SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-12
TROY FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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|_| Fee paid previously with preliminary materials.
<PAGE>
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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<PAGE>
TROY FINANCIAL CORPORATION
[INSERT GRAPHIC]
January 8, 2001
TO THE SHAREHOLDERS OF
TROY FINANCIAL CORPORATION:
You are cordially invited to attend the annual meeting of shareholders
(the "Annual Meeting") of Troy Financial Corporation to be held on Thursday,
February 8, 2001, at 10:00 a.m. Eastern Time, at The Century House, 997 New
Loudon Road, Route 9, Latham, NY 12110.
At the Annual Meeting, you will be asked: (i) to elect three directors,
each to serve for a three-year term, (ii) approve matters related to the vesting
of awards under the Troy Financial Corporation Long-Term Equity Compensation
Plan and (iii) to transact such other business as may properly come before the
Annual Meeting or any adjournments of the meeting.
The Board of Directors unanimously recommends that you vote FOR the
proposals. We encourage you to read the accompanying Proxy Statement, which
provides information about Troy Financial and the matters to be voted on at the
Annual Meeting.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed postage
paid envelope.
Sincerely,
/s/ Daniel J. Hogarty, Jr.
---------------------------------
Daniel J. Hogarty, Jr.
Chairman, President and
Chief Executive Officer
<PAGE>
TROY FINANCIAL CORPORATION
32 SECOND STREET
TROY, NEW YORK 12180
(518) 270-3313
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 8, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Troy
Financial Corporation will be held at The Century House, 997 New Loudon Road,
Route 9, Latham, NY 12110 on Thursday, February 8, 2001, at 10:00 a.m., Eastern
Time, and at any adjournments thereof, for the following purposes, all of which
are more completely set forth in the accompanying Proxy Statement:
1. To elect three directors for a three-year term (Proposal 1);
2. To approve the granting of discretion to the Board of
Directors or its Compensation Committee to (i) amend grants of
stock options, restricted stock and restricted stock units
made to directors, officers and employees under the company's
Long-Term Equity Compensation Plan prior to this Annual
Meeting to allow accelerated vesting upon certain
circumstances related to a change in control; and (ii)
establish the vesting terms and conditions for future awards
without regard to previous limitations (Proposal 2); and
3. To transact such other business as may properly come before
the Annual Meeting and any adjournments of the meeting. Except
for procedural matters, the Board of Directors is not aware of
any other matters that may properly come before the Annual
Meeting and any adjournments of the meeting.
Shareholders of record at the close of business on December 28, 2000
are entitled to notice of and to vote at the Annual Meeting and at any
adjournments of the meeting.
By Order of the Board of Directors
/s/ Daniel J. Hogarty, Jr.
---------------------------------
Daniel J. Hogarty, Jr.
Chairman, President and
Chief Executive Officer
Troy, New York
January 8, 2001
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER
YOU OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE ENVELOPE PROVIDED. ANY PROXY
GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR TO ITS
EXERCISE.
<PAGE>
TROY FINANCIAL CORPORATION
32 SECOND STREET
TROY, NEW YORK 12180
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2001
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
This Proxy Statement, which is first being mailed on or about January
8, 2001, is furnished to shareholders of Troy Financial Corporation (the
"Company" or "Troy Financial") in connection with the solicitation of proxies on
behalf of the Board of Directors to be used at the 2001 Annual Meeting of
Shareholders (the "Annual Meeting"). The Annual Meeting will be held at The
Century House, 997 New Loudon Road, Route 9, Latham, NY 12110 on February 8,
2001 at 10:00 a.m. Eastern Time, and at any adjournments of the meeting.
The Annual Meeting has been called for the following purposes: (1) to
elect three directors for a three-year term (Proposal 1), (2) to approve the
granting of discretion to the Board of Directors or its Compensation Committee
to (i) amend grants of stock options, restricted stock and restricted stock
units made to directors, officers and employees under the Company's Long-Term
Equity Compensation Plan prior to this Annual Meeting to allow accelerated
vesting upon certain circumstances related to a change in control; and (ii)
establish the vesting terms and conditions for future awards without regard to
previous limitations (Proposal 2) and (3) to transact such other business as may
properly come before the Annual Meeting and any adjournments of the meeting.
The proxies solicited hereby, if properly signed and returned to the
Company and not revoked prior to their use, will be voted in accordance with the
instructions contained therein by a member of the law firm of Pattison, Sampson,
Ginsberg & Griffin, PC, who has been duly appointed by the Board of Directors to
vote such proxies. Unless contrary instructions are given, each proxy will be
voted FOR the election of the nominees of the Board of Directors and FOR the
proposal related to the Company's Long-Term Equity Compensation Plan. Except for
procedural matters incident to the conduct of the Annual Meeting, the Board of
Directors does not know of any matters other than those described in the Notice
of Annual Meeting of Shareholders that are to come before the Annual Meeting. If
any other matters are properly brought before the Annual Meeting, the person
appointed to vote the proxies will vote the shares represented by the proxies on
such matters as determined by a majority of the Company's Board of Directors.
Any shareholder giving a proxy has the power to revoke it any time
before it is exercised by (i) delivering to the Secretary of the Company (Kevin
M. O'Bryan, Senior Vice President and Secretary, Troy Financial Corporation, 32
Second Street, Troy, New York 12180) written revocation of the proxy, (ii)
submitting a duly executed proxy bearing a later date, or (iii) appearing at the
Annual Meeting and voting in person. Proxies solicited hereby
1
<PAGE>
may be exercised only at the Annual Meeting and any adjournments of the Annual
Meeting and will not be used for any other meeting.
The securities which can be voted at the Annual Meeting consist of
shares of the Company's common stock, par value $0.0001 per share (the "Common
Stock"), with each share entitling its owner to one vote on each matter
presented. The close of business on December 28, 2000 has been fixed by the
Board of Directors as the record date for the determination of shareholders
entitled to notice of and to vote at the Annual Meeting. The number of shares of
Common Stock issued and outstanding on December 28, 2000 was 10,494,597.
Shareholders' votes will be tabulated by the person appointed by the Board of
Directors to act as inspector of election of the Annual Meeting. The presence,
in person or by proxy, of the holders of a majority of the Common Stock issued
and outstanding and entitled to vote at the Annual Meeting is necessary to
constitute a quorum at the Annual Meeting. Under the Company's Bylaws, directors
are elected by a plurality of the votes cast by the shares of Common Stock
entitled to vote at the Annual Meeting present in person or represented by
proxy. The proposal regarding the Company's Long-Term Equity Compensation Plan
requires the affirmative vote of the majority of votes cast on the matter either
in person or represented by proxy at the Annual Meeting. Unless otherwise
required by General Corporation Law of the State of Delaware or the Company's
Certificate of Incorporation or Bylaws, any other matter put to a shareholder
vote will be decided by the affirmative vote of a majority of the votes cast on
the matter either in person or represented by proxy at the Annual Meeting.
Abstentions and broker non-votes will be treated as shares that are
present, or represented, and entitled to vote for purposes of determining the
presence of a quorum at the Annual Meeting. Broker non-votes will not be counted
as a vote cast or entitled to vote on any matter presented at the Annual
Meeting. Abstentions will not be counted in determining the number of votes cast
in connection with any matter presented at the Annual Meeting.
The Company will pay the cost of soliciting proxies for the Annual
Meeting. In addition to using the mail, Troy Financial's directors, officers and
employees may solicit proxies personally, by telephone or by fax. The Company
will not pay additional compensation to its directors, officers or employees for
these activities. The Company also will request persons, firms and companies
holding shares in their names or in the name of their nominees, which are
beneficially owned by others, to send proxy materials to and obtain proxies from
the beneficial owners of those shares and will reimburse these holders for the
reasonable expenses they incur for these efforts.
ELECTION OF DIRECTORS
(PROPOSAL 1)
At the Annual Meeting, three directors will be elected to serve for a
three-year term and until the director's successor is elected and qualified or
until the director's earlier death, resignation or removal. Unless otherwise
specified on the proxy, it is the intention of the person serving as the proxy
to vote the shares represented by each properly executed proxy for the election
as directors of the persons named below as nominees. The Board of Directors
believes that the nominees will stand for election and will serve if elected as
directors. If, however, any person nominated by the Board fails to stand for
election or is unable to accept election, the proxies will be voted for the
election of such other person as the Board of Directors may recommend. Assuming
the presence of a quorum at the Annual Meeting,
2
<PAGE>
directors will be elected by a plurality of the votes cast by the shares of
Common Stock entitled to vote at the Annual Meeting and present in person or
represented by proxy. There are no cumulative voting rights in the election of
directors.
The Board of Directors currently consists of ten members and is divided
into three classes. The term of office of only one class of directors expires in
each year, and their successors are elected for terms of up to three years and
until their successors are elected and qualified. Messrs. George H. Arakelian,
Richard B. Devane and Edward G. O'Haire, whose terms expire at the 2001 Annual
Meeting, have been nominated to stand for reelection at the 2001 Annual Meeting
for terms expiring in 2004. Under the terms of the Company's November 2000
acquisition of Catskill Financial Corporation, Wilbur J. Cross, Catskill's
former Chairman of the Board, Chief Executive Officer and President, was
appointed as a member of the Board of the Company with a term expiring in 2003.
INFORMATION AS TO NOMINEES AND OTHER DIRECTORS
The following table sets forth the names of the Board of Directors'
nominees for election as directors and the current directors of Troy Financial
whose offices continue beyond the Annual Meeting. Also set forth is certain
other information with respect to each person's age at December 31, 2000, the
periods during which that person has served as a director of the Company or its
subsidiary, The Troy Savings Bank ("Troy Savings"), and positions currently held
with the Company.
