TOMPKINS COUNTY TRUSTCO, INC.
March 30, 1998
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF TOMPKINS COUNTY TRUSTCO, INC.
The Annual Meeting of Stockholders (the "Meeting") of Tompkins County
Trustco, Inc. ("the Company") will be held on Wednesday, April 29, 1998 at 7:30
p.m., in the ballroom, Triphammer Lodge & Conference Center, One Sheraton Drive,
Ithaca, New York, for the following purposes:
1. To elect four (4) Directors for a term of three years expiring in the year
2001;
2. To approve the proposal to adopt the 1998 Stock Option Plan; and
3. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 16, 1998 as
the record date for determining stockholders entitled to notice of and to vote
at the Meeting. Only stockholders of record at the close of business on that
date are entitled to vote at the Meeting.
Enclosed with this notice are the attached proxy statement, a proxy card and
return envelope, and our 1997 Annual Report.
Your vote is important regardless of the number of shares you own. WE URGE
YOU TO READ AND CAREFULLY CONSIDER THE ATTACHED PROXY STATEMENT AND TO MARK,
SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING. A self-addressed postage prepaid envelope is
enclosed for your convenience. You may vote personally on each matter at the
Meeting even though you have returned the proxy card.
By Order of the Board of Directors,
James J. Byrnes, Chairman,
President & Chief Executive Officer
James W. Hulbert
Vice President & Corporate Secretary
P.O. BOX 460, ITHACA, NEW YORK 14851 (607) 273-3210
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 29, 1998
This Proxy Statement is being mailed to stockholders on or about March 30,
1998 in connection with the solicitation by the Board of Directors of TOMPKINS
COUNTY TRUSTCO, INC. ("the Company") of proxies to be used at the Annual Meeting
of Stockholders (the "Meeting") of the Company to be held Wednesday, April 29,
1998 and any adjournment thereof.
VOTING
Only stockholders of record at the close of business on March 16, 1998 will
be entitled to vote. On March 16, 1998, there were 4,862,619 shares of Common
Stock of the Company, par value $0.10 per share (the "Common Stock"),
outstanding. Unless otherwise noted, all share numbers and share prices
reflected in this Proxy Statement have been adjusted to reflect a 3-for-2 stock
split effective March 15, 1998 (the "Stock Split"). Each share of Common Stock
is entitled to one vote on each matter to be voted on at the Meeting.
Shares covered by any proxy that is properly executed and received prior to
the close of business on the day of the Meeting will be voted and, if the
stockholder who executes such proxy shall specify therein how such shares shall
be voted on such proposals, the shares will be voted as so specified. Executed
proxies with no instructions will be voted "FOR" each proposal for which no
instruction is given. It is not anticipated that any matters other than as set
forth in the Notice of Annual Meeting will be brought before the Meeting, but
the persons named in the accompanying proxy will vote the shares represented by
all properly executed proxies on any such matters that may come before the
Meeting in such manner as shall be determined by the majority of the Board of
Directors of the Company.
The presence of a stockholder at the Meeting will not automatically revoke
the stockholder's proxy. A stockholder may, however, revoke a proxy at any time
prior to its exercise by: (1) delivering to the Corporate Secretary a written
notice of revocation prior to the Meeting, (2) delivering to the Corporate
Secretary a duly executed proxy bearing a later date, or (3) attending the
Meeting and filing a written revocation with the Corporate Secretary at the
Meeting prior to the vote and voting in person.
The presence, in person or by proxy, of at least a majority of the total
number of shares of Common Stock outstanding and entitled to vote is necessary
to constitute a quorum for the conduct of business, and in the event there are
not sufficient votes on any matter, the Meeting may be adjourned. Directors
shall be elected by a plurality of the eligible votes cast and such other
business, whether or not set forth in this Proxy Statement as may properly come
before the Meeting, will be determined by a majority of the eligible votes cast.
Abstentions, in person or by proxy, and broker non-votes shall be counted toward
a quorum, but abstentions and broker non-votes are not deemed to be votes cast
and therefore have no effect on the outcome of the vote, which requires either a
plurality or majority of the "votes cast," depending upon the proposal. Votes
withheld in connection with the election of one or more of the nominees for
director will not be counted as votes cast. Accordingly, votes withheld will
have a negative impact on the outcome of the vote.
PAGE 1
<PAGE>
SOLICITATION OF PROXIES
The total cost of solicitation of proxies in connection with this Meeting
will be borne by the Company. In addition to solicitation by mail, directors,
officers and employees of the Company, and its wholly-owned subsidiary, Tompkins
County Trust Company ("Trust Company"; as the context may require, references
herein to the "Company" include the Trust Company) may solicit proxies for the
Meeting personally or by telephone or electronic communication without
additional remuneration. The Company will also provide brokers and other record
owners holding shares in their names or in the names of nominees, in either case
which are beneficially owned by others, proxy material for transmittal to such
beneficial owners and will reimburse such record owners for their expenses in
doing so. Although the Company has not yet retained a proxy soliciting firm to
aid in the solicitation of proxies for the Meeting, it may do so at any time
prior to the Meeting or any adjournment thereof. In such event, the Company will
pay the fees and expenses of any such proxy solicitation firm.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information with
respect to the beneficial ownership of Common Stock of the Company as of March
16, 1998 by (i) each of the chief executive officer and the Company's four other
most highly compensated executive officers in 1997 (the "Named Executive
Officers") and each director of the Company, (ii) all executive officers and
directors of the Company as a group and (iii) all beneficial owners of 5% or
more of the Common Stock of the Company. Except as otherwise indicated, each of
the stockholders named below has sole voting and investment power with respect
to the outstanding shares of Common Stock beneficially owned:
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
------------------
PERCENT OF
NUMBER OF OUTSTANDING
NAMES SHARES SHARES(1)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John A. Alexander+ 8,149 (2) **
James J. Byrnes*+ 69,825 (3) 1.42
Reeder D. Gates+ 77,910 (2) (4) 1.60
William W. Griswold+ 877 (2) **
Carl E. Haynes+ 692 (2) **
Edward C. Hooks+ 3,854 (2) (5) **
Robert T. Horn, Jr.+ 3,097 (2) (6) **
Bonnie H. Howell+ 3,610 (2) **
Lucinda A. Noble+ 2,498 (2) **
Hunter R. Rawlings, III+ 580 (2) **
Frank H. T. Rhodes+ 1,937 (2) **
Thomas R. Salm+ 1,561 (2) (7) **
Michael D. Shay+ 5,417 (2) **
Francis E. Benedict* 66,151 (8) 1.36
Richard D. Farr* 19,230 (9) **
Thomas J. Smith* 22,746 (10) **
Donald S. Stewart* 46,348 (11) **
All Directors and executive
officers as a group (18 persons) 362,278 7.31
</TABLE>
PAGE 2
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
------------------
PERCENT OF
NUMBER OF OUTSTANDING
NAMES SHARES SHARES(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust and Investment Services
Department of the Trust Company
in the fiduciary capacity indicated:
- Executor, Trustee or Co-Trustee 948,366 (12) 19.50
- Trustee for the Company Investment
and Stock Ownership Plan 423,509 (12) 8.70
- Agent or Custodian 103,327 (12) 2.13
* Named Executive Officer
+ Director of the Company
** Less than 1 percent
</TABLE>
(1) The number of shares of Common Stock deemed outstanding includes: (i)
4,862,619 of Common Stock outstanding as of March 16, 1998 and (ii)
shares of Common Stock subject to outstanding stock options which are
exercisable by the named individual or group in the next 60 days.
(2) Includes 250 shares held in trust pursuant to the Company's 1996 Stock
Retainer Plan for Non-Employee Directors. Directors have no voting or
investment power with respect to such shares.
(3) Includes 42,105 shares issuable upon the exercise of exercisable stock
options.
(4) Includes 64,882 shares held in the R. D. Gates, Ltd. Employee Profit
Sharing Fund and 1,987 shares owned by the spouse of Mr. Gates.
(5) Includes 333 shares which Mr. Hooks holds as Custodian, under the UGMA
for his children.
(6) Includes 704 shares which Dr. Horn holds as Trustee for his children.
