FNB ROCHESTER CORP.
35 STATE STREET
ROCHESTER, NEW YORK 14614
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
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 19, 1998 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 consider and act upon a proposal to approve and ratify an
amendment to the Company's 1992 Stock Option Plan to increase
the number of shares of the Company's common stock authorized
for purchase under the Plan by 200,000 to an aggregate of
525,000.
(3) 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 March 31,
1998 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 15, 1998
BY ORDER OF THE BOARD OF DIRECTORS,
s/ Mariann Joyal
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 19, 1998
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 19, 1998 or any adjournments
thereof. This Proxy Statement and form of proxy are first being sent or given to
shareholders on or about April 15, 1998.
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 and
for Proposal 2, 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, and Item 2, the proposal to amend the
Company's 1992 Stock Option Plan, must be approved by a majority 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 March 31, 1998 as the
time as of which shareholders entitled to notice of and to vote at the Annual
Meeting shall be determined. There were 3,604,114 shares of the Company's common
stock, par value $1.00 per share, outstanding and entitled to vote at the close
of business on March 31, 1998.
<PAGE>
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 March 31, 1998 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 313,057 (2) 8.7%
c/o Alleson of Rochester
2921 Brighton-Henrietta Town Line Road
Rochester, New York 14623
The Banc Funds 306,300 (3) 8.5%
208 South LaSalle Street, Suite 200
Chicago, Illinois 60604
John Hancock Advisers, Inc. 287,587 (4) 8.0%
101 Huntington Avenue
Boston, Massachusetts 02199
(1) Information presented in this table has been obtained from the
respective shareholder or from filings made with the Securities and
Exchange Commission. 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, 45,000 shares held by
the William and Mildred Levine Foundation and 98,343 shares held by Mr.
Levine as Trustee for the benefit of certain members of his family.
(3) The Banc Funds share ownership is as follows: 34,441 shares are held by
Banc Fund III L.P., an Illinois Limited Partnership; 105,559 shares are
held by Banc Fund III Trust, 38,114 shares are held by Banc Fund IV
L.P., an Illinois Limited Partnership, and 128,126 shares are held by
Banc Fund IV Trust. Each of the foregoing entities has sole voting and
investment powers with respect to the shares indicated.
(4) John Hancock Advisers, Inc. has sole voting and investment powers with
respect to the shares under Advisory Agreements with the following
funds: John Hancock Regional Bank Fund (225,337 shares); John Hancock
Financial Industries Fund (37,750 shares); and Southeastern Thrift and
Bank Fund, Inc. (24,500 shares).
Security Ownership of Directors and Officers
The following table shows the name, address, and beneficial ownership of the
Company's common stock as of March 31, 1998, 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 105,918 (1) 2.9%
Michael J. Falcone 131,549 (2) 3.6%
Gayle C. Johnston 1,450 (3) **
Joseph M. Lobozzo II 22,500 (4) **
Francis T. Lombardi 8,224 (2) **
Carl R. Reynolds 17,870 (2,5) **
H. Bruce Russell 7,500 (2) **
James D. Ryan 6,812 (2,6) **
Linda Cornell Weinstein 31,852 (2,7) **
Donald R. Aldred 23,159 (8) **
Robert B. Bantle 23,755 (8) **
Stacy C. Campbell 23,075 (8) **
Robert E. Gilbert 23,424 (8) **
All directors and executive
officers as a group (14 persons) 444,717 (9) 11.6%
* 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 100,000 common shares that are exercisable
within 60 days.
(2) Includes options to purchase 2,500 common shares that are exercisable
within 60 days.
(3) Includes options to purchase 1,250 common shares that are exercisable
within 60 days and 200 shares held jointly with Ms. Johnston's spouse.
(4) Includes options to purchase 1,250 common shares that are exercisable
within 60 days and 20,000 shares held by Mr. Lobozzo's spouse, with Mr.
Lobozzo sharing investment power.
(5) Includes 15,370 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 21,500 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 220,000 shares.
ITEM 1. 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 was
elected at the Company's last Annual Meeting of Shareholders. 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.
<TABLE>
<CAPTION>
Director's Name (age) Director Since Principal Occupation
<S> <C> <C>
R. Carlos Carballada (63) 1992 President, Chief Executive Officer, FNB Rochester Corp.
Michael J. Falcone (62) 1978 Real Estate Developer, Pioneer Group
Gayle C. Johnston (42) 1996 Vice President and General Manager, Sunglass Hut Business,
Bausch & Lomb
Joseph M. Lobozzo II (54) 1993 President & CEO, JML Optical Industries, Inc.
Francis T. Lombardi (66) 1978 Vice President, Syracuse Tank & Mfg. Co. Inc.