<TABLE>
<CAPTION>
DIRECTOR NOMINEES FOR AGE AT DIRECTOR EXPIRATION POSITIONS HELD WITH
A THREE-YEAR TERM: DECEMBER 31, 2000 SINCE OF TERM TROY FINANCIAL
--------------------- ----------------- -------- ---------- -------------------
<S> <C> <C> <C> <C>
George H. Arakelian 66 1988 2001 Director
Richard B. Devane 66 1970 2001 Director
Edward G. O'Haire 69 1979 2001 Director
</TABLE>
<TABLE>
<CAPTION>
AGE AT DIRECTOR EXPIRATION POSITIONS HELD WITH
CONTINUING DIRECTORS: DECEMBER 31, 2000 SINCE OF TERM TROY FINANCIAL
--------------------- ----------------- -------- ---------- -------------------
<S> <C> <C> <C> <C>
Daniel J. Hogarty, Jr. 61 1985 2003 Chairman of the Board,
President and Chief
Executive Officer
Wilbur J. Cross 58 2000 2003 Director
Michael E. Fleming 70 1980 2002 Director
Willie A. Hammett 56 1990 2003 Director
Thomas B. Healy 54 1995 2003 Director
Keith D. Millsop 74 1979 2002 Director
Marvin L. Wulf 75 1973 2002 Director
</TABLE>
BIOGRAPHICAL INFORMATION
Provided below is a brief description of the principal occupation for
the past five years of each of Troy Financial's directors.
Daniel J. Hogarty, Jr. has been Chairman of the Board, President and
Chief Executive Officer of Troy Financial since its formation in 1998. He joined
Troy Savings in 1985 and has
3
<PAGE>
been Troy Savings' President, Chief Executive Officer and a trustee/director
since that time. He also has served as the President, Chief Executive Officer
and a director of The Troy Commercial Bank ("Troy Commercial") since its
formation in July 2000. In addition, Mr. Hogarty serves as President and/or
director of ten of Troy Savings' subsidiaries.
George H. Arakelian has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1988 and a director of Troy Commercial since its formation in July 2000. Mr.
Arakelian is President and Chairman of the Board of Standard Manufacturing Co.,
Inc., a manufacturer of outerwear and sportswear located in Troy, New York.
Wilbur J. Cross has been a Director of Troy Financial and a director of
Troy Savings since the Company acquired Catskill Financial Corporation in
November 2000. Prior to the Catskill acquisition, Mr. Cross was the Chairman of
the Board, President and Chief Executive Officer of Catskill Financial
Corporation and its subsidiary, Catskill Savings Bank.
Richard B. Devane has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1970 and a director of Troy Commercial since its formation in July 2000. Mr.
Devane is President of Devane's Inc., a carpet and flooring contractor, and is a
real estate broker with Devane Realty, both of which are located in Troy, New
York.
Michael E. Fleming, DDS has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1980 and a director of Troy Commercial since its formation in July 2000. Dr.
Fleming is a retired orthodontist in Troy, New York.
Willie A. Hammett has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1990 and a director of Troy Commercial since its formation in July 2000. Mr.
Hammett is Vice President of Student Services at Hudson Valley Community College
located in Troy, New York.
Thomas B. Healy has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1995 and a director of Troy Commercial since its formation in July 2000. Since
November 1996, Mr. Healy has been Senior Vice President of Investments at
Prudential Securities, Inc., located in Albany, New York. Prior to September
1996, he was a financial consultant with Shearson/Smith Barney.
Keith D. Millsop has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1979 and a director of Troy Commercial since its formation in July 2000. Mr.
Millsop is a retired Manager of Industrial Relations at Ford Motor Company's
Plant in Green Island, New York.
Edward G. O'Haire has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1979 and a director of Troy Commercial since its formation in July 2000. Mr.
O'Haire has served as President of Ryan & O'Haire Agency, Inc., an insurance
agency, located in Troy, New York and presently continues as an insurance
broker.
4
<PAGE>
Marvin L. Wulf has been a Director of Troy Financial since its
formation in 1998. He has served as a trustee/director of Troy Savings since
1973 and a director of Troy Commercial since its formation in July 2000. Mr.
Wulf is an Economic Development Specialist for the City of Troy, New York.
CERTAIN BOARD COMMITTEES; NOMINATIONS BY SHAREHOLDERS
The entire Board of Directors, excluding Messrs. Hogarty and Cross,
serves as a standing Audit Committee that oversees Troy Financial's financial
reporting process, the system of internal financial and accounting controls, the
audit process and compliance with applicable laws and regulations. The Audit
Committee reviews Troy Financial's annual financial statements, including
management's discussion and analysis and regulatory examination findings. The
Audit Committee recommends the appointment of independent auditors. During the
fiscal year ended September 30, 2000, the Audit Committee held 6 meetings.
The entire Board of Directors, excluding Messrs. Hogarty and Cross,
also serves as a Compensation Committee that reviews and makes determinations as
to employee and executive officer compensation. The Compensation Committee also
recommends long-term incentive plan awards. During the fiscal year ended
September 30, 2000, the Compensation Committee held 1 meeting.
The Board of Directors acts as the full Nominating Committee for
selecting nominees for election as directors. During fiscal 2000, the Nominating
Committee held 1 meeting. Troy Financial's Bylaws also permit shareholders
eligible to vote at the Annual Meeting to make nominations for directors but
only if such nominations are made pursuant to timely notice in writing to the
Secretary of Troy Financial. To be timely, notice must be delivered to, or
mailed to and received at, the principal executive offices of Troy Financial not
less than 60 days nor more than 90 days prior to the date of the meeting,
provided that at least 70 days' notice or prior public disclosure of the date of
the Annual Meeting is given or made to shareholders. If less than 70 days'
notice or prior public disclosure of the date of the Annual Meeting is given or
made to shareholders, notice by the shareholder to be timely must be received by
Troy Financial not later than the close of business on the 10th day following
the day on which such notice of the date of the Annual Meeting was mailed or
such public disclosure was made. Public disclosure of the date of the Annual
Meeting was made by the issuance of a press release and the filing of a Current
Report on Form 8-K under the Securities Exchange Act of 1934, as amended, with
the Securities and Exchange Commission on November 29, 2000. A shareholder's
notice of nomination must also set forth certain information specified in
Section 3.5 of the Company's Bylaws concerning each person the shareholder
proposes to nominate for election and the nominating shareholder.
During fiscal 2000, Troy Financial held 15 meetings of its Board of
Directors. Each incumbent director attended at least 75% of the aggregate of (i)
the total number of meetings of the Board of Directors held during the period
that the individual served and (ii) the total number of meetings held by all
committees of the Board on which the director served during the period that the
individual served.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF ALL OF ITS DIRECTOR NOMINEES.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
EXECUTIVE OFFICERS OF TROY FINANCIAL
The executive officers of Troy Financial are the same as the executive
officers of Troy Savings. They also hold officer positions with Troy Commercial.
They are appointed annually and hold office until their respective successors
are chosen and qualified or until their earlier death, resignation or removal
from office. The following table shows information regarding the executive
officers at December 31, 2000.
<TABLE>
<CAPTION>
POSITIONS HELD WITH
AGE AS OF TROY FINANCIAL, TROY SAVINGS
NAME DECEMBER 31, 2000 AND TROY COMMERCIAL
---- ----------------- -------------------
<S> <C> <C>
Daniel J. Hogarty, Jr. 61 Chairman of the Board of Troy
Financial; Director of Troy Savings
and Troy Commercial; President and
Chief Executive Officer of each entity
Kevin M. O'Bryan 51 Senior Vice President and Secretary
of each entity; Chief Credit Officer of
Troy Savings
Michael C. Mahar 53 Senior Vice President of each entity
David J. DeLuca 48 Senior Vice President and
Chief Financial Officer of each entity
</TABLE>
Provided below is a brief description of the principal occupation for
the past five years of each of Troy Financial's executive officers other than
Mr. Hogarty. For information regarding Mr. Hogarty, see "Election of Directors -
Biographical Information."
Kevin M. O'Bryan has been Senior Vice President and Secretary of Troy
Financial since its formation in 1998. He joined Troy Savings in 1976 and is a
Senior Vice President, Chief Credit Officer and Secretary of Troy Savings. Mr.
O'Bryan's primary responsibilities include oversight of all of Troy Savings'
lending departments. Prior to his appointment as Senior Vice President and Chief
Credit Officer in 1992, Mr. O'Bryan held numerous positions in Troy Savings'
commercial mortgage department. Mr. O'Bryan is also Senior Vice President and
Secretary of Troy Commercial. In addition, Mr. O'Bryan is Secretary and Director
of FMB, Troy S.B. Real Estate Co., Inc., The Family Advertising Co., T.S. Real
Property, Inc., Realty Umbrella, Ltd., and 32 Second Street, Inc., all of which
are subsidiaries of Troy Savings. Mr. O'Bryan is also President and Director of
Camel Hill Corporation, 507 Height, and T.S. Capital Corp., which are also
subsidiaries of Troy Savings.
Michael C. Mahar has been Senior Vice President of Troy Financial since
its formation in 1998. He joined Troy Savings in 1988 and is a Senior Vice
President of Troy Savings and Troy Commercial. Mr. Mahar's primary
responsibilities include oversight of Troy Savings' retail banking, deposit
services, sales and marketing, and operations. Prior to that appointment in
1992, he was the director of Troy Savings' commercial lending program.
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<PAGE>
David J. DeLuca has been Senior Vice President and Chief Financial
Officer of Troy Financial, Troy Savings and Troy Commercial since December 2000.
He served as Vice President of Troy Savings from November 2000 to December 2000.
He joined Troy Savings when the Company acquired Catskill Financial Corporation
in November 2000. From August 1996 to November 2000, Mr. DeLuca served as Vice
President and Chief Financial Officer of Catskill Financial Corporation and its
subsidiary, Catskill Savings Bank, and Treasurer of Catskill Financial
Corporation. Mr. DeLuca was Senior Vice President and Manager of Corporate
Planning and Forecasting of KeyCorp, a bank holding company, from March 1994 to
August 1996. He is a certified public accountant.
