Definitive Proxy Statement

DEF 14A 1 ddef14a.htm DEFINITIVE PROXY STATEMENT Definitive Proxy Statement

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. )

Filed by the Registrant x Filed by a Party other than the Registrant ¨

Check the appropriate box:

¨	Preliminary Proxy Statement

¨	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x	Definitive Proxy Statement

¨	Definitive Additional Materials

¨	Soliciting Material Pursuant to §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	No fee required.

¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:

LOGO

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

March 12, 2010

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 Suffolk County National Bank, Administrative Center, Lower Level, 4 West Second Street, Riverhead, New York, on Tuesday, April 13, 2010 at 1:00 P.M. for the purpose of considering and voting upon the following matters:

The election of three directors to hold office for three years, until their successors shall have been duly elected and qualified.

The ratification of the Board of Directors’ selection of independent auditors for the year ending December 31, 2010.

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

Senior Vice President & 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 REVOKE 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, OR BY SUBMITTING A LATER PROXY, OR BY ATTENDING THE MEETING AND VOTING IN PERSON.

THIS PAGE LEFT BLANK INTENTIONALLY.

LOGO

4 West Second Street, P.O. Box 9000

Riverhead, New York 11901

1 (631) 208-2400

www.suffolkbancorp.com

PROXY STATEMENT ON SCHEDULE 14A

FOR THE

ANNUAL MEETING OF SHAREHOLDERS

April 13, 2010

Item 1.

Date, Time and Place Information

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 13, 2010 at The Suffolk County National Bank, Administrative Center, Lower Level, 4 West Second Street, Riverhead, New York 11901. This proxy statement and the form of proxy are first being sent to shareholders on March 12, 2010.

Item 2.

Revocability of Proxy

Any shareholder executing a proxy that is solicited in this statement has the power to revoke it by giving written notice to the Secretary of the Company at any time prior to the exercise of the proxy. It may be revoked by filing with the Secretary of the Company at the Company’s principal executive offices at Suffolk Bancorp, 4 West Second Street, P.O. Box 9000, Riverhead, New York 11901, a written notice of revocation or a duly executed proxy bearing a later date, or it may be revoked by attending the meeting and voting in person. Attendance at the meeting will not, by itself, revoke a proxy. Persons whose shares are held for their benefit by a bank, broker, or other third-party are reminded that they must obtain a legal proxy from that third-party in order to revoke prior proxies submitted through that third-party, or to vote those shares at the meeting of shareholders, and must present that legal proxy to the Inspector of Election prior to exercising that proxy.

Item 3.

Not applicable.

Item 4.

Persons Making the Solicitation

The Company will bear all costs of soliciting proxies. Proxies will be solicited by mail and may also be solicited by directors, officers, and regular employees of the Company, as well as those of The Suffolk County National Bank (the “Bank”), which is a wholly-owned subsidiary of the Company. Such solicitation may be done personally, or by telephone or electronically, but such directors, officers, and employees will receive no additional compensation for these 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. In addition, the Company has agreed to pay Georgeson Inc. $6,000, plus expenses, to assist the Company in soliciting proxies and providing information to shareholders in connection with the annual meeting.

Item 5.

Not applicable.

Item 6.

Voting Securities and Principal Holders Thereof

As of March 5, 2010, there were 9,643,694 shares of common stock, $2.50 par value, of the Company outstanding. Only stockholders of record at the close of business on March 5, 2010 are entitled to notice of and to vote at the annual meeting.

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Each shareholder of record on that date is entitled to one vote for each share held. Shareholders do not have cumulative voting rights in the election of directors.

To the best of the knowledge of the Company, the following table presents the total number of shares and percent beneficially owned by shareholders who own more than 5 percent of the Company’s common stock as of March 5, 2010:


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

(1) Title of class	(2) Name and address of beneficial owner	(3) Amount and nature of beneficial ownership	(4) Percent of class (d)
Common Stock	The Killen Group, Inc. (a)	595,048	6.17	%
	1189 Lancaster Avenue
	Berwyn, PA 19312

Common Stock	BlackRock Inc. (b)	560,170	5.81	%
	40 East 52nd Street
	New York, NY 10022

Common Stock	The Vanguard Group, Inc. (c)	489,471	5.08	%
	100 Vanguard Blvd.
	Malvern, PA 19355

(a)	Based on Schedule 13G filed with the Securities and Exchange Commission as of February 2, 2010.

(b)	Based on Schedule 13G filed with the Securities and Exchange Commission as of January 29, 2010.

(c)

Based on Schedule 13G filed with the Securities and Exchange Commission as of February 2, 2010. According to that Schedule 13G, Vanguard Fiduciary Trust Company (“VFTC”), a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 16,040 shares as a result of its serving as investment manager of collective trust accounts. VFTC directs the voting of these shares.

(d)

There were 9,643,694 shares of common stock outstanding as of March 5, 2010. The “Percent of class” for each of the persons in the table was calculated by using the disclosed number of beneficially owned shares as the numerator and the number of the Company’s outstanding common shares as of March 5, 2010 as the denominator.

The following table details security ownership of management as of March 5, 2010:


SECURITY OWNERSHIP OF MANAGEMENT

(1) Title of class	(2) Name of beneficial owner	(3) Amount and nature of beneficial ownership ⁽²⁾⁽³⁾	(4) Percent of class
Common Stock	Nominees for a term of three years:
	Edgar F. Goodale	88,250	0.92	%
	David A. Kandell	17,648	0.18	%
	Susan V. B. O’Shea	17,268	0.18	%
	Directors Continuing In Office:
	Joseph A. Gaviola	6,517	0.07	%
	J. Gordon Huszagh ⁽¹⁾	40,533	0.42	%
	John D. Stark Jr.	28,886	0.30	%
	James E. Danowski	17,566	0.18	%
	Thomas S. Kohlmann ⁽¹⁾	32,379	0.34	%
	Terence X. Meyer	13,721	0.14	%
	Named Executive Officers
	Stacey L. Moran	431	0.00	%
	Robert C. Dick ⁽¹⁾	27,865	0.29	%
	Frank D. Filipo ⁽¹⁾	18,507	0.19	%

	Directors and Executive Officers as a Group (12 people) ⁽¹⁾	309,573	3.21	%

⁽¹⁾	Includes exercisable options to purchase 70,500 shares as detailed in “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END” included under Item 8 below.

⁽²⁾	None of these shares are pledged as security except 11,210 owned by Terence X. Meyer.

⁽³⁾	There are no shares with respect to which such persons have the right to acquire beneficial ownership other than as provided for in “OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END” included under Item 8 below.

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Item 7.

Directors and Executive Officers

Election of Directors and Information With Respect To Directors and Officers

(Item 1 on Proxy Card)

The first item to be acted upon at the meeting of shareholders is the election of three directors to hold office for three years, 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. The Board has fixed the number of directors at nine. 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.

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 currently expected to continue to serve on the Board until their respective terms expire.

Following is information about 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

Name ⁽¹⁾	Age at March 5, 2010	Position and Offices With Company ⁽⁴⁾	Business Experience During Past 5 Years ⁽²⁾	Served as Director Since	Present Term Expires ⁽³⁾
Nominees for a term of three years:

Edgar F. Goodale	56	Chairman, Director	President; Riverhead Building Supply Corp.	1989	2010

David A. Kandell	56	Director	Managing Partner; Kandell, Farnworth, & Pubins, C.P.A.’s (accounting firm)	2003	2010

Susan V. B. O’Shea	60	Director	Managing Partner; O’Shea Properties (multi-tenant commercial real estate)	2000	2010
Directors Continuing In Office:

Joseph A. Gaviola	54	Director	Principal; Gaviola’s Montauk Market, Chris-Nic Properties (retail, commercial and residential real estate)	2004	2011

J. Gordon Huszagh	56	President & Chief Executive Officer, Director	President and Chief Executive Officer; Past Executive Vice President & Chief Financial Officer; The Suffolk County National Bank & Suffolk Bancorp	2009	2011

John D. Stark Jr.	47	Director	Vice President; Foxwood Corporation (manufactured housing)	2007	2011

James E. Danowski	54	Director	C.P.A., Partner; Coughlin, Foundotos, Cullen & Danowski, LLP (accounting)	2002	2012

Thomas S. Kohlmann	63	Director	Past Chairman, President & Chief Executive Officer; The Suffolk County National Bank and Suffolk Bancorp	1999	2012

Terence X. Meyer	53	Director	Managing Partner; Meyer, Meyer & Keneally Esqs. LLP (attorneys)	1999	2012

⁽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 Thomas S. Kohlmann and J. Gordon Huszagh have been executive officers of the Company in the last fiscal year.

