March 29, 1999
Dear Shareholder:
We cordially invite you to attend the first Annual Meeting of Shareholders of
Oneida Financial Corp. (the "Company"). The Annual Meeting will be held at the
main office of The Oneida Savings Bank, 182 Main Street, Oneida, New York, at
4:00, Eastern Time, on April 27, 1999.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the Annual Meeting we will also report on the
operations of the Company. Directors and officers of the Company, as well as a
representative of our independent auditors, will be present to respond to any
questions that shareholders may have.
The Annual Meeting is being held so that stockholders may consider the election
of directors and the ratification of the appointment of PricewaterhouseCoopers,
LLP as the Company's auditors for fiscal year 1999.
The Board of Directors of the Company has determined that the matters to be
considered at the Annual Meeting are in the best interest of the Company and its
shareholders. For the reasons set forth in the Proxy Statement, the Board of
Directors unanimously recommends a vote "FOR" each matter to be considered.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible, even if you currently plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting. Your
vote is important, regardless of the number of shares that you own.
Sincerely,
Michael R. Kallet
President and Chief Executive Officer
<PAGE>
Oneida Financial Corp.
182 Main Street
Oneida, New York 13421
(315) 363-2000
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
To Be Held On April 27, 1999
Notice is hereby given that the Annual Meeting of Oneida Financial Corp.,
(the "Company") will be held at the main office of The Oneida Savings Bank, 182
Main Street, Oneida, New York, on April 27, 1999 at 4:00, Eastern Time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1. Election of four Directors to the Board of Directors;
2. The ratification of the appointment of PricewaterhouseCoopers, LLP as
auditors for the Company for the fiscal year ending December 31, 1999;
and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which the Annual Meeting
may be adjourned. Shareholders of record at the close of business on March 15,
1999, are the shareholders entitled to vote at the Annual Meeting, and any
adjournments thereof.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
Eric E. Stickels
Secretary
March 29, 1999
- --------------------------------------------------------------------------------
IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
Oneida Financial Corp.
182 Main Street
Oneida, New York 13421
(315) 363-2000
ANNUAL MEETING OF SHAREHOLDERS
April 27, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Oneida Financial Corp. (the
"Company") to be used at the Annual Meeting of Shareholders of the Company (the
"Annual Meeting"), which will be held at the main office of The Oneida Savings
Bank, 182 Main Street, Oneida, New York, on April 27, 1999, at 4:00, Eastern
Time, and all adjournments of the Annual Meeting. The accompanying Notice of
Annual Meeting of Shareholders and this Proxy Statement are first being mailed
to shareholders on or about March 29, 1999.
- --------------------------------------------------------------------------------
REVOCATION OF PROXIES
- ----------------------- --------------------------------------------------------
Shareholders who execute proxies in the form solicited hereby retain the
right to revoke them in the manner described below. Unless so revoked, the
shares represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon. Where
no instructions are indicated, validly executed proxies will be voted "FOR" the
proposals set forth in this Proxy Statement for consideration at the Annual
Meeting.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, at the address shown above. The presence at the Annual
Meeting of any shareholder who had returned a proxy shall not revoke such proxy
unless the shareholder delivers his or her ballot in person at the Annual
Meeting or delivers a written revocation to the Secretary of the Company prior
to the voting of such proxy.
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
Holders of record of the Company's common stock, par value $0.10 per share
(the "Common Stock") as of the close of business on March 15, 1999 (the "Record
Date") are entitled to one vote for each share then held. As of the Record Date,
the Company had 3,580,200 shares of Common Stock issued and outstanding,
1,915,445 of which were held by Oneida Financial, MHC (the "Mutual Holding
Company"), and 1,664,755 of which were held by shareholders other than the
Mutual Holding Company ("Minority Shareholders"). The presence in person or by
proxy of a majority of the outstanding shares of Common Stock entitled to vote
is necessary to constitute a quorum at the Annual Meeting. Directors are elected
by a plurality of votes cast, without regard to either broker non-votes, or
proxies as to which the authority to vote for the nominees being proposed is
withheld. The affirmative vote of holders of a majority of the total votes
present at the Annual Meeting in person or by proxy is required for ratification
of PricewaterhouseCoopers, LLP as the Company's auditors. Abstentions and broker
non-votes will be counted for purposes of determining that a quorum is present,
but will not be counted as votes in favor of Proposal II.