EXECUTIVE COMPENSATION
The following table sets forth the cash and certain other compensation
paid by Troy Savings for services rendered in all capacities during fiscal 2000,
1999 and 1998, to the President and Chief Executive Officer and all executive
officers who received annual salary and bonus compensation in excess of $100,000
(the "named executive officers"). The Company has not granted any stock
appreciation rights to its executive officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------- -----------------------------
SECURITIES
NAME AND RESTRICTED UNDERLYING ALL OTHER
PRINCIPAL POSITIONS YEAR SALARY BONUS STOCK AWARDS OPTIONS COMPENSATION
------------------- ---- ------ ----- ------------ ------- ------------
($) ($) ($)(1) (#) ($)(2)
<S> <C> <C> <C> <C> <C> <C>
Daniel J. Hogarty, Jr. 2000 $615,083 (3) -- $1,308,313 (4) 255,000 $19,073
Chairman of the Board, 1999 $603,074 (3) -- -- -- $ 6,128
President and 1998 $577,967 -- -- -- $ 6,128
Chief Executive Officer
Kevin M. O'Bryan 2000 $186,067 -- $ 540,625 (4) 80,000 $22,833
Senior Vice President 1999 $169,348 $ 5,000 -- -- $ 8,536
and Secretary 1998 $151,048 -- -- -- $12,074
Michael C. Mahar 2000 $124,923 -- $ 270,313 (4) 40,000 $14,382
Senior Vice President 1999 $104,979 $ 7,500 -- -- $ 4,128
1998 $ 94,885 -- -- -- $ 4,128
Edward M. Maziejka, Jr. 2000 $102,644 -- $ 162,188 (4) 25,000 $ 9,537
Former Vice President and 1999 $ 90,072 $12,500 -- -- $ 2,197
Chief Financial Officer (5) 1998 $ 83,384 -- -- -- $ 3,340
<FN>
----------
(1) As of September 30, 2000, the executive officers held the following shares
of restricted stock: Mr. Hogarty, 121,000 shares with a value of
$1,421,750; Mr. O'Bryan, 50,000 shares with a value of $587,500; Mr. Mahar,
25,000 shares with a value of $293,750; and Mr. Maziejka, 15,000 shares
with a value of $176,250. The September 30, 2000 values of these shares are
based on the closing price of the Company's Common Stock on the Nasdaq
National Market of $11.75 on September 29, 2000.
(2) All other compensation includes life insurance premiums, contributions to
the Company's 401(k) plan, allocable Employee Stock Ownership Plan ("ESOP")
contributions, automobile allowances and country club dues, as
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<PAGE>
applicable. Life insurance premiums for fiscal 2000, 1999 and 1998 were
$1,112, $1,128 and $1,128 for Messrs. Hogarty, O'Bryan, Mahar and Maziejka.
401(k) contributions for fiscal 1999 and 1998 were $5,000 for each year for
Mr. Hogarty; $908 and $4,446 for Mr. O'Bryan; and $1,069 and $2,212 for Mr.
Maziejka. There were no 401(k) contributions in fiscal 2000. ESOP
allocations for fiscal 2,000 were $17,961 for Mr. Hogarty, $15,221 for Mr.
O'Bryan, $10,270 for Mr. Mahar and $8,425 for Mr. Maziejka. There were no
ESOP allocations for fiscal 1999 and 1998. Automobile allowances for fiscal
2000, 1999 and 1998 were $3,000 for each year for Messrs. O'Bryan and
Mahar. Country club dues for Mr. O'Bryan for 2000, 1999 and 1998 were
$3,500 for each year.
(3) Includes deferred compensation for fiscal 2000 of $104,000 and for fiscal
1999 of $78,000.
(4) Calculated based on the closing market price of the Company's Common Stock
on the Nasdaq National Market of $10.8125 on October 1, 1999, the grant
date. The total number of shares of restricted stock awarded to Messrs.
Hogarty, O'Bryan, Mahar and Maziejka in fiscal 2000 was 121,000 shares,
50,000 shares, 25,000 shares and 15,000 shares, respectively. The
restricted stock vests in five annual installments beginning on October 1,
2000. Dividends are being paid on the restricted stock.
(5) Mr. Maziejka served as Vice President and Chief Financial Officer until
December 2000.
</FN>
</TABLE>
DIRECTOR COMPENSATION
Directors of Troy Savings receive fees of $1,375 per board meeting
attended and fees ranging from $250 to $850 per committee meeting attended,
depending on the type of committee. The Chairmen of the Audit Committee and the
Compensation Committee receive an additional $150 and $50, respectively, per
meeting. No separate fees are paid to directors in their role as directors of
Troy Financial or Troy Commercial. In fiscal 2000, each of the non-employee
directors of Troy Financial serving at October 1, 1999 received grants of 16,185
shares of restricted Common Stock and an option to acquire 40,463 shares of
Common Stock. The restricted stock grants and option grants each vest in five
annual installments beginning on October 1, 2000. At this time, the Company does
not intend to make new grants of restricted stock and options to these directors
until the fiscal year in which the last installments will vest.
In addition, Troy Savings has implemented a Trustees Deferred
Compensation Plan (the "Deferred Compensation Plan") that allows its directors
to make pre-tax contributions to any of the following benefit accounts:
retirement, education or fixed period. Retirement benefits can be paid in one
lump sum payment, in installments for up to 10 years or as a life annuity. The
payments may be deferred for up to 10 years beyond a participant's retirement
date. Education accounts can be opened for up to four students, who are 13 years
old or younger. Payments are made in four installments beginning after January 1
of the year in which the student turns 18. Fixed period distributions are made
as soon as possible after January 1 of the year in which the account matures.
The minimum maturity date is five years. Troy Savings retains the right to
contribute additional funds to a participant's account. All amounts contributed
to the Deferred Compensation Plan are always 100% vested. In the event of
termination, death, or disability, a participant or his beneficiary will receive
a lump sum payment distribution from his accounts. For calendar year 2000,
Messrs. Arakelian, Healy, Millsop and O'Haire elected to defer compensation.
8
<PAGE>
OPTION GRANTS
The following table contains information concerning the grant of stock
options to the named executive officers during fiscal year 2000.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------
NUMBER % OF POTENTIAL REALIZABLE VALUE AT
OF SECURITIES TOTAL OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION TERM
OPTIONS EMPLOYEES OR BASE PRICE EXPIRATION ----------------------------------
NAME GRANTED (#)(1) IN FISCAL YEAR (%) ($/SHARE) DATE 5% 10%
---- -------------- ------------------ --------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Daniel J. Hogarty Jr. 255,000 39.14% $10.8125 9/30/09 $1,733,633 $4,393,013
Kevin M. O'Bryan 80,000 12.28 10.8125 9/30/09 543,800 1,378,200
Michael C. Mahar 40,000 6.14 10.8125 9/30/09 271,900 689,100
Edward M. Maziejka, Jr. 25,000 3.84 10.8125 9/30/09 169,938 430,688
<FN>
----------
(1) The options vest in five annual installments beginning on October 1, 2000.
If shareholders approve the proposal related to the Company's Long-Term
Equity Compensation Plan, these grants may be amended after the Annual
Meeting to provide for vesting upon certain circumstances related to a
change in control. See "Approval of Matters Related to the Vesting of
Awards under the Company's Long-Term Equity Compensation Plan."
</FN>
</TABLE>
OPTION EXERCISES AND VALUES
AGGREGATED OPTION EXERCISES IN FISCAL 2000 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE
SHARES OPTIONS AT FY-END MONEY OPTIONS AT FY-END(1)
ACQUIRED ON VALUE --------------------------- ------------------------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ -------------- --------------------------- ------------------------------
(#) ($) (#) ($)
<S> <C> <C> <C> <C>
Daniel J. Hogarty, Jr. -- -- --/255,000 --/$239,063
Kevin M. O'Bryan -- -- --/80,000 --/$75,000
Michael C. Mahar -- -- --/40,000 --/$37,500
Edward M. Maziejka, Jr. -- -- --/25,000 --/$23,438
<FN>
----------
(1) Based on the closing price per share of the Company's Common Stock on the
Nasdaq National Market of $11.75 on September 29, 2000, less the exercise
price, of all unexercised stock options having an adjusted exercise price
less than that market value.
</FN>
</TABLE>
EMPLOYMENT AGREEMENTS
Troy Financial has entered into employment agreements with Messrs.
Hogarty, O'Bryan and Mahar (the "Employment Agreements"). These Employment
Agreements have an initial term of three years, with possible year-to-year
renewals. Pursuant to the Employment Agreements, the executives are entitled to
a specified annual salary, plus annual cost of living and merit increases,
discretionary bonuses, participation in all benefit and compensation plans and a
car or an automobile allowance. As of October 1, 2000, the base
9
<PAGE>
salaries for Messrs. Hogarty, O'Bryan and Mahar are $618,000, $185,400 and
$128,750, respectively.
Troy Financial and Troy Savings may terminate an executive officer's
employment at any time during the term of an Employment Agreement. Unless the
termination is for "cause" (as defined in the Employment Agreement), Troy
Financial and Troy Savings will be required to pay each executive officer three
times his annual base salary plus bonus and the value of the additional
retirement benefits that the executive officer would have been entitled to
receive under Troy Savings' qualified benefit plans and Supplemental Retirement
and Benefits Restoration Plan ("Supplemental Plan") if the executive officer had
continued to be employed for three years. These amounts will be paid in a lump
sum.
Troy Financial and Troy Savings will also provide the terminated
executive with insurance and other non-pension benefits for three years,
outplacement services, indemnification and director and officer liability
insurance.
In addition, following a termination without cause or if an executive
officer terminates his employment agreement with "good reason" (as defined in
the Employment Agreements), the executive officer will be fully vested, except
to the extent limited by applicable regulations, in stock options, restricted
stock, the Supplemental Plan and any other benefit that would otherwise be
forfeited.