⁽²⁾	The business experience of each director during the past five years was typical of a person engaged in the principal occupations listed that period. Each of the directors has held the same or another similar position with the same employer during the past five years.

⁽³⁾	The policy of the Board of Directors of Suffolk Bancorp is that directors shall retire at the end of the term of service during which they attain 72 years of age.

⁽⁴⁾	No directors serve as directors of other publicly-held companies.

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Directors’ Qualifications

Mr. Goodale has extensive experience in retailing to the professional building trades, real estate development, corporate structure, and has a working knowledge of financial markets. He is President of one of Long Island’s largest building supply companies, which has grown steadily, both through organic development and through a series of acquisitions. These experiences provide him with a strategic overview of Long Island’s economy and business expansion.

Mr. Kandell has 30 years of experience as a Certified Public Accountant: in a large, national, public accounting firm; as the operations manager of a growing CPA firm; and now as a partner in a firm with a clientele of the same sort of small businesses that are a key part of the Company’s business. This experience in the analysis of his clients’ financial data has provided him with significant insight into the small-business community across a number of industries and professions.

Ms. O’Shea has more than 30 years of experience as a principal and manager of a portfolio of commercial real estate on Long Island, New York, as well as a retail hardware business. Many of the tenants of the commercial properties are also customers of the Company’s subsidiary bank, which along with the management of the properties, provide her with insight into the local economy in the Company’s market area, as well as perspective on a major element of the Company’s loan portfolio.

Mr. Gaviola owns several established and ongoing small businesses on Eastern Long Island, having built them up over a span of 20 years. He is active in municipal government: in planning on an ongoing basis, and in financial oversight on an ad hoc basis. Additionally he serves on the boards of various charitable organizations. These experiences provide him with a particular understanding of one of Suffolk’s key markets.

Mr. Huszagh holds a degree from the American Bankers Association Stonier Graduate School of Banking at the University of Delaware and has more than 30 years of experience in financial institutions in the Company’s primary service area. He also has served on the Board of Directors of the Peconic Bay Medical Center (formerly known as Central Suffolk Hospital) for 18 years. He is past Chairman of the Board and is currently Vice Chairman of the Board, and Chairman of the Peconic Bay Medical Center Foundation, all of which provide him with a broad perspective on the Company’s business.

Mr. Stark was educated as an engineer, and is currently a principal of one of the largest manufactured-home community development and management companies in the Company’s primary market area. A lifelong resident of Eastern Long Island, he brings a thorough knowledge of the local economy as well as an analytical understanding of business problems to influence his advice to his colleagues on the Board.

Mr. Danowski is a Certified Public Accountant with more than 30 years’ experience, and is a partner in an accounting firm with a diversified base of clientele in the area the Company serves. These qualifications and experience suit him to his position as Chairperson of the Audit Committee, and the large numbers of business and political contacts he has developed through his professional activities have provided him with considerable insight into Long Island’s economy and regulatory environment.

Mr. Kohlmann has 25 years experience in an executive capacity and/or director of publicly-traded financial institutions, including at the Company for the past 18 years. His experience has helped him to understand the distinction between the roles of the Board in the approval of policy and management in the execution of policy, therefore improving the efficiency of both functions, and his experience and knowledge of credit has assisted the Company in evaluating the quality of its assets.

Mr. Meyer has significant financial and legal experience with regard to banks. He started his career as a Certified Public Accountant auditing banks. He moved on to practice law, and is a partner in a firm with a significant practice representing financial institutions, both locally and nationally. He is also a private investor, both domestically and internationally. His experience has qualified him to understand financial institutions, and to develop a wide network of contacts which he has been able to use for the Company’s benefit.

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Following is information concerning the experience of the four executive officers of Suffolk Bancorp:

EXECUTIVE OFFICERS’ EXPERIENCE

Name

Age

Position

Dates

Business Experience during past 5 years

J. Gordon Huszagh

President & Chief Executive Officer

Feb-09

Present

President, CEO, and Director, Suffolk Bancorp

Feb-09

Present

President, CEO, and Director, SCNB

Jan-99

Mar-09

CFO Suffolk Bancorp, SCNB

Jan-99

Feb-09

EVP Suffolk Bancorp, SCNB

Employed by SCNB since January 1983.

Stacey L. Moran

Executive Vice President and

Mar-09

Present

EVP and Chief Financial Officer, Suffolk Bancorp

Chief Financial Officer

Mar-09

Present

EVP and Chief Financial Officer, SCNB

Apr-06

Mar-09

VP and Comptroller, SCNB

Jan-04

Apr-06

AVP, Assistant Comptroller, SCNB

Employed by SCNB since May 1998.

Robert C. Dick

Executive Vice President and

Apr-00

Present

EVP, Suffolk Bancorp

Chief Lending Officer

Apr-00

Present

EVP and Chief Lending Officer, SCNB

Employed by SCNB since January 1980.

Frank D. Filipo

Executive Vice President,

Mar-03

Present

EVP, Suffolk Bancorp

Retail Banking

Mar-03

Present

EVP, Retail Banking, SCNB

Employed by SCNB from April 1994 to

September 1996 and since September 2001.

No officers or directors serve as directors of any other publicly held company. To the best of the knowledge of management, there are no material proceedings to which any director, officer or affiliate of the registrant, any owner of record or beneficially of more than five percent of any class of voting securities of the registrant, or any associate of any such director, officer, affiliate of the registrant, or security holder is a party adverse to the registrant or any of its subsidiaries or has a material interest adverse to the registrant or any of its subsidiaries.

Board Leadership Structure and Role in Risk Oversight

The Company currently has separate individuals serving in the roles of Chairman of the Board of Directors and Chief Executive Officer of the Company. The Board of Directors currently believes that separating the two positions enhances the accountability of the Chief Executive Officer to the Board and strengthens the Board’s independence from management. However, the Board of Directors believes that Board governance requires a dynamic approach and may determine in the future that the same individual should serve in the role of Chief Executive Officer and Chairman of the Board.

The Board of Directors delegates risk oversight to the Audit Committee, which reviews, considers and addresses risk management issues and concerns. The Audit Committee operates under a formal charter, available on the Company’s web site, www.suffolkbancorp.com.

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. They may also have taken loans from the Bank of $60,000 or more. It is anticipated that these people 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. They were made on substantially the same terms as those prevailing at the time for comparable transactions with unaffiliated persons, including interest rates and collateral. All such loans are reviewed and approved by the full Board of Directors of the Bank as soon as practicable after they are made. At present, none of these loans to nominees, directors, executive officers, or their associates is non-performing.

Other than normal relationships as customers or by virtue of position or ownership in the Company, none of the directors or officers of the Company or their associates now maintains, or has maintained, any significant business or personal relationship with the Company or the Bank during 2009, except for the following. The law firm of Meyer, Meyer & Keneally Esqs. LLP, of which Director Meyer is a partner with a one-half interest, has been employed to represent the Bank in real-estate transactions and was paid $291,636 for legal services. It is anticipated that the Bank will employ this law firm in the future. Management and the Board of Directors of the Company have determined that these amounts are fair and competitive for the services provided.

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Filing of S.E.C. Reports—Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) 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 2009 its executive officers, directors, and beneficial owners of more than 10 percent of the stock complied with all applicable filing requirements of Section 16(a).