Persons and groups who beneficially own in excess of five percent of the
Common Stock are required to file certain reports with the Securities and
Exchange Commission (the "SEC") regarding such ownership. The following table
sets forth, as of the Record Date, the shares of Common Stock beneficially owned
by Directors individually,
<PAGE>
by executive officers individually, by executive officers and Directors as a
group and by each person who was the beneficial owner of more than five percent
of the Company's outstanding shares of Common Stock.
<TABLE>
<CAPTION>
Amount of Shares
Owned and Nature Percent of Shares
Name and Address of of Beneficial of Common Stock
Beneficial Owners Ownership (1) (4) Outstanding
----------------------- ------------------- --------------------
Directors and Officers (2):
<S> <C> <C>
Nicholas J. Christakos 25,000 0.70%
Michael R. Kallet 25,927 0.72
Patricia D. Caprio 10,000 0.28
Edward J. Clarke 5,538 0.15
James J. Devine, Jr. 6,900 0.19
John E. Haskell 23,892 0.67
Rodney D. Kent 25,000 0.70
William D. Matthews 1,000 0.03
Michael W. Milmoe 3,000 0.08
Richard B. Myers 17,000 0.48
Frank O. White, Jr. 10,000 0.28
Eric E. Stickels 17,235 0.48
Thomas H. Dixon 14,866 0.42
All Directors and Executive Officers 185,358 5.18
as a Group (13 persons) (3)
Principal Shareholders:
Oneida Financial, MHC (3) 1,915,445 53.50
182 Main Street
Oneida, New York 13421
Oneida Financial, MHC (3) 2,076,911 58.01%
and all Trustees and Executive Officers
of Oneida Financial, MHC as a group (12 persons)
</TABLE>
- -----------------------------
* Less than one-tenth of 1%.
(1) A person is deemed to be the beneficial owner for purposes of this table,
of any shares of Common Stock if he has shared voting or investment power
with respect to such security, or has a right to acquire beneficial
ownership at any time within 60 days from the Record Date. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. Includes all shares held directly as well as by spouses and minor
children, in trust and other indirect ownership, over which shares the
named individuals effectively exercise sole or shared voting and investment
power. Unless otherwise indicated, the named individual has sole voting and
investment power.
(2) The mailing address for each person is listed as 182 Main Street, Oneida,
New York 13421
(3) The Company's executive officers and directors are also executive officers
and trustees of Oneida Financial, MHC, with the exception of John E.
Haskell.
- --------------------------------------------------------------------------------
PROPOSAL I--ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Company's Board of Directors is currently composed of eleven (11)
members. The Company's Bylaws provide that approximately one-third of the
Directors are to be elected annually. Directors of the Company are generally
elected to serve for a three-year period or until their respective successors
shall have been elected and shall qualify. Four Directors will be elected at the
Annual Meeting to serve for a three-year period and until their respective
successors shall have been elected and shall qualify. The Board of Directors has
nominated to serve as
2
<PAGE>
Directors, Edward J. Clarke, Rodney D. Kent, Michael W. Milmoe and Richard B.
Myers, who are currently members of the Board of Directors.
The table below sets forth certain information regarding the composition of
the Company's Board of Directors, including the terms of office of Board
members. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to one or more
nominees) will be voted at the Annual Meeting for the election of the nominees
identified below. If the nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why any of the nominees might be unable to serve, if elected. Except as
indicated herein, there are no arrangements or understandings between any
nominee and any other person pursuant to which such nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common Stock
Beneficially
Positions Director Current Term Owned on Percent
Name (1) Age* Held Since (2) to Expire Record Date (3) Of Class
-------- ---- ---- --------- --------- --------------- --------
NOMINEES
<S> <C> <S> <C> <C> <C> <C>
Edward J. Clarke 59 Director 1987 2002 5,538 0.15%
Rodney D. Kent 51 Director 1990 2002 25,000 0.70
Michael W. Milmoe 66 Director 1976 2002 3,000 0.08
Richard B. Myers 62 Director 1981 2002 17,000 0.48
DIRECTORS CONTINUING IN OFFICE
Nicholas J. Christakos 67 Chairman of the Board 1974 2000 25,000 0.70
Patricia D. Caprio 49 Director 1985 2000 10,000 0.28
Frank O. White, Jr. 43 Director 1994 2000 10,000 0.28
Michael R. Kallet 47 President and Chief 1997 2001 25,927 0.72
Executive Officer
James J. Devine, Jr. 64 Director 1987 2001 6,900 0.19
John E. Haskell 56 Director 1992 2001 23,892 0.67
William D. Matthews 63 Director 1996 2001 1,000 0.03
</TABLE>
- ------------------------
(1) The mailing address for each person listed is 182 Main Street, Oneida, New
York 13421. Each of the persons listed, with the exception of John E.