Carl R. Reynolds (50) 1977 Attorney
H. Bruce Russell (60) 1993 Retired
James D. Ryan (65) 1992 President and Owner, RYCO Management, Inc.
Linda Cornell Weinstein (53) 1993 Executive Director, Cornell/Weinstein Family Foundation
</TABLE>
Other than Ms. Johnston and Mr. Russell, 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 and in 1997 she became Vice President and General
Manager of Bausch & Lomb's Sunglass Hut business, 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 and Vice
President of the Logan Consulting Group, Inc., a Rochester, New York financial
and business consulting firm. Since 1992, Mr. Reynolds has served as Vice
Chairman of the Board Directors of the Company and the Bank.
Mr. Russell retired from the Eastman Kodak Company in 1997. He joined the
Finance and Administration Division of the Eastman Kodak Company in Rochester in
1963, and thereafter he held a variety of positions at Kodak, each with
increasing responsibility. In 1986, he became a divisional Vice President and
Director, Corporate Real Estate Office, a position he held until his retirement.
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 two
times in 1997. 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 1997. 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.
Board of Directors and Committee Meetings
The Board of Directors held twelve meetings in fiscal year 1997, 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
For 1997, Directors received compensation of $300 for attendance at each Board
of Directors' meeting and $200 for attendance at each Board committee meeting.
No executive officer of the Company who also serves as a director receives fees
for Board or committee meetings attended. The Company's 1995 Non-Employee
Director Plan provides for a one-time grant of options to purchase 2,500 shares
of the Company's common stock to (a) each person who was serving as a
non-employee director on October 3, 1995, and (b) each person who first becomes
a non-employee director after that date. Generally, such options vest over a
two-year period, are exercisable at fair market value on the date of grant, and
have a term of ten years.
Compensation Committee Interlocks and Insider Participation
During 1997, 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, 1998, at an annual premium of $59,000, 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 (63), 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 (55), 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 (46), 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 (61), 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 (50), 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 (45), 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, 1997 (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, 1997, 1996, and 1995. 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
Annual Compensation Long-Term (1)
Name and Compensation All Other
Principal Position Year Salary Bonus Options (Shares) Compensation
------------------ ---- ------ ----- ---------------- ------------
<S> <C> <C> <C> <C> <C>
R. Carlos Carballada, President & 1997 $210,618 $ 10,531 0 $3,236
Chief Executive Officer 1996 $203,964 $ 8,159 0 $3,139
1995 $196,618 $ 5,899 7,000 $3,184
Donald R. Aldred, Senior Vice 1997 $113,734 $ 7,687 0 $1,327
President, Business & Professional 1996 $110,141 $ 6,406 1,000 $1,096
Banking 1995 $106,174 $ 5,185 5,000 $ 843
Robert B. Bantle, Senior Vice 1997 $102,352 $ 7,118 0 $1,964
President, Community Banking 1996 $ 99,119 $ 5,965 1,000 $1,899
1995 $ 95,548 $ 4,866 5,000 $2,001
Stacy C. Campbell, Senior Vice 1997 $102,349 $ 7,118 0 $1,964
President & Chief Financial Officer 1996 $ 99,116 $ 5,965 1,000 $1,899
1995 $ 95,546 $ 4,866 5,000 $2,001
Robert E. Gilbert, Senior Vice 1997 $102,671 $ 7,134 0 $1,729
President, Operations 1996 $ 99,428 $ 5,977 1,000 $1,714
1995 $ 94,367 $ 4,831 5,000 $1,831
</TABLE>
(1) Includes for 1997: $2,375, $853, $1,535, $1,535 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 $861, $474, $429,
$429, and $429 in group term life insurance premiums for Messrs.
Carballada, Aldred, Bantle, Campbell, and Gilbert, respectively.
Option Grants and Exercises
During the last fiscal year, no options were granted by the Company to the Named
Officers.
The following table summarizes aggregate exercises of options by Named Officers,
and the number of and the spread on unexercised options that they held at fiscal
year end:
<TABLE>
<CAPTION>
Option Exercises and Year-End Value Table
Aggregated Options Exercised in Last Fiscal Year and FY-End Option Value
Number of Unexercised Value of Unexercised
Options at FY-End In-the-Money Options
Name Shares Acquired on Value Realized at FY-End
Exercise
Exercisable/ Exercisable/
Unexercisable Unexercisable
<S> <C> <C> <C> <C>
R. Carlos Carballada 0 0 100,000/ $1,203,070/
0 $0
Donald R. Aldred 0 0 21,500/ $278,805/
500 $3,375
Robert B. Bantle 0 0 21,500/ $278,805/
500 $3,375
Stacy C. Campbell 0 0 21,500/ $278,805/
500 $3,375
Robert E. Gilbert 0 0 21,500/ $278,805/
500 $3,375
</TABLE>
(1) Based on the difference between the option exercise prices and $19.50, the
closing price of the Company's common stock on 12/31/97 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:
Pension Plan Table
ANNUAL BENEFITS PER NUMBER OF YEARS OF SERVICE (1)
AVERAGE
COMPENSATION 5 8 10 12
$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
(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, 1998, all of the Named Officers had five 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.
