of four non-employee Directors as well as the Chairman of the Board, and President. Members of the Bank's management staff attend Committee meetings regularly to furnish information regarding personnel policies and programs along with related costs. Management's presence on this Committee provides an integral component in the development and continuance of important benefit plans and appropriate compensation levels. Discussions held by the Committee with management in attendance insure that decisions effecting both shareholder return and Bank operations are made diligently. The Committee was established to review, at least annually, the salaries, benefits, and employment policies of the Bank and then make recommendations to the full Board. COMPENSATION POLICY It is the Company's policy to compensate individuals at fair and competitive levels to encourage them to work to the benefit of our shareholders. It is to this end that The Company has established a program which links employees' remuneration to demonstrated and measurable performance goals. These goals are aligned with corporate philosophy and the annual business plan. The performance of an employee is reviewed individually. However, the individual's impact on overall corporate success is also weighed. Leadership, presence in community, and loyalty to the company are other factors. The Company continues to attract and maintain qualified staff. The Company, through the use of incentives, competitive salaries, and direct ownership, rewards these individuals for their on-going commitment to our shareholders. Management remains diligent in its pursuit of new and innovative ways to determine compensation. COMPONENTS OF COMPENSATION The Committee examines annually three components of compensation: Base salary, Executive Incentive (Bonus), and Long Term incentive. The Company uses base salary ranges for all employees, with the exception of the President and Executive Vice President. The ranges have been determined by regional salary surveys, industry guides, and regional economic conditions. Comparisons to compensation at similar companies are made regularly. Information gained from membership in regional banking organizations also permit valuable comparisons. The Company also participates in comparison surveys conducted by independent consulting firms which provide additional information in return. The second component of executive compensation is the Executive Officer Incentive Program (Bonus). This program rewards key individuals who have successfully contributed to the Company's profitability during the business year. Over the years, different methodologies have been employed to determine these awards. Recent methods have included a strict formula of net earnings, pro-rata by base salary and ratings matrices based on individual performance and position. The Company is investigating alternatives and has retained an outside consulting firm. Long-term Incentives in the form of stock options have been used in prior years. The Committee acknowledges the value of using such incentives as they tie the executives' interest to the shareholder's. Executive compensation, in general, is to provide the incentive to increase shareholder wealth -3- 6 and ultimately the net worth or the Company. The Committee will continue to consider this form of compensation for future discussions. It should also be noted that the Company has no long term contracts in effect for its Executive Officers other than such contracts as would become effective only if a change in control of the Company occurs. COMPENSATION OF CHIEF EXECUTIVE OFFICER To assess the appropriate form and amount of compensation, the Committee evaluates the performance of the Company and the C.E.O.'s individual contribution to that performance. In evaluating the Company, the Committee considers return on stockholder's equity, return on assets, the quality and quantity of assets, operating efficiency, growth in earnings and earnings-per-share, and the market price of the Company's common stock. The C.E.O.'s individual performance is evaluated on the basis of the quality of oversight, and the development of strategy. The Company's operating results and market performance are compared quarterly to the commercial banking industry as a whole, all banking companies in the New York metropolitan area, all banking companies of similar size nationwide, and selected regional competitors. The C.E.O.'s compensation is compared annually to selected regional competitors operating in the state of New York. The Committee then makes an estimation in awarding base salary, cash bonus, and stock options. CONCLUSION The Committee believes that the compensation awarded to the Company's senior executives is appropriate given the Company's performance and the performance of individual executives. Hallock Luce 3rd J. Douglas Stark Joseph A. Deerkoski Howard M. Finkelstein The following table sets forth the cash compensation paid to the CEO and each of the four highest paid executive officers of the Company whose salary and bonus exceeded $100,000 as accrued for the fiscal year ended December 31, 1994. SUMMARY COMPENSATION TABLE