Haskell, is also a Trustee of Oneida Financial, MHC, which owns the
majority of the Company's issued and outstanding shares of Common Stock.
(2) Reflects initial appointment to the Board of Trustees of the mutual
predecessor to The Oneida Savings Bank. (3) See definition of "beneficial
ownership" in the table in "Voting Securities and Principal Holders
Thereof." * At December 31, 1998.
The principal occupation during the past five years of each Director is set
forth below. All Directors have held their present positions for five years
unless otherwise stated.
Nicholas J. Christakos is the Chairman of the Board. Mr. Christakos is a
retired businessman.
Michael R. Kallet is President and Chief Executive Officer of the Bank. Mr.
Kallet has been President and Chief Executive Officer since March 1990.
Patricia D. Caprio is the Director of Development Programs at Colgate
University.
3
<PAGE>
Edward J. Clarke is the President of Kennedy & Clarke, Inc., a property and
casualty insurance agency located in Cazenovia, New York.
James J. Devine, Jr. is the President of the Kiley Law Firm, P.C. located
in Oneida, New York.
John E. Haskell is the President of Bailey & Haskell Associates, Inc., an
insurance agency located in Oneida, New York.
Rodney D. Kent is the President of Omega Wire, Inc., a copper wire
manufacturer located in Camden, New York.
William D. Matthews is the Chairman and Retired Chief Executive Officer of
Oneida, Ltd. located in Oneida, New York. Mr. Matthews is also a director of
Conmed Corporation located in Utica, New York.
Michael W. Milmoe is retired. Prior to his retirement, Mr. Milmoe was the
President of Canastota Publishing Co., Inc., located in Canastota, New York.
Richard B. Myers is the President of Orthodontic Associates of C.N.Y., P.C.
a clinical orthodontics practice located in Oneida, New York.
Frank O. White, Jr. is the Assistant Director of Athletics at Colgate
University. Until January 1998, Mr. White was the President and Chief Executive
Officer of Mid-State Raceway, Inc. located in Vernon, New York.
Ownership Reports by Officers and Directors
The Common Stock of the Company is registered with the SEC pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"). The
officers and directors of the Company and beneficial owners of greater than 10%
of the Company's Common Stock ("10% beneficial owners") are required to file
reports on Forms 3,4 and 5 with the SEC disclosing beneficial ownership and
changes in beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company's Proxy Statement or Annual Report on Form 10-K of the
failure of an officer, director or 10% beneficial owner of the Company's Common
Stock to file a Form 3, 4, or 5 on a timely basis. All of the Company's officers
and directors filed these reports on a timely basis.
Meetings and Committees of the Board of Directors
The Company did not become an operating company until December 30, 1998.
Consequently during the year ended December 31, 1998 the Board of Directors did
not hold regular meetings and did not operate through committees.
The business of the Bank's Board of Directors is conducted through meetings
and activities of the Board and its committees. During the year ended December
31, 1998, the Board of Directors of the Bank held 18 regular and special
meetings. During the year ended December 31, 1998, no Director attended fewer
than 75% percent of the total meetings of the Board of Directors of the Bank and
committees on which such Director served.
The executive committee consists of the following six directors of the
Company: Messrs. Myers, Christakos, Kent, Clarke, Haskell and Milmoe. The
executive committee meets as necessary when the board is not in session to
exercise general control and supervision in all matters pertaining to the
interests of the Company, subject at all times to the direction of the board of
directors. The executive committee also serves as the nominating committee for
the purpose of identifying, evaluating and recommending potential candidates for
election to the board.
4
<PAGE>
The audit committee consists of the following directors of the Company:
Messrs. Kent, Christakos, Myers, White and Milmoe. The audit committee meets at
least quarterly to examine and approve the audit report prepared by the
independent auditors of the Bank, to review and recommend the independent
auditors to be engaged by the Company, to review the internal audit function and
internal accounting controls of the Company, and to review and approve audit
policies.
Personnel Committee Interlocks and Insider Participation
The full Board of Directors of the Bank has in the past determined the
salaries to be paid each year to the Bank's officers. In the future the full
Board of Directors of the Company shall act as the Compensation Committee for
the Company. Michael R. Kallet is a Director of the Company and the Bank in
addition to being the President and Chief Executive Officer of the Company and
the Bank. Mr. Kallet has not, and will not, participate in the Board of
Directors' determination of compensation for the President and Chief Executive
Officer.