If the executive officer is subject to the federal excise tax imposed
on excess parachute payments, Troy Financial and Troy Savings will pay to the
executive officer a gross-up amount sufficient, after all taxes, to pay the
excise tax and any interest and penalties. However, if making the gross-up
payment would not produce a net after-tax benefit to the executive officer of at
least $50,000 more than the amount the executive officer could receive without
triggering the excise tax, the amounts payable to the executive officer will be
reduced as necessary to avoid the excise tax.
After termination, the executive officer cannot be employed during a
specified noncompetition period with a substantial competitor (as defined in the
Employment Agreements) of Troy Savings or Troy Financial if the executive
officer terminates his employment without consent and without good reason or if
Troy Financial and Troy Savings terminate the officer's employment for cause.
The noncompetition period is one year or the remaining term of the
agreement plus six months, whichever is less. The Employment Agreements also
contain provisions relating to unauthorized disclosure of confidential
information and return of written materials upon termination of employment.
Mr. Maziejka, formerly Vice President and Chief Financial Officer of
Troy Financial, served pursuant to an employment agreement at the time that he
left the Company in December 2000. The Company has paid a total of $415,092 to
Mr. Maziejka pursuant to that agreement in connection with his departure.
10
<PAGE>
DEFINED BENEFIT PENSION PLAN
Troy Savings maintains a non-contributory defined benefit pension plan
covering substantially all of its full-time salaried employees (the "Pension
Plan"). A participant is 100% vested after five years of service, upon attaining
normal retirement age or upon a change of control.
The normal retirement benefit (generally at age 65) is based on the
participant's highest three-year average annual base earnings during the
participant's final 10-years of participation, subject to a limitation on the
amount of compensation that can be taken into account under the Internal Revenue
Code of 1986, as amended (the "IRC"). The annual benefit provided to a
participant at normal retirement age is:
o 2% of average annual earnings, times years of credited
service, up to 32.5 years, plus
o 4% of average annual earnings that exceed 50% of the Social
Security wage base, times years of credited service, up to 30 years.
An unreduced annual retirement benefit, calculated in the same manner
as described above, will be provided to a participant who:
o is eligible for an early retirement benefit (generally age 60
with five years of service or age 55 with 10 years of service) and elects to
defer the payment of the benefit to normal retirement age;
o has attained age 60 and completed 30 years of service, or
attained age 62 and completed 25 years of service, and elects to receive payment
of the benefit before normal retirement age; or
o postpones annual benefits beyond normal retirement age.
If a participant begins receiving early retirement benefits before satisfying
the foregoing age and service requirements, his benefits will be actuarially
reduced.
The Pension Plan also provides a surviving spouse benefit if the
participant dies before retirement or other termination of employment with a
vested retirement benefit.
SUPPLEMENTAL RETIREMENT AND BENEFIT RESTORATION PLAN
Troy Savings has implemented a non-tax qualified Supplemental
Retirement and Benefit Restoration Plan (the "Supplemental Plan") to provide
additional benefits to designated employees. Messrs. Hogarty, O'Bryan and Mahar
participate in the Supplemental Plan. Participants receive additional retirement
benefits that cannot be provided under Troy Savings' qualified retirement plans,
because of limitations in effect under the IRC. In addition, the Supplemental
Plan makes up for benefits lost under the Employee Stock Ownership Plan ("ESOP")
allocation procedures if participants retire or otherwise terminate employment
before the ESOP has repaid the funds it borrowed to purchase Common Stock.
11
<PAGE>
Each participant in the Supplemental Plan is entitled to an annual
pension amount at age 65 equal to 65% of his average annual earnings (the
"Pension Amount"), reduced by any amounts actually payable under the Pension
Plan and an offset amount. No more than $500,000 of Mr. Hogarty's annual
compensation will be counted. The benefit will be fully vested upon completion
of five years of service, including service before adoption, and will be reduced
in proportion to years of service if the participant retires or terminates
employment before age 65. In the event of the participant's death, the Pension
Amount (reduced by the death benefit payable under the Pension Plan) will be
paid to his surviving spouse for life, beginning when the participant would have
reached age 65. The Pension Amount will be actuarially reduced if benefits are
paid before the participant attains age 65, unless the participant is eligible
for an unreduced early retirement benefit under the Pension Plan, and will be
reduced by the benefit payable at that time under the Pension Plan.
Each participant in the Supplemental Plan is also entitled to an annual
defined contribution amount, based on the matching contribution Troy Savings
would make to the 401(k) Plan, if any, if the participant made the maximum
allowable pre-tax contribution, and there were no nondiscrimination limitations,
reduced by the maximum matching contribution that could actually be made under
such circumstances, but applying existing nondiscrimination provisions. The
defined contribution amounts are reflected in a bookkeeping account on Troy
Savings' books, which are credited with earnings based on the performance of
investments selected by the participant. The defined contribution amounts are
fully vested and are paid in a lump sum upon the participant's retirement or
other termination of employment.
Each participant in the Supplemental Plan is also entitled, at
retirement or other termination of employment, to an additional benefit if
shares have not been allocated under the ESOP because the ESOP has not repaid
its loan. The benefit will be based on the number of shares of Common Stock that
were allocated to the participant under the ESOP during the last plan year
before the retirement, termination of employment or change of control,
multiplied by the number of years remaining in the term of the ESOP loan. The
vesting provisions of the ESOP apply to the ESOP replacement benefit.
Participants' rights to benefits under the Supplemental Plan are
limited to those of general unsecured creditors of Troy Savings. Troy Savings
may establish a trust to provide funds to pay benefits under the Supplemental
Plan, but the assets of the trust will be subject to claims of Troy Savings'
creditors in the event of insolvency and, if the trust invests in Troy
Financial's Common Stock, Troy Savings will have the right to substitute other
assets for the Common Stock.
The following table sets forth, as of September 30, 2000, estimated
annual Supplemental Plan benefits, including benefits received under the Pension
Plan, for individuals at age 65 for various levels of compensation. The figures
in this table are based upon the assumption that the Supplemental Plan continues
in its present form and do not reflect Social Security benefits and benefits
payable under the ESOP.
FINAL AVERAGE SALARY PENSION AMOUNT
-------------------- --------------
$ 75,000 $ 48,750
100,000 65,000
12
<PAGE>
125,000 81,250
150,000 97,500
200,000 130,000
300,000 195,000
400,000 260,000
500,000 or more 325,000
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors comprises all of
the non-employee directors other than Mr. Cross. The Committee determines
executive officer salaries, bonuses and certain other forms of compensation, and
recommends long-term incentive awards. In fiscal 1999, in connection with the
conversion of Troy Savings to the stock form of organization, Troy Financial
retained an independent compensation consultant, and in that regard received an
opinion that the total compensation was reasonable in comparison to the total
compensation provided by similarly situated publicly-traded financial
institutions. The Compensation Committee also sought the advice of that
consultant in connection with the grant of options in fiscal 2000. Set forth
below is a report addressing Troy Financial's compensation policies for fiscal
year 2000 as they affected Troy Financial's executive officers.
Compensation Policies for Executive Officers. Troy Financial's
executive compensation policies are designed to provide competitive levels of
compensation, to assist Troy Financial in attracting and retaining qualified
executives and to encourage superior performance. In determining levels of
executive officers' overall compensation, the Compensation Committee considers
the qualifications and experience of the persons concerned, the size of the
institution and the complexity of its operations, the financial condition,
including income, of the institution, the compensation paid to other persons
employed by the institution and the compensation paid to persons having similar
duties and responsibilities in comparable financial institutions. The
Compensation Committee has in the past employed outside consultants and refers
to published survey data in establishing compensation.
Relationship of Performance to Executive Compensation. Compensation
paid or awarded to Troy Financial's executive officers in fiscal 2000 consisted
of the following components: base salary and grants of restricted stock and
options. While each of these components has a separate purpose and may have a
different relative value to the total, a significant portion of the total
compensation package is highly dependent on the financial success of Troy
Financial and total return to shareholders. The Compensation Committee believes
that generally, base salaries for executive officers are at or below the average
salaries paid for comparable positions at other financial institutions.
Base Salary. The Compensation Committee reviews executive base salaries
annually. Base salary is intended to signal the internal value of the position
and to track with the external marketplace. All current executive officers other
than David J. DeLuca presently serve pursuant to employment agreements that
provide for a minimum base salary that may not be reduced without the consent of
the executive officer. The Company anticipates entering into an employment
agreement with Mr. DeLuca. In establishing the fiscal 2000 salary for each
executive officer, the Compensation Committee considered the officer's
responsibilities, qualifications and experience, the size of the institution and
the complexity of its operations,
13
<PAGE>
the financial condition of the institution (based on levels of income, asset
quality and capital), and compensation paid to persons having similar duties and
responsibilities in comparable financial institutions.
Stock Compensation Plan. In October 1999, Troy Financial approved a
Long-Term Equity Compensation Plan that provides directors, officers, employees
and independent contractors with a proprietary interest in Troy Financial as an
incentive to contribute to its success. In fiscal 2000, 1,015,617 options and
446,165 shares of restricted stock were granted to employees, directors and a
director emeritus pursuant to the plan.
Other. In addition to the compensation paid to executive officers as
described above, executive officers received, along with and on the same terms
as other employees, certain benefits pursuant to a 401(k) Savings Plan and the
ESOP. All salaried or commissioned employees who have attained age 21 and
completed one year of employment are eligible to participate in the 401(k)
Savings Plan. Participants may contribute from 2% to 15% of their base
compensation to the 401(k) Savings Plan on a pre-tax basis. Participants are
permitted to borrow against their account balances in the 401(k) Savings Plan
and are eligible to receive hardship distributions from their pre-tax
contributions. For the fiscal year ended September 30, 2000, Troy Savings did
not make contributions to the 401(k) Savings Plan on behalf of the executive
officers.
In addition, Troy Savings has implemented the ESOP, which is a
noncontributory, tax-qualified stock purchase plan that invests primarily in
Common Stock of Troy Financial. The ESOP is designed to meet the applicable
requirements of a leveraged employee stock ownership plan as described in the
IRC and the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and, as such, the ESOP is permitted to borrow in order to finance
purchases of Common Stock.
CEO Compensation. The Compensation Committee, in determining the
compensation for the Chief Executive Officer, considers Troy Financial's size
and complexity, financial condition and results and progress in meeting
strategic objectives. The Chief Executive Officer's fiscal 2000 salary was
$615,083, an increase of 2.0%, compared to $603,074 in fiscal 1999. In fiscal
2000, the Chief Executive Officer also received grants of 121,000 shares of
restricted stock and options to purchase 255,000 shares of Common Stock. The
grants of restricted stock and options vest in five annual installments
beginning on October 1, 2000. At this time, the Compensation Committee does not
intend to make new grants of restricted stock or options to the Chief Executive
Officer until the fiscal year in which the last installments of these grants
vest. As noted above, in 1999 Troy Financial retained an independent
compensation consultant, and in that regard received an opinion that the total
compensation was reasonable in comparison to the total compensation provided by
similarly situated publicly-traded financial institutions. The Compensation
Committee also sought the advice of that consultant in connection with the grant
of options in fiscal 2000, and is further studying the compensation of the Chief
Executive Officer. For the fiscal year 2000, the Compensation Committee intended
that total compensation for the Chief Executive Officer be reasonable in
comparison to similarly situated publicly-traded financial institutions.
Internal Revenue Code Section 162(m). In 1993, the IRC was amended to
disallow publicly traded companies from receiving a tax deduction on
compensation paid to executive officers in excess of $1 million (section 162(m)
of the IRC), unless, among other things, the
14
<PAGE>
compensation meets the requirements for performance-based compensation. In
structuring Troy Financial's compensation programs and in determining executive
compensation, the Committee takes into consideration the deductibility limit for
compensation.
COMPENSATION COMMITTEE
Richard B. Devane (Chairman)
George H. Arakelian
Michael E. Fleming
Willie A. Hammett
Thomas B. Healy
Keith D. Millsop
Edward G. O'Haire
Marvin L. Wulf
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From time to time Troy Financial makes loans to its directors and
executive officers and related persons and entities for the financing of homes,
as well as home improvement, consumer and commercial loans. It is the belief of
management that these loans are made in the ordinary course of business, are
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other persons,
and neither involve more than normal risk of collectibility nor present other
unfavorable features.
AUDIT COMMITTEE REPORT
The entire Board of Directors, excluding Messrs. Hogarty and Cross,
serves as a standing Audit Committee. As of the date of this Proxy Statement,
each of the Committee members is an "independent director" under the Rule
4200(a)(14) of the Nasdaq Stock Market. The Audit Committee's responsibilities
are described in a written charter that was adopted by the Board of Directors of
Troy Financial. A copy of the Audit Committee's charter is attached as Appendix
A to this Proxy Statement.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended September 30, 2000 with Troy
Financial's management. The Audit Committee has discussed with KPMG LLP, the
Company's independent accountants, the matters required to be discussed by
Statement on Auditing Standards No. 61, Communications with Audit Committees.
The Audit Committee has received the written disclosures and the letter from
KPMG LLP required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed with KPMG LLP the
independence of KPMG LLP. Based on the review and discussions described in this
paragraph, the Audit Committee recommended to Troy Financial's Board of
Directors that the Company's audited consolidated financial statements for the
fiscal year ended September 30, 2000 be included in the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 2000 for filing with the
Securities and Exchange Commission.
15
<PAGE>
AUDIT COMMITTEE
Edward G. O'Haire (Chairman)
George H. Arakelian
Richard B. Devane
Michael E. Fleming
Willie A. Hammett
Thomas B. Healy
Keith D. Millsop
Marvin L. Wulf
CERTAIN RELATIONSHIPS
Directors, officers and employees of Troy Financial or Troy Savings are
permitted to borrow from Troy Savings to the extent permitted by New York law
and the regulations of the Board of Governors of the Federal Reserve System.
Under applicable New York law, Troy Savings may make first or second mortgage
loans to officers provided that each such loan is secured by the officer's
primary residence and is authorized in writing by the Board of Directors. In
addition, Troy Savings makes consumer loans and commercial real estate and
commercial business loans to officers and directors and related persons
consistent with applicable law. All loans made by Troy Savings to directors and
executive officers or their associates and related entities have been made in
the ordinary course of business, on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other persons. It is the belief of management that, at the
time of origination, these loans neither involved more than the normal risk of
collectibility nor presented any other unfavorable features. In addition, Mr.
Morris Massry has reported in a Schedule 13G filed with the Securities and
Exchange Commission that he holds more than five percent of the outstanding
Common Stock of the Company. The Savings Bank has made a number of loans to Mr.
Massry and related persons and entities controlled by Mr. Massry. At December
29, 2000, these loans aggregated $31.9 million and included unsecured lines of
credit and loans secured by commercial and other real estate.
TROY FINANCIAL'S INDEPENDENT AUDITORS
KPMG LLP has served as the independent auditors of Troy Financial since
the Company's formation in 1998. Representatives of KPMG LLP are expected to be
present at the Annual Meeting. They will be given an opportunity to make a
statement if they desire to do so and will be available to respond to
appropriate questions.
16
<PAGE>
STOCK OWNED BY MANAGEMENT
The following table sets forth information as of December 28, 2000 with
respect to the amount of the Company's Common Stock beneficially owned by each
director of the Company, each nominee for election as a director, each of the
named executive officers and by all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
NAME AND POSITION NUMBER OF SHARES AND NATURE OF PERCENT OF COMMON
WITH TROY FINANCIAL BENEFICIAL OWNERSHIP (a) STOCK OUTSTANDING
------------------- ------------------------ -----------------
<S> <C> <C>
Daniel J. Hogarty, Jr. 277,610 (b) 2.63%
Chairman of the Board,
President and Chief Executive Officer
George H. Arakelian 144,277 (c) 1.37%
Director
Wilbur J. Cross -- --
Director
Richard B. Devane 23,075 (d) *
Director
Michael E. Fleming 54,277 (e) *
Director
Willie A. Hammett 38,812 (f) *
Director
Thomas B. Healy 74,277 (g) *
Director
Keith D. Millsop 64,975 (h) *
Director
Edward G. O'Haire 60,413 (i) *
Director
Marvin L. Wulf 39,332 (j) *
Director
Michael C. Mahar 40,273 (k) *
Senior Vice President
Edward M. Maziejka, Jr.
Former Vice President and
Chief Financial Officer 29,187 (l) *
Kevin M. O'Bryan 77,863 (m) *
Senior Vice President and Secretary
All Directors and Executive Officers
as a Group (14 persons) 924,371 (n) 8.69%
<FN>
---------------------
* less than one percent
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner of a security for
purposes of the Rule if such person has or shares
</FN>
</TABLE>
17
<PAGE>
<TABLE>
<S><C>
<FN>
voting power or investment power with respect to such security or has the
right to acquire beneficial ownership at any time within 60 days. 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.
(b) Mr. Hogarty's share ownership includes (a) 121,000 shares held directly by
Mr. Hogarty, (b) 26,083 shares held in Mr. Hogarty's Individual Retirement
Account ("IRA"), (c) 27,324 shares held in the Company's 401(k) plan, (d)
1,763 shares held in the Company's ESOP, (e) 50,440 shares held by Mr.
Hogarty's wife, as to which Mr. Hogarty disclaims beneficial ownership, and
(f) options to purchase 51,000 shares of Common Stock that are exercisable
within 60 days of December 28, 2000.
(c) Mr. Arakelian's share ownership includes (a) 16,185 shares held directly by
Mr. Arakelian, (b) 50,000 shares held in Mr. Arakelian's IRA, (c) 50,000
shares held by Mr. Arakelian's wife, as to which Mr. Arakelian disclaims
beneficial ownership, (d) 20,000 shares held by Standard Manufacturing Co.,
Inc. of which Mr. Arakelian is President and Chairman of the Board, and (e)
options to purchase 8,092 shares of Common Stock that are exercisable
within 60 days of December 28, 2000.
(d) Mr. Devane's share ownership includes 14,983 shares held directly by Mr.
Devane and options to purchase 8,092 shares of Common Stock that are
exercisable within 60 days of December 28, 2000.
(e) Dr. Fleming's share ownership includes 16,185 shares held directly by Dr.
Fleming, 15,000 shares held with his wife as joint tenants, 15,000 shares
held in Dr. Fleming's IRA and options to purchase 8,092 shares of Common
Stock that are exercisable within 60 days of December 28, 2000.
(f) Mr. Hammett's share ownership includes (a) 18,574 shares held directly by
Mr. Hammett, (b) 730 shares held in Mr. Hammett's IRA, (c) 11,416 shares
held in his wife's IRA, as to which Mr. Hammett disclaims beneficial
ownership, and (d) options to purchase 8,092 shares of Common Stock that
are exercisable within 60 days of December 28, 2000.
(g) Mr. Healy's share ownership includes 37,985 shares held directly by Mr.
Healy, 28,200 shares held in Mr. Healy's IRAs and options to purchase 8,092
shares of Common Stock that are exercisable within 60 days of December 28,
2000.
(h) Mr. Millsop's share ownership includes 56,883 shares held directly by Mr.
Millsop and options to purchase 8,092 shares of Common Stock that are
exercisable within 60 days of December 28, 2000.
(i) Mr. O'Haire's share ownership includes (a) 16,385 shares held directly by
Mr. O'Haire, (b) 18,210 shares held in Mr. O'Haire's IRA (c) 12,000 shares
held by Mr. O'Haire's wife, as to which Mr. O'Haire disclaims beneficial
ownership, (d) 2,726 shares held by his wife's IRA, as to which Mr. O'Haire
disclaims beneficial ownership, (e) options to purchase 8,092 shares of
Common Stock that are exercisable within 60 days of December 28, 2000 and
(f) 3,000 shares held by Ryan & O'Haire Agency, Inc. Mr. O'Haire serves as
president of Ryan & O'Haire Agency and, as such, is deemed to exercise
beneficial ownership over Ryan & O'Haire's shares.
(j) Mr. Wulf's share ownership includes (a) 14,891 shares held by Mr. Wulf
directly, (b) 11,349 shares held in Mr. Wulf's IRAs, (c) 5,000 shares held
by Mr. Wulf's wife, as to which Mr. Wulf disclaims beneficial ownership,
and (d) options to purchase 8,092 shares of Common Stock that are
exercisable within 60 days of December 28, 2000.
(k) Mr. Mahar's share ownership includes 25,000 shares held directly by Mr.
Mahar, 6,265 shares held in the Company's 401(k) Plan, 1,008 shares held by
the Company's ESOP and options to purchase 8,000 shares of Common Stock
that are exercisable within 60 days of December 28, 2000.
</FN>
</TABLE>
18
<PAGE>
<TABLE>
<S><C>
<FN>
(l) Mr. Maziejka's share ownership includes 15,000 shares held directly by Mr.
Maziejka, 8,360 shares held in the Company's 401(k) Plan, 827 shares held
by the Company's ESOP and options to purchase 5,000 shares of Common Stock
that are exercisable within 60 days of December 28, 2000.
(m) Mr. O'Bryan's share ownership includes (a) 50,000 shares held directly by
Mr. O'Bryan, (b) 10,169 shares held in the Company's 401(k) Plan, (c) 1,494
shares held by the Company's ESOP, (d) 200 shares held by Mr. O'Bryan's
son, as to which Mr. O'Bryan disclaims beneficial ownership, and (e)
options to purchase 16,000 shares of Common Stock that are exercisable
within 60 days of December 28, 2000.
(n) Includes options to purchase 144,736 shares of Common Stock that are
exercisable within 60 days of December 28, 2000.
</FN>
</TABLE>
PRINCIPAL SHAREHOLDERS
The following table presents information known to the Company regarding
the beneficial ownership of Common Stock as of December 28, 2000 by each person
believed by management to be the beneficial owner of more than 5% of the
outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES
AND NATURE OF PERCENT OF
BENEFICIAL COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(a) OUTSTANDING
------------------------------------ ------------ -----------
<S> <C> <C>
The Troy Savings Bank Employee Stock Ownership 969,733 (b) 9.24%
Plan Trust (the "ESOP Trust")
c/o Troy Financial Corporation
32 Second Street
Troy, NY 12180
Wellington Management Company, LLP ("WMC") 770,000 (c) 7.34%
75 State Street
Boston, MA 02109
Morris Massry 556,779 (d) 5.31%
c/o Executive Park North
2 Tower Place
Albany, NY 12203
<FN>
----------
(a) In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, a
person is deemed to be the beneficial owner, for purposes of this table, of
any shares of Common Stock if that person has or shares voting power or
investment power over the security, or has the right to acquire beneficial
ownership at any time within 60 days from December 28, 2000. For this
table, voting power includes the power to vote or direct the voting of
shares and investment power includes the power to dispose or direct the
disposition of shares.
(b) Based on the Schedule 13G dated February 14, 2000 filed by the ESOP Trust
and the Company's records, the ESOP Trust has sole voting power and sole
dispositive power over 911,286 shares and shared voting power and shared
dispositive power over 58,447 shares.
(c) WMC filed a Schedule 13G dated February 9, 2000 reporting shared voting
power over 153,000
</FN>
</TABLE>
19
<PAGE>
<TABLE>
<S><C>
<FN>
shares and shared dispositive power over 770,000 shares. The Schedule 13G
states that WMC is an investment advisor and that these securities are
owned of record by clients of WMC. It further states that those clients
have the right to receive, or the power to direct the receipt of, dividends
from, or the proceeds from the sale of the securities.
(d) Mr. Massry filed a Schedule 13G dated October 6, 2000 reporting sole voting
power and sole dispositive power over these shares.
</FN>
</TABLE>
COMPARATIVE COMPANY PERFORMANCE
The following graph sets forth comparative information regarding Troy
Financial's cumulative shareholder return on its Common Stock over the last
seven fiscal quarters. Total shareholder return is measured by dividing total
dividends (assuming dividend reinvestment) for the measurement period plus share
price change for a period by the share price at the beginning of the measurement
period. Troy Financial's cumulative shareholder return over a seven-quarter
period is based on an investment of $100 on March 31, 1999, which was the date
of Troy Financial's initial public offering, and is compared to the cumulative
total return of the Standard & Poor's 500 Index ("S&P 500 Index"), the NASDAQ
Bank Index and the SNL Securities LC Thrift Index for thrifts with total assets
between $1.0 and $5.0 billion (the "SNL Thrift ($1B to $5B) Index").
COMPARISON OF SEVEN QUARTER CUMULATIVE TOTAL RETURN AMONG
TROY, S&P 500 INDEX, NASDAQ BANK INDEX AND SNL THRIFT ($1B TO $5B) INDEX
TROY FINANCIAL CORP.
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
PERIOD ENDING
------------------------------------------------------------------------------
INDEX 3/31/99 6/30/99 9/30/99 12/31/99 3/31/00 6/30/00 9/30/00
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Troy Financial Corp. 100.00 104.38 108.13 102.34 103.50 100.29 120.12
S&P 500 Index 100.00 107.05 100.36 115.30 117.94 114.81 113.70
NASDAQ Bank Index 100.00 107.31 97.65 100.13 90.45 88.03 104.77
SNL Thrift ($1B - $5B) Index 100.00 108.39 98.60 94.71 86.73 88.25 105.27
</TABLE>
20
<PAGE>
APPROVAL OF MATTERS RELATED TO THE VESTING OF AWARDS
UNDER THE COMPANY'S LONG-TERM EQUITY COMPENSATION PLAN
(PROPOSAL 2)
At a special meeting held on October 1, 1999, the Company's
shareholders approved the Troy Financial Corporation Long-Term Equity
Compensation Plan (the "Plan"). Pursuant to the Plan, the Company may grant
options, restricted stock and units representing a conditional right to receive
restricted stock ("restricted stock units") to eligible persons. Under
regulatory restrictions that were applicable at the time of the Company's March
1999 conversion from mutual to stock form of ownership, options, restricted
stock and restricted stock units granted under the Plan may not vest in excess
of 20% a year or provide for accelerated vesting except in the case of
disability or death (the "Regulatory Restrictions"). The Regulatory Restrictions
currently apply to grants under the Plan because the Plan was adopted by the
Company after approval by shareholders prior to the first anniversary of the
Company's conversion. All grants made under the Plan prior to this Annual
Meeting comply with the Regulatory Restrictions.
If the Company's shareholders approve this proposal, the Board of
Directors or its Compensation Committee will be authorized to amend grants under
the Plan that were made prior to the date of the Annual Meeting to allow for
accelerated vesting upon certain circumstances related to a change in control.
As to any grants made under the Plan after the Annual Meeting, the Board of
Directors or its Compensation Committee will have the authority to establish in
its discretion the vesting terms, if any, including vesting upon a change in
control, without regard to the Regulatory Restrictions.
The Board of Directors believes that it is in the best interests of the
Company for shareholders to approve this proposal. The Company has notified the
appropriate regulatory authorities that it intends to present this proposal to
shareholders and those regulatory authorities have not objected to this action.
PURPOSES OF THE PLAN
The purposes of the Plan are to enhance our ability to attract and
retain highly qualified directors, consultants, officers and other employees and
service providers to advance the Company's interests by providing such persons
with stronger incentives to continue to serve the Company and to expend maximum
effort to improve its business results and earnings.
DESCRIPTION OF THE PLAN
The Plan consists of a stock option plan and a Management Recognition
Plan. The Plan permits the Company to grant:
o stock options intended to qualify as incentive options
("incentive options") under Section 422 of the IRC to officers
and other employees;
o stock options that do not qualify as incentive options
("non-qualified options") to directors, officers, employees
and independent contractors;
21
<PAGE>
o restricted stock to directors, officers, employees and
independent contractors; and
o restricted stock units to directors, officers, employees and
independent contractors.
The Plan does not provide for the grant of stock appreciation rights.
The Company has reserved 1,213,902 shares for options to be issued under the
Plan. The Company has contributed cash to a trust it established and the trust
has acquired 485,561 shares of common stock that have been and will be used for
grants of Restricted Stock under the Management Recognition Plan.
The Company's Compensation Committee administers the Plan. Each member
of the Compensation Committee is a "non-employee director," as defined in
regulations issued by the Securities and Exchange Commission, and an "outside
director," as defined under Section 162(m) of the IRC. The Compensation
Committee has the authority to grant options, restricted stock and restricted
stock units and to determine whether options will be incentive options. When the
Compensation Committee grants an option, it specifies the number of shares
subject to the option, the exercise price, the manner of exercise and any
vesting or other restrictions.
The option exercise price must be paid in full in cash or by
exchanging shares of the Company's Common Stock with a fair market value equal
to or less than the total option price plus cash for any difference. Options may
also be exercised by directing that certificates for the shares purchased be
delivered to a licensed broker acceptable to the Company, as agent for the
optionee, provided that the broker tenders to us cash or cash equivalents equal
to the option exercise price.
The option exercise price of an incentive option may not be less than
100% of the fair market value of the Common Stock on the grant date (110% if an
Incentive Option is granted to an owner of more than 10% of the outstanding
Common Stock). The maximum option term is 10 years (five years if an incentive
option is granted to an owner of more than 10% of the outstanding Common Stock).
The maximum number of shares that may be covered by options granted to any
employee in any calendar year is 500,000. There is a $100,000 limit on the value
of stock (determined at the time of grant) covered by incentive options that
first become exercisable by an employee in any calendar year. The Compensation
Committee specifies the number of shares of restricted stock and restricted
stock units it grants to an eligible individual and the nature of the vesting
and other restrictions that apply to each grant. At present, vesting of options,
restricted stock and restricted stock units may not be accelerated except upon
death or disability.