Long Term Compensation --------------------------------------- Annual Compensation Awards Payouts - --------------------------------------------------------------------------------------------------------------------------------- (a) (b) (c) (d) (e) (f) (g) (h) (i) Restricted All Other Other Annual Stock Options/ LTIP Compen- Name and Salary Bonus Compensation Award(s) SARs Payouts sations Principal Position Year ($) ($) ($) ($) (#) ($) ($) 1/ - --------------------------------------------------------------------------------------------------------------------------------- Edward J. Merz, 1994 $247,000 $30,000 n/a n/a n/a n/a $1,847 President and 1993 235,000 41,000 n/a n/a 2,062 n/a n/a Chief Executive Officer 1992 228,700 40,641 n/a n/a n/a n/a 6,636 Victor F. Bozuhoski, Jr. 1994 $132,000 $15,000 n/a n/a 449 n/a $1,400 Executive Vice-President, 1993 123,550 20,000 n/a n/a 1,026 n/a n/a Treasurer, 1992 115,850 20,350 n/a n/a n/a n/a 4,122 and Chief Financial Officer Ronald M. Krawczyk 1994 $130,000 $11,250 n/a n/a n/a n/a $ 260 Executive Vice President Augustus C. Weaver 1994 $113,619 $12,000 n/a n/a n/a n/a n/a President, Island Computer 1993 109,200 15,000 n/a n/a 1,091/264 n/a n/a 1992 116,086 20,165 n/a n/a n/a n/a n/a John F. Hanley 1994 $108,501 $15,000 n/a n/a n/a n/a $ 988 Senior Vice President 1993 100,276 20,000 n/a n/a 936/417 n/a n/a Senior Vice President 1992 94,600 22,410 n/a n/a n/a n/a n/a - -----------------------------------------------------------------------------------------------------------------------------------
1/ Includes (a) above-market or preferential earnings on deferred compensation, and (b) company contributions to 401(K) plan. -4- 7 STOCK OPTION AND OTHER PLANS The Company has in effect two stock option plans for its employees and employees of its subsidiaries. The plans are an incentive stock option plan (the "Incentive Stock Option Plan") and a non-qualified stock option plan (the "Non-Qualified Plan"). Under the Plans, options to purchase up to 330,000 shares of Common Stock may be issued. As of March 3, 1995, options for 313,503 shares remain to be granted. No options were granted in 1994 to the person named in the summary compensation table. Under the Plans, key employees are granted options to purchase Common Stock of the Company at a price equal to the fair market value of the shares on the date that the option is granted. Almost all of the Company's 426 employees could qualify as key employees. The Personnel Committee of the Board of Directors determines the optionee, the number of shares covered by the options, and the exercise price of options granted under the Plans. When granted, options expire after a time determined by the Personnel Committee, but in no event longer than ten years, or on termination of the employment of the optionee unless the termination resulted from death, disability, or retirement. In those events, the option expires in two years, one year, and three months after termination of employment, respectively. The exercise price may be paid either in cash or by delivery of shares of the Company's Common Stock, valued at the market price. Optionees may also be given stock appreciation rights in connection with the option. The Personnel Committee may, in its discretion, establish provisions for the exercise of stock options different from those described in this paragraph. Copies of the Plans are available upon shareholder request. The following table details options and stock appreciation rights granted to executive officers.
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUE (a) (b) (c) (d) (e) Value of Number of Unexercised Unexercised In-the-Money Options/SARs at Options/SARs at FY-End (#) FY-End ($) Shares Acquired Value Name on Exercise (#) Realized ($) Exercisable Exercisable 1/ - --------------------------------------------------------------------------------------------------------------- Edward J. Merz -0- -0- -0- -0- Victor F. Bozuhoski, Jr. 449 $3,650.37 -0- -0- Ronald M. Krawczyk -0- -0- -0- -0- Augustus C. Weaver -0- -0- -0- -0- John F. Hanley -0- -0- -0- -0- - ---------------------------------------------------------------------------------------------------------------
1/ Market value of underlying securities at year-end, minus the base price. COMPENSATION PURSUANT TO PLANS The Company has a defined-benefit pension plan. It is the only form of contingent remuneration. It is non-contributory and is applicable to all officers and employees after one year of service and attainment of age 21. Annual Retirement Allowance is equal to 1 3/4 percent of Average Compensation times Creditable Service up to 35 years, plus 1 1/4 percent of Average Compensation times Creditable Service in excess of 35 years (up to 5 such years), less .49% of the Final Three Year Average Compensation (limited to Covered Compensation) times Creditable Service up to 35 years. "Average Compensation" is the average of compensation during the five consecutive years of employment affording the highest such average. "Covered Compensation" is the average of the Social Security taxable wage base for the 35 years ending with the year an individual attains Social Security Retirement Age. Vesting is 100% after five years of service from employment. The total pension plan expense for all officers and employees for 1994 was $462,881. -5- 8 The table to the right presents the estimated retirement benefits payable under the Plan based on selected compensation amounts and years of service, after deducting Social Security Benefits. APPROXIMATE ANNUAL RETIREMENT BENEFITS BASED ON AVERAGE ANNUAL EARNINGS FOR HIGHEST FIVE CONSECUTIVE YEARS
Average 15 Years of 5 Years of 35 Years of Earnings Service Service Service - -------------------------------------------------------------- $ 50,000 $ 11,455 $ 19,092 $ 26,729 100,000 24,580 40,967 57,354 150,000 37,750 62,842 87,979 200,000 50,830 84,717 112,820 228,860 58,406 97,344 112,820 235,840 60,238 110,397 112,820 - --------------------------------------------------------------
Only those directors who are also executive officers of the Company participate in the plan. The single plan maximum benefit limit under Internal Revenue Code Section 415 as of January 1, 1994, $115,641 ($112,820 under the Normal Form of Payment for a Single Participant), is reflected in the benefits. The maximum annual compensation allowed under a qualified plan, $150,000 for 1994, is also reflected in the calculations.