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, 1992 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,
1997. 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:
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
FNBR vs NASDAQ Market and NASDAQ Bank Stocks (US)*
Measurement Period NASDAQ NASDAQ
(Fiscal Year Covered) FNBR Stock Market Bank Stocks (US)
Measurement Pt-12/31/92 $100 $100 $100
YE 12/31/93 $85.2 $114.8 $114.0
YE 12/31/94 $77.8 $112.2 $113.6
YE 12/31/95 $144.4 $158.7 $169.2
YE 12/31/96 $182.2 $195.2 $223.4
YE 12/31/97 $292.6 $239.5 $377.4
*Assumes reinvestment of dividends
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
3% salary increase that was given to all employees during 1997. 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 equity
during that fiscal year. All eligible staff members, including the Executive
Officers, received a "profit sharing" bonus of 5% with respect to 1997.
During 1997, the Company had record earnings and met its targeted business plan
for return on equity. In recognition of the Company's exceptional performance, a
$2,000 bonus for 1997 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 for Executive Officers 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. While no options were granted to Executive Officers in
1997, in recognition of the fact that options for fewer than 24,000 shares were
available under the 1992 Stock Option Plan at the beginning of fiscal 1997, the
Committee proposed to the Company's entire Board of Directors that the 1992
Stock Option Plan be amended to make an additional 200,000 shares available
under the Plan. With such an amendment in place, the Committee intends to grant
options for additional shares to Executive Officers and other key full-time
salaried employees of the Company. In February 1998, the entire Board of
Directors approved the amendment to the 1992 Stock Option Plan and is seeking
shareholder approval for that amendment (See" Item 2.
Proposal to Amend the FNB Rochester Corp. 1992 Stock Option Plan," below).
In general terms, the Committee believes the grant of options under the 1992
Stock Option Plan allows the Company to reward senior management and other key
employees in a form that does not reduce the cash resources of the Company. The
grant of options also promotes the goal of the Committee to encourage
participation by management in ownership of the Company. In the view of this
Committee, such participation in ownership aligns management with the interests
of shareholders and helps 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 and June 27, 1996. The agreement currently expires on June 30,
1999, but will automatically extend to June 30, 2000 unless either party
notifies the other by June 30, 1998 that the agreement should not be so
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 certain other senior
officers of the Company, including each of the Executive Officers. 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 covered officer will continue to be employed by the Company. The
Agreements provide that each such officer 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 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 covered officer is actually or
constructively terminated from his or her position during the employment period,
he or she will be entitled to receive a severance payment equal to his or her
annual compensation (1.67 times annual compensation in the case of Mr.
Carballada). In addition, if the officer is still employed by the Company 12
months after the date of the Change of Control, the officer 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 officers 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.
ITEM 2. PROPOSAL TO AMEND THE FNB ROCHESTER CORP. 1992 STOCK OPTION PLAN
At the annual meeting, shareholders are being asked to consider and to take
action upon a proposal to approve an amendment to the FNB Rochester Corp. 1992
Stock Option Plan (the "Option Plan"). The amendment will increase the number of
shares available for grants of options under the Option Plan by 200,000 shares.
The full text of the Option Plan is attached to the end of this Proxy Statement
as an Appendix, and shareholders are urged to refer to it for a complete
description of the Option Plan, as amended. The following summary is qualified
in its entirety by reference to the full text of the Option Plan.
The purpose of the Option Plan is to encourage employees of the Company and its
wholly owned subsidiaries, who are largely responsible for the management,
growth and protection of the Company's business and who are making and can
continue to make substantial contributions to the success of its business, to
acquire a larger stock ownership in the Company, thus increasing their
proprietary interest in the Company's business, providing them with greater
incentive for their continued employment and promoting the interests of the
Company and all of its stockholders.
As originally approved by the Company's shareholders, on August 5, 1992, options
covering 125,000 shares of common stock could be granted under the Option Plan.
On June 25, 1993, the Company's shareholders approved an amendment to the Option
Plan that increased the number of shares for which options could be granted to
225,000 and on May 28, 1996, the Company's shareholders approved a further
amendment that increased the number of shares for which options could be granted
to 325,000. The amendment to the Option Plan which is being submitted for
shareholder approval will increase the number of shares issuable under the plan
from 325,000 to 525,000 shares. From the inception of the Option Plan to date,
eligible participants have received options covering 316,450 shares of common
stock. There are currently outstanding under the Plan options to purchase
304,200 shares of common stock. The Company has approximately 110 full-time
salaried employees who are, therefore, potential participants in the Option
Plan.