(7) Includes 493 shares owned by the spouse of Mr. Salm.
(8) Includes 8,863 shares issuable upon the exercise of exercisable stock
options. Includes 3,630 shares owned by the spouse of Mr. Benedict. Mr.
Benedict resigned as an executive officer of the Company effective
December 31, 1997.
(9) Includes 10,566 shares issuable upon the exercise of exercisable stock
options. Includes 450 shares owned by the spouse of Mr. Farr.
(10) Includes 12,143 shares issuable upon the exercise of exercisable stock
options. Includes 56 shares owned by the children of Mr. Smith.
(11) Includes 12,143 shares issuable upon the exercise of exercisable stock
options. Includes 10,516 shares owned by the spouse of Mr. Stewart.
(12) As of March 16, 1998, the Trust and Investment Services Department of
the Trust Company held 1,475,202 shares representing 30.33% of the
Common Stock of the Company. Of such shares, 948,366 shares are held in
a fiduciary capacity as Executor, Trustee or Co-Trustee. Where the Trust
Company is sole executor or trustee, such shares will be voted only if
the legal instrument provides for voting the stock at the direction of
the donor or a beneficiary and such direction is in fact received. When
acting in a co-fiduciary capacity, such shares will be voted by the
co-fiduciary or fiduciaries in the same manner as if the co-fiduciary or
fiduciaries were the sole fiduciary. Of the 1,475,202 shares mentioned
above, 423,509 shares or 8.70% of the outstanding stock is held by the
Company's Investment and Stock Ownership Plan, with 404,080 shares or
8.31% allocated to participant accounts. These shares are voted by
individual plan participants. In addition, 103,327 shares are held as
Agent or Custodian with the voting power retained by the owner. Such
shares represent 2.13% of the Common Stock outstanding.
PAGE 3
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The purpose of the Meeting is the election of four directors for a term of
three years expiring in the year 2001. The Bylaws of the Company provide that
the stockholders elect directors to serve a three year term to succeed those
directors in the class whose terms of office expire at the Meeting or for a
shorter period as the Board of Directors determines for the purposes of
equalizing the classes of directors.
The persons named in the Proxy to represent stockholders at the Meeting are:
DOROTHY B. BOOTH, ANTON J. EGNER and WILLIAM T. PRITCHARD, all of Ithaca, N.Y.
They will vote Proxies as directed and in the absence of instructions, will vote
the shares represented by the Proxies in favor of the election of nominees named
below. If any one or more of such nominees should become unavailable for
election by reason of death, or unexpected occurrence, they will vote the shares
for the election of such substitute nominees as the Board of Directors may
propose.
The following table sets forth each nominee and continuing director's name,
age, the year he or she first became a director and the year in which such term
will expire. Biographies of the nominees and the directors continuing in office
follow the table.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED TERM TO
NAME AGE DIRECTOR EXPIRE
- -------------------------------------------------------------------------------------------------------------------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2001
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
James J. Byrnes 56 1989 2001
Reeder D. Gates 52 1985 2001
Bonnie H. Howell 50 1982 2001
Lucinda A. Noble 66 1985 2001
- -------------------------------------------------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE
- -------------------------------------------------------------------------------------------------------------------
John E. Alexander 45 1993 1999
Edward C. Hooks 48 1990 1999
Hunter R. Rawlings, III 53 1996 1999
Michael D. Shay 56 1989 1999
William W. Griswold 40 1996 2000
Carl E. Haynes 52 1996 2000
Robert T. Horn, Jr. 50 1995 2000
Frank H. T. Rhodes 71 1984 2000
Thomas R. Salm 57 1981 2000
</TABLE>
PAGE 4
<PAGE>
JAMES J. BYRNES has been the President and Chief Executive Officer and a
director of the Trust Company since 1989. Mr. Byrnes has also served as the
Chairman of the Board of Directors since 1992. He was elected to serve in the
same capacities for the Company in 1995.
REEDER D. GATES has served as a director of the Trust Company since 1985 and of
the Company since 1995. Mr. Gates is President of R.D. Gates, Ltd., a company
engaged in community pharmacies.
BONNIE H. HOWELL has served as a director of the Trust Company since 1982. She
has also served as Vice Chair of the Board of Directors since 1992. She was
elected to serve in the same capacities for the Company in 1995. Ms. Howell is
President and Chief Executive Officer of Cayuga Medical Center at Ithaca. She is
also a Trustee of the Hospital Association of New York State and a member of the
Board of Directors of Central New York Hospital Association.
LUCINDA A. NOBLE has served as a director of the Trust Company since 1985 and of
the Company since 1995. Ms. Noble is a retired Director of the Cooperative
Extension System at Cornell University.
JOHN E. ALEXANDER has served as a director of the Trust Company since 1993 and
of the Company since 1995. He is President of The CBORD Group, Inc., a computer
software company.
EDWARD C. HOOKS has served as a director of the Trust Company since 1990 and of
the Company since 1995. He is an attorney and a partner of Harris Beach &
Wilcox, LLP. Mr. Hooks also serves as counsel to the Company.
HUNTER R. RAWLINGS, III has served as a director of the Company and the Trust
Company since 1996. He is the 10th President of Cornell University. Dr. Rawlings
was previously President of the University of Iowa.
MICHAEL D. SHAY has served as a director of the Trust Company since 1989 and of
the Company since 1995. Mr. Shay is Chairman of the Board of Evaporated Metal
Films Corp., a company engaged in optical coatings.
WILLIAM W. GRISWOLD has served as a director of the Company and the Trust
Company since 1996. He is President and Chief Operating Officer of the Ontario
Telephone Company, Inc. and the Trumansburg Home Telephone Company where he has
been employed since 1979. Mr. Griswold serves on the Board of the New York State
Telephone Association.
CARL E. HAYNES has served as a director of the Company and the Trust Company
since 1996. He is President of Tompkins Cortland Community College having been
appointed to that position in 1995. Dr. Haynes has been with the College in
various capacities for the past 27 years.
ROBERT T. HORN, JR. has served as a director of the Company and the Trust
Company since 1995. Dr. Horn is a physician and has a private practice in
dermatology.
FRANK H. T. RHODES has served as a director of the Trust Company since 1984 and
of the Company since 1995. Dr. Rhodes retired from his position as President of
Cornell University in 1995. He is a director of General Electric Company,
National Broadcasting Corporation and Dyson Charitable Fund. He is also a
Trustee of the Andrew W. Mellon Foundation.
THOMAS R. SALM has served as a director of the Trust Company since 1981 and of
the Company since 1995. Mr. Salm is Vice President for Business Affairs at
Ithaca College.
PAGE 5
<PAGE>
BOARD OF DIRECTORS
The corporate reorganization pursuant to which the Company became the parent
bank holding company of the Trust Company (the "Reorganization") was consummated
on January 1, 1996. The Boards of Directors of the Company and the Trust Company
are identical, and consequently, in an effort to provide stockholders with
meaningful disclosure, set forth below is information with respect to the
meetings of the Board of Directors and committees thereof of the Company and the
Trust Company during the fiscal year ended December 31, 1997.
The Board of Directors held 16 meetings during 1997. Each director attended
75% or more of the aggregate number of meetings of the Board of Directors and
the committees of which such director was a member, except for Director Rhodes
with 56%.
During 1997, directors who were not employees of the Company received for
their services a quarterly retainer of $750 in the form of Common Stock (as
described below), plus a fee of $400 for each Directors meeting attended.
Directors who are also committee members received $275 for each committee
meeting attended. Directors who chaired a board committee received an additional
annual fee of $1,000. Members of the Board who are salaried employees of the
Trust Company are not compensated for their service on the Board or any Board
committee. Aggregate fees paid to the twelve non-employee directors in 1997 were
$159,328. Director Howell does not receive the fees described above, but instead
receives an annual retainer for her services as Vice Chair. The amount paid to
her in 1997 was $23,500.
Under the 1985 Deferred Compensation Plan for Directors, each director may
elect to defer all or a portion of his or her cash compensation until the
individual ceases to be a director. During 1997, four directors elected to
participate in such plan.