Name of Officer Capacities In Which Served Years of Creditable Service - ------------------------------------------------------------------------------------------------------------------- Edward J. Merz President and Chief Executive Officer 19 Victor F. Bozuhoski, Jr. Executive Vice-President, 29 Treasurer, and Chief Financial Officer Ronald M. Krawczyk Executive Vice President 10 Augustus C. Weaver President, Island Computer 8 John F. Hanley Senior Vice-President 23 - -------------------------------------------------------------------------------------------------------------------
Directors and executive officers of the Company and the Bank, who as a group total 17, beneficially own 197,865 shares of common stock which is 5.21 percent of the outstanding shares of common stock of the Company as of March 3, 1995. BENEFICIAL INTEREST OF EXECUTIVE OFFICERS
# of beneficially % of total shares Name Position Held owned shares outstanding - ---------------------------------------------------------------------------------------------------------- Edward J. Merz President,CEO and 11,961 0.31% Director Victor F. Bozuhoski, Jr. Executive Vice-President 3,502 0.09% Treasurer and CFO Ronald M. Krawczyk Executive Vice President 6,291 0.16% Augustus C. Weaver President, Island Computer 604 0.02% John F. Hanley Senior Vice President 2,523 0.07% - ----------------------------------------------------------------------------------------------------------
-6- 9 EMPLOYMENT CONTRACTS The Company has entered into agreements with ten employees, including Messrs. Merz, Bozuhoski, Krawczyk, Weaver, and Hanley. These agreements provide for certain benefits in the event of an involuntary termination of the employee within three years of a "change in control" of the Company or a voluntary termination by the employee within three years of a "change of control" if there has been a material change in the employee's salary, function, duties or responsibilities which causes the employee's position to be of less dignity, responsibility, importance, or scope than it was immediately prior to the "change of control," or if there is a significant change in geographic location of the employee's place of employment. Under the agreements, a "change of control" occurs if (i) any individual, entity or group acquires 25 percent or more of the Company's common stock or the outstanding voting securities of the Company; (ii) the existing directors of the Company and directors approved in the future by a majority of the existing directors and their approved successors ("Incumbent Directors") cease to comprise a majority of the directors of the Company; (iii) a reorganization, merger, or consolidation of the Company or sale or other disposition of all the Company's assets is consummated; or (iv) the shareholders of the Company approve its liquidation or dissolution. An acquisition by a corporation otherwise described in (i) above and the events described in (iii) above do not comprise a "change of control" when or if (a) the holders of 60 percent of the Company's common stock and voting securities own substantially the same proportion of common stock and voting securities of the corporation resulting from such event; (b) no person, entity, or group owns 25 percent or more of the common stock or voting securities of the resulting corporation to the extent that such ownership existed prior to the event; and (c) a majority of the directors of the Board of the resulting corporation are currently Incumbent Directors or are Incumbent Directors at the time of action by the Board approving such event. After an "event of termination," pursuant to the agreement, an employee shall be entitled to a monthly payment in the amount of his or her monthly rate of salary immediately prior to such "event of termination" plus 1/12th of all bonuses paid to the employee in the 12 preceding months. In addition, the employee shall be entitled to receive the Company's health benefits during the benefit period. Such payments and benefits shall continue for up to 36 months. These payments and benefits will be reduced by the amount of salary and benefits the employee receives from other employment during the benefit period. The agreements are effective for any "change of control" taking place prior to January 1, 2000. DIRECTORS' COMPENSATION With the exception of directors' fees described below, directors of the Company are not compensated in any way for their services. All directors of the Bank receive an annual fee of $15,000 for their services. All directors of the Bank, except Messrs. Mazgulski and Merz, also receive $750 per meeting of the Finance Committee and $600 per meeting of any other committee of which each may be a member. TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND ASSOCIATES Some of the nominees, directors continuing in office, and executive officers of the Company, as well as members of their immediate families and the