Options granted pursuant to the Plan generally will be exercisable for
at least three months after a participant terminates employment or service,
unless the Compensation Committee determines otherwise. Unvested options,
restricted stock and restricted stock units will be forfeited upon a voluntary
termination of employment without "good reason" or involuntary termination of
employment for "cause." However, in the event of death or disability, options,
restricted stock and restricted stock units will be vested and exercisable for
up to one year, or such other period as determined by the Compensation
Committee.
22
<PAGE>
Incentive options, restricted stock and restricted stock unit awards are
non-transferable and non-assignable except at death. In its discretion, the
Compensation Committee may allow an optionee to transfer non-qualified options
for estate planning purposes.
If shareholders approve this proposal, the Board of Directors or the
Compensation Committee would have the authority to provide for accelerated
vesting upon certain circumstances related to a change in control for existing
grants and to provide for more rapid vesting or accelerated vesting, in their
discretion, for future grants. The circumstances that would constitute a change
in control for purposes of grants under the Plan will be determined by the Board
of Directors and/or the Compensation Committee. As of the date of this Proxy
Statement, the Board of Directors and the Compensation Committee have not
adopted a definition of change in control. It is possible that in the future,
the Board or the Compensation Committee could approve more than one such
definition. If grants provide for accelerated vesting upon circumstances related
to a change in control, a potential acquirer would have to take the options and
the potential issuance of shares into consideration. Unless otherwise determined
by the Company, vesting shall be subject to limitations to prevent such
accelerated vesting from constituting an excess parachute payment under the IRC.
Appropriate adjustments will be made to shares available under the Plan
and to shares covered by outstanding grants to reflect changes in the Company's
capitalization. The Board of Directors at any time may terminate or suspend the
Plan. Unless previously terminated, the Plan will terminate automatically on the
tenth anniversary of the effective date of the Plan. No termination, suspension
or amendment of the Plan may, without the consent of the optionee to whom an
option has been granted, adversely affect the rights of the holder of the
option.
GRANTS UNDER THE PLAN
As of December 28, 2000, options to purchase 1,015,617 shares of Common
Stock, 446,165 shares of restricted stock and no restricted stock units have
been granted under the Plan, of which 201,173 options and 88,933 shares of
restricted stock have vested and remain outstanding and 9,750 options and 1,500
shares of restricted stock have been forfeited. The table below provides
information regarding stock options and restricted stock granted as of December
28, 2000 under the Plan to each of the named executive officers and the director
nominees, to all executive officers of the Company as a group, to all
non-employee directors of the Company as a group and to all non-executive
officer employees of the Company as a group (including officers who are not
executive officers).
23
<PAGE>
PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
NAME AND POSITION NUMBER OF OPTIONS (a)(b) RESTRICTED STOCK (b)
----------------- ------------------------ --------------------
<S> <C> <C>
Daniel J. Hogarty, Jr. 255,000 121,000
Chairman of the Board, President and Chief
Executive Officer
Kevin M. O'Bryan 80,000 50,000
Senior Vice President and Secretary
Michael C. Mahar 40,000 25,000
Senior Vice President
Edward M. Maziejka, Jr. 25,000 15,000
Former Vice President and
Chief Financial Officer
George H. Arakelian 40,463 16,185
Director (and Director Nominee)
Richard B. Devane 40,463 16,185
Director (and Director Nominee)
Edward G. O'Haire 40,463 16,185
Director (and Director Nominee)
Executive officer group 400,000 211,000
(5 persons)
Non-employee Director Group 364,167 145,665
comprised of the three Directors/Director Nominees
named above, six other Directors and one Director
Emeritus (9 persons)
Non-Executive Officer Employee Group 251,450 89,500
(54 persons)
<FN>
(a) Each option grant has a per share exercise price of $10.8125 and an expiration date of September 30, 2009.
(b) Each grant vests in five annual installments beginning on October 1, 2000.
</FN>
</TABLE>
The closing sales price per share of Troy Financial's Common Stock on
the Nasdaq National Market was $13.9375 on December 28, 2000.
24
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The grant of an option or restricted stock unit under the Plan is not a
taxable event. When a participant in the Plan exercises a non-qualified option,
he will generally recognize ordinary income equal to the difference between the
exercise price and the fair market value of the Common Stock on the date of
exercise and the Company generally will be entitled to a business expense
deduction in the same amount. Different rules may apply if the Common Stock is
subject to restrictions.
An employee will not recognize taxable income upon exercise of an
incentive option, except that the alternative minimum tax may apply. Gain
realized upon a sale of shares received pursuant to the exercise of an incentive
option will be taxed as long-term capital gain if the employee has held the
shares for at least two years after the grant date and for one year after the
date of exercise of the option. The Company will not be entitled to any business
expense deduction with respect to the grant or exercise of an incentive option,
except as discussed below.
If an employee exercises an incentive option and does not complete the
special holding period set forth above, he will recognize ordinary income when
he disposes of the shares, generally in an amount equal to the excess of the
fair market value of the shares at the time the option was exercised over the
option exercise price (or, if less, the amount of gain recognized on the
disposition). Any remaining gain will be taxed as long- or short-term capital
gain, depending upon how long the shares were held. If the Company complies with
applicable reporting requirements, it will be allowed a business expense
deduction to the extent the employee recognizes ordinary income.
The grant of restricted stock will not be a taxable event if the shares
are subject to a substantial risk of forfeiture, unless the recipient makes a
special tax election under Section 83(b) of the IRC within 30 days after the
grant. Upon the vesting of restricted stock (assuming no Section 83(b)
election), the grantee will realize ordinary income equal to the value of the
restricted stock that becomes vested and the Company will generally be entitled
to a deduction for tax purposes in the same amount, except as limited by Section
162(m) of the IRC, if the employee's annual compensation exceeds $1 million. If
the grantee makes a Section 83(b) election, he will realize ordinary income as
of the grant date in an amount equal to the value of the restricted stock at
that time and the Company generally will be entitled to a deduction in a like
amount. A grantee who makes a Section 83(b) election will not be entitled to any
tax deduction if he subsequently forfeits the shares.
If a grantee receives unrestricted shares of stock pursuant to a
restricted stock unit, he will recognize ordinary income equal to the value of
the shares at the time he receives them. Subject to the Section 162(m)
limitation discussed in the previous paragraph, the Company will be allowed a
deduction for the same amount, if it satisfies applicable reporting
requirements. If an employee becomes vested in an option or in shares of
restricted stock or restricted stock units because of a change of control, the
employee maybe subject to an additional 20% excise tax if he has an "excess
parachute payment" under the IRC. In that case, the Company would not be allowed
to claim a deduction for the amount that constituted an excess parachute
payment.
25
<PAGE>
REQUIRED VOTE
The affirmative vote of the majority of the votes cast on the matter
either in person or represented by proxy at the Annual Meeting is required to
approve the proposal regarding the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
FOR INCLUSION IN PROXY STATEMENT
Any proposal that a Company shareholder wishes to have included in the
Company's proxy statement and form of proxy relating to the Company's 2002
annual meeting of shareholders under Rule 14a-8 of the Securities and Exchange
Commission must be received by the Company's Secretary at Troy Financial
Corporation, 32 Second Street, Troy, New York 12180 by September 10, 2001.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and form of proxy for such meeting any shareholder proposal
that does not meet the requirements of the Securities and Exchange Commission in
effect at the time. Any other proposal for consideration by shareholders at the
Company's 2002 annual meeting of shareholders must be delivered to, or mailed to
and received by, the Secretary of the Company not less that 60 days nor more
than 90 days prior to the date of the meeting if the Company gives at least 70
days' notice or prior public disclosure of the meeting date to shareholders.
ANNUAL REPORT AND FINANCIAL STATEMENTS
A copy of the Company's Annual Report to Shareholders for the year
ended September 30, 2000 accompanies this Proxy Statement.
UPON RECEIPT OF A WRITTEN REQUEST, THE COMPANY WILL FURNISH TO ANY
SHAREHOLDER WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED SEPTEMBER 30, 2000 AND THE EXHIBITS THERETO REQUIRED TO BE
FILED WITH THE COMMISSION UNDER THE SECURITIES EXCHANGE ACT OF 1934. SUCH
WRITTEN REQUEST SHOULD BE DIRECTED TO:
KEVIN M. O'BRYAN
SENIOR VICE PRESIDENT AND SECRETARY
TROY FINANCIAL CORPORATION
32 SECOND STREET
TROY, NEW YORK 12180
THE FORM 10-K IS NOT PART OF THE PROXY SOLICITATION MATERIALS.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Troy Financial's directors, certain officers and persons who own more
than 10% of its Common
26
<PAGE>
Stock, to file with the Securities and Exchange Commission initial reports of
ownership of Troy Financial's equity securities and to file subsequent reports
when there are changes in such ownership. Based on a review of reports submitted
to Troy Financial, the Company believes that during the fiscal years ended
September 30, 2000 and 1999, all Section 16(a) filing requirements applicable to
Troy Financial's officers, directors, and more than 10% owners were complied
with on a timely basis, other than two late reports, each related to one
transaction, by Director George H. Arakelian.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
know of any other matters to be presented for action by the shareholders at the
Annual Meeting. If, however, any other matters not now known are properly
brought before the meeting, the persons named in the accompanying proxy will
vote such proxy in accordance with the determination of a majority of the Board
of Directors.
By order of the Board of Directors
/s/ Daniel J. Hogarty, Jr.
----------------------------------
Daniel J. Hogarty, Jr.