Report of the Board of Directors on Executive Compensation
Under rules established by the SEC, the Company is required to provide
certain data and information in regard to the compensation and benefits provided
to its Chief Executive Officer and other executive officers. The disclosure
requirements for the Chief Executive Officer and other executive officers
include the use of tables and a report explaining the rationale and
considerations that led to fundamental executive compensation decisions
affecting those individuals. In fulfillment of this requirement, the Company's
Board of Directors has prepared the following report for inclusion in this proxy
statement. The discussion below relates to the Bank's Board actions during 1998.
The Board of Directors annually reviews the performance of the Chief
Executive Officer and other executive officers and approves changes to base
compensation as well as the level of bonus, if any, to be awarded. In
determining whether the base salary of the Chief Executive Officer and other
executive officers should be increased, the Board of Directors takes into
account individual performance, performance of the Company, the size of the
Company and the complexity of its operations, and information regarding
compensation paid to executives performing similar duties for financial
institutions in the Bank's market area.
While the Board of Directors does not use strict numerical formulas to
determine changes in compensation for the Chief Executive Officer and other
executive officers; and while it weighs a variety of different factors in its
deliberations, it has emphasized and will continue to emphasize earnings,
profitability, capital position and asset quality, and return on tangible equity
as factors in setting the compensation of the Chief Executive Officer and other
executive officers. Other non-quantitative factors considered by the Board of
Directors in fiscal 1998 included general management oversight of the Company,
the quality of communication with the Board of Directors, and the productivity
of employees. Finally, the Board of Directors considered the standing of the
Company with customers and the community, as evidenced by the level of
customer/community complaints and compliments. While each of the quantitative
and non-quantitative factors described above was considered by the Board of
Directors, such factors were not assigned a specific weight in evaluating the
performance of the Chief Executive Officer and other executive officers. Rather,
all factors were considered, and based upon the effectiveness of such officers
in addressing each of the factors, and the range of compensation paid to
officers of peer institutions, the Board of Directors approved an increase in
the base salary of the Chief Executive Officer and other executive officers.
Accordingly, the Board of Directors approved salary increases totaling $28,000
for the Company's and Bank's three executive officers, bringing 1999 total base
compensation for the group to $365,000 from $337,000 in 1998.
This report has been provided by the Board of Directors: Nicholas J.
Christakos, Michael R. Kallet, Patricia D. Caprio, Edward J. Clarke, James J.
Devine, Jr., John E. Haskell, Rodney D. Kent, William D. Matthews, Michael W.
Milmoe, Richard B. Myers and Frank O. White, Jr.
5
<PAGE>
Directors' Compensation
Directors of the Company are not separately compensated.
Directors of the Bank receive an annual retainer of $6,000 and a fee of
$300 for each Bank Board meeting attended. Directors receive $200 for each
committee meeting attended. Members of the Executive Committee receive $250 for
each Executive Committee meeting attended. The Chairman of the Board receives an
additional $200 for every Board meeting attended and each committee chair
receives an additional $100 for every committee meeting attended. Employee
directors do not receive monthly meeting fees. The Company did not pay Directors
fees during the year ending December 31, 1998. The Bank paid a total of $123,000
in Director fees during the year ending December 31, 1998
Executive Compensation
The following table sets forth for the years ended December 31, 1998 and
1997, certain information as to the total remuneration paid by the Company to
the Company's chief executive officer. No other officer of the Company received
cash compensation exceeding $100,000 in 1998.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
============================================================================================================================
Long-Term
Annual Compensation(1) Compensation Awards
Fiscal
Years Other Restricted
Ended Annual Stock Options/ All Other
Name and December Salary Bonus Compensation Award(s) SARs Payouts Compensation
Principal Position 31 ($) ($) ($)(2) ($)(3) (#)(4) ($)(5)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael R. Kallet 1998 $167,000 -- $27,000 -- -- -- $17,690
President and Chief 1997 $159,000 -- $30,000 -- -- -- $16,491
Executive Officer
=============================================================================================================================
</TABLE>
(1) In accordance with the rules on executive officer and director compensation
disclosure adopted by the SEC, Summary Compensation information is excluded
for the fiscal year ended December 31, 1996, as the Bank was not a public
company during such periods.
(2) The Bank also provides certain members of senior management, including Mr.
Kallet, with the use of an automobile, club membership dues, and certain
other personal benefits which have not been included in the table. The
aggregate amount of such other benefits did not exceed the lesser of
$50,000 or 10% of Mr. Kallet's cash compensation for the year .
(3) At December 31, 1998, neither the Company nor the Bank had implemented a
Stock Award Plan.
(4) At December 31, 1998, neither the Company nor the Bank had implemented a
Stock Option Plan.
(5) Consists of the Bank's contribution to the Bank's 401(k) Plan and health,
dental and group term life insurance premiums paid by the Bank on behalf of
Mr. Kallet.
6
<PAGE>
Benefit Plans
Incentive Compensation Plan. The Incentive Compensation Plan (the
"Incentive Plan") was established in 1993 as a non-qualified plan. Under the
Incentive Plan, annual performance awards for the Bank's financial performance
relative to the return on average assets as reported by the FDIC, adjusted for
any one-time income or expense recognition, are made to eligible non-trustee
officers and employees designated as participants by the Human Resource and
Development Committee.
Participants are classified into four categories: Class I (CEO and EVP),
Class II (Senior Management Group), Class III (All Other Officers) and Class IV
(Supervisors and all other employees). Awards are allocated to eligible
participants within each class in accordance with the participant's base
compensation (as reported to the Internal Revenue Service on Form W-2) as a
ratio of the base compensation of the entire class. The maximum award payable to
each participant in Class I is 25%, Class II and Class III is 40% and Class IV
is 35% and the maximum total award payable to all participants is 10% of the
Bank's income. The following limitations on awards also apply: If the return on
average assets for an award year is (i) less than .75%, no award will be made to
any Class I, Class II or Class III participant, (ii) less than .75% but at least
.60%, Class IV participants will receive awards equivalent to 5% of base
compensation and (iii) less than .60%, no award shall be made to any
participant. No award shall be made to any participant if (i) average total
assets do not exceed $200 million for the award year, (ii) the most recent
Regulatory Examination Report does not reflect a Uniform Composite Rating of 1
or 2, or (iii) the allowance for possible loan losses at the end of the award
year is less than the greater of 1% of outstanding loans or the regulatory
guideline amount.
Defined Benefit Pension Plan. The Bank maintains the Retirement Plan of The
Oneida Savings Bank in RSI Retirement Trust ("Retirement Plan") which is a
qualified, tax-exempt defined benefit plan. Employees age 21 or older who have
worked at the Bank for a period of one year and have been credited with 1,000 or
more hours of service with the Bank during the year are eligible to participate
in the Retirement Plan, provided, however, that leased employees, employees paid
on an hourly rate or contract basis and employees regularly employed outside the
Bank's offices in connection with the operation and maintenance of buildings or
other properties acquired through foreclosure or deed are not eligible to
participate. The Bank contributes each year, if necessary, an amount to the
Retirement Plan to satisfy the actuarially determined minimum funding
requirements in accordance with the ERISA. At September 30, 1998, the total
market value of the assets in the Retirement Plan trust fund was approximately
$3.8 million.
In the event of retirement on or after the normal retirement date (i.e.,
the first day of the calendar month coincident with or next following the later
of age 65 or the 5th anniversary of participation in the Retirement Plan or, for
a participant prior to October 1, 1988, age 65) the plan is designed to provide
a single life annuity. For a married participant, the normal form of benefit is
an actuarially reduced joint and survivor annuity where, upon the participant's
death, the participant's spouse is entitled to receive a benefit equal to 50% of
that paid during the participant's lifetime. Alternatively, a participant may
elect (with proper spousal consent, if necessary) from various other options,
including a joint and 100% survivor annuity, period certain and life option,
rollover or direct transfer to an individual retirement account. The normal
retirement benefit provided is an amount equal to 2% of a participant's average
annual earnings, multiplied times the years of a participant's credited service,
not to exceed 70% of a participant's average annual earnings during the
consecutive 36 month period yielding the highest average in the participant's
final 10 years of employment. Retirement benefits are also payable upon
retirement due to early and late retirement or death. A reduced benefit is
payable upon early retirement after completion of five years of service, at age
60 or once the sum of the participant's age and years of vested service equals
75. In the event of a participant's pre-retirement death on or after attainment
of age 60 or after the sum of the participant's age and service (including
service with certain other employers participating in the RSI Retirement Trust)
equals or exceeds 75, a participant's beneficiary will be entitled to a special
pre-retirement survivor benefit. The special pre-retirement survivor benefit
will be equal to that which would have been available to the beneficiary if the
participant had retired and elected a 100% joint and survivor benefit. In the
event of the death of a participant prior to satisfaction of the conditions for
a special pre-retirement survivors benefit, but after having met the
requirements for a vested retirement benefit, the vested retirement benefit will
be equal to that which would have been available to the beneficiary if the
participant had retired and elected a 50% joint and survivor benefit.
7
<PAGE>
Upon termination of employment other than as specified above, a participant who
has five years of vested service is eligible to receive his or her accrued
benefit commencing, generally, on his normal retirement date, or, if elected, on
or after his early retirement date. In certain cases, a participant who had
three years of service on or before November 1, 1993, but not more than four
years of service, will be entitled to up to 40% of his vested accrued benefit at
his normal or early retirement date.
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement at age 65 in calendar year
1998, expressed in the form of a single life annuity for the final average
salary and benefit service classifications specified below.
<TABLE>
<CAPTION>
Average Annual Years of Service and Benefit Payable at Retirement
---------------------------------------------------------------
Earnings 15 20 25 30 35
-------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
$50,000 15,000 20,000 25,000 30,000 35,000
$75,000 22,500 30,000 37,500 45,000 52,500
$100,000 30,000 40,000 50,000 60,000 70,000
$125,000 37,500 50,000 62,500 75,000 87,500
$160,000 and above 48,000 64,000 80,000 96,000 112,000
</TABLE>
The maximum annual compensation which may be taken into account under the
Code for calculating contributions under qualified defined benefit plans such as
the Retirement Plan is currently $160,000. As of December 31, 1998, Mr. Kallet
had 15.9 years of credited service (i.e., benefit service) under the Retirement
Plan.
401(k) Plan. The Bank maintains the Oneida Savings Bank 401(k) Savings Plan
in RSI Retirement Trust (the "401(k) Plan") which is a qualified, tax-exempt
profit sharing plan with a salary deferral feature under Section 401(k) of the
Code. Employees who have completed one year of employment are eligible to
participate, provided, however, that leased employees, employees paid on a daily
fee or retainer basis and employees covered by a collective bargaining agreement
(unless the agreement provides for plan participation) are not eligible to
participate. Eligible employees are entitled to enter the 401(k) Plan on the
first day of any payroll period following the completion of the eligibility
requirements.
Under the 401(k) Plan, participants are permitted to make salary reduction
contributions (in whole percentages) equal to the lesser of (i) from 1% to 10%
of compensation or (ii) $10,000 (as indexed annually). For these purposes,
"compensation" includes wages, salary, fees and other amounts received for
personal services prior to reduction for the participant contribution to the
401(k) Plan, commissions, overtime, bonuses, wage continuation payments due to
illness or disability of a short-term nature, amounts paid or reimbursed for
moving expenses, and the value of any nonqualified stock option granted to the
extent includable in gross income for the year granted. Compensation does not
include contributions made by the Bank to any other pension, deferred
compensation, welfare or other employee benefit plan, amounts realized from the
exercise of a nonqualified stock option or the sale of a qualified stock option,
and other amounts which received special tax benefits. Compensation does not
include compensation in excess of the Code Section 401(a)(17) limits (i.e.,
$160,000 in 1998). The Bank will match 100% of the first 3% of salary that a
participant contributes to the 401(k) Plan. All salary reduction contributions
and rollover contributions and earnings thereon are fully and immediately
vested. Matching contributions and earnings thereon vest at 20% per year, until
a participant is 100% vested after five years of service. A participant may
withdraw salary reduction contributions, rollover contributions and vested
matching contributions in the event the participant suffers a financial
hardship. A participant may make a withdrawal from his salary reduction
contributions, rollover contributions and vested matching contribution for any
reason after age 59 1/2. A participant may request a loan from his or her
accounts in an amount up to the lesser of (i) 50% of the net value of the Basic
Contribution Account, vested Matching Contribution Account, Voluntary
Contribution Account and Rollover Contribution Account, or (ii) $50,000 reduced
by the highest outstanding loan balance during the preceding twelve months. The
minimum loan permitted is $1,000.
The 401(k) Plan permits employees to direct the investment of his or her
own accounts into various investment options. As a result of the Offering, the
401(k) Plan provided participants the opportunity to invest in an "Employer
8
<PAGE>
Stock Fund" which purchased Common Stock in the Offering. Each participant who
directs the trustee to invest all or part of his or her account in the Employer
Stock Fund will have assets in his or her account applied to the purchase of
shares of Common Stock. Participants will be entitled to direct the trustee as
to how to vote his or her allocable shares of Common Stock.
Plan benefits will be paid to each participant in the form of a single cash
payment at normal retirement age unless earlier or later payment is selected. A
participant may, however, elect payment in installments, direct transfer to
another qualified plan or rollover to an Individual Retirement Account. If a
participant dies prior to receipt of the entire value of his or her 401(k) Plan
accounts, payment will generally be made to the beneficiary in a single cash
payment as soon as possible following the participant's death. Payment will be
deferred if the participant had previously elected a later payment date. If the
beneficiary is not the participant's spouse, payment will be made within one
year of the date of death. If the spouse is the designated beneficiary, payment
will be made no later than the date the participant would have attained age 70
1/2. If the participant was receiving installment payments and dies before
receiving all installments, the designated beneficiary will continue to receive
the installments in the same manner as the participant. Normal retirement age
under the 401(k) Plan is 65 with five years of service. Early retirement age is
age 60 with five years of service.
At December 31, 1998, the total market value of the assets in the 401(k)
Plan was approximately $2.2 million. The Bank's matching contributions to the
401(k) Plan for the Plan year ended December 31, 1998 totaled approximately
$66,000.
Employee Stock Ownership Plan and Trust. The Bank implemented an Employee
Stock Ownership Plan (the "ESOP") in connection with the Reorganization.
Employees with at least one year of employment with the Bank and who have
attained age 21 are eligible to participate. As part of the Reorganization, the
ESOP borrowed funds from the Company and used those funds to purchase a number
of shares equal to up to 8.0% of the Minority Ownership Interest. Collateral for
the loan was the Common Stock purchased by the ESOP. The loan will be repaid
principally from the Bank's discretionary contributions to the ESOP over a
period of up to 10 years. The interest rate for the loan is 7.75%. Shares
purchased by the ESOP are held in a suspense account for allocation among
participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account in
an amount proportional to the repayment of the ESOP loan are allocated among
ESOP participants on the basis of compensation in the year of allocation. For
this purpose, compensation is defined as wages reported on federal income tax
Form W-2 and also includes amounts contributed under a salary reduction
agreement pursuant to Section 401(k) or Section 125 of the Code, but not in
excess of the Code Section 401(a)(17) limit. Participants in the ESOP receive
credit for all years of service prior to the effective date of the ESOP for
vesting purposes. A participant vests in 100% of his or her account balance
after five years of vesting service or upon normal or early retirement (as
defined in the ESOP), disability, death or following a change in control. A
participant who terminates employment for reasons other than death, retirement,
disability or following a change in control, prior to five years of credited
service forfeits the nonvested portion of his benefits under the ESOP. Benefits
are payable in the form of Common Stock and cash upon death, retirement,
disability or separation from service. Alternatively, a participant may request
that the benefits be paid entirely in the form of Common Stock or entirely in
cash. The Bank's contributions to the ESOP are discretionary, subject to the
loan terms and tax law limits, and therefore, benefits payable under the ESOP
cannot be estimated. In November 1993, the American Institute of Certified
Public Accountants (the "AICPA") issued Statement of Position ("SOP") 93-6,
which requires the Bank to record compensation expense in an amount equal to the
fair market value of the shares committed to be released from the suspense
account each year.
In connection with the establishment of the ESOP, the Bank established an
employee committee to administer the ESOP. The Bank appointed an independent
retirement plan administrator to serve as trustee of the ESOP. The ESOP
committee may instruct the trustee regarding investment of funds contributed to
the ESOP. The ESOP trustee, subject to its fiduciary duty, must vote all
allocated shares held in the ESOP in accordance with the instructions of
participating employees. Under the ESOP, nondirected shares and shares held in
the suspense account, are voted in a manner
9
<PAGE>
calculated to most accurately reflect the instructions it has received from
participants regarding the allocated stock so long as such vote is in accordance
with the provisions of ERISA.
Transactions With Certain Related Persons
All transactions between the Company and its executive officers, directors,
holders of 10% or more of the shares of its Common Stock and affiliates thereof,
are on terms no less favorable to the Company than could have been obtained by
it in arm's-length negotiations with unaffiliated persons. Such transactions
must be approved by a majority of independent outside directors of the Company
not having any interest in the transaction.
- --------------------------------------------------------------------------------
PROPOSAL II--RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors of the Company has approved the engagement of
PricewaterhouseCoopers, LLP, to be the Company's auditors for the 1999 fiscal
year, subject to the ratification of the engagement by the Company's
stockholders. At the Meeting, stockholders will consider and vote on the
ratification of the engagement of PricewaterhouseCoopers, LLP, for the Company's
fiscal year ending December 31, 1999. A representative of
PricewaterhouseCoopers, LLP, is expected to attend the Meeting to respond to
appropriate questions and to make a statement if he so desires.
In order to ratify the selection of PricewaterhouseCoopers, LLP, as the
auditors for the 1999 fiscal year, the proposal must receive at least a majority
of the votes cast, either in person or by proxy, in favor of such ratification.
The Board of Directors recommends a vote "FOR" the ratification of
PricewaterhouseCoopers, LLP, as auditors for the 1999 fiscal year.
- --------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials for next
year's Annual Meeting of Shareholders, any shareholder proposal to take action
at such meeting must be received at the Company's executive office, 182 Main
Street, Oneida, New York 13421, no later than November 30, 1999. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934.
- --------------------------------------------------------------------------------
OTHER MATTERS
- --------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than the matters described above in the Proxy Statement.
However, if any matters should properly come before the Annual Meeting, it is
intended that holders of the proxies will act as directed by a majority of the
Board of Directors, except for matters related to the conduct of the Annual
Meeting, as to which they shall act in accordance with their best judgment. The
Board of Directors intends to exercise its discretionary authority to the
fullest extent permitted under the Securities Exchange Act of 1934.
The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors to be brought before an
annual meeting. In order for a stockholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the stockholder must give
written notice to the Secretary of the Company not less than ninety (90) days
before the date fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the annual meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name,
record address, and number of shares owned by the stockholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the stockholder in the proposed business.
In the case of nominations to the Board, certain
10
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information regarding the nominee must be provided. Nothing in this paragraph
shall be deemed to require the Company to include in its proxy statement and
proxy relating to an annual meeting any stockholder proposal which does not meet
all of the requirements for inclusion established by the SEC in effect at the
time such proposal is received.
The date on which the Annual Meeting of Stockholders is expected to be held
is April 25, 2000. Accordingly, advance written notice of business or
nominations to the Board of Directors to be brought before the 2000 Annual
Meeting of Stockholders must be given to the Company no later than January 24,
2000.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1998, WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS OF
THE RECORD DATE UPON WRITTEN OR TELEPHONIC REQUEST TO ERIC E. STICKELS,
SECRETARY, ONEIDA FINANCIAL CORP., 182 MAIN STREET, ONEIDA, NEW YORK 13421, OR
CALL (315) 363-2000.
BY ORDER OF THE BOARD OF DIRECTORS
Eric E. Stickels
Secretary
Oneida, New York
March 29, 1999
11
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REVOCABLE PROXY
ONEIDA FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS
April 27, 1999
The undersigned hereby appoints the official proxy committee consisting of
the Board of Directors with full powers of substitution to act as attorneys and
proxies for the undersigned to vote all shares of Common Stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Shareholders
("Annual Meeting") to be held at the main office of The Oneida Savings Bank, 182
Main Street, Oneida, New York on April 27, 1999, at 4:00 Eastern Time. The
official proxy committee is authorized to cast all votes to which the
undersigned is entitled as follows:
VOTE
FOR WITHHELD
--- --------
(except as
marked to
the contrary
below)
1. The election as Directors of all nominees |_| |_|
listed below each to serve for a three-year
term
Edward J. Clarke
Rodney D. Kent
Michael W. Milmoe
Richard B. Myers
INSTRUCTION: To withhold your vote for one or more
nominees, write the name of the nominee(s)on the line(s) below.
- ------------------------------
- ------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. The ratification of PricewaterhouseCoopers, LLP |_| |_| |_|
as the Company's independent auditor for the
fiscal year ended December 31, 1999.
The Board of Directors recommends a vote "FOR" each of the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED ABOVE. IF ANY OTHER
BUSINESS IS PRESENTED AT SUCH ANNUAL MEETING, THIS PROXY WILL BE VOTED AS
DIRECTED BY A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD
OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
<PAGE>
- --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the Annual Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the shareholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice of
Annual Meeting of Shareholders, or by the filing of a later proxy prior to a
vote being taken on a particular proposal at the Annual Meeting.
The undersigned acknowledges receipt from the Company prior to the execution of
this proxy of notice of the Annual Meeting, a proxy statement dated March 29,
1999, and audited financial statements.
Dated: _________________________ --- Check Box if You Plan
--- to Attend Annual Meeting
- ------------------------------- -----------------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ------------------------------- -----------------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on this card. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title.
- --------------------------------------------------------------------------------
Please complete and date this proxy and return it promptly
in the enclosed postage-prepaid envelope.
- --------------------------------------------------------------------------------