The Option Plan is administered by the Nominating and Compensation Committee
(the "Compensation Committee"). The Option Plan provides that the Board of
Directors may at any time terminate, amend, modify or suspend the Option Plan
provided that, without the approval of the shareholders of the Company, no
amendment or modification may be made by the Board of Directors which: (i)
increases the maximum number of shares as to which options may be granted under
the Plan; (ii) alters the method by which the option price is determined; (iii)
extends any option for a period longer than 10 years after the date of grant;
(iv) materially modifies the requirements as to eligibility for participation
under the Option Plan; or (v) alters the Option Plan to defeat its purpose.
Pursuant to the Option Plan, the option exercise price is equal to 100% of the
fair market value of the Company's common stock on the date of grant, with fair
market value based upon the last reported sale price for the Company's common
stock as quoted on the NASDAQ system on the day of grant. The option exercise
price for an option is payable in cash upon the exercise of the option, or in
lieu of cash and with the approval of the Compensation Committee at or prior to
the exercise, by tendering to the Company shares of common stock owned by the
optionee having a fair market value equal to the cash exercise price of the
option.
Under the Option Plan, the Compensation Committee is authorized to designate an
option as an "incentive stock option", or as a "nonqualified" stock option,
under the Internal Revenue Code of 1986, as amended (the "Code"), In order to be
eligible under the Code, incentive stock options granted to individuals who own
more than 10% out of the total combined voting power of all classes of
outstanding stock must have an option exercise price of I 10% of fair market
value of the stock at the date of grant. Options to such individuals, by their
terms, may not be exercisable more than 5 years from the date of grant.
The Option Plan provides that options granted to full-time salaried employees of
the Company will terminate on such date as determined by the Compensation
Committee, and as set forth in an option agreement executed at the time of the
grant. If an incentive stock option is held by an employee who is terminated,
and if at the time of termination such employee is not permanently and totally
disabled, such incentive stock option shall terminate not more than 3 months
after termination of employment. In the case of an employee holding an incentive
stock option who at the time of termination of employment is permanently or
totally disabled, such incentive stock option shall terminate not more than 12
months after the termination of employment. Termination of nonqualified stock
options shall be governed by applicable rules as adopted from time to time by
the Compensation Committee; provided, however, that if no such rules are adopted
then the nonqualified stock options shall terminate no later than 3 months after
termination of the option holder's employment.
If the holder of an incentive stock option dies, then the executor or
administrator of the optionee's estate or any person or persons who have
acquired the option directly from the optionee by bequest or inheritance may
exercise the option within 12 months after the date of death. The same
provisions apply for nonqualified stock options, except that the effective
period shall be as described by the Compensation Committee. In no event,
however, shall either an incentive stock option or a nonqualified stock option
be exercisable after its respective expiration date. No option granted under the
Option Plan is exercisable more than 10 years from the date of the grant, nor is
it assignable or transferrable by the optionee to any other party. Options
granted to eligible individuals under the Option Plan do not confer any right to
continue in the employ of the Company.
The aggregate fair market value (determined at the time the option is granted)
of the Company's common stock subject to incentive stock options granted under
the Option Plan which are exercisable for the first time by an individual
optionee during any calendar year may not exceed $100,000.
To the extent that options qualify as incentive stock options under Section 422
of the Code, there is no taxable income to the recipient when the option is
granted or exercised. If a recipient exercises an incentive stock option and
does not dispose of those shares within one year of the date the shares were
transferred to him or her, or within two years from the date of the granting of
the option (the "Waiting Period"), any gain realized upon disposition may be
taxable to the recipient as long-term capital gain. If a recipient disposes of
incentive stock option shares prior to the expiration of the Waiting Period, he
or she will generally recognize ordinary income in the year of sale in an amount
equal to the excess, if any, of (i) the lesser of (a) the fair market value of
the shares as of the date of exercise or (b) the amount realized on the sale,
over (ii) the option exercise price. Any additional amount realized on the
disposition during such time period may be treated as either long-term or
short-term capital gain depending on the length of time the recipient held the
shares. The Company will not be entitled to a deduction as a result of the grant
of an incentive stock option, the exercise of such an option or the sale of the
underlying shares after the Waiting Period. If a recipient disposes of the
underlying shares prior to the expiration of the Waiting Period, the Company may
be entitled to deduct an amount equal to the ordinary income recognized by the
recipient.