corporations, organizations, trusts, and other entities with which they are associated, are also customers of the Bank in the ordinary course of business, or are indebted to the Bank in respect to loans of $60,000 or more, and it is anticipated that such persons and their associates will continue to be customers of and indebted to the Bank in the future. All such loans, however, were made in the ordinary course of business, did not involve more than normal risk of collectibility or present other unfavorable features, and were made on substantially the same terms, including interest rates and collateral, as those prevailing at the same time for comparable transactions with unaffiliated persons. At present, none of these loans to nominees, directors, executive officers, or their associates is non-performing. Outside of normal customer relationships, none of the directors or officers of the Company or their associates currently maintains or has maintained within the past 12 months any significant business or personal relationship with the Company or the Bank other than such as arises by virtue of position or ownership interest in the Company or the Bank except for the following: The law firm of Smith, Finkelstein, Lundberg, Isler & Yakaboski, of which Director Finkelstein is a partner, has been employed by the Bank during the past fiscal year as general counsel and was paid $128,664. It is anticipated that the Bank will employ this law firm on a similar basis in the future. The insurance firm of See Neefus, Inc., in which Director Deerkoski has an equity interest, was paid $311,793 for insurance premiums on various commercial and liability policies. -7- 10 Late Reporting PRINCIPAL SHAREHOLDERS OF THE COMPANY To the knowledge of the Company, the table below presents the total number of shares and percent beneficially owned by shareholders who own more than five percent of the Company's common stock as of March 3, 1995:
NAME AND ADDRESS AMOUNT AND NATURE PERCENT TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS - -------------- ------------------- ----------------------- -------- Common Stock Tweedy Browne Company L.P. 211,636 (Direct) 5.57 52 Vanderbilt Avenue New York, New York 10017
The following table compares the total return to shareholders of Suffolk Bancorp with the NASDAQ Market Index, and a group of 173 national commercial banks, both of which Suffolk Bancorp is a part. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG SUFFOLK BANCORP, NASDAQ MARKET INDEX AND ONE-HUNDRED-SEVENTY-THREE NATIONAL COMMERCIAL BANKS*
COMPANY 1989 1990 1991 1992 1993 1994 SUFFOLK BANCORP 100 63.37 80.51 184.11 218.62 254.57 INDUSTRY INDEX 100 69.61 110.04 152.80 170.24 167.47 BROAD MARKET 100 81.12 104.14 105.16 126.14 132.44
ASSUMES $100 INVESTED ON JANUARY 1, 1989 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING DECEMBER 31, 1994 -8- 11 ITEM 2. STOCK INCREASE AND PAR VALUE REDUCTION The Company is presently authorized to issue 7,500,000 shares of its common stock of which 3,799,674 have actually been issued and are outstanding. Of the remaining authorized but unissued shares, the Company has reserved 93,929 shares for use under the dividend reinvestment plan and reserved 313,503 shares for the employee stock option plans adopted by the Company. The proposal to increase the number of authorized shares to 37,500,000 shares is being made to enable the Board of Directors of the Company to issue additional shares from time to time without further shareholder action. Among the possible purposes for which these additional shares would be available are the declaration and issuance of stock dividends, issuance in connection with acquisitions of other financial institutions or other companies or properties, issuance under stock option plans that may be adopted in the future, issuance in public or private offerings to raise additional capital and issuance under rights or warrants issued to existing shareholders under a plan to prevent future hostile takeovers of the Company. The Board of Directors has no present intention to issue shares but has given serious consideration to the declaration of stock dividends from time to time and may declare such stock dividends in the future although there is no assurance that it will do so. The Board of Directors currently intends to adopt a plan under which it would issue to existing shareholders rights to purchase additional shares at reduced prices in the event of an attempted takeover of the Company not approved in advance by the Board of Directors of the Company. The Board may consider adopting other anti-takeover plans involving the issuance of shares. Because the additional shares can be issued without further shareholder action, the increase in authorized shares would have the effect of deterring future tender offers or takeovers of the Company and, therefore, may be considered anti-takeover in nature. The change in par value will avoid payment of New