The 1996 Stock Retainer Plan for Non-Employee Directors (the "Plan") was
approved by the Company's stockholders on April 24, 1996. Since that date,
non-employee directors of the Company have received, in lieu of the $750
quarterly cash retainer referenced above (the "Quarterly Fee"), that number of
whole shares of Common Stock (rounded up to the nearest whole number) equal to
the Quarterly Fee divided by the fair market value of the Common Stock on the
date the Quarterly Fee was otherwise payable. At their election, each director
participating in the Plan may defer receipt of the stock retainer. During 1997,
1,118 shares of Common Stock were issued to non-employee directors or placed in
a trust account with respect to deferred shares.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Executive Committee, Audit/Examining Committee,
Compensation/Personnel Committee and Nominating Committee, each of which was
constituted after the consummation of the Reorganization. Consequently, set
forth below is information with respect to the committees of the Company and the
Trust Company and meetings thereof held during the fiscal year ended December
31, 1997.
TOMPKINS COUNTY TRUSTCO, INC.
EXECUTIVE COMMITTEE
The Executive Committee serves as the long-range planning, compliance
and marketing committee of the Board of Directors.
The Committee held 5 meetings in 1997, and its members at the close of
business on December 31, 1997 were: Bonnie H. Howell, Chair; James J.
Byrnes; Reeder D. Gates; Edward C. Hooks; Lucinda A. Noble and Thomas
R. Salm.
PAGE 6
<PAGE>
AUDIT/EXAMINING COMMITTEE
The Audit/Examining Committee represents the Board of Directors in
supervising audit activities and is responsible for conducting an
annual examination of the Company.
The Committee held 6 meetings in 1997, and its members at the close of
business on December 31, 1997 were: Thomas R. Salm, Chairman; Wendell
L. Bryce; William W. Griswold and Michael D. Shay.
COMPENSATION/PERSONNEL COMMITTEE
The Compensation/Personnel Committee reviews employee compensation and
benefit policies. Annual compensation and benefit actions are reviewed
and recommended for action by the Board. The Committee also administers
the Company's equity-based plans.
The Committee held 8 meetings in 1997, and its members at the close of
business on December 31, 1997 were: Lucinda A. Noble, Chair; John E.
Alexander; Reeder D. Gates and William W. Griswold.
NOMINATING COMMITTEE
The Nominating Committee recommends to the Board of Directors nominees
for election as directors. The Committee will consider recommendations
from stockholders if submitted in a timely manner and will apply the
same criteria to all persons being considered.
The Committee held 2 meetings in 1997, and its members at the close of
business on December 31, 1997 were: Reeder D. Gates, Chairman; James J.
Byrnes and Bonnie H. Howell.
TOMPKINS COUNTY TRUST COMPANY
TRUST COMMITTEE
The Trust Committee has general supervision of the Trust and Investment
Services Department, including its general and operating policies.
The Committee held 9 meetings in 1997, and its members at the close of
business on December 31, 1997 were: Reeder D. Gates, Chairman; John E.
Alexander; James J. Byrnes; Carl E. Haynes and Robert T. Horn, Jr.
CREDIT COMMITTEE
The Credit Committee reviews credit applications presented to it by
management and makes recommendations to the Board on credit policies.
The Committee also monitors the Trust Company's Community Reinvestment
Act Plan.
The Committee held 20 meetings in 1997, and its members at the close of
business on December 31, 1997 were: Michael D. Shay, Chairman; Wendell
L. Bryce, James J. Byrnes; Edward C. Hooks and Lucinda A. Noble.
PENSION ADMINISTRATION COMMITTEE
The Pension/Administration Committee is appointed by the Board and is
responsible for the implementation, operation and administration of
employee pension plans and trusts.
The Committee held 3 meetings in 1997, and its Board members at the close of
business on December 31, 1997 were: James J. Byrnes, Chairman; Wendell L. Bryce
and Thomas R. Salm.
PAGE 7
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION/PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation/Personnel Committee (the "Committee") is composed of four
outside directors. Among its duties, the Committee is responsible for monitoring
the compensation of the Company's executive officers. A goal of the Committee is
to maintain executive compensation which is fair and reasonable, given the size,
nature and performance goals of the Company. The Committee also strives to see
that compensation and benefits are competitive in order to attract and retain
qualified management. The financial services industry is increasingly
competitive and the board believes that strong management is essential for
continuing the Company's record of financial performance.
The Committee regularly surveys compensation practices, base salary, and
total compensation, including incentives, in the banking industry. In 1997, the
Committee utilized a self selected survey of ten comparable banks, mostly in New
York, as well as the 1997 Northeast Banking Industry Compensation Survey and the
1997 SNL Executive Compensation Review for Commercial Banks. These surveys
provide the Committee with comparable information regarding the three
compensation components used by the Company to motivate executive performance,
namely annual base salary, incentive bonuses and equity-based incentive
compensation. Based upon these surveys, the committee believes that the
Company's compensation practices are well within normal range, particularly
given the Company's historical and 1997 record of results.
Each of the Named Executive Officers has an annual base salary at a level
the Committee believes is comparable to companies in the commercial banking
industry with similar marketplace geography and demographics. In addition to
base salary, each executive officer participates in the Company's profit sharing
plan and receives an incentive cash bonus at the end of each fiscal year based
upon corporate performance and that officer's individual performance. Corporate
performance is measured by the Company's strategic and financial performance in
that fiscal year, with particular reference to net income and profitability for
the year. In making recommendations to the Board, the Committee does not
emphasize year-to-year changes in stock price in its evaluation of corporate
performance because the Committee does not believe that short-term fluctuations
in stock price necessarily reflect the underlying strength or future prospects
of the Company. Individual performance is measured by the strategic and
financial performance of the particular officer's operational responsibility in
comparison to targeted performance criteria. As reported in the Summary
Compensation Table, the bonuses granted with respect to 1997 to the Named
Executive Officers, including Mr. Byrnes, reflect the Company's strong 1997
results.
While the Committee recognizes that the Company can exert very little
influence on short-term fluctuations in stock price, the Committee does believe
that long-term stock price appreciation reflects achievement of strategic goals
and objectives. Accordingly, the Company seeks to create long-term performance
incentives for its key employees by aligning their economic interests with the
interests of long-term stockholders through the equity-based component of its
compensation program. Stock options are granted periodically to key employees at
a price equal to the fair market value on the date of grant, and awards are
based on the performance of such employees and anticipated contributions by such
employees to the achievement of strategic goals and objectives. In addition to
stock options, employees, including the Named Executive Officers, are given
incentives to invest in Common Stock through the profit sharing component of the
Company's Investment And Stock Ownership Plan. During 1997, as reflected in the
Summary Compensation Table, the options granted to the Named Executive Officers,
including Mr. Byrnes, reflect the Company's strong 1997 results.
With respect to the above matters, the Compensation/Personnel Committee
submits this report.
Compensation/Personnel Committee
Lucinda A. Noble, Chair
John E. Alexander
Reeder D. Gates
William W. Griswold
PAGE 8
<PAGE>
The following tables set forth information concerning compensation of the Chief
Executive Officer and the four most highly compensated executive officers for
services in all capacities to the Trust Company during the years indicated. In
connection with the consummation of the Reorganization, the Named Executive
Officers were elected to identical positions of the Company. However, all of the
Named Executive Officers receive compensation only from the Trust Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
NAME AND ANNUAL COMPENSATION COMPENSATION
PRINCIPAL OTHER ANNUAL ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(#)
COMPENSATION(3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JAMES J. BYRNES 1997 273,000 $115,000 $ 4,785 18,000 $ 40,812
Chairman of the Board, 1996 250,000 85,000 7,276 22,500 37,435
President & Chief 1995 235,000 65,000 6,464 - 35,185
Executive Officer
FRANCIS E. BENEDICT 1997 $110,000 $ 27,000 $ 6,309 - $ 16,248
Executive Vice President, 1996 105,500 26,000 7,111 6,750 15,779
Senior Banking and 1995 101,000 24,000 5,225 - 15,160
Investment Officer
DONALD S. STEWART 1997 $108,077 $ 30,000 $ 5,876 5,250 $ 15,964
Executive Vice President & 1996 100,000 27,000 6,416 6,300 14,957
Senior Trust Officer 1995 95,000 25,000 6,420 - 14,209
THOMAS J. SMITH 1997 $105,000 $ 25,000 $ 4,665 3,750 $ 15,509
Senior Vice President & 1996 100,000 23,000 4,880 6,300 14,957
Senior Credit Officer 1995 95,000 23,000 4,329 - 14,209
RICHARD D. FARR 1997 $ 95,000 $ 22,500 $ 1,771 3,750 $ 14,032
Senior Vice President & 1996 90,000 20,700 1,086 6,000 13,461
Chief Financial Officer 1995 85,000 20,000 746 - 12,713
</TABLE>
(1) These amounts represent cash awards made under the Senior Officer
Incentive Compensation Plan, which may be deferred under the Deferred
Compensation Plan for Senior Officers.