Committees

The Boards of both the Company and the Bank have standing Audit, Nominating and Governance, and Compensation Committees, composed as follows:


COMMITTEE MEMBERSHIP

Audit	Nominating and Governance	Compensation
James E. Danowski, Chairman	Edgar F. Goodale, Chairman	Susan V. B. O’Shea, Chairwoman
Joseph A. Gaviola	James E. Danowski	James E. Danowski
David A. Kandell	David A. Kandell	Edgar F. Goodale
John D. Stark Jr.

The Audit Committee operates under a formal charter, available on the Company’s web site, www.suffolkbancorp.com. It performs the functions described below under “Report of the Audit Committee.” The Board has determined that all of the members of the Audit Committee are independent under the applicable listing standards of NASDAQ. The Board has also determined that Messrs. Danowski and Kandell are “audit committee financial experts,” and have the requisite financial and accounting expertise and knowledge regarding the Company’s financial reporting process and internal controls. None of the members of the committee serve on more than three audit committees, including that of the Company. The committee pre-approves all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor, subject to the de minimus exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee prior to the completion of the audit. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.

The Nominating and Governance Committee operates under a formal charter, available on the Company’s web site, www.suffolkbancorp.com. It is appointed by the Board to (1) assist the Board by identifying individuals qualified to become Board members, and to recommend to the Board the director nominees for the next annual meeting of shareholders; (2) recommend to the Board the Corporate Governance Guidelines applicable to the Company; (3) lead the Board in its annual review of the Board’s performance; and (4) recommend to the Board director nominees for each committee. The Board of Directors, in its business judgment, has determined that all members of the Committee are “independent” as required by the applicable listing standards of NASDAQ. The Committee operates pursuant to a Charter that was last reaffirmed by the Board on February 22, 2010.

The Compensation Committee does not operate under a formal charter. It reviews salaries, benefits, and employment policies of the Company and the Bank at least annually, and makes recommendations to the Board. The Board of Directors, in its business judgment, has determined that all members of the Committee are “independent” as required by the applicable listing standards of NASDAQ.

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REPORT OF THE AUDIT COMMITTEE

The role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s financial reporting process. The Board of Directors, in its business judgment, has determined that all members of the Committee are “independent” as required by, and meet the experience requirements of, the applicable listing standards of NASDAQ. The Committee operates pursuant to a Charter whose adequacy is reviewed and reassessed by the Committee on an annual basis, and was reaffirmed by the Board on May 21, 2009. As set forth in the Charter, management of the Company is responsible for the preparation, presentation, and integrity of the Company’s financial statements; the Company’s accounting and financial reporting principles; and the Company’s internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent auditors are responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity with generally accepted accounting principles.

In the performance of its oversight function, the Committee has reviewed and discussed the audited financial statements and related controls, procedures, compliance, and other matters with management and the independent auditors. These discussions included those required by Statement on Auditing Standards No. 61, Communication with Audit Committees, as currently in effect. The Committee has (1) also received the written disclosures and the letter from the independent auditors required by Independent Standards Board Standard No. 1, Independence Discussions with Audit Committees, as currently in effect; (2) received written confirmations from management with respect to information technology consulting services relating to financial information systems design and implementation, internal audit, and any other services provided by the auditors; (3) considered whether the provision of those services by the independent auditors to the Company is compatible with maintaining the auditor’s independence; and (4) discussed with the auditors the auditors’ independence.

Based upon the reports and discussions described in this report, the Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009 to be filed with the Securities and Exchange Commission.

Submitted by: James E. Danowski, Chairman of the Committee; Joseph A. Gaviola; David A. Kandell; John D. Stark Jr.

The information contained in the Audit Committee Report is not deemed filed for purposes of the Securities Exchange Act of 1934, shall not be deemed incorporated by reference by any general statement incorporating this document by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates such information by reference, and shall not otherwise be deemed filed under such Acts.

REPORT OF THE NOMINATING AND GOVERNANCE COMMITTEE

The key roles, among others, of the Nominating & Governance Committee are to assist the Board by identifying individuals qualified to become Board members; and to recommend to the Board the corporate governance guidelines applicable to the Company. The Committee assesses the independence of both current and prospective directors with reference to the applicable listing requirements of NASDAQ under Rule 4200 which require that directors’ relationships with the Company not be material as defined in the rule. On recommendation by the Committee, the Board of Directors has determined the independence of each of the Company’s directors, nominated or continuing in office, as follows:


INDEPENDENCE OF DIRECTORS

Name	Independent	Name	Independent
James E. Danowski	yes	Thomas S. Kohlmann	no
Joseph A. Gaviola	yes	Terence X. Meyer	no
Edgar F. Goodale, Chairman	yes	Susan V. B. O’Shea	yes
J. Gordon Huszagh	no	John D. Stark Jr.	yes
David A. Kandell	yes

The Board of Directors has chosen to conduct its executive sessions which include only directors deemed to be independent at least two times annually, chaired by a lead director.

The primary business of the Company is the operation of the Bank. The directors of the Company met fourteen times during the fiscal year ended December 31, 2009; the Audit Committee met eight times; the Compensation Committee met two times; and the Nominating and Governance Committee met once during 2009. The Board of the Bank met thirteen times. No director currently serving attended fewer than 75 percent of the meetings of the Board of the Company and its committees, or of the Bank and its committees.

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The Nominating and Governance Committee has a policy to encourage shareholders, as well as directors, employees, and other stakeholders in the Company to submit candidates for the Committee’s consideration. Submissions may be made at any time in writing, but to be considered by the Committee for nomination at the 2011 annual meeting should be submitted by December 13, 2010, to:

The Chairman of the Nominating and Governance Committee

c/o Corporate Secretary

Suffolk Bancorp

4 West Second Street

P.O. Box 9000

Riverhead, New York 11901

The Committee makes no representation that it will recommend to the Board of Directors a candidate as a nominee, but will consider all individuals whose names are submitted. All candidates for nominee, regardless of the source of submission, will be evaluated under the same criteria. Accordingly, candidates for director of Suffolk Bancorp and the Bank should be at minimum:

•

Growing in prominence or already prominent, respected, with good contacts in the communities that the Company serves.

•

Experienced and successful in business, finance, or administration.

•

Familiar with fiduciary responsibility, and with an unblemished reputation for integrity.

The members of the Nominating and Governance Committee consider the professional experience, education, independence and other diverse factors in the director nomination process; however, the Nominating and Governance Committee does not have any formal policy regarding the diversity of the Board.

At present, the Committee does not use third parties to help identify nominees for the Board of Directors, although it reserves the right to do so in the future. Candidates for nominee may be suggested by the Directors, members of management, other employees, shareholders, customers, or members of the communities the Company serves.

Shareholders are encouraged to communicate with the Board of Directors whenever they believe it is important to do so. Communications should be designated on the outside of the envelope in which they are sent as being intended for the full Board of Directors or for the sole consideration of Directors who are not also part of management, and can be sent to the Board as follows:

The Board of Directors (or Non-management Directors)

c/o Corporate Secretary

Suffolk Bancorp

4 West Second Street

P.O. Box 9000

Riverhead, New York 11901

All such communications from bona-fide shareholders will be forwarded to the designated directors upon the sender’s confirmation as a shareholder.

The Board of Directors expects that directors shall attend a minimum of 75 percent of the regular and special meetings of the Board, unless granted leave for illness or personal reasons, and directors are strongly encouraged to attend the annual meeting of the shareholders. All directors then serving attended the most recent annual meeting of the shareholders held on April 14, 2009.