York State stock issuance tax on the additional shares and will not affect the capital structure of the company except that stated capital will be reduced to one dollar par value for each issued share and the excess amount created by such reduction will be transferred to capital surplus. The affirmative vote of the holders of 70 percent of stock entitled to vote is required for approval. The Board of Directors recommends a vote for this proposal, which is item 2 on the proxy card. ITEM 3. APPROVAL OF INDEPENDENT AUDITORS KPMG Peat Marwick, Certified Public Accountants, were the auditors for the Company and the Bank for the year ended December 31, 1994 and the Board of Directors has selected them as auditors for the year ending December 31, 1995. A resolution will be presented to the meeting to approve the selection by the Board of Directors of said accountants as independent auditors. The auditors will report on the consolidated financial statements of the Company for the current fiscal year and perform such other non-audit services as may be required of them. A representative of KPMG Peat Marwick will be present at the shareholders meeting. This representative will have an opportunity to make a statement, if he so desires, and will be available to respond to appropriate questions from the shareholders. The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote is required for approval of the Board of Directors' selection of independent auditors for the year ending December 31, 1995. The Board of Directors recommends a vote FOR this proposal, which is Item 3 on the proxy card. FILING OF S.E.C. REPORTS Section 16(a) of the Securities Exchange Act of 1934 requires executive officers, directors, and persons who beneficially own more than 10 percent of the stock of the Company to file initial reports of ownership and reports of changes in ownership. Such persons are also required by S.E.C. regulations to furnish the Company with copies of these reports. Based solely on a review of the copies of such reports furnished to the Company, the Company believes that during 1994 its executive officers, directors, and greater than 10 percent beneficial owners complied with all applicable section 16(a) filing requirements except that the following person was inadvertently late in filing a Form 4 for the number of transactions indicated: Joseph A. Deerkoski (1) -9- 12 OTHER MATTERS The Board of Directors of the Company is not aware of any other matters that may come before the meeting. However, the proxies may be voted with discretionary authority with respect to any other matters that may properly come before the meeting. Date: March 15, 1995 By Order of the Board of Directors DOUGLAS IAN SHAW Corporate Secretary -10- 13 SUFFOLK BANCORP PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - APRIL 11, 1994 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoint(s) Thomas E. Behringer, Jr. and Richard J. Carey as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the matters shown on the reverse side in the manner directed, and upon any other matter which may properly come before the meeting, all the shares of common stock of Suffolk Bancorp held on record by the undersigned on March 3, 1995 at the annual meeting of shareholders to be held on April 11, 1995, or any adjournment thereof. The undersigned hereby revokes any proxy previously given. (continued and to be signed on reverse side) 14 THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. 1. ELECTION OF DIRECTORS To vote your shares for all director nominees, mark the "FOR" box. To withhold voting for all nominees, mark the "WITHHOLD" box. If you wish your shares voted "FOR" one or more nominees, but not all, mark the "EXCEPTION" box and enter the name(s) of the exception(s) in the space provided. NOMINEES: Edgar F. Goodale, J. Douglas Stark, Howard M. Finkelstein, John J. Raynor for three years; and Bruce Collins for two years. FOR WITHHOLD EXCEPTION(S) / / / / / / Exception(s): - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ 2. PROPOSAL AMENDING THE CERTIFICATE OF INCORPORATION to increase authorized shares from 7,500,000 to 37,500,000 and change the par value for each share from five dollars to one dollar. FOR AGAINST ABSTAIN / / / / / / 3. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK as the independent public accountants of the Company. FOR AGAINST ABSTAIN / / / / / / NO OFFICER OR EMPLOYEE OF THE COMPANY MAY BE NAMED AS PROXY. Please sign exactly as name appears on reverse side. DATED:____________________________________,1995 - ------------------------------------------------ Signature - ------------------------------------------------ Signature if held jointly When shares are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If partnership, please sign in partnership name by authorized person. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY FORM PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----