Chairman, President and
Chief Executive Officer
Troy, New York
January 8, 2001
27
<PAGE>
Appendix A
TROY FINANCIAL CORPORATION
AUDIT COMMITTEE CHARTER
I. ORGANIZATION
There shall be a committee of the Board of Directors to be known as the Audit
Committee. The Audit Committee shall be composed of directors who are
independent of the management of the corporation and are free of any
relationship that, in the opinion of the Board of Directors, would interfere
with their exercise of independent judgement as a committee member. The
corporation follows the guidelines contained in Section 36 of the Federal
Deposit Insurance Act, Part 363 of the regulations of the Federal Deposit
Insurance Corporation and the Rules of the Nasdaq Stock Market, Inc., which
establish criteria for an independent audit committee. The Audit Committee shall
be comprised of three or more directors as determined by the Board. All members
of the Committee shall be able to read and understand fundamental financial
statements, including a company's balance sheet, income statement, and cash flow
statement. Additionally, at least one member of the Audit Committee must have
past employment experience in finance or accounting, requisite professional
certification in accounting, or any other comparable experience or background
which results in the individual's financial sophistication.
Members of the Committee shall be elected annually by the Board at a regular
meeting of the Board of Directors. Unless a Chair is elected by the Board, the
members of the Committee may designate a Chair by a majority vote of the
Committee membership.
II. STATEMENT OF POLICY
The Audit Committee shall provide assistance to the corporate directors in
fulfilling their oversight responsibilities to the shareholders of the company
by reviewing the financial reports and other financial information, the
corporation's systems of internal controls regarding finance, accounting, legal
compliance and ethics that management and the Board have established, and the
corporation's auditing, accounting and financial reporting processes. In doing
so, it is the responsibility of the Audit Committee to maintain free and open
means of communication between the directors, the independent accountant, the
internal auditor, and the financial management of the corporation. Consistent
with this function, the Committee should encourage continuous improvement of,
and should foster adherence to, the corporation's polices, procedures and
practices at all levels.
A-1
<PAGE>
III. MEETINGS
The Audit Committee shall meet four times annually or more frequently as
circumstances dictate.
IV. RESPONSIBILITIES & DUTIES
In carrying out its responsibilities, the Audit Committee believes it should be
flexible, in order to best react to changing conditions and to ensure to the
directors and shareholders that the quality and integrity of corporate
accounting and reporting practices of the corporation are in accordance with all
applicable requirements. The duties and responsibilities of a member of the
Audit Committee are in addition to those duties set out for a member of the
Board of Directors.
In carrying out these responsibilities, the Audit Committee will:
Management:
1. Provide an open avenue of communication between the internal auditor,
the independent accountant and the Board of Directors.
2. Review and assess this Charter periodically, at least annually, as
conditions dictate.
3. Review and discuss the organization's annual audited financial
statements with management. On the basis of the reviews and
discussions referred to in the second and third sentences of Section
IV 10, recommend to the Board of Directors whether the audited
financial statements should be included in the corporation's Annual
Report on Form 10-K for the last fiscal year for filing with the
Securities and Exchange Commission.
4. Unless presented to the Board, review with financial management, the
Quarterly Report on Form 10-Q.
5. Confirm and assure the independence of the independent accountant,
including review of any management consulting services and related
fees provided by the independent accountant.
6. Report Audit Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.
7. Approve a report for inclusion in the corporation's proxy statement
for its annual meeting of shareholders that describes the Audit
Committee' s composition and responsibilities, the independence of the
members of the Audit Committee and other matters required to be
addressed by applicable regulations.
A-2
<PAGE>
8. The Audit Committee shall have the power to conduct or authorize
investigations into any matters within the Committee's scope of
responsibilities. The Audit Committee shall be empowered to retain
independent counsel, accountants, or others to assist it in the
conduct of any investigation. The Audit Committee may ask members of
management or others to attend a meeting and provide pertinent
information as necessary.
9. Prepare and maintain minutes of each Audit Committee meeting and
approve such minutes at the next appropriate Committee meeting.
Independent Accountants:
10. Recommend to the Board of Directors of the selection of the
independent accountants, noting the Audit Committee's consideration of
their independence, effectiveness and the fees and other compensation
to be paid to the independent accountants. The independent accountant
is ultimately accountable to the Board of Directors and the Audit
Committee, as representatives of the corporation's shareholders. On an
annual basis in order to determine the accountant's independence, the
Committee should review and discuss with the accountants their
independence, all significant relationships the accountants have with
the corporation and the matters required to be discussed by Statement
of Auditing Standards 61, as may be modified or supplemented. Receive
formal written letter from the independent accountants delineating all
relationships between the independent accountants and the corporation
required by Independence Standards Board Standard No. 1, as may be
modified or supplemented. Actively engage in a dialogue with the
independent accountant with respect to any disclosed relationships or
services that may impact the objectivity and independence of the
accountant and take, or recommend that the full Board of Directors
take, appropriate action to oversee the independence of the
independent accountant.
11. Review the performance of the independent accountants and recommend
any proposed discharge of the independent accountants when
circumstances warrant.
12. Meet with the independent accountants and the internal auditor of the
corporation to review the scope of the proposed audit for the current
year. At the conclusion of the annual examination, review:
a. The company's annual financial statements and related footnotes.
b. The independent accountant's audit of the financial statements
and their report thereon.
c. Any significant changes required in the independent accountant's
annual plan.
A-3
<PAGE>
d. Any serious difficulties or disputes with management encountered
during the course of the audit.
e. Other matters related to the conduct of the audit which are to be
communicated to the Committee under generally accepted auditing
standards.
13. Elicit any recommendations from the independent accountants and
internal auditors for the improvement of internal controls procedures
or particular areas where new or more detailed controls or procedures
are considered desirable.
Internal Audit:
14. Review the internal audit function of the corporation including the
independence and authority of its reporting obligations, the
corporation's Audit Policy, and the proposed audit plan for the coming
year.
15. Consider and review with the internal auditor:
a. Significant findings noted during the course of the various
internal audits and management's response thereto.
b. Any difficulties encountered in the course of their audits,
including any restrictions on the scope of their work or access
to required information.
c. Any changes required in the planned scope of their audit plan.
d. The Audit Department budget including staff compensation,
training and staffing.
e. Regulatory examination findings.
Financial Reporting:
16. Consider the independent accountants' judgements about the quality and
appropriateness of the corporation's accounting principles as applied
in its financial reporting.
17. Consider and recommend to the Board of Directors, if appropriate,
major changes to the corporation's auditing and accounting principles
and practices as suggested by the independent accountants, the
internal auditor, or management.
18. Review with the independent accountants, the internal auditor, and
management the extent to which changes or improvements in financial or
accounting practices, as approved by the Board of Directors, have been
implemented.
A-4
<PAGE>
Compliance:
19. Review periodically with management the corporation's Code of Ethical
Conduct and corporate compliance with that code.
20. Review, with management or with the corporation's legal counsel, any
legal, regulatory or compliance matter reported to the Committee.
21. Investigate any matter brought to its attention within the scope of
its duties, with the power to retain outside counsel or other advisors
for this purpose if, in its judgement, the matter so warrants.
22. Perform any other activities consistent with this Charter, the
corporation's By-laws and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
A-5
<PAGE>
REVOCABLE PROXY
TROY FINANCIAL CORPORATION
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 8, 2001
The undersigned shareholder of Troy Financial Corporation (the "Company") hereby
appoints a member of Pattison, Sampson, Ginsberg & Griffin, PC of Troy, New
York, as proxy, such person being duly appointed by the Board of Directors with
the power to appoint an appropriate substitute, to cast all votes that the
undersigned shareholder is entitled to cast at the annual meeting of
shareholders (the "Annual Meeting") to be held at 10:00 a.m. Eastern Time on
Thursday, February 8, 2001, at The Century House, 997 New Loudon Road, Route 9,
Latham, NY 12110 and at any adjournments thereof, upon the following matters.
The undersigned shareholder hereby revokes any proxy or proxies heretofore
given.
___________________________
Please be sure to sign and date Date
this proxy in the box below.
________________________________________________________________________________
________________________________________________________________________________
Shareholder sign above Co-holder (if any) sign above
For all
nominees With- For All
listed hold Except
1. To elect three directors for a
three-year term (Proposal 1). |_| |_| |_|
NOMINEES: GEORGE H. ARAKELIAN
RICHARD B. DEVANE
EDWARD G. O'HAIRE
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), MARK
"FOR ALL EXCEPT" AND WRITE THE NAME OF THE NOMINEE(S) IN THE SPACE PROVIDED
BELOW.
--------------------------------------------------------------------------------
2. To approve the granting of For Against Abstain
discretion to the Board of
Directors or its Compensation |_| |_| |_|
Committee to (i) amend grants
of stock options, restricted
stock and restricted stock units made to directors, officers and employees
under the Company's Long-Term Equity Compensation Plan prior to this Annual
Meeting to allow accelerated vesting upon certain circumstances related to a
change in control; and (ii) establish the vesting terms and conditions for
future awards without regard to previous limitations (Proposal 2).
3. The proxies are authorized to vote upon such other business as may properly
come before the Annual Meeting and any adjournments of the meeting, in
accordance with the determination of a majority of the Company's Board of
Directors.
Please check box if you plan to attend the February 8, 2001
Annual Shareholders Meeting. |_|
<PAGE>
^ DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PREPAID ^
TROY FINANCIAL CORPORATION
--------------------------------------------------------------------------------
This proxy will be voted as directed by the undersigned shareholder. UNLESS
CONTRARY INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
THE NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSAL 2 AND IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE COMPANY'S BOARD OF DIRECTORS AS TO ANY OTHER
MATTERS. The above signed shareholder may revoke this proxy at any time before
it is exercised by delivering to the Secretary of the Company either a written
revocation of the proxy or a duly executed proxy bearing a later date, or by
appearing at the Annual Meeting and voting in person. The above signed
shareholder hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement.
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) HEREON. EACH EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ATTORNEY-IN-FACT, AND ANY OTHER FIDUCIARY
SHOULD SIGN AND INDICATE HIS OR HER FULL TITLE. WHEN STOCK HAS BEEN ISSUED IN
THE NAME OF TWO OR MORE PERSONS, ALL SHOULD SIGN.
IF YOU RECEIVE MORE THAN ONE PROXY CARD, PLEASE SIGN AND RETURN ALL CARDS IN THE
ACCOMPANYING ENVELOPE.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
--------------------------------------------------------------------------------