(2) Includes amounts for cost of applicable Group Term Life Insurance, club
dues and use of company vehicle or reimbursement for use of personal
vehicle.
(3) Includes amounts paid by the Trust Company and deferred pursuant to the
Company's Investment and Stock Ownership Plan.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL OPTIONS ASSUMED ANNUAL RATE OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE APPRECIATE FOR
OPTIONS EMPLOYEES IN OR BASE EXPIRATION OPTION TERM
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
James J. Byrnes 18,000 28.57 $23.659 8/12/07 $267,822 $678,714
Donald S. Stewart 5,250 8.33 23.659 8/12/07 78,115 197,958
Thomas J. Smith 3,750 5.95 23.659 8/12/07 55,796 141,398
Richard D. Farr 3,750 5.95 23.659 8/12/07 55,796 141,398
</TABLE>
PAGE 9
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT YEAR END (#) AT YEAR END ($)
--------------- ---------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE (1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James J. Byrnes -0- -0- 36,480/34,875 $550,039/$247,304
Francis E. Benedict -0- -0- 11,532/ 5,679 $153,391/$ 52,131
Donald S. Stewart -0- -0- 10,568/10,552 $140,308/$ 74,741
Thomas J. Smith -0- -0- 10,568/ 9,052 $140,308/$ 67,292
Richard D. Farr -0- -0- 9,066/ 8,745 $119,530/$ 64,553
</TABLE>
(1) The average price for the Company's Common Stock on the American Stock
Exchange on December 31, 1997, the last trading day of the year, was
$28.625 per share, as adjusted for the Stock Split.
None of the Named Executive Officers elected to exercise any options during the
fiscal year ended December 31, 1997.
EMPLOYMENT ARRANGEMENTS
The Company has an agreement with James J. Byrnes, Chairman, President and
Chief Executive Officer, which provides for severance payments equal to
approximately three times his annualized tax-includable compensation under
certain circumstances. This agreement would be operable should certain events
take place which seek to effect a change of control (as defined in the
agreement) of the Company. Payments would be due to Mr. Byrnes in the event of
his termination (as defined in the agreement) within two years of a change of
control.
DEFERRED PROFIT-SHARING PLAN
The Company has an Investment and Stock Ownership Plan (the "ISOP"), which
covers substantially all employees and has an employer funded profit sharing
component and an employee funded 401(k) component. The ISOP allows employees to
elect to defer a portion of their profit-sharing, as well as receive monetary
contributions as determined by the Board of Directors. The ISOP further allows
for contributions in the form of Common Stock of the Company. Contributions are
determined by the Board of Directors and are limited to a maximum amount as
stipulated in the ISOP. Amounts accrued for the accounts of the Named Executive
Officers are included in the Summary Compensation Table.
RETIREMENT PLANS
The Company has a noncontributory defined benefit pension plan covering
substantially all of its employees. The assets of the plan are held in a
separate trust and administered by the Pension/Administration Committee
appointed by the Board of Directors.
The benefits are based on years of service and a percentage of the
employees' average compensation for the five highest consecutive years in the
last ten years of employment. Under the plan, normal retirement age is 65 with
reduced benefit payments for early retirement following age 55 through 61.
Currently, Messrs. Byrnes, Benedict, Stewart, Smith and Farr have 9, 40, 26, 33
and 13 years of service under the plan, respectively.
PAGE 10
<PAGE>
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Years of Service
- ------------------------------------------------------------------------------------------------------------------
Average Final
Earnings 15 20 25 30 35
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 50,000.00 $12,712 $16,949 $21,187 $25,424 $29,662
$ 75,000.00 $20,212 $26,949 $33,687 $40,424 $47,162
$100,000.00 $27,712 $36,949 $46,187 $55,424 $64,662
$125,000.00 $35,212 $46,949 $58,687 $70,424 $82,162
$150,000.00 $42,712 $56,949 $71,187 $85,424 $99,662
</TABLE>
The Company also has a Supplemental Employee Retirement Plan (SERP) covering
James J. Byrnes. The Plan provides for a retirement benefit at age 65 equal to
50% of earnings as defined in the SERP, averaged over the highest five
consecutive years. Benefits under the SERP are reduced by payments due under the
Company's basic pension plan and Social Security. Reduced benefits are payable
in the event of retirement prior to age 65.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were satisfied.
In making the above statements, the Company has relied on copies of the
reports that have been filed with the SEC.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and officers of the Company and the Trust Company and their
affiliated companies were customers of, and had other transactions with, the
Company in the ordinary course of business during 1997. All loans and
commitments were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and did not involve more than normal risk of collectibility or
present other unfavorable features. As of December 31, 1997, the balance of such
loans included in total loans was $3,996,618, and borrowings of a director or
officer did not exceed 10% of stockholders equity.
Edward C. Hooks, a director of the Company and the Trust Company, is a
partner of Harris Beach & Wilcox, LLP, a law firm which provides legal services
to the Company.
PAGE 11
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph sets forth comparative information regarding the
Company's cumulative return on its common stock over the five year period ended
December 31, 1997. Total shareholder return is measured by dividing total
dividends (assuming dividend reinvestment) plus the change in share price during
the measurement period by the share price at the beginning of the measurement
period. The Company's cumulative shareholder return for the five year period
based upon an initial investment of $100 is compared to the cumulative return of
the Nasdaq Stock Market (U.S. Companies), the Nasdaq Bank Stock Index, and the
SNL Securities L.P. Bank Index. The stock prices on the performance graph are
not necessarily indicative of future stock price performance.
On February 3, 1997, the Company's common stock began trading on the
American Stock Exchange. Management selected the SNL Securities Bank Index as
its primary industry comparison index, to reflect a broader range of bank
stocks, including banks trading on the American Stock Exchange. A comparison to
the Nasdaq Bank Stock Index will not be included in future filings.
<TABLE>
<CAPTION>
TOMPKINS COUNTY TRUSTCO, INC.
Total Return Performance
PERIOD ENDING
- -------------------------------------------------------------------------------------------------------------------
INDEX 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/32/97
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tompkins County Trustco, Inc. 100.00 165.07 174.40 147.44 186.70 247.80
NASDAQ - Total US 100.00 114.80 112.21 158.70 195.19 239.53
NASDAQ Bank Index 100.00 114.04 113.63 169.22 223.41 377.44
SNL Bank Index 100.00 109.54 107.06 166.68 232.57 352.43
</TABLE>
PAGE 12
<PAGE>
PROPOSAL NO. 2
ADOPTION OF TOMPKINS COUNTY TRUSTCO, INC.
1998 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN
The 1998 Stock Option Plan (the "Plan"), attached hereto as Exhibit A,
provides for the granting of stock options ("Options") to employees (including
executive officers), consultants and other persons providing services to the
Company ("Participants"). The Company's Board of Directors approved the Plan on
January 20, 1998. The Plan will become effective on May 1, 1998 if adopted by
the Company's stockholders at the Meeting and, subject to certain limitations
under the Internal Revenue Code (the "Code), shall be unlimited in duration. The
purposes of the Plan are to (i) attract and retain persons eligible to
participate in the Plan, (ii) motivate Participants by means of appropriate
incentives to achieve long-range goals, (iii) provide incentive compensation
opportunities that are competitive with those of other similar companies, and
(iv) further identify Participants' interests with those of the Company's other
shareholders through compensation that is based on the Company's Common Stock.
