FNB ROCHESTER CORP.
35 STATE STREET
ROCHESTER, NEW YORK 14614
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1997
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of
FNB ROCHESTER CORP. (the "Company") will be held at the
Strathallan, 550 East Avenue, Rochester, New York 14607, on May
27, 1997 at 10:00 a.m., local time, for the following purposes:
(1) To elect NINE (9) Directors to hold office for the
ensuing year, and until their successors have been duly
elected and qualified.
(2) To transact such other business as may properly come
before the Meeting.
The holders of record of common shares at the close of business
on April 10, 1997 are entitled to notice of and to vote at the
Annual Meeting.
PLEASE INDICATE YOUR INSTRUCTIONS FOR VOTING ON THE ENCLOSED
PROXY CARD, DATE AND SIGN IT, AND MAIL IT IN THE ENCLOSED
ENVELOPE AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU
MAY VOTE IN PERSON AND THE PROXY WILL NOT BE USED.
Dated: April 24, 1997
BY ORDER OF THE BOARD OF DIRECTORS,
Mariann Joyal
Secretary
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FNB ROCHESTER CORP.
35 STATE STREET
ROCHESTER, NEW YORK 14614
TO BE HELD AT THE
STRATHALLAN
550 EAST AVENUE, ROCHESTER, NEW YORK
ON MAY 27, 1997
This Proxy statement is furnished to the holders of common stock
of FNB ROCHESTER CORP. (the "Company") in connection with the
solicitation of proxies on behalf of the Board of Directors for
use at the Annual Meeting of Shareholders of the Company to be
held on May 27, 1997, or any adjournments thereof. This Proxy
Statement and form of proxy are first being sent or given to
shareholders on or about April 24, 1997.
Shareholders who execute proxies retain the right to revoke them
at any time before they are exercised. If you sign and return
the enclosed proxy, the shares represented thereby will be voted
for the nominees of the Board of Directors unless otherwise
indicated on the proxy.
VOTING
Under the New York Business Corporation Law ("BCL") and the
Company's by-laws, the presence, in person or by proxy, of a
majority of the outstanding common shares is necessary to
constitute a quorum of the shareholders to take action at the
Annual Meeting. The shares which are present, or represented by
a proxy, will be counted for quorum purposes regardless of
whether or not a broker with discretionary authority fails to
exercise its discretionary voting authority with respect to any
particular matter. Once a quorum is established, under the BCL
and the Company's by-laws, the Directors standing for election
must be elected by a plurality of the votes cast. For voting
purposes, all votes cast "for", "against", "abstain", or
"withhold authority" will be counted in accordance with such
instruction as to each item. Broker non-votes will not be
counted for any item.
The cost of solicitation of proxies by the Board of Directors
will be borne by the Company. The Company has retained Regan &
Associates, Inc. to assist in the solicitation of proxies under a
contract providing for payment of $2,250, plus reimbursement of
reasonable out-of-pocket expenses. In addition to solicitations
by mail, Regan & Associates, Inc. and regular employees of the
Company and its subsidiaries may solicit proxies in person, by
facsimile transmission, or by telephone, but no employee of the
Company or its subsidiaries will receive any compensation for
their solicitation activities in addition to their regular
compensation. The Company will reimburse the reasonable expenses
of brokerage houses and other custodians, nominees, and
fiduciaries for forwarding solicitation material to the
beneficial owners of Company stock held of record by such
persons.
The Board of Directors has fixed the close of business on April
10, 1997 as the time as of which shareholders entitled to notice
of and to vote at the Annual Meeting shall be determined. There
were 3,577,366 shares of the Company's common stock, par value
$1.00 per share, outstanding and entitled to vote at the close of
business on April 10, 1997.
BENEFICIAL OWNERSHIP OF THE COMPANY'S COMMON STOCK
BY CERTAIN PERSONS AND BY MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows the name, address, and beneficial
ownership of the Company's common stock as of April 10, 1997 of
each person known to the Company to be a beneficial owner,
directly or indirectly, of more than 5% of any class of its
outstanding securities entitled to vote:
Name and Address of Common Shares
Beneficial Owner (1) Beneficially Owned Percent of Class
William Levine 320,957 (2) 9.0%
c/o Alleson of Rochester
2921 Brighton-Henrietta
Town Line Road
Rochester, New York 14623
The Banc Funds 263,200 (3) 7.4%
208 South LaSalle Street
Suite 200
Chicago, Illinois 60604
Laurie Kuskin 227,056 (4) 6.3%
c/o Kravetz Realty, Inc.
150 Linden Oaks Drive
Rochester, New York 14625
(1) Information presented in this table has been obtained from
the respective shareholder, from filings made with the
Securities and Exchange Commission or from the Company s
transfer agent. Except as otherwise indicated, each holder
has sole voting and investment power with respect to the
shares indicated.
(2) Includes 340 shares held by Mr. Levine's wife and 98,343
shares held by Mr. Levine as Trustee for the benefit of
certain members of his family.
(3) The aggregate number of shares specified are divided among
Banc Fund III L.P., an Illinois Limited Partnership, Banc
Fund III Trust, Banc Fund IV L.P., an Illinois Limited
Partnership, and Banc Fund IV Trust. The Company does not
have information as to the specific holdings of each entity.
(4) Includes 86,085 shares held as Executrix of the Estate of
Fred B. Kravetz, 10,932 shares held as Executrix of the
Estate of Arline Kravetz, and 33,000 shares held as Trustee
for the benefit of certain members of her immediate family.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table shows the name, address, and beneficial
ownership of the Company's common stock as of April 10, 1997, of
each Director of the Company and nominee for director, of each
executive officer who is named in the Summary Compensation Table
( Named Officer ) and of all directors, nominees for director,
and executive officers of the Company as a group, respectively:
Name and Address* Shares owned Percent of Class
----------------- ------------ ----------------
R. Carlos Carballada 104,137 (1) 2.8%
Michael J. Falcone 130,299 (2) 3.6%
Gayle C. Johnston 200 (2,3) **
Joseph M. Lobozzo II 21,250 (4) **
Francis T. Lombardi 6,974 (2) **
Carl R. Reynolds 23,057 (2,5) **
H. Bruce Russell 6,250 (2) **
James D. Ryan 5,562 (2,6) **
Linda Cornell Weinstein 30,602 (2,7) **
Donald R. Aldred 19,724 (8) **
Robert B. Bantle 20,454 (8) **
Stacy C. Campbell 19,708 (8) **
Robert E. Gilbert 20,203 (8) **
All directors and
executive officers
as a group
(14 persons) 427,387 (9) 11.3%
* The address of each Director and Named Officer is c/o FNB
Rochester Corp., 35 State Street, Rochester, New York 14614.
** Less than 1%.
(1) Includes options to purchase 96,500 common shares that are
exercisable within 60 days.
(2) Includes options to purchase 1,250 common shares that are
exercisable within 60 days.
(3) Held jointly with Ms. Johnston's spouse.
(4) Includes 20,000 shares held by Mr. Lobozzo's spouse, with
Mr. Lobozzo sharing investment power.
(5) Includes 21,807 shares that are held jointly with Mr.
Reynolds' spouse.
(6) Includes 2,906 shares held by Mr. Ryan's spouse.
(7) Includes 14,852 shares held by the Cornell/Weinstein Family
Foundation, as to which shares Ms. Weinstein has shared
voting and investment power, and 5,000 shares held by Ms.
Weinstein's spouse.
(8) Includes options to purchase 18,500 common shares that are
exercisable within 60 days.
(9) Except as otherwise indicated above, members of the group
have sole voting and investment power with respect to such
shares. Includes options exercisable within 60 days to
purchase 196,500 shares.
ELECTION OF DIRECTORS
Nominees for Election as Directors
At the Annual Meeting, nine (9) Directors will be elected to
serve for the ensuing year, and until their successors are duly
elected and qualified. Each of the nominees named below is a
present member of the Board of Directors and in the case of each
nominee other than Gayle C. Johnston, was elected at the
Company's last Annual Meeting of Shareholders. The Board of
Directors elected Ms. Johnston to the Board in July 1996. She
assumed her place on the Board at its August 1996 meeting. All
nominees have consented to serve as directors, if elected.
However, if at the time of the meeting any nominee should be
unable to stand for election, it is the intention of the persons
designated as proxies to vote, in their discretion, for such
other persons, if any, as may be designated as nominees by the
Board of Directors. The Board of Directors proposes to nominate
and recommends a vote for election of the following persons.
Director
Director's Name (age) Since Principal Occupation
--------------------- -------- --------------------
R. Carlos Carballada (62) 1992 President, Chief Executive
Officer, FNB Rochester Corp.
Michael J. Falcone (61) 1978 Real Estate Developer, Pioneer
Group
Gayle C. Johnston (41) 1996 President, Thin Film
Technology Division, Bausch &
Lomb
Joseph M. Lobozzo II (53) 1993 President & CEO, JML Optical
Industries, Inc.
Francis T. Lombardi (65) 1978 Vice President, Syracuse Tank
& Mfg. Co. Inc.
Carl R. Reynolds (49) 1977 Attorney
H. Bruce Russell (59) 1993 Vice President - Corporate
Real Estate - Eastman Kodak
Company
James D. Ryan (64) 1992 President and Owner, RYCO
Management, Inc.
Linda Cornell Weinstein (52) 1993 Executive Director,
Cornell/Weinstein Family
Foundation
Other than Mr. Carballada and Ms. Johnston, each director of the
Company has been engaged in his or her principal occupation or
employment as specified above for five years or more.
Each director of the Company is also a director of First National
Bank of Rochester (the "Bank").
Mr. Carballada has been employed in the banking business since
1968. He was President and Chief Executive Officer of Citizens
Central Bank in Arcade, New York from July 1976 until August
1981, and was President and Chief Executive Officer of Central
Trust Company in Rochester, New York, from September, 1981 until
May, 1992. Mr. Carballada became the President and Chief
Executive Officer of the Company in June of 1992. Mr. Carballada
also serves as President and Chief Executive Officer of the
Bank, and until its sale on April 1, 1994, served as President
and Chief Executive Officer of Atlanta National Bank.
Mr. Falcone is the Senior Partner of Pioneer Development Company,
a real estate development and management company headquartered in
Syracuse, New York. He has held that position since 1987. Since
1992, Mr. Falcone has served as Chairman of the Board of
Directors of the Company and the Bank.
Ms. Johnston joined Bausch & Lomb in February 1992 as a Director
of Marketing and Group Product Manager in Bausch & Lomb's lens
care product businesses. In February 1994 she was promoted to
Director of Quality Process in the Personal Products Division.
In March 1994 she became President of Bausch & Lomb's Thin Film
Technology Division, a position she currently holds.
Mr. Lobozzo has been the President, Chief Executive Officer, and
principal shareholder of JML Optical Industries, Inc., located in
Rochester, New York, since 1972. JML Optical Industries, Inc.
manufactures, designs, and imports precision optical systems.
Mr. Lombardi is Vice President of Syracuse Tank & Manufacturing
Company, Incorporated, a manufacturer of metal products in
Syracuse, New York, and has been associated with the
manufacturing company since 1957.
Mr. Reynolds has been an attorney engaged in the general practice
of law in Rochester, New York since 1975. Mr. Reynolds is also
President and a director of New Sky Communications, Inc., a
motion picture production company. Since 1992, Mr. Reynolds has
served as Vice Chairman of the Board Directors of the Company and
the Bank.
Mr. Russell joined the Finance and Administration Division of the
Eastman Kodak Company in Rochester in 1963. Since that time, Mr.
Russell has held a variety of positions there, each with
increasing responsibility. In 1986, he became a divisional Vice
President and Director, Corporate Real Estate Office, a position
he currently holds.
Mr. Ryan is a Rochester area real estate developer, and since
1969 has been the principal shareholder and president of RYCO
Management, Inc., a real property development and management
company.
Ms. Weinstein has served as Executive Director of the
Cornell/Weinstein Family Foundation, a private non-profit
foundation located in Rochester, New York, since 1986.
No family relationships exist among the above-named Directors or
Officers of the Company. None of the Directors of the Company
holds a directorship in any other publicly traded company, except
for Carl R. Reynolds, who is a director of New Sky
Communications, Inc., a company registered under Section 15(d) of
the Securities and Exchange Act of 1934, as amended.
INFORMATION ABOUT MANAGEMENT
COMMITTEES OF THE BOARD OF DIRECTORS
Among other committees, the Company has a Nominating and
Compensation Committee and an Audit and Examining Committee. The
defined purposes and current membership of these two committees
are as follows.
Nominating and Compensation Committee, chaired by Mr. Lobozzo,
met three times in 1996. The Nominating and Compensation
Committee was formed in 1993 and combines the previous Stock
Option Committee and Nominating Committee. The Committee selects
and recommends to the Board of Directors candidates for the Board
of Directors of the Company, evaluates the performance of the
Chief Executive Officer on an annual basis, makes recommendations
regarding executive officer compensation, and administers the
Company's employee Stock Option Plan. The Nominating and
Compensation Committee will review shareholders' suggestions of
nominees for director that are submitted in writing to the
committee, at the address of the Company's principal executive
office, not less than 120 days in advance of the date the
Company's proxy statement is released to shareholders in
connection with the previous year's annual meeting of
shareholders. In addition to Mr. Lobozzo, Messrs. Falcone,
Russell, and Ryan are members of this committee.
Audit and Examining Committee, chaired by Mr. Lombardi, met four
times in 1996. The Audit and Examining Committee has
responsibility for general oversight of the Company's internal
auditors, reviewing the Company's annual audit plan with its
auditors, considering questions and issues arising during the
course of the audit, oversight of the Company's financial
reporting, and inquiring into related matters such as the
adequacy of internal controls. The Committee also has the
responsibility for making a recommendation to the Board of
Directors regarding the selection of the Company's independent
auditors. In addition to Mr. Lombardi, Messrs. Lobozzo and
Reynolds and Ms. Johnston are members. Ms. Johnston became a
member of the committee in January 1997.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
The Board of Directors held 12 meetings in fiscal year 1996, and
all of the Directors attended at least 75% of the aggregate of
(a) the total number of meetings of the Board of Directors held
during the period for which they served as Director, and (b) the
total number of meetings held by all committees of the Board of
Directors on which they served.
DIRECTOR COMPENSATION
All Directors receive compensation of $300 for attendance at each
Board of Directors' meeting of the Company or any Board of
Directors' meeting of any subsidiary. All directors receive $200
for each meeting of any committee of the Board or committee
meeting of the Board of Directors of any subsidiary of the
Company. No executive officer of the Company who also serves as
a director receives fees for Board or committee meetings
attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, each of the Nominating and Compensation Committee
members, or members of their immediate families, borrowed or had
outstanding, either directly or indirectly, loans in excess of
$60,000 from the Bank. In each instance the loans (a) were made
in the ordinary course of business, (b) were made on
substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable
transactions with other persons, and (c) did not involve more
than the normal risk of collectibility or present other
unfavorable features.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
The Company maintains a Directors' and Officers' liability
insurance policy written by the Aetna Casualty and Surety
Company. The policy is for a one-year period expiring April 30,
1997, at an annual premium of $67,000, and is expected to be
renewed for an additional year at an annual premium that is still
to be determined. The policy provides for indemnification
benefits and the payment of expenses in actions instituted
against any director or officer of the Company or any subsidiary,
for claimed liability arising out of their conduct in such
capacities.
EXECUTIVE OFFICERS
The following current officers of the Company or the Bank
("Executive Officers") are deemed to be "executive officers" for
purposes of the federal securities laws.
R. Carlos Carballada (62), President and Chief Executive Officer
of the Company and the Bank, commencing June 8, 1992. See the
information provided under "Nominees for Director," above, for a
description of employment history and business experience of Mr.
Carballada.
Donald R. Aldred (54), Senior Vice President, Business and
Professional Banking Division of the Bank, commencing June 23,
1992. From 1987 to 1992, he was Senior Vice President and
Manager of the Commercial Banking Division at Central Trust
Company. Prior to his time with Central Trust Company, he spent
21 years with Manufacturers and Traders Trust Company progressing
through numerous lending/credit functions to the position of Vice
President and Manager of Commercial Finance.
Robert B. Bantle (45), Senior Vice President, Community Banking
Division of the Bank, commencing July 1, 1992. He was Senior
Vice President, Human Resources, at Central Trust Company from
1989 until 1992. Prior to joining Central Trust Company, he
spent 15 years with Security Trust/Fleet Bank in various areas,
including Human Resources, Branch Administration, and Strategic
Planning.
Stacy C. Campbell (60), Senior Vice President and Chief
Financial Officer of the Company and the Bank, commencing July 1,
1992. From 1976 to 1992, Mr. Campbell was Senior Vice President
and Chief Financial Officer at Central Trust Company. Prior to
joining Central Trust Company, he was employed by Marine Midland
Bank N.A. in Commercial Lending, Treasury, and Financial
positions.
Robert E. Gilbert (49), Senior Vice President, Operations
Division of the Bank, commencing June 29, 1992. From 1990 to
1992, he was a Managing Agent at the Resolution Trust
Corporation. From 1975 to 1989, he worked in various capacities
with Irving Bank Corporation including Executive Vice President
and General Manager of Irving Services Corporation, Senior Vice
President of Operations at Central Trust Company, and Vice
President of Operations at Citizens Central Bank of Arcade, New
York.
Theresa B. Mazzullo (44), Senior Vice President, Trust &
Investment Division of the Bank, commencing March 10, 1993. She
was Vice President and Manager of the Personal Trust and
Investment Estate Planning and New Business Department of The
Chase Manhattan Bank, N.A. in Rochester from March 1992 until
March 1993. From 1978 until 1992 she progressed through various
trust positions at Central Trust Company to the level of Vice
President and Manager of Trust Marketing Sales.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities and Exchange Act of 1934, as
amended, Directors, Executive Officers, and certain other persons
are required to report their ownership of equity securities of
the Company, and any changes in that ownership, to the Securities
and Exchange Commission and the Company. Based solely upon a
review of reports furnished to the Company by such persons on
Forms 3, 4, or 5 for the year ended December 31, 1996 (the
"Section 16(a) Reports"), there were no omissions from filing or
late filings of Section 16(a) Reports.
EXECUTIVE COMPENSATION
Shown below is information concerning annual and long-term
compensation to certain Executive Officers for services to the
Company for the years ended December 31, 1996, 1995, and 1994.
The table includes information on the Company's Chief Executive
Officer, Mr. Carballada, and its Chief Financial Officer, Mr.
Campbell, and also on Mr. Aldred, Mr. Bantle, and Mr. Gilbert,
three of the Bank's Senior Vice Presidents (the "Named
Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation (1)
Name and All other
Position Year Salary Bonus Options (Shares) Compensation
<S> <C> <C> <C> <C> <C>
R. Carlos 1996 $203,964 $8,159 0 $7,477
Carballada, 1995 $196,618 $5,899 7,000 $7,435
President & 1994 $190,692 $ 0 8,000 $5,190
Chief
Executive
Officer
Donald R. 1996 $110,141 $6,406 1,000 $1,693
Aldred, 1995 $106,174 $5,185 5,000 $1,323
Senior Vice 1994 $102,974 $ 0 4,000 $1,189
President,
Business &
Professional
Banking
Robert B. 1996 $ 99,119 $5,965 1,000 $1,968
Bantle, 1995 $ 95,548 $4,866 5,000 $1,857
Senior Vice 1994 $ 92,666 $ 0 4,000 $1,655
President,
Community
Banking
Stacy C. 1996 $ 99,116 $5,965 1,000 $3,677
Campbell, 1995 $ 95,546 $4,866 5,000 $2,839
Senior Vice 1994 $ 92,666 $ 0 4,000 $2,631
President &
Chief
Financial
Officer
Robert E. 1996 $ 99,428 $5,977 1,000 $1,843
Gilbert, 1995 $ 94,367 $4,831 5,000 $1,880
Senior Vice 1994 $ 87,534 $ 0 4,000 $1,718
President,
Operations
</TABLE>
(1) Includes for 1996: $2,310, $639, $1,487, $1,487, and
$1,300 for Company contributions to the Company's 401(k)
plan on behalf of Messrs. Carballada, Aldred, Bantle,
Campbell, and Gilbert, respectively, and $5,167, $1,054,
$481, $2,190, and $543 in group term life insurance premiums
for Messrs. Carballada, Aldred, Bantle, Campbell, and
Gilbert, respectively.
<PAGE>
OPTION GRANTS
The following table details the number and terms of options
granted during the last fiscal year to Named Officers.
<TABLE>
<CAPTION>
Option Grants in the Last Fiscal Year
Realizable
Value at
Assumed Annual
Rates of Stock
Price
Appreciation
Individual Grants for Option Term
% of Total
(1) Options Granted
Options to Employees in Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Donald R. 1,000 5.48% $12.75 12/20/06 $8,020 $20,320
Aldred
Robert B. 1,000 5.48% $12.75 12/20/06 $8,020 $20,320
Bantle
Stacy C. 1,000 5.48% $12.75 12/20/06 $8,020 $20,320
Campbell
Robert E. 1,000 5.48% $12.75 12/20/06 $8,020 $20,320
Gilbert
</TABLE>
(1) Granted December 20, 1996 at fair market value with one-half
exercisable per year commencing December 20, 1997. Assuming 5%
and 10% compounded annual appreciation of the stock price over
the term of the option, the price per share of common stock would
be $20.77 and $33.07 respectively, on December 20, 2006.
OPTION EXERCISES
The following table summarizes aggregate exercises of options by
Named Officers, and the number of and the spread on unexercised
options that they hold:
<TABLE>
<CAPTION>
Option Exercises and Year-End Value Table
Aggregated Options Exercised in Last Fiscal Year and FY-End Option Value
(1)
Value of
Number of Unexercised In-
Unexercised Options the-Money Options
Shares at FY-End at FY-End
Acquired
on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
<S> <C> <C> <C> <C>
R. Carlos Carballada 0 0 81,500/ $395,275/
18,500 $82,795
Donald R. Aldred 0 0 18,500/ $112,255/
3,500 $10,925
Robert B. Bantle 0 0 18,500/ $112,255/
3,500 $10,925
Stacy C. Campbell 0 0 18,500/ $112,255/
3,500 $10,925
Robert E. Gilbert 0 0 18,500/ $112,255/
3,500 $10,925
</TABLE>
(1) Based on the difference between the option exercise prices
and $12.25, the closing price of the Company s common stock on
12/31/96 as quoted on the Nasdaq Stock Market.
RETIREMENT PLAN
The following table shows the estimated retirement benefits
payable under the Bank's plan with the New York State Bankers
Retirement System (the "Plan") to Named Officers based upon
hypothetical compensation and years of service levels:
<TABLE>
<CAPTION>
Pension Plan Table
Annual Benefits Per Number of Years of Service
(1)
Average
Compensation
5 8 10 12
<S> <C> <C> <C> <C>
$100,000 $7,500 $12,000 $15,000 $18,000
$125,000 $9,375 $15,000 $18,750 $22,500
$150,000 $11,250 $18,000 $22,500 $27,000
$175,000 $13,125 $21,000 $26,250 $31,500
</TABLE>
(1) Annual benefits equal 1.5% of Average Compensation at time
of retirement multiplied by years of creditable service
commencing on or after April 1, 1993. For the purposes of
determining benefits under the Plan, Average Annual Compensation
is the average annual compensation during the highest five
consecutive years in all of the years of creditable service
including salary, bonus, and other taxable compensation.
Effective October 1, 1994, the maximum amount of annual
compensation that is taken into account in determining benefits
is $150,000. Because Mr. Carballada presently has 1.5 years of
credited service at higher compensation levels, he may be
entitled to benefits at retirement based on more than $150,000 of
Average Compensation. The annual benefits are not subject to
deduction for social security or other offsets. As of April 1,
1997, all of the Named Officers had four years of creditable
service. Mr. Carballada reached his normal retirement age as
defined in the Plan on April 1, 1997, when he had five years of
vesting service and had reached age 62. The Plan allows him to
continue accruing years of creditable service so that a full five
years of creditable service is possible.
FNBR STOCK PERFORMANCE
As part of the executive compensation information presented in
this proxy statement, the Securities and Exchange Commission
requires a five-year comparison of stock performance for the
Company with stock performance by a broad equity market index and
with a line-of -business market index. The Company's common
stock is traded in the over-the-counter market and listed on
NASDAQ, so that a broad market index comparison with the NASDAQ
Stock Market Total Return Index (U.S. Companies) is presented. A
peer group index, on a line-of-business basis, is the NASDAQ Bank
Stock index, which is the other comparison presented in this
proxy statement.
The annual change for the five-year period shown in the graph is
based (as required by SEC rules) on the assumption that $100 had
been invested in the Company's stock on December 31, 1991 and
that all dividends had been re-invested quarterly during the
period. The total cumulative dollar returns shown on the graph
represents the value that the investments would have had on
December 31, 1996. The calculations exclude trading commissions
and taxes. The following graph shows the performance of the
Company's stock compared to the performance of stocks quoted on
the NASDAQ National Market System and the performance of Bank
Stocks quoted on the NASDAQ National Market System:
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FNBR vs NASDAQ Market and NASDAQ Bank Stocks (US)*
<CAPTION>
Measurement Period NASDAQ NASDAQ
(Fiscal Year Covered) FNBR Stock Market Bank Stocks (US)
<S> <C> <C> <C>
Measurement Pt-12/31/91 $100 $100 $100
YE 12/31/92 $77.1 $116.4 $145.6
YE 12/31/93 $65.7 $133.6 $166.0
YE 12/31/94 $60.0 $130.6 $165.4
YE 12/31/95 $111.4 $184.7 $246.3
YE 12/31/96 $140.6 $227.2 $325.6
* Assumes reinvestment of dividends
</TABLE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Nominating and Compensation Committee (the "Committee") of
the Board of Directors, each member of which is a non-employee
director, is responsible for approving executive management
compensation and for administering the Company's employee stock
option plan.
The senior management of the Company was hired in 1992 in
conjunction with the entry of Consent Orders between the Company
and the Federal Reserve Board and between the Bank and the Office
of the Comptroller of the Currency. At that time, the Company
sought to attract and retain a capable and experienced management
team that would stabilize and reorganize the Company's banking
operations during a period of regulatory and financial disarray.
The basic salary arrangements between the Company (and the Bank)
and the Chief Executive Officer and the other Named Officers were
established under employment agreements entered into at the time
the management team was hired. Except in the case of Mr.
Carballada (see "Employment Agreement," below), all of these
employment agreements have expired in accordance with their
terms.
The Committee's evaluation of management's performance has not
been reduced to a formula of specific objective criteria but has
included a general review of the Company's development and
performance in many areas. The Committee believes that the Chief
Executive Officer and the rest of the management team have been
highly successful in resolving the Company's regulatory problems
and have established a commendable record of continuing increases
in the Company's assets and profitability.
The Committee included the Executive Officers of the Company and
the Bank in a 4% salary increase that was given to all employees
during 1996. In addition, the Company has maintained a "profit
sharing" program applicable to all staff members which provides
bonuses of specific percentages of base salary or wages earned
during the fiscal year if the Bank obtains specific returns on
assets during that fiscal year. All eligible staff members,
including the Executive Officers, received a "profit sharing"
bonus of 4% with respect to 1996.
During 1996, the Company's financial results exceeded the amounts
targeted under the Company's business plan. In recognition of
the Company's exceptional performance, a $2,000 bonus for 1996
was paid to each Executive Officer other than the Chief Executive
Officer. While the Committee believed that the CEO was also
instrumental to the Company's performance, upon the
recommendation of the CEO and with the full support of the
Committee, the entire amount of the available bonus money was
directed to Executive Officers other than the Chief Executive
Officer.
Since 1992, the Company's policy has been to try to create long
term incentives that link compensation with performance and
shareholder return. Under the circumstances, the Committee has
viewed the award of stock options as a particularly appropriate
means of providing compensation and incentives since the value of
awards will normally increase in direct relation to the success
of management in enhancing corporate performance in a manner that
will be reflected in shareholder returns. In 1996, the Company
granted options to acquire 18,250 shares to key employees under
the 1992 Stock Option Plan, including the grants of options to
acquire 1,000 shares made to each of the Executive Officers other
than the CEO. The Committee's decision not to grant any options
to the Chief Executive Officer in 1996 was consistent with the
CEO's recommendation that all option grants for the year be
directed to other key officers of the Company. Options to
acquire 23,800 shares remain available to be granted under the
1992 Stock Option Plan.
In general terms, the Committee believes the grant of options
under the 1992 Stock Option Plan allowed the Company to reward
senior management in a form that did not reduce the cash
resources of the Company. The grant of options also promoted the
goal of the Committee to encourage participation by management in
ownership of the Company. Mr. Carballada has expressed to the
Committee his firm commitment to implement future programs which
will enable senior management, over the next four to seven years,
to own Company Stock in an amount valued at greater than 50% of
their base annual salary. In the view of this Committee, such
programs, if implemented, would align management with the
interests of the shareholders, and help to promote the long-term
performance goals that will enhance shareholder returns.
Members of the Compensation Committee:
Joseph M. Lobozzo II, Chairman
Michael J. Falcone
H. Bruce Russell
James D. Ryan
EMPLOYMENT AGREEMENT
On June 8, 1992, the Company entered into a three-year
employment agreement with Mr. Carballada, which was extended by
the mutual consent of the parties on February 22, 1994 until June
30, 1997 and was subsequently extended on June 27, 1996 until
June 30, 1998. A further provision of the June 27, 1996
extension is that there shall be two automatic extensions of the
employment agreement, to each of June 30, 1999 and June 30, 2000,
unless at least one year prior to the next expiration date,
either party notifies the other of a desire that the agreement
not be further extended. This agreement provides for an initial
annual base salary of $185,000 plus benefits, with the base
amount subject to increases by the Board of Directors based on
performance, inflation and other factors. The agreement is
terminable by the Company at the direction of the Board of
Directors. Under such circumstances, Mr. Carballada would be
entitled to salary, benefits, and other compensation for the
greater of one year or the remainder of the term unless his
employment has been terminated for "cause" as defined in the
agreement. If Mr. Carballada resigns for "good reason" as
defined in the agreement, he is entitled to salary, benefits, and
other compensation for the lesser of one year or the remainder of
the term. Payments after termination will cease if Mr.
Carballada accepts employment with any other financial
institution directly in competition with the Company in one or
more contiguous counties. Certain change of control provisions
contained in the agreement have been superseded by a Change of
Control Employment Agreement entered into between Mr. Carballada
and the Company (see "Change of Control Employment Agreements,"
below).
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
On February 1, 1996, the Company entered into Change of Control
Employment Agreements (the "Agreements") with Mr. Carballada and
with each of eight other senior officers of the Company. The
Agreements provide that in the event a "Change of Control" of the
Company occurs, the Agreements will become effective and govern
the terms and conditions under which the executive will continue
to be employed by the Company. The Agreements provide that each
executive will then be employed by the Company for a period of 18
months (24 months in the case of Mr. Carballada) in the same
position, with the same compensation and benefits, that applied
to the executive immediately prior to the Change of Control.
Under the Agreements, a Change of Control is generally defined
as: (i) the acquisition by any person of beneficial ownership of
35% or more of the combined voting power of the Company's voting
securities, (ii) individuals who are on the Board of Directors,
or who are nominated by the Board of Directors, ceasing to
constitute a majority of the Board, (iii) approval by the
shareholders of the Company of a reorganization, merger or
consolidation unless following the transaction more than 65% of
the common stock and combined voting power of voting stock of the
surviving corporation is owned in substantially the same
proportions by persons who were stockholders of the Company
immediately prior to the transaction, or (iv) approval by the
Company's stockholders of any sale, lease, exchange or other
transfer of all or substantially all of the assets of the Company
other than to a controlled entity.
Generally, the Agreements provide that, if the executive is
actually or constructively terminated from his or her position
during the employment period, the executive will be entitled to
receive a severance payment equal to the executive's annual
compensation (1.67 times annual compensation in the case of Mr.
Carballada). In addition, if the executive is still employed by
the Company 12 months after the date of the Change of Control,
the Employee may during a 30 day "Window Period" voluntarily
terminate his or her employment and receive a severance payment
equal to one-half of annual compensation (full annual
compensation in the case of Mr. Carballada).
The Agreements are not intended to deter combinations, but to
reduce the uncertainty and stress attendant upon a potential
change of control and thereby help to retain the Company's key
executives and help to assure the full and impartial
consideration of any acquisition proposal by the Company's
officers. The Window Period provision is intended to help hold
together an effective management team for a one year period
during which an acquisition may be pending but before it has been
completed.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Bank leases the Henrietta Community Banking Office (South
Town Plaza), at an annual rental of $100,667, from a partnership
that includes a member of the immediate family of William A.
Levine, who beneficially owns more than 5% of the Company's
outstanding common stock. This lease terminates on January 31,
2016. The lease is believed to be on comparable terms for
agreements for similar space similarly situated, and the space is
adequate for the Company's needs.
The Bank has from time to time made and has outstanding loans to
executive officers, directors and shareholders owning in excess
of 5% of the outstanding shares of the Company, and entities
related to such persons, which loans (a) were made in the
ordinary course of business, (b) were made on substantially the
same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other
persons, and (c) did not involve more than the normal risk of
collectibility or present other unfavorable features. It is
anticipated that the Bank will continue to make such loans from
time to time in the future.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the proxy
statement for the next annual meeting must be submitted on a
timely basis for the 1998 Annual Meeting of Shareholders and must
be received by the Company at its principal executive offices no
later than December 26, 1997. Any such proposals, as well as any
questions related thereto, should be directed to the Secretary of
the Company.
INDEPENDENT AUDITORS
A representative of KPMG Peat Marwick LLP, the Company's
independent auditors for 1996, is expected to attend the annual
meeting. The representative will have an opportunity to make a
statement, if desired, and will be provided with time to respond
to appropriate questions by Shareholders concerning the financial
statements. As described under the caption "Board of Directors
and Committee Meetings," the Audit and Examining Committee will
recommend to the Board of Directors a firm of independent
auditors for selection as auditors of the Company's 1997
financial statements.
OTHER MATTERS
Except for the matters set forth above, the Board knows of no
other matters which may be presented at the Annual Meeting of
Shareholders, but if any other matters properly come before the
Annual Meeting, it is the intention of the persons named in the
accompanying form of proxy to vote such proxies in accordance
with their judgment in such matters.
The Company's 1996 Annual Report to Shareholders, although not a
part of this Proxy Statement, is enclosed.
A copy of the Company's Annual Report on Form 10-K for fiscal
year 1996, as well as additional copies of the Company's Annual
Report, may be obtained without charge by any shareholder of
record by written request to Mariann Joyal, Secretary of the
Company, FNB Rochester Corp., 35 State Street, Rochester, New
York 14614. Exhibits to the Annual Report on Form 10-K may be
obtained on payment of a nominal charge.
Dated: April 24, 1997
BY ORDER OF THE BOARD OF DIRECTORS,
Mariann Joyal, Secretary
<PAGE>
PROXY PROXY
FNB ROCHESTER CORP.
35 STATE STREET, ROCHESTER, NEW YORK
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders
To Be Held On Tuesday, May 27, 1997
at 10:00 a.m. at the Strathallan,
550 East Avenue, Rochester, New York 14607
The undersigned hereby appoints Michael J. Falcone and Carl R.
Reynolds, each of them, as attorneys and proxies, each with full
power of substitution, to vote all shares of common stock of FNB
Rochester Corp. held by the undersigned and entitled to vote at
the Annual Meeting of Shareholders to be held on May 27, 1997 and
at all adjournments thereof, as designated on the reverse of this
Proxy Card, and confers upon each such proxy discretionary
authority to vote upon any other matter properly brought before
the meeting or any adjournment thereof.
It is understood that this proxy may be revoked at any time
insofar as it has not been exercised, and that the shares may be
voted in person if the undersigned attends the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED ON
THE REVERSE, OR IF NO DIRECTION IS GIVEN, THEY WILL BE VOTED FOR
ALL NOMINEES LISTED UNDER ELECTION OF DIRECTORS, AND TO GIVE
DISCRETION TO THE PROXIES ON ALL OTHER MATTERS PROPERLY BROUGHT
BEFORE THE MEETING.
(Continued on reverse side)
_________________________________________________________________
FOLD AND DETACH HERE
<PAGE>
[X] PLEASE MARK YOUR VOTES
AS INDICATED IN THIS EXAMPLE.
Election of Directors.
[__] FOR all nominees listed to the right
(except as marked to the contrary)
[__] WITHHOLD AUTHORITY
to vote for all nominees listed to the right
Directors:
R. Carlos Carballada, Michael J. Falcone, Gayle C. Johnston,
Joseph M. Lobozzo II, Francis T. Lomabardi, Carl R. Reynolds, H.
Bruce Russell, James D. Ryan, Linda Cornell Weinstein
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below.)
_________________________________________________________________
Please DATE and SIGN your name below as it appears on this PROXY.
Joint owners should each sign. If the signer is a corporation,
please sign by a duly authorized officer. Executors, trustees,
administrators, etc. should give full title as such. If a
partnership, please sign in partnership name by authorized
person.
Dated:____________________________________, 1997
_________________________________________________________________
Signature
_________________________________________________________________
Signature, if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
PLEASE RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
THANK YOU.