To the extent options are treated as nonqualified stock options, there is no
taxable income to the recipient at the time of grant. A recipient will recognize
income on the date of exercise of a nonqualified stock option equal to the
difference between (i) the fair market value on the date of exercise and (ii)
the exercise price. The income recognized by a recipient on the exercise of the
option is subject to withholding taxes. The Company may be entitled to a
deduction equal to the amount of ordinary income recognized by a recipient on
the exercise of a nonqualified stock option.
The foregoing is merely a summary and does not purport to be a complete
description of the federal income tax aspects of the Option Plan.
Once a quorum is established at the meeting, the favorable vote of a majority of
all shares voting at the meeting is required for adoption of the of the
amendment to the Option Plan.
The Board of Directors recommends a vote FOR the adoption of the amendment to
the Option Plan.
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 1999 Annual
Meeting of Shareholders and must be received by the Company at its principal
executive offices no later than December 17, 1998. 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 1997, 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 1998 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 1997 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 1997, 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.
Dated: April 15, 1998
BY ORDER OF THE BOARD OF DIRECTORS,
s/ Mariann Joyal
Mariann Joyal, Secretary
<PAGE>
APPENDIX
FNB ROCHESTER CORP.
1992 STOCK OPTION PLAN
(As Amended)
1. PURPOSES OF THE PLAN The purpose of the FNB Rochester Corp. 1992 Stock Option
Plan ("Plan") is to provide a method by which those employees of FNB Rochester
Corp. and its wholly owned subsidiaries ("the Corporation") who are largely
responsible for the management, growth and protection of the Corporation's
business, and who are making and can continue to make substantial contributions
to the success of such business, may be encouraged to acquire a larger stock
ownership in the Corporation, thus increasing their proprietary interest in such
business, providing them with greater incentive for their continued employment,
and promoting the interests of the Corporation and all its stockholders.
Accordingly, the Corporation will from time to time during the term of the Plan
grant to such employees as may be selected in the manner provided in the Plan
options to purchase shares of Common Stock of the Corporation, subject to the
conditions provided in the Plan.
2. DEFINITIONS Unless the context clearly indicates otherwise, the following
terms have the meanings set forth below.
"Board of Directors" or "Board" means the Board of Directors of the
Corporation.
"Code" means the Internal Revenue Code of 1986.
"Common Stock" means the Common Stock of the Corporation, $1 par value.
"Corporation" means FNB Rochester Corp. and its wholly owned subsidiaries.
"Grant Date" as used with respect to a particular option, means the date as
of which such option is granted by the Committee pursuant to the Plan.
"Grantee" means an individual to whom an Incentive Stock Option or
Nonqualified Stock Option is granted by the Committee pursuant to the Plan.
"Option" means an option, granted by the Committee pursuant to Section 5 of
the Plan, to purchase shares of Common Stock and which shall be designated as
either an "Incentive Stock Option" or a "Nonqualified Stock Option."
"Incentive Stock Option" means an option that qualified as an Incentive
Stock Option as described in Section 422 of the Code.
"Nonqualified Stock Option" means any option granted under the Plan, other
than an Incentive Stock Option.
"Plan" means this Stock Option Plan as set forth herein and as may be
amended from time to time.
"Total and Permanent Disability" as applied to a Grantee, means that the
Grantee; (i) has established to the satisfaction of the Corporation that the
Grantee is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than 12 months (all within the meaning of Section 22(e)(3) of
the Code); and (ii) has satisfied any requirement imposed by the Committee.
3. ADMINISTRATION OF THE PLAN The Plan shall be administered by a Committee (the
"Committee") composed of three or more members who are appointed by the Board of
Directors. The Committee shall select one of the Committee's members as
Chairman. The Committee shall hold meetings at such times and places as it may
determine, subject to such rules as to procedures to the extent not inconsistent
with the provisions of the Plan asare prescribed by the Board or by the
Committee. A majority of the authorized number of members of the Committee shall
constitute a quorum for the transaction of business. Acts reduced to or approved
in writing by a majority of the members of the Committee then serving shall be
the valid acts of the Committee. No member of the Committee shall be eligible to
be granted options under the Plan while a member of the Committee.
The Committee shall be vested with full authority to make such rules and
regulations as it deems necessary or desirable to administer the Plan and to
interpret the provisions of the Plan. Any determination, decision or action of
the Committee in connection with the construction, interpretation,
administration or application of the Plan shall be final, conclusive and binding
upon all optionees and any person claiming under or through an optionee unless
otherwise determined by the Board.