The Company believes that the Plan's stated purposes will promote the long-term
financial interest of the Company, including the growth in value of the
Company's equity and enhancement of long-term shareholder return.
The Plan will be administered by the Compensation/Personnel Committee. Terms
and conditions of awards will be set forth in written agreements. The Plan
provides that the maximum number of shares of Common Stock issuable thereunder
is equal to the sum of (i) 240,000 plus (ii) shares of Common Stock, to the
extent authorized by the Board of Directors, which are reacquired in the open
market or in private transactions. To the extent any shares of Common Stock
covered by an Option are not delivered to a Participant or beneficiary because
the Option is forfeited or canceled (i.e., upon termination of employment with
the Company), such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Common Stock available
for delivery under the Plan. No Options have been granted under the Plan prior
to its effective date. The closing price of the Common Stock on the American
Stock Exchange on March 16, 1998 was $32.125, and therefore, as of such date,
the aggregate market value of securities underlying Options issuable under the
Plan was $7,710,000.
Any Participant selected by the Committee will be eligible for the grant of
Options under the Plan. Subject to the provisions of the Plan, the Committee
will have full authority and discretion to determine the Participants to whom
Options will be granted and the amount and form of such Options. There are
currently approximately 220 persons employed by the Company who would be
eligible for selection for participation by the Committee. No determination has
been made by the Committee with respect to the specific Participants who will be
recipients or the amount or nature of any awards under the Plan. Therefore, the
amount or nature of awards that would have been received or that will be
received by Participants under the Plan cannot currently be determined. The Plan
does provide that the maximum number of shares that may be covered by Options
granted to one individual shall be 25,000 during any calendar year.
Under the Plan, the Committee will be authorized to grant Options that
qualify as incentive stock options ("ISOs") under the Code and those that do not
so qualify ("Non-Qualified Options"). The exercise price of each Option granted
under the Plan shall be established by the Committee at the time of grant except
that the exercise price of an ISO may not be less than the fair market value of
the Common Stock at the time of grant. The duration of each Option will be set
forth in the agreement relating thereto. In the case of an ISO, the aggregate
fair market value of the Common Stock with respect to which Options are
exercisable for the first time by any Participant during any calendar year
cannot, under present tax rules, exceed $100,000. Additionally, in order to
comply with certain Code requirements, the Plan states that the maximum number
of Options that may be granted under the Plan as ISOs is 240,000 plus, if
permitted under the Code, shares reacquired in the open market or private
transactions that are authorized to be delivered under the Plan.
PAGE 13
<PAGE>
Although the Plan is flexible in determining the terms and provisions of
specific Options, it has been the Company's practice to grant Options that vest
equally over a period of 4 years. Additionally, it has been the Company's
practice to grant Options carrying an exercise price equal to the underlying
Common Stock's fair market value at the time of grant. Although no assurance can
be given, the Company expects such historic practices to continue with respect
to Options granted under the Plan.
Subject to provisions in the Plan relating to changes of control (as
described below), in the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation,
split-up, spin-off, combination or exchange of shares), the Committee may (i)
make appropriate adjustments to the maximum number of shares that may be
delivered under the Plan and (ii) adjust Options to preserve the benefits or
potential benefits of the Options. Action by the Committee may include
adjustment of (i) the number and kind of shares which may be delivered under the
Plan, (ii) the number and kind of shares subject to outstanding Options and
(iii) any other adjustments that the Committee determines to be equitable.
Except as otherwise provided in the Plan or the agreement reflecting the
applicable Option, upon the occurrence of a change in control all outstanding
Options shall become fully vested and exercisable. The term "change in control"
is fully defined in the Plan, but generally means a change in control of a
nature that would be required to be reported in a proxy statement under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), except that
any transaction in which the owners of the Company's capital stock entitled to
vote in the election of directors (the "Voting Stock") prior to said transaction
receive more than 50% of the resulting entity's Voting Stock shall not be
considered a change in control for the purposes of this Plan. Additionally, the
following events are deemed to be changes in control: (i) if without the prior
approval of the Company's Board of Directors, any "person" (as that term is
defined in the Exchange Act), excluding shares held by any shareholder as of the
effective date of the Plan and all shares now or hereafter owned by any stock
purchase or employee stock ownership plan maintained by the Company, is or
becomes the "beneficial owner" (as that term is defined in the Exchange Act),
directly or indirectly, of more than 20% of the outstanding Voting Stock of the
Company or its successors; or (ii) if during any period of two consecutive years
a majority of the Board of Directors no longer consists of individuals who were
members of the Board of Directors at the beginning of such period, unless the
election of each director who was not a director at the beginning of the period
was approved by a vote of at least 75% of the directors still in office who were
directors at the beginning of the period.
INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax consequences
of participation in the Plan and is based on the law as in effect on the date of
this Proxy.
TO A PARTICIPANT. The grant of an Option does not itself result in any
taxable income to a Participant. Taxable income also does not result merely
because an Option becomes exercisable. However, a Participant may have taxable
income upon exercise of an Option and may have further tax consequences upon
disposition of any Common Stock purchased with the Option.
Participants who exercise Non-Qualified Options realize "ordinary income"
equal to the difference (the "option spread") between the value of the Common
Stock purchased and the exercise price. If the Participant is an employee of the
Company, this income, like other wages, is subject to tax withholding.
Any subsequent sale of Common Stock purchased under a Non-Qualified Option
may result in a capital gain or loss. Generally, gain on a sale of Common Stock
held for more than 18 months is treated as "long term" gain subject to a maximum
federal income tax rate of 20%. A Participant who sells the Common Stock at a
loss is generally entitled to claim a capital loss, although the tax rules do
not allow losses on so-called "wash sales" and sales to certain related parties
(for example, a family member). The amount of gain or loss recognized on any
sale will depend on the Participant's tax basis in the Common Stock. If the
Participant paid the option exercise price entirely in cash, his or her tax
basis is the amount of cash paid PLUS any ordinary income realized upon
exercise. If the Participant paid part or all of the exercise price by
surrendering previously acquired shares of Common Stock, his
PAGE 14
<PAGE>
or her tax basis (and capital gains holding period) in the surrendered shares
carries over dollar-for-dollar to an equivalent number of shares purchased under
the option. Any additional shares purchased under the option have a tax basis
equal to any cash paid upon exercise PLUS ALL the ordinary income realized upon
exercise of the entire option.
Different rules apply to options that qualify as ISOs. A Participant does
not have ordinary income upon exercise of an ISO. However, exercise of an ISO
increases alternative minimum taxable income ("AMTI") by an amount equal to the
option spread. This increase may give rise to an alternative minimum tax ("AMT")
liability. Whether exercise of an ISO gives rise to an AMT liability will depend
on a number of factors, including the size of the option spread relative to the
Participant's overall income. The rules for determining AMT liability require
the Participant to compute AMTI in excess of certain exemption amounts, make
certain adjustments, and then apply the AMT tax rate (maximum 20%). If the
resulting tax amount is greater than the tax computed under the ordinary method,
the Participant owes the AMT. A Participant who is required to pay the AMT by
reason of exercising an ISO may be able to credit a portion of the AMT against
regular tax liability in subsequent years.
Shares purchased under an ISO are subject to special tax holding rules. If a
Participant holds on to ISO shares for at least two years from the date the
option was granted and at least one year after exercise, any subsequent sale of
the shares will produce long-term capital gain or loss. However, a disposition
of ISO shares within either of these special holding periods (a so-called
"disqualifying disposition") will generally result in the Participant having (i)
ordinary income, subject to specific calculations, in the year of the
disposition and (ii) additional gain on the disposition.
A Participant's tax basis in ISO shares (used in measuring any capital gain
or loss upon a sale or exchange) will depend on a number of factors. In general,
the rules for determining tax basis are the same as those described above for
Non-Qualified Options. However, since a Participant does not have taxable
ordinary income upon exercising an ISO, his or her aggregate tax basis in ISO
shares (except for AMT calculation purposes) is generally limited to the amount
of cash paid plus the tax basis in any shares surrendered as part of the
purchase price. On the other hand, the Participant's tax basis in ISO shares
that are disposed of in a "disqualifying disposition" is increased by the amount
of any ordinary income realized by reason of that disposition.
The rules described above for ISOs assume that the Participant exercises the
ISO while an employee of the Company or within three months following
termination of his or her employment (one year, if termination occurred by
reason of total and permanent disability). If the Participant exercises an ISO
after the expiration of these periods, the option will be treated for tax
purposes as a Non-Qualified Option. ISOs are also treated as Non-Qualified
Options for tax purposes to the extent that, in the aggregate, they first become
exercisable in any calendar year for shares of Common Stock having a fair market
value (determined at time of grant) in excess of $100,000.
TO THE COMPANY. In general, the Company will be entitled to a deduction in
connection with awards under the Plan only at such time, and in such amount, as
Participants realize ordinary income in connection with the awards. Thus, in the
case of an ISO, assuming there is no disqualifying disposition, the Company will
not be entitled to a deduction because the Participant will not realize ordinary
income. Where a transfer of Common Stock results in ordinary income subject to
withholding, the Code requires satisfaction of the applicable withholding
requirements as a condition to the Company's claiming its deduction.
The Code limits to $1 million the deduction a public corporation may claim
for remuneration paid to certain of its top officers, with a number of
exceptions. Qualifying performance-based compensation is exempt from this
deduction limitation. It is intended that stock options awarded under the Plan
may qualify for this performance-based exemption except as the Board of
Directors may otherwise determine. Other performance-based Plan awards may also
qualify. However, final regulations have not been issued under the $1 million
deduction limitation, and a number of aspects of that provision remain unclear.
PAGE 15
<PAGE>
VOTE REQUIRED AND RECOMMENDATION
The affirmative vote of a majority of the shares of Common Stock present, in
person or by proxy, at the Meeting is required for the approval of the Plan. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PLAN. SHARES OF
COMMON STOCK COVERED BY PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS STOCKHOLDERS SPECIFY A DIFFERENT CHOICE.
PAGE 16
<PAGE>
INDEPENDENT AUDITORS
On recommendation of its Audit/Examining Committee, the Board of Directors
of the Company engaged the firm of KPMG Peat Marwick LLP ("KPMG") as its
independent auditors for the year ended December 31, 1997.
KPMG has served as the independent auditors of the Company since 1995. The
Board of Directors has retained KPMG to continue as independent auditors and to
audit the consolidated financial statements of the Company for the year ending
December 31, 1998, and further to report the results of their examination.
A representative of KPMG is expected to attend the Meeting and will have an
opportunity to make statements and respond to appropriate questions from
stockholders.
STOCKHOLDER PROPOSALS
If any stockholder desires to have a proposal formally considered at the
1999 Annual Meeting and included in the Proxy Statement for that meeting, the
proposal must be received in writing by the Corporate Secretary no later than
December 1, 1998.
FORM 10-K
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SEC IS
AVAILABLE WITHOUT CHARGE BY WRITING TO: TOMPKINS COUNTY TRUSTCO, INC., ATTN:
RICHARD D. FARR, SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER, P.O. BOX 460,
ITHACA, NEW YORK 14851.
OTHER MATTERS
The management knows of no business which will be presented for
consideration at the Meeting other than that stated in the Notice of Annual
Meeting. If any additional matters should be presented, it is intended that the
enclosed proxy will be voted in accordance with the judgment of the person or
persons acting under the proxy.
It is important that proxies be returned promptly. Therefore, stockholders
who do not expect to attend in person are urged to MARK, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD in the accompanying postage prepaid envelope.
Dated: March 30, 1998 By Order of the Board of Directors
/s/ JAMES W. HULBERT
--------------------
James W. Hulbert
Vice President & Corporate Secretary
PAGE 17
<PAGE>
EXHIBIT A
1998 STOCK OPTION PLAN
SECTION 1. GENERAL
1.1 PURPOSE. The Tompkins County Trustco, Inc. 1998 Stock Option Plan (the
"Plan") has been established by Tompkins County Trustco, Inc. (the "Company") to
(a) attract and retain persons eligible to participate in the Plan; (b) motivate
Participants (as defined in Section 1.2) by means of appropriate incentives to
achieve long-range goals; (c) provide incentive compensation opportunities that
are competitive with those of other similar companies; and (d) further identify
Participants' interests with those of the Company's other shareholders through
compensation that is based on the Company's common stock par value $.10 (the
"Stock"); and thereby promote the long-term financial interest of the Company
and the Related Companies (as defined in Section 6), including the growth in
value of the Company's equity and enhancement of long-term shareholder return.
1.2 PARTICIPATION. Subject to the terms and conditions of the Plan, the
Committee (as defined in Section 4.1) shall determine and designate, from time
to time, from among the Eligible Individuals (as defined in Section 6), those
persons who will be granted one or more Awards (as defined in Section 6) under
the Plan, and thereby become "Participants" in the Plan. In the discretion of
the Committee, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or replacement of awards outstanding
under the Plan, or any other plan or arrangement of the Company or a Related
Company (including a plan or arrangement of a business or entity, all or a
portion of which is acquired by the Company or a Related Company).
1.3 OPERATION, ADMINISTRATION AND DEFINITIONS. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Sections 3 and 4. Capitalized terms in the Plan
shall be defined as set forth in the Plan, including the definition provisions
of Section 6 of the Plan.
SECTION 2. OPTIONS
2.1 DEFINITIONS. The grant of an "Option" entitles the Participant to
purchase shares of Stock at an Exercise Price (as defined in Section 2.2)
established by the Committee. Options granted under this Section 2 may be either
incentive stock options or non-qualified stock options, as determined in the
discretion of the Committee. An "Incentive Stock Option" is an Option that is
intended to satisfy the requirements applicable to an "incentive stock option"
described in Section 422(b) of the Code (as defined in Section 6). A
"Non-Qualified Option" is an Option that is not intended to be an "incentive
stock option" as that term is described in Section 422(b) of the Code.
2.2 EXERCISE PRICE. The "Exercise Price" of each Option granted under this
Section 2 shall be established by the Committee or shall be determined by a
method established by the Committee at the time the Option is granted; except
that the Exercise Price for Incentive Stock Options shall not be less than 100%
of the Fair Market Value of a share of Stock as of the Pricing Date. For
purposes of the preceding sentence, the "Pricing Date" shall be the date on
which the Option is granted, except that the Committee may provide that: (i) the
Pricing Date is the date on which the recipient is hired or promoted (or similar
event), if the grant of the Option occurs not more than 90 days after the date
of such hiring, promotion or other event; and (ii) if an Option is granted in
tandem with, or in substitution for, an outstanding Award, the Pricing Date is
the date of grant of such outstanding Award.
2.3 EXERCISE. An Option shall be exercisable in accordance with such terms
and conditions and during such periods as may be established by the Committee.
2.4 PAYMENT OF OPTION EXERCISE PRICE. The payment of the Exercise Price of
an Option granted under this Section 2 shall be subject to the following:
(a) Subject to the following provisions of this subsection 2.4, the full
Exercise Price for shares of Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise (except
PAGE 18
<PAGE>
that, in the case of an exercise arrangement approved by the Committee and
described in subsection 2.4(c), payment may be made as soon as practicable after
the exercise).
(b) The Exercise Price shall be payable in cash or by tendering shares of
Stock (by either actual delivery of shares or by attestation, with such shares
valued at Fair Market Value as of the day of exercise), or in any combination
thereof, as determined by the Committee.
(c) The Committee may permit a Participant to elect to pay the Exercise
Price upon the exercise of an Option by authorizing a third party to sell shares
of Stock (or a sufficient portion of the shares) acquired upon exercise of the
Option and remit to the Company a sufficient portion of the sale proceeds to pay
the entire Exercise Price and any tax withholding resulting from such exercise.
2.5 SETTLEMENT OF AWARD. Distribution following exercise of an Option, and
shares of Stock distributed pursuant to such exercise, shall be subject to such
conditions, restrictions and contingencies as the Committee may establish. The
Committee, in its discretion, may impose such conditions, restrictions and
contingencies with respect to shares of Stock acquired pursuant to the exercise
of an Option as the Committee determines to be desirable.
2.6 EXCEEDING LIMITATIONS. To the extent that the aggregate Fair Market
Value of Stock (determined at the time the Option is granted) with respect to
which Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year (under all plans of the Company and all
Related Companies) exceeds $100,000, such Options shall be treated as
Non-Qualified Options, to the extent required by Section 422 of the Code.
SECTION 3. OPERATION
3.1 EFFECTIVE DATE. Subject to the approval of the shareholders of the
Company at the Company's 1998 annual meeting of its shareholders, the Plan shall
be effective as of May 1, 1998 (the "Effective Date"); PROVIDED, HOWEVER, that
to the extent that Awards are made under the Plan prior to its approval by
shareholders, they shall be contingent on approval of the Plan by the
shareholders of the Company. The Plan shall be unlimited in duration and, in the
event of Plan termination, shall remain in effect as long as any Awards under it
are outstanding; PROVIDED, HOWEVER, that, to the extent required by the Code, no
Incentive Stock Options may be granted under the Plan on a date that is more
than ten years from the date the Plan is adopted or, if earlier, the date the
Plan is approved by shareholders.
3.2 SHARES SUBJECT TO PLAN.
(a) (i) Subject to the following provisions of this subsection 3.2, the
maximum number shares of Stock that may be delivered to Participants and their
beneficiaries under the Plan shall be equal to the sum of: (x) 240,000 shares of
Stock and (y) shares of Stock, to the extent authorized by the Board (as defined
in Section 6), which are reacquired in the open market or in a private
transaction after the Effective Date.
(ii) Any shares of Stock granted under the Plan that are forfeited back
to the Company because of the failure to meet an Award contingency or condition
shall again be available for delivery pursuant to new Awards granted under the
Plan. To the extent any shares of Stock covered by an Award are not delivered to
a Participant or beneficiary because the Award is forfeited or canceled, such
shares shall not be deemed to have been delivered for purposes of determining
the maximum number of shares of Stock available for delivery under the Plan.
(iii)If the Exercise Price of any Option granted under the Plan is
satisfied by tendering shares of Stock to the Company (by either actual delivery
or by attestation), only the number of shares of Stock issued net of the shares
of Stock tendered shall be deemed delivered for purposes of determining the
maximum number of shares of Stock available for delivery under the Plan.
(iv) Shares of Stock delivered under the Plan in settlement, assumption
or substitution of outstanding awards (or obligations to grant future awards)
under the plans or arrangements of another entity shall not reduce the maximum
number of shares of Stock available for delivery under the Plan,
PAGE 19
<PAGE>
to the extent that such settlement, assumption or substitution is a result of
the Company or a Related Company acquiring another entity (or an interest in
another entity).
(b) Subject to subsection 3.2(c), the following additional maximums are
imposed under the Plan:
(i) The maximum number of shares of Stock that may be issued by Options
intended to be Incentive Stock Options shall be 240,000 plus, if permitted under
the Code, the number of shares of Stock reacquired in the open market or in a
private transaction after the Effective Date specifically authorized by the
Board to be delivered under the Plan in accordance with Section 3.2 hereof.
(ii) The maximum number of shares that may be covered by Awards granted
to any one individual pursuant to Section 2 shall be 25,000 shares during any
calendar year.
(c) Subject to Section 3.13 below relating to changes of control, in the
event of a corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), (i) the Committee may make appropriate
adjustments to the maximum number of shares that may be delivered under the
Plan, including without limitation, the numbers specified in Sections 3.2(a)(i),
3.2(b)(i) and 3.2(b)(ii), and (ii) the Committee may adjust Awards to preserve
the benefits or potential benefits of the Awards. Action by the Committee may
include adjustment of: (a) the number and kind of shares which may be delivered
under the Plan; (b) the number and kind of shares subject to outstanding Awards;
and (c) any other adjustments that the Committee determines to be equitable.
3.3 LIMIT ON DISTRIBUTION. Distribution of shares of Stock or other amounts
under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall have
no liability to deliver any shares of Stock under the Plan unless such delivery
or distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act of 1933) and the applicable
requirements of any securities exchange or similar entity.
(b) To the extent that the Plan provides for issuance of stock certificates
to reflect the issuance of shares of Stock, the issuance may be effected on a
noncertificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.
3.4 TAX WITHHOLDING. The Company may require the recipient to remit to the
Company an amount sufficient to satisfy any Federal, state and local tax
withholding requirements prior to the delivery of any shares of Stock under the
Plan or, in the discretion of the Committee, the Company may withhold from the
shares to be delivered shares sufficient to satisfy all or a portion of such tax
withholding requirements.
3.5 PAYMENT SHARES. Subject to the overall limitation on the number of
shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Related Company, including the plans and arrangements of the
Company or a Related Company acquiring another entity (or an interest in another
entity).
3.6 DIVIDENDS AND DIVIDEND EQUIVALENTS. An Award may provide the
Participant with the right to receive dividends or dividend equivalent payments
with respect to Stock which may be either paid currently or credited to an
account for the Participant, and may be settled in cash or Stock as determined
by the Committee. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.
PAGE 20
<PAGE>
3.7 TRANSFERABILITY. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
3.8 FORM AND TIME OF ELECTIONS. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
3.9 AGREEMENT WITH COMPANY. At the time of an Award to a Participant under
the Plan, the Committee may require a Participant to enter into an agreement
with the Company (the "Agreement") in a form specified by the Committee,
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions, not inconsistent with the Plan, as the Committee may, in its
sole discretion, prescribe.
3.10 LIMITATION OF IMPLIED RIGHTS.
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Company or any Related Company whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or any Related
Company, in their sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual right to the stock
unsecured by any assets of the Company or any Related Company.
(b) The Plan does not constitute a contract of employment, and selection as
a Participant will not give any Eligible Individual the right to be retained in
the employ of the Company or any Related Company or as a service provider to the
Company or any Related Company, nor any right or claim to any benefit under the
Plan, unless such right or claim has specifically accrued under the terms of the
Plan. Except as otherwise provided in the Plan, no Award under the Plan shall
confer upon the holder thereof any right as a shareholder of the Company prior
to the date on which the individual fulfills all conditions for receipt of such
rights.
3.11 NO FRACTIONAL SHARES. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid or transferred in lieu of any fractional shares of
Stock, or whether such fractional shares of Stock or any rights thereto shall be
canceled.
3.12 EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
3.13 CHANGE IN CONTROL. Subject to the provisions of subsection 3.2 (c)
(relating to the adjustment of shares), and except as otherwise provided in the
Plan or the agreement reflecting the applicable Award, upon the occurrence of a
Change in Control (as defined in Section 6) all outstanding Awards shall become
fully vested and exercisable.
3.14 ACTION BY COMPANY OR RELATED COMPANY. Any action required or permitted
to be taken by the Company or any Related Company shall be by resolution of its
board of directors, or by action of one or more members of the board (including
a committee of the board) who are duly authorized to act for the board, or
(except to the extent prohibited by applicable law or applicable rules of any
stock exchange) by a duly authorized officer of the company.
3.15 GENDER AND NUMBER. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.
PAGE 21
<PAGE>
SECTION 4. COMMITTEE
4.1 ADMINISTRATION. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee") in
accordance with this Section 4.
4.2 SELECTION OF COMMITTEE. The Committee shall be selected by the Board,
and shall consist of two or more members of the Board.
4.3 POWERS OF COMMITTEE. The authority to manage and control the operation
and administration of the Plan shall be vested in the Committee, subject to the
following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Individuals those
persons who shall receive Awards, to determine the time or times of receipt, to
determine the types of Awards and the number of shares covered by the Awards, to
establish the terms, conditions, performance criteria, restrictions, and other
provisions of such Awards, and (subject to the restrictions imposed by Section
5) to cancel or suspend Awards. In making such Award determinations, the
Committee may take into account the nature of services rendered by the
individual, the individual's present and potential contribution to the Company's
success and such other factors as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to determine the extent to which Awards under the Plan
will be structured to conform to the requirements applicable to
performance-based compensation as described in Code Section 162(m), and to take
such action, establish such procedures, and impose such restrictions at the time
such Awards are granted as the Committee determines to be necessary or
appropriate to conform to such requirements.
(c) The Committee will have the authority and discretion to establish terms
and conditions of Awards as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of jurisdictions
outside of the United States.
(d) The Committee will have the authority and discretion to interpret the
Plan, to establish, amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any agreements made pursuant to
the Plan, and to make all other determinations that may be necessary or
advisable for the administration of the Plan.
(e) Any interpretation of the Plan by the Committee and any decision made
by it under the Plan is final and binding.
(f) Except as otherwise expressly provided in the Plan, where the Committee
is authorized to make a determination with respect to any Award, such
determination shall be made at the time the Award is made, except that the
Committee may reserve the authority to have such determination made by the
Committee in the future (but only if such reservation is made at the time the
Award is granted and is expressly stated in the Agreement reflecting the Award).
(g) In controlling and managing the operation and administration of the
Plan, the Committee shall act by a majority of its then members, by meeting or
by a writing filed without a meeting. The Committee shall maintain and keep
adequate records concerning the Plan and concerning its proceedings and acts in
such form and detail as the Committee may decide.
4.4 DELEGATION BY COMMITTEE. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members and may delegate all or any part of its responsibilities and powers to
any person or persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.
4.5 INFORMATION TO BE FURNISHED TO COMMITTEE. The Company and Related
Companies shall furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the Company and Related
Companies as to an Eligible Individual's employment or
PAGE 22
<PAGE>
other provision of services, termination of employment or cessation of the
provision of services, leave of absence, reemployment and compensation shall be
conclusive on all persons unless determined to be incorrect. Participants and
other persons entitled to benefits under the Plan must furnish the Committee
such evidence, data or information as the Committee considers desirable to carry
out the terms of the Plan.
SECTION 5. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
5.1 EFFECT ON OTHER AWARDS OR BONUSES. Neither adoption of the Plan nor the
grant of Awards to a Participant will affect the Company's right to grant to
such Participant Awards that are not subject to the Plan, to issue to such
Participant Stock as a bonus or otherwise, or to adopt other plans or
arrangements under which Stock may be issued to Eligible Individuals or other
persons.
5.2 DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION. The Board may
at any time discontinue granting Awards under the Plan. The Board may at any
time or times alter or amend the Plan or any outstanding Award for any purpose
which may at the time be permitted by law, or may at any time terminate the Plan
as to any further grants of Awards, provided that (except to the extent
expressly required or permitted by the Plan) no such amendment will, without the
approval of (a) the Company's stockholders, to the extent stockholder approval
of the amendment is required by applicable law or regulations or the
requirements of the principal exchange or interdealer quotation system on which
the Stock is listed or quoted, (i) increase the maximum number of shares
available under the Plan, (ii) change the group of persons eligible to receive
Awards under the Plan, (iii) extend the time within which Awards may be granted,
or (iv) amend the provisions of this Section 5.2, and (b) each affected
Participant if the amendment, alteration or termination would adversely affect
the Participant's rights or obligations under any Award made prior to the date
of the amendment, alteration or termination. The termination of the Plan would
not affect the validity of any Award outstanding on the date of termination.
SECTION 6. DEFINED TERMS
For purposes of the Plan, the terms listed below shall be defined as
follows:
(a) AWARD. The term "Award" shall mean any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of Options.
(b) BOARD. The term "Board" shall mean the Board of Directors of the
Company.
(c) CHANGE IN CONTROL. The term "Change in Control" means a change in
control of a nature that would be required to be reported in a proxy statement
with respect to the Company (even if the Company is not actually subject to said
reporting requirements) in response to Item 6(e) (or any comparable or successor
Item) of Schedule 14A of Regulation 14A promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), except that any merger,
consolidation or corporate reorganization in which the owners of the Company's
capital stock entitled to vote in the election of directors (the "Voting Stock")
prior to said combination receive more than 50% of the resulting entity's Voting
Stock shall not be considered a change in control for the purposes of this Plan;
and provided that, without limitation of the foregoing, such change in control
shall be deemed to have occurred if (i) without the prior approval of the
Company's Board of Directors, any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the Exchange Act), excluding shares held by any
shareholder as of the Effective Date and all shares now or hereafter owned by
any stock purchase or employee stock ownership plan maintained by the Company or
a Related Company, is or becomes the "beneficial owner" (as that term is defined
by the Securities and Exchange Commission for purposes of Section 13(d) of the
Exchange Act), directly or indirectly, of more than 20% of the outstanding
Voting Stock of the Company or its successors, or (ii) during any period of two
consecutive years a majority of the Board of Directors no longer consists of
individuals who were members of the Board of Directors at the beginning of such
period, unless the election of each director who was not a director at the
beginning of the period was approved by a vote of at least 75% of the directors
still in office who were directors at the beginning of the period.
PAGE 23
<PAGE>
(d) CODE. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.
(e) ELIGIBLE INDIVIDUAL. The term "Eligible Individual" shall mean any
employee of the Company or a Related Company and any consultant or other person
providing services to the Company or a Related Company.
(f) FAIR MARKET VALUE. For purposes of determining the "Fair Market Value"
of a share of Stock, the following rules shall apply:
(i) If the Stock is at the time listed or admitted to trading on any
stock exchange, then the "Fair Market Value" shall be the closing price on the
date in question on the principal exchange on which the Stock is then listed or
admitted to trading. If no reported sale of Stock takes place on the date in
question on the principal exchange, then the average of the last reported bid
and asked price of the Stock on such date on the principal exchange shall be
determinative of "Fair Market Value."
(ii) If the Stock is not at the time listed or admitted to trading on a
stock exchange, the "Fair Market Value" shall be the average between the lowest
reported bid price and highest reported asked price of the Stock on the date in
question in the over-the-counter market, as such prices are reported in a
publication of general circulation selected by the Committee and regularly
reporting the market price of Stock in such market.
(iii)If the Stock is not listed or admitted to trading on any stock
exchange or traded in the over-the-counter market, the "Fair Market Value" shall
be as determined in good faith by the Committee.
(g) RELATED COMPANIES. The term "Related Company" means (i) any company
during any period in which it is a "parent-company" (as that term is defined in
Code Section 424(e)) with respect to the Company or a "subsidiary corporation"
(as that term is defined in Code Section 424(f)) with respect to the Company,
and (ii) any business venture in which the Company has a significant interest,
as determined in the discretion of the Committee.
PAGE 24
<PAGE>
Tompkins County Trustco, Inc.
P.O. Box 460, Ithaca, New York 14851
(607) 273-3210
<PAGE>
1. ELECTION OF FOUR DIRECTORS FOR THREE YEAR TERMS EXPIRING IN THE YEAR 2001.
FOR all nominees
listed below
WITHHOLD AUTHORITY to vote
for all nominees listed below.
*EXCEPTIONS
Nominees: James J. Byrnes, Reeder D. Gates, Bonnie H. Howell, Lucinda A. Noble.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions:
2. To approve the proposal to adopt the 1998 Stock Option Plan.
FOR AGAINST ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
(Management at present knows of no other business to be presented at the
meeting.)
Change of Address and
or Comments Mark Here
(Name of stockholder should be signed exactly as it appears to the left.)
Date , 1998
Signature
Signature, if held jointly
Votes must be indicated
(x) in Black or Blue ink.
x
Please Mark, Sign, Date and Return the Proxy Card Promptly Using the Enclosed
Envelope.
TOMPKINS COUNTY TRUSTCO, INC
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned holder of common stock of Tompkins County Trustco, Inc.
hereby appoints Dorothy B. Booth, Anton J. Egner and William T. Pritchard and
each of them his/her attorneys, agents and proxies to represent the undersigned
and to vote and act upon the shares of common stock standing in the name of the
undersigned which he/she would be entitled to vote if personally present, as
specified below, at the Annual Meeting of Stockholders to be held on Wednesday,
April 29, 1998 at 7:30 p.m. or at any adjournment thereof, with full power of
substitution and revocation.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON
THE OTHER SIDE OF THIS CARD. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1 AND 2. (Signature on reverse side required)
TOMPKINS COUNTY TRUSTCO INC
P.O. BOX 11289
NEW YORK, N.Y. 10203-0289