Shareholder proposals to be considered at an annual meeting must be submitted in a timely fashion. Shareholder proposals to be considered for inclusion in the proxy statement for the 2011 annual meeting of the shareholders must be received by the Company at its principal executive offices no later than November 10, 2010, any such proposals, as well as any questions about them, should be directed to the Secretary of the Company. Shareholder proposals for the 2011 annual meeting of the shareholders submitted outside of the processes of the Securities and Exchange Commission’s Rule 14a-8 must be, and will be considered untimely unless they are, (a) in the case of nominations for election to the Board of Directors, delivered or mailed to the President of the Company not less than 14 nor more than 50 days prior to the date of the 2011 annual meeting (or no later than the close of business on the seventh day following the date on which notice of the meeting is mailed, if less

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than 21 days notice of the 2011 annual meeting is given to shareholders), or (b) in the case of shareholder proposals concerning business other than nominations for election to the Board of Directors, received by the Company at its principal offices, directed to: Corporate Secretary, no later than January 20, 2011 or, if the date of the 2011 annual meeting is more than 30 days earlier or later than April 13th, a reasonable time before the Company mails its proxy materials for the 2011 annual meeting.

Submitted by: Edgar F. Goodale, Chairman of the Committee; James E. Danowski; David A. Kandell

Item 8.

Compensation of Directors and Executive Officers

REPORT OF THE COMPENSATION COMMITTEE

Compensation Committee Interlocks and Insider Participation

No person served as a member of the Compensation Committee of the Company’s board of directors during the last completed fiscal year, who:

Was, during the fiscal year, an officer or employee of the registrant;

Was formerly an officer of the registrant; or

Had any relationship requiring disclosure by the registrant under any paragraph of Item 404.

Compensation Discussion and Analysis

Overview

This Compensation Discussion and Analysis explains the Company’s compensation philosophy, policies and practices with respect to the Chief Executive Officer, Chief Financial Officer, and the other current and former executive officers included in the Summary Compensation Table on page 13, referred to collectively as the “named executive officers.”

Role of the Compensation Committee

The Company’s Compensation Committee includes Susan V.B. O’Shea, James E. Danowski and Edgar F. Goodale, each of whom is an “outside director” for purposes of Section 162(m) of the Internal Revenue Code and a “non-employee director” for purposes of Rule 16b-3 under the Exchange Act. The Compensation Committee determines the salaries, benefits, and employment policies of the Company as they relate to the named executive officers.

Role of Executive Officers

Members of the Company’s management may attend Compensation Committee meetings regularly to provide information about personnel policies and programs. Management’s participation plays an important part in the development and continuation of benefit plans, and in determining appropriate levels of compensation. The Compensation Committee holds discussions with management in attendance to ensure that the Compensation Committee makes fully informed decisions with respect to compensation matters that affect the Company’s operations and shareholder returns. Finally, the Company’s President and Chief Executive Officer participates in deliberations of the Compensation Committee on an ex-officio, non-voting basis, but does not participate during, or attend, deliberations concerning his own compensation. No member of management was present during the portion of a Compensation Committee meeting at which the Committee made determinations regarding such executive’s compensation.

Objectives of Compensation Program

The key objectives of the Company’s compensation programs are to attract and retain qualified, talented individuals to fill key positions and to compensate the employees at fair and competitive levels in order to encourage them to work to increase the net worth of the Company, and ultimately shareholder wealth.

The Company has established programs that link remuneration to demonstrated and measurable performance goals, including return on equity, return on assets, and net income, all of which provide the basis for dividends on common stock, earnings per share growth and growth of the stock price. These goals align with the Company’s corporate philosophy and the annual business plan.

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In making determinations regarding executive compensation, the Company weighs an individual’s performance as an individual, the performance of his or her area of responsibility, and the overall performance of the Company. The performance of the Chief Executive Officer in each of these regards is evaluated by the Compensation Committee. The performance of each of the executive officers is evaluated by the Chief Executive Officer. The Company rewards individuals for their ongoing commitment to the Company’s shareholders through the use of competitive salaries, incentive bonus payments and direct ownership of Company equity. Further information concerning these determinations is noted under “Base Salary” and “Cash Bonus” in the following.

Elements of Compensation Program

General

The Company endeavors to achieve a balance between short- and long-term compensation and uses a mix of cash and equity to compensate its executives. Elements of compensation include base salary; cash bonus; stock options; and participation in a defined-benefit pension plan as well as a voluntary, defined contribution plan, with respect to which the Company provides partial matching contributions. The Company evaluates each element of compensation to align individual remuneration with the Company’s overall compensation strategy. The Compensation Committee reviews performance of the named executive officers on an annual basis and examines each named executive officer’s base salary, incentive bonus, and stock option awards at such time.

Base Salary

Base salary represents the annual salary paid to each executive. In order to determine an individual’s base salary, the Company uses salary ranges which are based on the nature of the position. As further described below, the Company determines these ranges based upon regional salary surveys, industry guidelines, and regional economic conditions. Base salary defines the Company’s position in the market for the position in question. As of the most recent comparison, the base salary of the Chief Executive Officer is somewhat under the average of comparable officers at comparable companies; that of the Chief Financial Officer is significantly under; that of Chief Lending Officer is somewhat over; and that of the head of Retail Banking slightly over. The ranges are computed as follows: 0 – 7.5 percent: “slightly” over/under; 7.5 – 15 percent: “somewhat” over/under; more than 15 percent: “significantly over/under. Those base salaries were adjusted for 2010 at a rate comparable to changes made to the base salaries or hourly rates of other employees of the Company.

Cash Bonus

The cash bonus rewards named executive officers for individual performance during the course of the year with respect to that individual’s goals and performance of the Company as a whole. Net income in comparison to the target established by budget early in the fiscal year, the relative efficiency of operations (as measured by return on average assets) in comparison with other banking companies, contribute to the computation of the amounts available for cash bonuses, and accruals are made throughout the fiscal year as actual performance is compared to budgetary targets. There are no guaranteed or minimum bonuses, and no specific individual or aggregate limits. Bonuses are determined and paid after the end of the fiscal year on which they are based. In making its determinations regarding annual bonuses, the Committee considers a variety of factors including certain qualitative factors as determined in the review of the individual’s performance, as well as achievement of strategic objectives, and does not quantify the weight given to any specific element or otherwise follow a formulaic calculation. Rather, the Committee engages in an overall assessment of appropriate bonus levels based on a subjective interpretation of all the relevant criteria.

The amounts paid or payable with respect to performance during 2009 were smaller than those paid with respect to performance during 2008 as included in the summary compensation table on page 13, as net income in comparison with budget was lower while the relative efficiency of operations in comparison with other banking companies was similar. The 2010 budget has been approved by the full Board of Directors, and it is anticipated that cash bonuses for the 2010 fiscal year will be determined in a manner substantially similar to past years, although the Committee reserves the right to revise the process and method by which they are determined at any time in the future.

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Stock Options

Stock options align the interests of key employees with the interests of the Company’s shareholders. Stock options provide for financial gain derived from the potential appreciation in stock price from the option grant date until the option exercise date. The Company favors stock options over other forms of equity awards because award recipients achieve value only if the value of the Company’s stock increases after the option grant date. The Company’s long-term performance ultimately determines the value of stock options, because gains from stock option exercises are entirely dependent on the long-term appreciation of the Company’s stock price. The Company’s general practice is to grant stock options that vest one year after the date of the grant. For specific grants to named executive officers, the Compensation Committee considers a variety of factors, including:

•

individual performance and future potential of the executive,

•

the overall size of the equity grant pool,

•

award value relative to other Company executives,

•

the value of previous grants and amount of outstanding unvested equity awards, and

•

the recommendations of the Chief Executive Officer, other than in connection with compensation for himself.

In the past, the Company has granted stock options on a fixed schedule during January of each year and at the closing price on the day of the regular meeting at which the Compensation Committee approves the grant. The meeting at which the Compensation Committees make these awards is generally scheduled several months in advance and is generally timed to occur after the public disclosure of the Company’s prior year financial statements.

Defined Benefit Pension Plan; Defined Contribution Plan

The defined-benefit pension plan helps to retain the named executive officers by rewarding tenure of service to the Company by providing a source of income upon retirement. For a description of the defined benefit pension plan and a quantification of the benefits accrued by the named executive officers, please see the section titled “Compensation Pursuant To Pension and Retirement Plans.”

The defined contribution plan provides the named executive officers with the opportunity to further augment income in retirement. It is offered in the form of a 401(k) plan on the same terms as are available to all full time employees of the Company that have at least one year of service. Those terms include contributions up to legal limits established by the Internal Revenue Service. Contributions are matched at fifty percent up to six percent of salary and cash bonus not otherwise deferred, or to a maximum of three (3) percent of cash compensation.

Deferred Compensation Plan

The Company provides directors and executives the opportunity to defer income, including directors’ fees, executive bonuses, and executive compensation. Because these funds represent income already earned, there is no vesting period. Deferrals are not matched. The director or executive becomes a general creditor of the subsidiary bank, and the deferral accrues interest at a rate tied to the prime interest rate, currently prime minus one percent.

Other Plans

There are no non-qualified defined-contribution plans (e.g., an excess plan) at the Company in which named executives participate.

Executive Perquisites

Executive perquisites are not a significant component of the Company’s executive compensation program; the Company limits the use of perquisites among eligible executives. Named executive officers are generally eligible for company-paid life insurance coverage and personal use of Company cars; however, none of the named executive officers received perquisites and personal benefits from the Company in excess of $10,000.

Change in Control Employment Agreements

Pursuant to change of control employment agreements, each of the named executive officers is entitled to receive severance payments and other benefits in the event of a qualifying termination of the executive’s employment following a change in control of the Company. These arrangements are intended to attract and retain qualified executives that could have other job

Page 11

alternatives that may appear to them to be less uncertain absent these arrangements. In addition, the Company believes that these arrangements provide an incentive for the Company’s executives to continue to help successfully execute a transaction involving a change in control of the Company from its early stages until closing and thereafter. For a description and quantification of these change-of-control benefits, please see the section titled “Employment Agreements in the Event of a Change-of-Control.”

Comparison of Compensation to Peers

In addition to many other factors considered by the Compensation Committee, the Company takes into account the compensation practices of comparable companies in formulating the compensation program. The Company makes comparisons to compensation at similar companies at least annually, including information regarding regional banking organizations. Such comparable companies include the following: Arrow Financial Corp., Bridge Bancorp Inc., Canandaigua National Corp., First of LI Corp., Hudson Valley Holding Corp., Smithtown Bancorp, State Bancorp Inc., Sterling Bancorp, and Tompkins Financial Corp.

The Company also participates in comparison surveys conducted by independent firms that provide additional summary compensation data in return for the Company’s participation. During 2009, the Company participated on a paid basis in the New York Bankers Association survey conducted by Pearl Meyer & Partners; the Wage-link survey of the New York Metropolitan Banking Group; and the Compensation Data Survey for the New York Metropolitan area.

In addition, on a periodic basis but at least annually, the Board of Directors compares the Company’s operating results and market performance 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 Compensation Committee uses this information to evaluate the reasonableness of its compensation to executives.

Tax Matters

Section 162(m) of the Internal Revenue Code generally permits a tax deduction to public corporations for compensation over $1,000,000 paid in any fiscal year to a corporation’s chief executive officer and certain other highly compensated executive officers only if the compensation qualifies as being performance-based under Section 162(m). The Company endeavors to structure its compensation policies to qualify as performance-based under Section 162(m) whenever it is reasonably possible to do so while meeting the Company’s compensation objectives.

Nonetheless, from time to time certain non-deductible compensation may be paid and the Board of Directors and the Compensation Committee reserve the authority to award non-deductible compensation in appropriate circumstances. In addition, it is possible that some compensation paid pursuant to certain equity awards that have already been granted may be nondeductible as a result of Section 162(m).

Stock Ownership

National banking law requires directors to own 200 shares of stock of either the Bank, or if it is a subsidiary of a holding company, of that company. The Company does not have a formal requirement for directors and executive officers to own shares in excess of that number, but strongly encourages directors to make a substantial investment in the Company’s stock, and seeks to facilitate that investment through a Director Stock Purchase plan wherein directors may elect to have their fees invested in common stock of the Company, purchased in market transactions and without discount, on the day that the fees are paid. All employees are also eligible to have any portion of their income, net of deductions, invested in common stock of the Company on the same terms. There is no Company match or premium contribution.

Claw-back Policies

Because of the subjective nature of certain aspects of executive cash bonuses, at present, the Company has no formal policies and/or provisions with respect to the adjustment or recovery of awards or payments if the relative performance measures upon which they are based are restated or otherwise adjusted in a manner that would have reduced the size of an award or payment. Such policies are under consideration, and may or may not be implemented in the future.

Page 12

Compensation Committee Report

The Compensation Committee of the Company has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Submitted by: Susan V.B. O’Shea, Chairwoman of the Committee; James E. Danowski; Edgar F. Goodale

The following table sets forth compensation to the named officers the fiscal year ended December 31, 2009, 2008 and 2007:

SUMMARY COMPENSATION TABLE


Name and principal position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ⁽¹⁾ ($) (f)	Non-Equity Incentive Plan Compensation ($) (g)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ⁽²⁾ ($) (h)	All Other Compensation ^(3)(4)(5)(6) ($) (i)	Total ($) (j)
Thomas S. Kohlmann	2009	163,016	60,000	n/a	36,960	n/a	79,749	39,162	378,887
Past Chairman, President &	2008	394,077	120,000	n/a	41,250	n/a	159,995	47,396	762,718
Chief Executive Officer	2007	385,802	140,000	n/a	60,420	n/a	77,610	45,094	708,927

J. Gordon Huszagh	2009	328,920	145,000	n/a	27,720	n/a	87,798	46,014	635,453
President &	2008	196,788	115,000	n/a	31,140	n/a	167,430	9,256	519,614
Chief Executive Officer	2007	191,591	100,000	n/a	50,350	n/a	67,207	9,103	418,251

Stacey L. Moran	2009	156,945	23,209	n/a	—	n/a	7,320	5,259	192,733
Executive Vice President &
Chief Financial Officer

Robert C. Dick	2009	189,512	80,000	n/a	18,480	n/a	117,602	6,592	412,185
Executive Vice President &	2008	181,538	60,000	n/a	20,760	n/a	221,471	6,221	489,991
Chief Lending Officer	2007	177,092	70,000	n/a	30,210	n/a	94,681	6,645	378,627

Frank D. Filipo	2009	189,299	65,500	n/a	18,480	n/a	46,781	14,739	334,799
Executive Vice President,	2008	175,115	45,000	n/a	20,760	n/a	72,403	11,079	324,358
Retail Banking	2007	177,157	50,000	n/a	30,210	n/a	26,798	4,315	288,481

⁽¹⁾	Options vest one year after date of grant without condition. The value was computed using the Black-Scholes option model using assumptions as noted in footnote one to the table in the following titled “GRANTS OF PLAN BASED AWARDS.”

⁽²⁾	Includes above-market or preferential earnings on non-qualified deferred compensation as follows:


Thomas S. Kohlmann	$	—	(duties as Chairman, President & CEO ended 2/9/09)
J. Gordon Huszagh	$	1,737	(duties as President & CEO started 2/9/09 - duties as CFO ended 3/31/09)
Stacey L. Moran	$	—	(duties as Executive Vice President & CFO started 3/31/09)
Robert C. Dick	$	2,995
Frank D. Filipo	$	—

⁽³⁾	Includes company matching contributions to 401(k) plan.

⁽⁴⁾	Includes life insurance premiums and personal use of automobiles owned by the Company.

⁽⁵⁾	All Other Compensation for Thomas S. Kohlmann includes retainer of $38,250 and for J. Gordon Huszagh retainer of $35,250 as Directors of the Suffolk County National Bank.

⁽⁶⁾	The total of perquisites and personal benefits did not exceed $10,000 for any of the named executive officers.

Grants of Plan-Based Awards

The Company adopted the 1999 Stock Option Plan for its employees and employees of its subsidiaries which was approved by the shareholders. The 1999 Stock Option Plan provided for the grant of incentive stock options and non-qualified stock options, as well as grants of stock appreciation rights in connection with the grant of an option. The 1999 Stock Option Plan expired on January 22, 1999 and no additional grants have been made since its expiration, nor will any additional grants be made under the 1999 Stock Option Plan in the future.

Page 13

At the annual meeting of shareholders on April 14, 2009, shareholders approved the 2009 Stock Incentive Plan, a successor to the 1999 Stock Option Plan. The 2009 Stock Incentive Plan provides for incentive stock options and non-qualified stock options, as well as grants of stock appreciation rights in connection with the grant of an option.

Under both plans, the Compensation Committee of the Board of Directors determines the optionee, the number of shares covered by the options, and the exercise price of options, which must equal the fair market value of a share of Common Stock on the grant date. When granted, options expire after a time determined by the Compensation Committee, but in no event longer than ten years, or on termination of the employment of the optionee unless the termination results 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 on the date of exercise. Copies of the Plans are available upon shareholder request. To date, options granted under both Plans have been granted subject to vesting one year after the date of grant, although the Company reserves the right to modify that practice in the future. No options have yet been granted under the 2009 Plan.

The following table details grants of plan-based awards under the 1999 Stock Option Plan and the 2009 Stock Incentive Plan made during the year ended December 31, 2009:

GRANTS OF PLAN-BASED AWARDS

Name (a)

Grant Date
(1)
(b)

Estimated Future Payouts
Under
Non-
Equity Incentive Plan Awards

Estimated Future Payouts
Under Equity Incentive Plan Awards

All Other
Stock
Awards:
Number
of Shares
of Stocks
or Units
(#)
(i)

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(j)

Exercise
or Base
Price of
Option
Awards
($/Sh)
(k)

Grant Date
Fair Value
of Stock
and
Option
Awards ⁽²⁾
($)
(l)

Threshold
($)
(c)

Target
($)
(d)

Maximum
($)
(e)

Threshold
(#)
(f)

Target
(#)
(g)

Maximum
(#)
(h)

Thomas S. Kohlmann

1/20/2009

n/a

4,000

28.30

36,960

J. Gordon Huszagh

1/20/2009

n/a

3,000

28.30

27,720

Stacey L. Moran

—

n/a

—

Robert C. Dick

1/20/2009

n/a

2,000

28.30

18,480

Frank D. Filipo

1/20/2009

n/a

2,000

28.30

18,480

⁽¹⁾	All options granted during the fiscal year vest without condition one year after the date of grant.

⁽²⁾

The weighted-average, fair value of the options granted during 2009 was $9.24. The fair value of each option was estimated on the date granted using the Black-Scholes option pricing model. The following weighted average assumptions were used for grants during 2009: risk-free interest rate of 3.17%; expected dividend yield of 3.06%; expected life of ten years; and expected volatility of 36.90%.

Page 14

The following table details outstanding equity awards to named executive officers at fiscal year-end December 31, 2009:

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

OPTION AWARDS

STOCK AWARDS

Name (a)

Number of
Securities
Underlying
Unexercised
Options
(#)

Number of
Securities
Underlying
Unexercised
Options ⁽¹⁾
(#)

Equity
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
(d)

Option
Exercise
Price
($)
(e)

Option
Expiration
Date
(f)

Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
(g)

Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested
($)
(h)

Equity
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
(i)

Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
(#)
(j)

Exercisable
(b)

Unexercisable
(c)

Thomas S. Kohlmann ⁽²⁾

10,000

n/a

13.13

1/18/2010

n/a

12,000

n/a

15.50

1/19/2011

n/a

5,000

n/a

31.83

2/24/2013

n/a

5,000

n/a

34.39

1/28/2014

n/a

6,000

n/a

31.25

1/19/2015

n/a

6,000

n/a

34.95

1/23/2016

n/a

6,000

n/a

32.90

1/29/2017

n/a

4,000

n/a

31.18

1/28/2018

n/a

4,000

n/a

28.30

1/20/2019

n/a

J. Gordon Huszagh

3,000

n/a

13.13

1/18/2010

n/a

5,000

n/a

15.50

1/19/2011

n/a

2,500

n/a

31.83

2/24/2013

n/a

2,500

n/a

34.39

1/28/2014

n/a

5,000

n/a

31.25

1/19/2015

n/a

5,000

n/a

34.95

1/23/2016

n/a

5,000

n/a

32.90

1/29/2017

n/a

3,000

n/a

31.18

1/28/2018

n/a

3,000

n/a

28.30

1/20/2019

n/a

Robert C. Dick

5,000

n/a

15.50

1/19/2011

n/a

2,500

n/a

31.83

2/24/2013

n/a

2,500

n/a

34.39

1/28/2014

n/a

3,000

n/a

31.25

1/19/2015

n/a

3,000

n/a

34.95

1/23/2016

n/a

3,000

n/a

32.90

1/29/2017

n/a

2,000

n/a

31.18

1/28/2018

n/a

2,000

n/a

28.30

1/20/2019

n/a

Frank D. Filipo

1,000

n/a

31.83

2/24/2013

n/a

2,500

n/a

34.39

1/28/2014

n/a

3,000

n/a

31.25

1/19/2015

n/a

3,000

n/a

34.95

1/23/2016

n/a

3,000

n/a

32.90

1/29/2017

n/a

2,000

n/a

31.18

1/28/2018

n/a

2,000

n/a

28.30

1/20/2019

n/a

⁽¹⁾	All options that were unexercisable at December 31, 2009 vested on January 20, 2010 without condition.

⁽²⁾	All remaining options outstanding to Thomas S. Kohlmann were cancelled as of March 1, 2010 owing to his having stepped down as an employee because of disability on March 1, 2009.

Page 15

The following table details option exercises and stock vested during the fiscal year ended December 31, 2009:

OPTION EXERCISES AND STOCK VESTED


	OPTION AWARDS		STOCK AWARDS
Name (a)	Acquired on Exercise (#) (b)	Exercise ($) (c)	Acquired on Vesting (#) (d)	Vesting ($) (e)
Thomas S. Kohlmann	3,000	57,645	n/a	n/a
J. Gordon Huszagh	—	—	n/a	n/a
Stacey L. Moran	—	—	n/a	n/a
Robert C. Dick	—	—	n/a	n/a
Frank D. Filipo	—	—	n/a	n/a

Compensation Pursuant To Pension and Retirement Plans

The Bank sponsors a defined benefit pension plan covering substantially all employees. Benefits are based on years of service and the employee’s highest average compensation during five consecutive years of employment. Compensation used to determine benefits is all compensation as reported on form W-2. A Participant’s Normal Retirement Benefit is an annual pension benefit commencing on his Normal Retirement Date payable in the Normal Benefit Form in an amount equal to: (1) 1.75% of his Average Annual Compensation, multiplied by Creditable Service up to 35 years; plus (2) 1.25% of his Average Annual Compensation, multiplied by Creditable Service in excess of 35 years up to 5 years; minus (3) 0.49% of his Final Average Compensation (up to Covered Compensation) multiplied by Creditable Service up to 35 years. The Normal Benefit Form is payable as a Single Life Pension with 60 payments guaranteed. An Employee will become a participant in the Plan on the 1st of the month which coincides with or next follows the completion of 12 months of Eligibility Service and attainment of age 21. There are a number of optional forms of benefit available to the above participants, all of which are adjusted actuarially. The following executives are eligible for early retirement: Robert C. Dick, Frank D. Filipo, and J. Gordon Huszagh. Participants are eligible for early retirement upon obtaining age 55. Early retirement benefits are determined as follows: Reduced 3% (per annum) for basic benefit and 6% for offset benefit. The total pension plan expense for all officers and employees for 2009 was $2,970,293. The following table details pension benefits earned as of December 31, 2009:

PENSION BENEFITS


Name (a)	Plan Name (b)	Number of Years Credited Service (#) (c)	Present Value of Accumulated Benefit ⁽¹⁾ ($) (d)	Payments During Last Fiscal Year ($) (e)
Thomas S. Kohlmann ⁽²⁾	New York State Bankers Retirement System Volume Submitter Plan as adopted by Suffolk County National Bank	16.8	612,963	—

J. Gordon Huszagh	New York State Bankers Retirement System Volume Submitter Plan as adopted by Suffolk County National Bank	25.9	646,074	—

Stacey L. Moran	New York State Bankers Retirement System Volume Submitter Plan as adopted by Suffolk County National Bank	3.3	11,350	—

Robert C. Dick	New York State Bankers Retirement System Volume Submitter Plan as adopted by Suffolk County National Bank	28.9	897,280	—

Frank D. Filipo	New York State Bankers Retirement System Volume Submitter Plan as adopted by Suffolk County National Bank	8.3	228,964	—

⁽¹⁾	The Present Value of Accumulated Benefits, column (d), was determined using the same assumptions used for financial reporting purposes under generally accepted accounting principles for 2009.

⁽²⁾	Thomas S. Kohlmann stepped down as an employee because of disability on March 1, 2009. He continues as a Director.

Deferred Compensation Plan

Page 16

accrues interest at a rate tied to the prime interest rate, currently prime minus one percent. There are no non-qualified defined-contribution plans (e.g., an excess plan) at the Company in which named executive’s participate.

The following table details non-qualified deferred compensation during the fiscal year ended December 31, 2009:

NON-QUALIFIED DEFERRED COMPENSATION


Name (a)	Executive Contributions in Last FY ($) (b)	Registrant Contributions in Last FY ($) (c)	Aggregate Earnings in Last FY ($) (d)	Aggregate Withdrawals/ Distributions ($) (e)	Aggregate Balance at Last FYE ($) (f)
Thomas S. Kohlmann	30,000	—	16,344	94,165	769,348
J. Gordon Huszagh	71,051	—	10,275	—	350,859
Stacey L. Moran	—	—	—	—	—
Robert C. Dick	77,624	—	17,230	—	558,208
Frank D. Filipo	—	—	—	—	—

Employment Agreements in the Event of a “Change-of-Control”

As of December 31, 2009, the Company had entered into agreements with twelve employees, including each of Messrs. Dick, Filipo, Huszagh, and Ms. Moran. These agreements generally provide for certain benefits in the event that the Company terminates the executive’s agreement without cause or if the executive terminates employment for good reason, in each case within three years of a “change of control” of the Company.

After a qualifying termination of employment following a change in control, an employee is entitled, for up to 36 months, to:

•

a monthly payment in the amount of his or her monthly rate of salary immediately before the “event of termination,” plus one-twelfth of the greater of the most recent annual bonus paid to the employee prior to the termination or the most recent annual bonus paid to the employee prior to the change in control; and

•

medical and dental insurance coverage and life insurance benefits.

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 do not provide for tax “gross-ups;” instead, if the employee would be subject to the so-called “golden parachute” excise tax under Internal Revenue Code Section 280G, payments and benefits payable under the agreement will be reduced to the extent necessary such that no excise tax under Code Section 280G of the Code will be payable. The agreements are effective for any “change of control” taking place prior to April 14, 2010. Each year, the Board of Directors of the Company considers whether or not to renew the change of control employment agreements.

Other than pursuant to the Change of Control Employment Agreements, the named executive officers are not entitled to any payments or benefits upon a termination of employment. Following is a summary of the maximum possible benefit to the four named executive officers, assuming a termination of their employment on December 31, 2009 immediately following a change of control of the Company:

POTENTIAL COST OF CHANGE-OF-CONTROL AGREEMENTS - Named Executive Officers


Name	2009 Salary ($)	2009 Bonus ($)	Annual Health Benefits ($)	Total Applicable Annual Compensation ($)	Number of Years of Benefit (#)	Maximum Possible Benefit under Contract ($)
J. Gordon Huszagh	328,920	145,000	11,266	485,186	2.99	1,450,707
Stacey L. Moran	156,945	23,209	86	180,240	2.99	538,917
Robert C. Dick	189,512	80,000	12,722	282,234	2.99	843,879
Frank D. Filipo	189,299	65,500	9,884	264,683	2.99	791,403

	Maximum Possible Benefit Over Term					3,624,907
	Assumed Effective Tax Rate (2010)					30	%

Maximum Possible Aggregate Benefit for Named Executive Officers Over 36 Month Term After-tax						2,537,435

Page 17

Directors’ Compensation

With the exception of directors’ fees described below, directors of the Company are not compensated in any way for their services.

•

Annual retainer of $39,000 for all directors, to include attendance at 12 regular meetings of the Board, 1 organizational meeting of the Board, the annual meeting of shareholders, approximately 13 meetings of the finance committee, and all other committee meetings as assigned, and any special meetings that the Board deems necessary.

•

An additional retainer of $4,000 per annum for service on the Audit Committee to reflect the additional work, responsibility, and liability.

•

A further retainer of $4,000 per annum for the Chairman of the Audit Committee to reflect the still greater responsibility and work of that position.

All retainers will be paid in 12 monthly installments on the date of each regular monthly meeting during the corporate year. Retainers will be recovered from any director who failed to attend less than 75 percent of the meetings to which he or she had been assigned.

The Company maintains a Directors’ Deferred Compensation Plan, under which a director may defer receipt of his fees as a director of the Bank until retirement or age 72, termination of service, or death. During the deferral period, amounts deferred earn interest at 1 percent less than the prime rate.

The Company seeks to help directors to make a substantial investment in the Company’s stock through a Director Stock Purchase plan wherein directors may elect to have their fees invested in common stock of the Company, purchased in market transactions and without discount, on the day that the fees are paid. Five directors participated in the plan during 2009, investing a total of $200,100 in 7,303 shares during 2009. These investments were made directly from the directors’ cash fees after taxes without deferral of income for purposes of taxes, and represent an investment of personal funds by these directors.

The following table details compensation paid to directors during the year ending December 31, 2009:

DIRECTOR COMPENSATION


Name (a)	Fees Earned or Paid in Cash ⁽¹⁾ ($) (b)		Stock Awards ($) (c)	Option Awards ($) (d)	Non-Equity Incentive Plan Compensation ($) (e)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ⁽²⁾⁽³⁾ ($) (f)	All Other Compensation ^(4)(5)(6) ($) (g)	Total ($) (j)
James E. Danowski	45,250		n/a	n/a	n/a	—	45	45,295
Joseph A. Gaviola	41,750		n/a	n/a	n/a	—	45	41,795
Edgar F. Goodale	38,250		n/a	n/a	n/a	18,430	45	56,725
David A. Kandell	41,750		n/a	n/a	n/a	—	45	41,795
Thomas S. Kohlmann		⁽¹⁾	n/a	n/a	n/a	6,560	45	6,605
Terence X. Meyer	38,250		n/a	n/a	n/a	—	45	38,295
Susan V.B. O’Shea	38,250		n/a	n/a	n/a	—	45	38,295
John D. Stark, Jr.	41,750		n/a	n/a	n/a	—	45	41,795

⁽¹⁾	Directors’ fees paid to Thomas S. Kohlmann and J. Gordon Huszagh, each of whom served as Principal Executive Officer during 2009, are included in the SUMMARY COMPENSATION TABLE under Item 8.

⁽²⁾	Includes above-market or preferential earnings on deferred compensation.

⁽³⁾	No director standing for election or continuing in office participates in a pension plan provided for or affiliated with the Company.

⁽⁴⁾	There were no director legacy programs in place, nor donations to charitable institutions made in directors’ names during 2009.

⁽⁵⁾	The total of perquisites and personal benefits did not exceed $10,000 for any director.

⁽⁶⁾	Includes life insurance of $25,000 per director at a premium of $45.00 per annum.

Page 18

Item 9.

Independent Public Accountants

RATIFICATION OF INDEPENDENT AUDITORS (Item 2 on Proxy Card)

The Audit Committee recommended, and the Board of Directors has selected, Grant Thornton LLP, independent auditors, to audit the financial statements of the Company for the fiscal year ending December 31, 2010, and recommends that shareholders vote for ratification of the appointment. Grant Thornton LLP has audited the Company’s financial statements since 2002. Notwithstanding the selection, the Board, in its discretion, may direct the appointment of new independent auditors at any time during the year, if the Board feels that the change would be in the best interests of the Company and its shareholders. In the event shareholders vote against ratification, the Board will reconsider its selection.

Representatives of Grant Thornton LLP are expected to be present at the annual meeting of the shareholders. They will have the opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions.

It is the policy of the Audit Committee that all non-audit services be approved by the Committee prior to engagement, and all such services were so approved. The following aggregate fees were billed by the accountants during 2009 and 2008:

AUDIT FEES


	2009		2008
Audit fees	$	322,707	$	278,837
Audit-related fees		24,840		35,160
Tax fees		—		—
All other fees		6,727		1,500

	$	354,274	$	315,497

The Board of Directors recommends a vote FOR this proposal, which is Item 2 on the proxy card.

Items 10. – 20.

Not applicable.

Item 21.

Voting Procedures

All proxies that 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 on page 3. Directors shall be elected by a plurality of the votes cast at the meeting. All proxies received will be voted in accordance with their specific instructions. In the event any nominee declines or is unable to serve, the proxies will be voted for a successor nominee designated by the Board of Directors.

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, 2010. Abstentions and broker ‘non-votes’ are counted as present and entitled to vote for purposes of determining a quorum, but are not treated as votes cast at the meeting. Accordingly, abstentions and broker non-votes will not be counted for purposes of determining the outcome of any of the proposals to be voted on.

Item 22.

Not applicable.

Item 23.

Delivery of Documents to Security Holders Sharing an Address

Only one annual report and proxy statement is delivered to two or more shareholders who share an address unless the Company or its agent has received contrary instructions from one or more of the shareholders. The Company will deliver promptly upon written or oral request a separate copy of these documents to shareholders at a shared address to which a single copy was delivered. To request that separate copies of these documents be delivered, shareholders can contact the Company’s registrar or transfer agent by mail at: American Stock Transfer & Trust Co., 59 Maiden Lane, New York, New York 10038; or by telephone at 1-800-937-5449; or on the Internet at www.amstock.com. You may also contact the Company’s registrar or transfer agent if you received multiple copies of the annual meeting materials and would prefer to receive a single copy in the future.

Page 19

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 12, 2010

By Order of the Board of Directors

DOUGLAS IAN SHAW

Senior Vice President and Corporate Secretary

Page 20

APPENDIX A

Suffolk Bancorp

Code of Ethics

as reaffirmed on May 21, 2009

The first and most significant element of a financial institution’s relationships with its customers, regulatory agencies, and the communities it serves is trust. In recognition of the importance of that trust, it is the policy of Suffolk Bancorp and its subsidiary, The Suffolk County National Bank, to maintain the highest standard of integrity in the conduct of its business.

This code of ethics should guide directors, officers, and employees of the Company and its subsidiaries in the ethical discharge of their responsibilities, and help them comply with federal bank bribery law (18 U.S.C., Section 215 as amended) and with the policies of the Federal Financial Institutions Examination Council released on April 27, 1987 which include the guidelines of the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency.

I.	Each director, officer, and employee of the Company should be familiar with the law which provides in pertinent part:

“Whoever —

A. “corruptly gives, offers, or promises anything of value to any person, with intent to influence or reward an officer, director, employee, agent, or attorney of a financial institution in connection with any business or transaction of such institution; or

B. “as an officer, director, employee, agent, or attorney of a financial institution, corruptly solicits or demands for the benefit of any person, or corruptly accepts or agrees to accept anything of value from any person intending to be influenced or rewarded in connection with any business or transaction of such institution;

“shall be guilty of an offense.”

II.	Each director, officer, and employee of the Bank shall:

A. respect the nature of privileged or confidential information concerning customers or the Company’s business.

B. not use information obtained in the conduct of the Company’s business for personal or business advantage.

C. be certain that a position held with the Company is not used to obtain an unauthorized, illegal or questionable benefit for a customer, supplier or other outside party.

D. not use a position at the Company to gain an unauthorized, illegal or questionable benefit for the Company or oneself.

E. not accept gifts from customers, suppliers, business associates, or competitors of the Company and its subsidiaries having a value of more than $25 or accept cash gifts of any amount, except where the relationship of the director, officer or employee to the donor is primarily and demonstratively personal in nature, and the gift is not intended to influence a business decision in any way.

F. not accept meals or entertainment of a value greater than is customary in the conduct of the business at hand.

G. avoid any conflict or appearance of conflict of interest between professional or fiduciary duties to the Company or its customers, and any employment, partnership, investment or directorship in any outside business venture.

H. disclose all things of value received or offered beyond what is authorized in this code and all potential conflicts of interest, including those in which they have been inadvertently placed due to either business or

Page 21

personal relationships with customers, suppliers, business associates, or competitors of the Company to the secretary of the corporation in writing.

I. not trade in stock of the Company based on information which is not generally available to the investing public.

III.

When questions arise concerning the ethics of a particular action, the director, officer, or employee should submit it in writing to the secretary of the corporation. If the secretary believes that there is a conflict with the code of ethics, it should be referred to the chief executive officer. If, in the opinion of the chief executive officer, it requires further discussion, it should be referred to the board of directors for resolution. Any such discussions should be summarized in written form, including a description of the situation and the determination of the chief executive officer or the board of directors, and filed with the secretary of the corporation.

IV.

All disclosures shall be made to the secretary of the corporation in writing. It is then the duty of the secretary of the corporation to review the situation, and make a preliminary determination as to whether the exception to the code is indeed ethical, subject to the review of the chief executive officer, and maintain a contemporaneous written record.

V.	Each director, officer, or employee of the bank should acknowledge that they have read the code of ethics, in writing, when they first become associated with the Company, and after each revision or update of the code.

Page 22


			n

	SUFFOLK BANCORP

	PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS – APRIL 13, 2010 This Proxy is Solicited on Behalf of the Board of Directors

	The undersigned hereby appoint(s) HERBERT DRESHER and TRACY L. STARK 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 5, 2010 at the annual meeting of shareholders to be held at 1:00 P.M. on Tuesday, April 13, 2010 at Suffolk County National Bank, Administrative Center, Lower Level, 4 West Second Street, Riverhead, New York, or any adjournment thereof. The undersigned hereby revokes any proxy previously given.

	(Continued and to be signed on the reverse side)


n		14475	n

ANNUAL MEETING OF SHAREHOLDERS OF

SUFFOLK BANCORP

April 13, 2010

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:

The Notice of Meeting, proxy statement and proxy card

are available at www.suffolkbancorp.com

Please sign, date and mail

your proxy card in the

envelope provided as soon

as possible.


		i		Please detach along perforated line and mail in the envelope provided.		i


n	20330000000000001000 8	041310

	PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x

FOR

AGAINST

ABSTAIN

1. Election of Directors:

2. The Approval of the Board of Directors’ selection of Grant Thornton, L.L.P. as independent public accountants for the fiscal year ending December 31, 2010.

NOMINEES:

FOR ALL NOMINEES

O Edgar F. Goodale

O David A. Kandell

(for a term of three years)

3. Any other business which may be properly brought before the meeting or any adjournment thereof.

WITHHOLD AUTHORITY

FOR ALL NOMINEES

O Susan V.B. O’Shea

(for a term of three years)

FOR ALL EXCEPT

(See instructions below)

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.

INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark

“FOR ALL EXCEPT” and fill in the circle next to each nominee

you wish to withhold, as shown here: l

Please check here if you plan to attend the meeting. ¨

To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.

Signature of Shareholder

Date:

Signature of Shareholder

Date:

Note:

Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.