Any determination, decision or action of the Committee provided for in the Plan
may be made or taken by action of the Board if it so determines, with the same
force and effect as if such determination, decision or action had been made or
taken by the Committee. No member of the Committee or of the Board shall be
liable for any determination, decision or action made in good faith with respect
to the Plan or any option granted under the Plan. The fact that a member of the
Board shall at the time be, or shall theretofore have been or thereafter may be,
a person who has received or is eligible to receive an option shall not
disqualify him or her from taking part in and voting at any time as a member of
the Board in favor of or against any amendment or repeal of the Plan.
4. STOCK SUBJECT TO THE PLAN
(a). The stock to be issued upon exercise of options granted under the
Plan shall be the Corporation's Common Stock, which shall be made
available, at the discretion of the Board, either from authorized but
unissued Common Stock or from Common Stock reacquired by the
Corporation, including shares purchased in the open market. The
aggregate number of shares of Common Stock which may be issued under
options granted under the Plan (as adjusted in a manner equivalent to
the adjustments made under Section 15 of the Plan) shall not exceed
525,000 shares. The limitation established by the preceding sentence
shall be subject to adjustment as provided in Section 15 of the Plan.
(b). In the event that any outstanding option under the Plan for any
reason expires or is terminated, the shares of Common Stock allocable
to the unexercised portion of such option may again be made subject to
another option granted under the Plan.
5. GRANT OF OPTIONS The Committee may from time to time, subject to the
provisions of the Plan, grant options to key employees of the Corporation to
purchase shares of Common Stock allotted in accordance with Section 4. The
Committee may designate any option granted as either an Incentive Stock Option
or a Nonqualified Stock Option, or the Committee may designate a portion of the
option as an "Incentive Stock Option" and the remaining portion as a
"Nonqualified Stock Option." Any portion of an option that is not designated as
an "Incentive Stock Option" shall be a "Nonqualified Stock Option."
6. OPTION PRICE The purchase price per share shall be 100 percent of the fair
market value of one share of Common Stock as reported for trading on the
national securities exchange on which the Common Stock may be principally traded
on the date the option is granted, except that the purchase price per share
shall be 110 percent of such fair market value (or the fair market value as
determined below) in the case of an Incentive Stock Option granted to an
individual described in Section 7(b) of this Plan. The fair market value of a
Share on any day shall be: (i) if the Shares are traded in the over-the-counter
market, the mean between the bid and the asked prices of the Shares in the
over-the-counter market as reported on the National Association of Security
Dealers Automatic Quotation System (NASDAQ); (ii) if the Shares are traded in
the over-the-counter market and are designated as National Market System
securities, the reported last sale price of the Shares, or (iii) if the Shares
are traded on one or more securities exchanges, the average of the closing
prices on all such exchanges on such day; or in the event that there are no
reports for such day, the preceding day for which there is such a report. The
purchase price shall be subject to adjustment only as provided in Section 15 of
the Plan.
7. ELIGIBILITY OF OPTIONEES
(a). Options shall be granted only to persons who are key full time
salaried employees of the Corporation, as determined by the Committee.
The term "key employees" shall include officers as well as other
employees of the Corporation, but shall not include members of the
Committee.
(b). Any other provision of the Plan notwithstanding, an individual who
owns more than 10 percent of the total combined voting power of all
classes of outstanding stock of the Corporation, shall not be eligible
for the grant of an Incentive Stock Option unless the special
requirements set forth in Sections 6 and 9(a) of the Plan are
satisfied. For purposes of this subsection (b), in determining stock
ownership, an individual shall be considered as owning the stock owned,
directly or indirectly, by or for his or her brothers and sisters,
spouse, ancestors and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate or trust shall
be considered as being owned proportionately by or for its
shareholders, partners or beneficiaries. Stock with respect to which
such individual holds an option shall not be counted. "Outstanding
stock" shall include all stock actually issued and outstanding
immediately after the grant of the option. "Outstanding stock" shall
not include shares authorized for issue under outstanding options held
by the optionee or by any other person.
(c). Subject to the terms, provisions and conditions of the Plan and
subject to review by the Board, the Committee shall have exclusive
jurisdiction (i) to select the employees to be granted options (it
being understood that more than one option may be granted to the same
person); (ii) to determine the number of shares subject to each option;
(iii) to determine the date or dates when the options will be granted;
(iv) to determine the purchase price of the shares subject to each
option in accordance with Section 6 of the Plan; (v) to determine the
date or dates when each option may be exercised within the term of the
option specified pursuant to Section 9 of the Plan; (vi) to determine
whether or not an option constitutes an Incentive Stock Option; and
(vii) to prescribe the form, which shall be consistent with the Plan,
of the documents evidencing any options granted under the Plan.
(d). Neither anything contained in the Plan or in any document under
the Plan nor the grant of any option under the Plan shall confer upon
any optionee any right to continue in the employ of the Corporation or
limit in any respect the right of the Corporation to terminate the
optionee's employment at any time and for any reason.
8. NON-TRANSFERABILITY OF OPTIONS No option granted under the Plan shall be
assignable or transferable by the optionee other than by will or the laws of
descent and distribution, and during the lifetime of an optionee the option
shall be exercisable only by such optionee.
9. TERM AND EXERCISE OF OPTIONS
(a). Each option granted under the Plan shall terminate on the date
determined by the Committee and specified in the option agreement;
provided that each Incentive Stock Option granted to an individual
described in Section 7(b) of the Plan shall terminate not later than
five years after the date of grant, and each other option shall
terminate not later than 10 years after the date of grant. The
Committee at its discretion may provide further limitations on the
exercisability of options granted under the Plan. An option may be
exercised only during the continuance of the optionee's employment,
except as provided in Sections 10 and 11 of the Plan.
(b). A person electing to exercise an option shall give written notice
to the Corporation of such election and of the number of shares he or
she has elected to purchase, in such forms as the Committee shall have
prescribed or approved, and shall at the time of exercise tender the
full purchase price of the shares he or she has elected to purchase.
The purchase price shall be paid in full in cash upon the exercise of
the option; provided, however, that in lieu of cash, with the approval
of the Committee at or prior to exercise, an optionee may exercise his
or her option by tendering to the Corporation shares of Common Stock
owned by him or her and having a fair market value equal to the cash
exercise price applicable to his or her option, with the fair market
value of such stock to be determined in the manner provided in Section
6 of
the Plan (with respect to the determination of the fair market value of
Common Stock on the date an option is granted).
(c). An optionee or a transferee of an option shall have no rights as a
stockholder with respect to any shares covered by his or her option
until the date the stock certificate is issued evidencing ownership of
the shares. No adjustments shall be made for dividends (ordinary or
extraordinary), whether in cash, securities or other property, or
distributions or other rights, for which the record date is prior to
the date such stock certificate is issued, except as provided in
Section 15 hereof.
(d). A person may, in accordance with the other provisions of the Plan,
elect to exercise options in any order, notwithstanding the fact that
options granted to him or her prior to the grant of the options
selected for exercise are unexpired.
(e). The aggregate fair market value (determined on the date the option
is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by an individual grantee during any
calendar year shall not exceed $100,000.
10. TERMINATION OF EMPLOYMENT If an optionee's employment with the Corporation
is terminated for any reason other than death, any option granted to him or her
under the Plan shall terminate, and all rights under the option shall cease, in
accordance with rules adopted by the Committee. In any event:
(a). In the case of an Incentive Stock Option held by an optionee who
is not permanently and totally disabled (within the meaning of Section
22(e)(3) of the Code), such Incentive Stock Option shall terminate no
more than three months after the termination of employment.
(b). In the case of an Incentive Stock Option held by an optionee who
is permanently and totally disabled (within the meaning of Section
22(e)(3) of the Code), such Incentive Stock Option shall terminate 12
months after the termination of employment.
(c). In the case of a Nonqualified Option, if the Committee has not
adopted an applicable rule concerning such termination, such Option
shall terminate no later than three months after termination of
employment.
(d). The foregoing notwithstanding, no option shall be exercisable
after its expiration date.
Whether an authorized leave of absence or an absence for military or
governmental service shall constitute termination of employment, for the
purposes of the Plan, shall be determined by the Committee, which determination
shall be final, conclusive and binding upon the affected optionee and any person
claiming under or through such optionee.
11. DEATH OF OPTIONEE If an optionee dies while in the employ of the Corporation
or after cessation of such employment but within the period during which he or
she could have exercised the option under Section 10 of the Plan, then the
option may be exercised by the executors or administrators of the optionee's
estate or by any person or persons who have acquired the option directly from
the optionee by bequest or inheritance, within 12 months after the termination
of the optionee's employment for Incentive Stock Options and within a period
prescribed by the Committee for Nonqualified Options; provided, however, that no
option shall be exercisable after its expiration date.
12. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS Subject to the terms and
conditions and within the limitations of the Plan, the Committee may modify,
extend or renew outstanding options granted under the Plan or accept the
surrender of outstanding options (to the extent not theretofore exercised) and
authorize the granting of new options in substitution therefor. Without limiting
the generality of the foregoing, the Committee may grant to an optionee, if he
or she is otherwise eligible and consents thereto, a new or modified option in
lieu of an outstanding option for a number of shares, at an exercise price and
for a term which are greater or lesser than under the earlier option, or may do
so by cancellation and regrant, amendment, substitution or otherwise, subject
only to the general limitations and conditions of the Plan. The foregoing
notwithstanding, no modification of an option shall, without the consent of the
optionee, alter or impair any rights or obligations under any option theretofore
granted under the Plan.
13. PERIOD IN WHICH OPTIONS MAY BE GRANTED Options may be granted pursuant to
the Plan at any time on or before the tenth anniversary of the Effective Date of
the Plan, as defined in Section 17 herein.
14. AMENDMENT OR TERMINATION OF THE PLAN The Board may at any time terminate,
amend, modify or suspend the Plan provided that, without the approval of the
stockholders of the Corporation, no amendment or modification shall be made by
the Board which:
(a). Increases the maximum number of shares as to which options may be
granted under the Plan;
(b). Alters the method by which the option price is determined;
(c). Extends any option for a period longer than 10 years after the
date of grant;
(d). Materially modifies the requirements as to eligibility for
participation in the Plan; or
(e). Alters this Section 14 so as to defeat its purpose.
Further, no amendment, modification, suspension or termination of the Plan shall
in any manner affect any option theretofore granted under the Plan without the
consent of the optionee or any person validly claiming under or through the
optionee.
15. CHANGES IN CAPITALIZATION
(a). In the event that the shares of the Corporation, as presently
constituted, shall be changed into or exchanged for a different number
or kind of shares of stock or other securities of the Corporation or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of shares or
otherwise) or if the number of such shares of stock shall be increased
through the payment of a stock dividend, then subject to the provisions
of subsection (c) below, there shall be substituted for or added to
each share of stock of the Corporation which was theretofore
appropriated, or which thereafter may become subject to an option under
the Plan, the number and kind of shares of stock or other securities
into which each outstanding share of stock of the Corporation shall be
so changed or for which each such share shall be exchanged or to which
each such share shall be entitled, as the case may be. Outstanding
options shall also be appropriately amended as to price and other
terms, as may be necessary to reflect the foregoing events.
(b). If there shall be any other change in the number of kind of the
outstanding shares of the stock of the Corporation, or of any stock or
other securities into which such stock shall have been changed, or for
which it shall have been exchanged, and if the Board or the Committee
(as the case may be), shall in its sole discretion, determine that such
change equitably requires an adjustment in any option which was
theretofore granted or which may thereafter be granted under the Plan,
then such adjustment shall be made in accordance with such
determination.
(c). A dissolution or liquidation of the Corporation, or a merger or
consolidation in which the Corporation is not the surviving
corporation, shall cause each outstanding option to terminate, except
to the extent that another corporation may and does in the transaction
assume and continue the option or substitute its own options. In either
event, the Board or the Committee (as the case may be) shall have the
right to accelerate the time within which the option may be exercised.
(d). Fractional shares resulting from any adjustment in options
pursuant to this Section 15 may be settled as the Board or the
Committee (as the case may be) shall determine.
(e). To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding
and conclusive. Notice of any adjustment shall be given by the
Corporation to each holder of an option which shall have been so
adjusted.
(f). The grant of an option pursuant to the Plan shall not affect in
any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure, to merge, to consolidate, to dissolve, to liquidate
or to sell or transfer all or any part of its business or assets.
16. TRANSFER OF OPTION SHARES Shares acquired by persons subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, pursuant to the
exercise of an option or portion thereof, shall not be sold or transferred for
at least six months after the date of grant.
17. PLAN EFFECTIVE DATE The "Effective Date" of the Plan is the date on which it
was first approved by the Corporation's shareholders, namely August 5, 1992.
Unless sooner terminated by the Board, the Plan will terminate 10 years from its
Effective Date and no options may be granted under the Plan after such
termination date.
<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 19, 1998
at 10:00 a.m. at the Strathallan, 550 East Avenue, Rochester, New York 14607
The undersigned hereby appoints Carl R. Reynolds and Francis T. Lombardi, 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 19,
1998 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
Item 1, Election of Directors, and FOR Item 2 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>
1. Election of Directors Directors
FOR all nominees WITHHOLD R. Carlos Carballada, Michael J. Falcone
listed to the right AUTHORITY Gayle C. Johnston, Joseph M. Lobozzo II
(except as marked to to vote for Francis T. Lombardi, Carl R. Reynolds,
the contrary) all nominees H. Bruce Russell, James D. Ryan, Linda
listed to the Cornell Weinstein
right
(INSTRUCTION: To withhold authority to
vote for any individual nominee, write
that nominee's name in the space
provided below.)
_______________________________________
2. Approval of amendment to 1992 Stock Option Plan FOR AGAINST ABSTAIN
to increase shares available for options from [__] [__] [__]
325,000 to 525,000
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: _____________________________, 1998
___________________________________________
Signature
___________________________________________
Signature, if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
PLEASE RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
THANK YOU.
FOLD AND DETACH HERE
FNB ROCHESTER CORP.
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THE ABOVE PROXY
CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE
