<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SUFFOLK BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
SUFFOLK BANCORP
6 West Second Street
Riverhead, New York 11901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 8, 1996
To Shareholders of Suffolk Bancorp:
Notice is hereby given that the annual meeting of shareholders of Suffolk
Bancorp, a New York corporation (the "Company"), will be held at the FOX HILL
GOLF & COUNTRY CLUB, Oakleigh Avenue, Baiting Hollow, New York, on Tuesday,
April 9, 1996 at 1:00 P.M. for the purpose of considering and voting upon the
following matters:
1. The election of three directors to hold office for a term of three
years, such terms to extend until their successors have been duly
elected and qualified.
2. Amending the Certificate of Incorporation to increase the authorized
shares of Common Stock from 7,500,000 to 15,000,000 and authorization
of the issuance of 1,000,000 shares of Preferred Stock.
3. The approval of the Board of Directors' selection of independent
auditors for the year ending December 31, 1996.
4. Any other business which may be properly brought before the meeting or
any adjournment thereof.
By Order of the Board of Directors
DOUGLAS IAN SHAW
Corporate Secretary
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS QUICKLY AS POSSIBLE, WHETHER YOU
PLAN TO ATTEND THE MEETING IN PERSON OR NOT. YOU MAY WITHDRAW YOUR PROXY AT ANY
TIME PRIOR TO THE EXERCISE OF THE PROXY AT THE MEETING BY GIVING WRITTEN NOTICE
TO THE SECRETARY OF THE COMPANY.
<PAGE> 3
SUFFOLK BANCORP
6 West Second Street
Riverhead, New York 11901
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
April 9, 1996
This proxy statement is furnished in connection with the solicitation
by the Board of Directors of Suffolk Bancorp, a New York corporation (the
"Company"), of proxies to be voted at the annual meeting of shareholders to be
held at 1:00 P.M. on Tuesday, April 9, 1996 at the Fox Hill Golf & Country Club,
Oakleigh Avenue, Baiting Hollow, New York. This proxy statement and the form of
proxy are first being sent to shareholders on March 8, 1996. Any shareholder
executing a proxy which is solicited hereby has the power to revoke it.
Revocation may be made effective by giving written notice to the Secretary of
the Company at any time prior to the exercise of the proxy.
Proxies will be solicited by mail. They also may be solicited by
directors, officers, and regular employees of the Company as well as those of
The Suffolk County National Bank (the "Bank") and Island Computer Corporation of
New York which are wholly owned subsidiaries of the Company, personally or by
telephone or telegraph, but such persons will receive no additional compensation
for such services. Proxies may also be solicited by Georgeson and Co., a proxy
solicitation firm retained by the Company. Copies of proxy material will be
furnished to brokerage houses, fiduciaries, and custodians to be forwarded to
the beneficial owners of the Company's common stock. The Company will bear all
costs of soliciting proxies.
As of March 1, 1996, there were __________ shares of common stock,
$5.00 par value, of the Company outstanding. Only holders of record of such
stock at the close of business on March 1, 1996 are entitled to notice of and to
vote at the annual meeting. Each shareholder of record on that date is entitled
to one vote for each share held.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in the proxy
statement and considered at the annual meeting must be submitted on a timely
basis. Proposals for the 1997 annual shareholders' meeting must be received by
the Company at its principal executive offices no later than November 8, 1996.
Any such proposals, as well as any questions related thereto, should be directed
to the Secretary of the Company.
ITEM 1. ELECTION OF DIRECTORS AND INFORMATION WITH RESPECT TO
DIRECTORS AND OFFICERS (ITEM 1 ON PROXY CARD)
The first item to be acted upon at the meeting of shareholders is the
election of three directors to hold office for three years, and until their
successors shall have been duly elected and qualified.
The By-Laws of the Company provide that the total number of directors
may be fixed by resolution of the Board of Directors. At present, the Board has
fixed the number of directors at ten. The By-Laws further provide that the
directors shall be divided into three classes, as nearly equal as possible, with
terms of office of each class expiring at the end of consecutive years.
All proxies which are received by the Board of Directors conferring
authority to so vote in the election of directors will be voted FOR the three
nominees listed below. All proxies received will be voted in accordance with
specific instructions contained therein. In the event any nominee declines or is
unable to serve, it is intended that the proxies will be voted for a successor
nominee designated by the Board of Directors. Each of the three nominees has
consented to being named in this proxy statement and to serve if elected, and
the Board of Directors knows of no reason to believe that any nominee will
decline or be unable to serve, if elected. The other seven members of the Board
of Directors, who are listed on the next page, are currently expected to
continue to serve on the Board until their respective terms expire.
-2-
<PAGE> 4
The following information is provided with respect to the nominees for
directors to be elected at this annual meeting of shareholders and the directors
of the Company whose terms of office continue after this annual meeting of
shareholders of the Company.
NOMINEES FOR DIRECTOR AND DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
Shares of
Common Stock
Position Served As Present Owned
and Offices Business Experience Director Term Beneficially at % of
Name (1) Age With Company During Past 5 Years (2) Since Expires 3/1/96 (4) Class
- -----------------------------------------------------------------------------------------------------------------------------------
NOMINEES FOR A TERM OF THREE YEARS:
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce Collins 65 Director Superintendent of Public Works 1994 1996 000 0.00%
Village of East Hampton, New York
Joseph A. Deerkoski 60 Director President, See Neefus, Inc. 1987 1996 000 0.00%
(general insurance)
Edward J. Merz 64 President, President and Chief Executive 1984 1996 000 0.00%
Chief Executive Officer, The Suffolk County
Officer and National Bank; Chairman & Director,
Director Island Computer Corporation
of New York, Inc. (3)
<CAPTION>
DIRECTORS CONTINUING IN OFFICE:
<S> <C> <C> <C> <C> <C> <C> <C>
Hallock Luce 3rd 74 Director Director, Lupton & Luce, Inc. 1984 1997 000 0.00%
(general insurance)
Raymond A. Mazgulski 72 Chairman and Chairman, The Suffolk County 1984 1997 000 0.00%
Director National Bank
Peter Van de Wetering 64 Director President, Van de Wetering 1985 1997 000 0.00%
Greenhouses (wholesale nursery)
Edgar F. Goodale 42 Director President, Riverhead 1989 1998 000 0.00%
Building Supply, Inc.
J. Douglas Stark 64 Director President, Stark Mobile Homes, 1984 1998 000 0.00%
Inc. (manufactured housing
community)
Howard M. Finkelstein 65 Director Partner, Smith, Finkelstein, 1984 1998 000 0.00%
Lundberg, Isler, and Yakaboski
(attorneys and general counsel
for the Bank)
Director, Island Computer Corporation
John J. Raynor 47 Director President, John J. Raynor P.E. & 1994 1998 000 0.00%
L.S., P.C. (civil engineering/surveying)
Director, Island Computer Corporation
</TABLE>
(1) All of the nominees and all of the directors continuing in office are
also directors of the Bank. Of the nominees and directors continuing in
office, only Edward J. Merz has been, within the Company's last fiscal
year, an executive officer of the Company.
(2) The business experience of each director during the past five years was
that typical of a person engaged in the principal occupations for that
period listed for each. Each of the directors has held the same or
another executive position with the same employer during the past five
years.
(3) Island Computer Corporation of New York, Inc. is a bank service
corporation wholly owned by Suffolk Bancorp which supplies computer
services to banks. Its Board of Directors consists of directors of
Suffolk Bancorp and officers of The Suffolk County National Bank.
(4) Included are the following shares in which directors disclaim
beneficial ownership: Joseph A. Deerkoski - _____ shares owned by
Patricia B. Deerkoski, wife; Howard M. Finkelstein - _____ shares owned
by Deonne C. Finkelstein, wife; J. Douglas Stark - _____ shares owned
by Michele Stark, daughter, and - _____ shares owned by Tracy Stark,
daughter.
-3-
<PAGE> 5
The primary business of the Company is the operation of The Suffolk
County National Bank. The directors of the Company met fourteen times during the
fiscal year ended December 31, 1995, and its Audit Committee met three times.
The Board of The Suffolk County National Bank met thirteen times, and its
Personnel Committee met three times in 1995. No director attended fewer than 75
percent of the meetings of the Board of the Company and its committees, or of
the Bank and its committees.
The Boards of the Company and the Bank have standing Audit and
Personnel Committees composed as follows:
The Audit Committee consists of Messrs. J. Douglas Stark, Hallock Luce
3rd, Joseph A. Deerkoski, Edgar F. Goodale, and John J. Raynor. This
committee reviews the internal audit controls and procedures and the
financial affairs of the Company and the Bank, and reports the results
to the Board. Additionally, the committee reviews the certified
examination prepared by the independent auditors who also provide
certain tax preparation services.
The Personnel Committee consists of Messrs. Hallock Luce 3rd, J.
Douglas Stark, Joseph A. Deerkoski, and Howard M. Finkelstein. This
committee, at least annually, reviews salaries, benefits and employment
policies of the Company and the Bank and makes recommendations to the
Board.
The Company does not have a Nominating Committee.
COMPENSATION
REPORT OF THE PERSONNEL COMMITTEE
The Company's Personnel Committee serves as its Compensation Committee.
It consists of four non-employee Directors as well as the Chairman of the Board,
Raymond A. Mazgulski, and President, Edward J. Merz. Members of the Bank's
management staff attend Committee meetings regularly to furnish information
regarding personnel policies and programs along with related costs. Management's
presence on this Committee provides an integral component in the development and
continuance of important benefit plans and appropriate compensation levels.
Discussions held by the Committee with management in attendance insure that
decisions affecting both shareholder return and Bank operations are made
diligently. The Committee was established to review, at least annually, the
salaries, benefits, and employment policies of the Bank and then make
recommendations to the full Board.
COMPENSATION POLICY
It is the Company's policy to compensate individuals at fair and
competitive levels to encourage them to work to the benefit of our shareholders.
It is to this end that the Company has established a program which links
employees' remuneration to demonstrated and measurable performance goals. These
goals are aligned with corporate philosophy and the annual business plan. The
performance of an employee is reviewed individually. However, the individual's
impact on overall corporate success is also weighed. Leadership, presence in
community, and loyalty to the company are other factors. The Company continues
to attract and maintain qualified staff. The Company, through the use of
incentives, competitive salaries, and direct ownership, rewards these
individuals for their on-going commitment to our shareholders. Management
remains diligent in its pursuit of new and innovative ways to determine
compensation.
COMPONENTS OF COMPENSATION
The Committee examines annually three components of compensation: Base
salary, Executive Incentive (Bonus), and Long Term incentive. The Company uses
base salary ranges for all employees, with the exception of the President and
Executive Vice Presidents. The ranges have been determined by regional salary
surveys, industry guides, and regional economic conditions. Comparisons to
compensation at similar companies are made regularly. Information gained from
membership in regional banking organizations also permit valuable comparisons.
The Company also participates in comparison surveys conducted by independent
consulting firms which provide additional information in return. The second
component of executive compensation is the Executive Officer Incentive Program
(Bonus). This program rewards key individuals who have successfully contributed
to the Company's profitability during the business year. Over the years,
different methodologies have been employed to determine these awards. Recent
methods have included a strict formula of net earnings, pro-rata by base salary
and ratings matrices based on individual performance and position. The Company
is investigating alternatives and has retained an outside consulting firm.
Long-term Incentives in the form of stock options have been used in prior years.
The Committee acknowledges the value of using such incentives as they tie the
executives' interest to the shareholders'. Executive compensation, in general,
is to provide the incentive to increase the net worth of the Company, and
ultimately shareholder wealth. The Committee will continue to consider this form
of compensation for future discussions. It should also be noted that the Company
has no long term contracts in effect for its Executive Officers other than such
contracts as would become effective only if a change in control of the Company
occurs.
-4-
<PAGE> 6
COMPENSATION OF CHIEF EXECUTIVE OFFICER
To assess the appropriate form and amount of compensation, the
Committee evaluates the performance of the Company and the C.E.O.'s individual
contribution to that performance. In evaluating the Company, the Committee
considers return on stockholders' equity, return on assets, the quality and
quantity of assets, operating efficiency, growth in earnings and
earnings-per-share, and the market price of the Company's common stock. The
C.E.O.'s individual performance is evaluated on the basis of the quality of
oversight, and the development of strategy. The Company's operating results and
market performance are compared quarterly to the commercial banking industry as
a whole, all banking companies in the New York metropolitan area, all banking
companies of similar size nationwide, and selected regional competitors. The
C.E.O.'s compensation is compared annually to selected regional competitors
operating in the state of New York. The Committee then makes an estimation in
awarding base salary, cash bonus, and stock options.
CONCLUSION
The Committee believes that the compensation awarded to the Company's
senior executives is appropriate given the Company's performance and the
performance of individual executives.
Submitted by:
<TABLE>
<S> <C>
Hallock Luce 3rd, Chairman of the Personnel Committee J. Douglas Stark
Joseph A. Deerkoski Howard M. Finkelstein
</TABLE>
The following table sets forth the cash compensation paid to the CEO
and each of the four highest paid executive officers of the Company whose salary
and bonus exceeded $100,000 as accrued for the fiscal year ended December 31,
1994.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted All Other
Other Annual Stock Options/ LTIP Compen-
Name and Salary Bonus Compensation Award(s) SARs Payouts sations
Principal Position Year ($) ($) ($) ($) (#) ($) ($) (1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward J. Merz, 1995 $254,410 $24,000 n/a n/a n/a n/a $1,800
President and 1994 247,000 30,000 n/a n/a n/a n/a 1,847
Chief Executive Officer 1993 235,000 41,000 n/a n/a 2,062 n/a n/a
Victor F. Bozuhoski, Jr. 1995 $140,012 $12,000 n/a n/a n/a n/a $1,400
Executive Vice President, 1994 132,000 15,000 n/a n/a 449 n/a 1,400
Treasurer, 1993 123,550 20,000 n/a n/a 1,026 n/a n/a
and Chief Financial Officer
Ronald M. Krawczyk 1995 $130,000 $12,000 n/a n/a n/a n/a $ 520
Executive Vice President 1994 130,000 11,250 n/a n/a n/a n/a 260
Augustus C. Weaver 1995 $118,831 $ 9,600 n/a n/a n/a n/a n/a
President, Island Computer 1994 113,619 15,000 n/a n/a n/a n/a n/a
1993 109,200 20,165 n/a n/a 1,091/264 n/a n/a
John F. Hanley 1995 $113,492 $12,000 n/a n/a n/a n/a $1,506
Executive Vice President 1994 108,501 15,000 n/a n/a n/a n/a 988
& Chief Administrative Officer 1993 100,276 20,000 n/a n/a 936/417 n/a n/a
</TABLE>
(1) Includes (a) above-market or preferential earnings on deferred
compensation, and (b) company contributions to 401(K) plan.
-5-
<PAGE> 7
STOCK OPTION AND OTHER PLANS
The Company has in effect two stock option plans for its employees and
employees of its subsidiaries. The plans are an incentive stock option plan (the
"Incentive Stock Option Plan") and a non-qualified stock option plan (the
"Non-Qualified Plan"). Under the Plans, options to purchase up to 330,000 shares
of Common Stock may be issued. As of March 1, 1996, options for 313,503 shares
remain to be granted. No options were granted in 1995 to the persons named in
the summary compensation table.
Under the Plans, key employees are granted options to purchase Common
Stock of the Company at a price equal to the fair market value of the shares on
the date that the option is granted. Almost all of the Company's 400 employees
could qualify as key employees. The Personnel Committee of the Board of
Directors determines the optionee, the number of shares covered by the options,
and the exercise price of options granted under the Plans. When granted, options
expire after a time determined by the Personnel Committee, but in no event
longer than ten years, or on termination of the employment of the optionee
unless the termination resulted from death, disability, or retirement. In those
events, the option expires in two years, one year, and three months after
termination of employment, respectively. The exercise price may be paid either
in cash or by delivery of shares of the Company's Common Stock, valued at the
market price. Optionees may also be given stock appreciation rights in
connection with the option. The Personnel Committee may, in its discretion,
establish provisions for the exercise of stock options different from those
described in this paragraph. Copies of the Plans are available upon shareholder
request.
During 1995, executive officers acquired no shares on exercise, and no
value was realized. At fiscal year-end 1995, there were no unexercised options
or stock appreciation rights, and therefore there was no value to unexercised
in-the-money options or stock appreciation rights.
COMPENSATION PURSUANT TO PLANS
The Company has a defined-benefit pension plan. It is the only form of
contingent remuneration. It is non-contributory and is applicable to all
officers and employees after one year of service and attainment of age 21.
Annual Retirement Allowance is equal to 1 3/4 percent of Average Compensation
times Creditable Service up to 35 years, plus 1 1/4 percent of Average
Compensation times Creditable Service in excess of 35 years (up to 5 such
years), less .49% of the Final Three Year Average Compensation (limited to
Covered Compensation) times Creditable Service up to 35 years. "Average
Compensation" is the average of compensation during the five consecutive years
of employment affording the highest such average. "Covered Compensation" is the
average of the Social Security taxable wage base for the 35 years ending with
the year an individual attains Social Security Retirement Age. Vesting is 100%
after five years of service from employment. The total pension plan expense for
all officers and employees for 1995 was $486,357.
In addition to the pension plan, the Company adopted a supplemental
deferred compensation retirement benefit for Mr. Merz by establishing a trust
which was funded by the transfer and surrender of a life insurance policy
covering his life having a value of $91,811, and by three payments of $20,000
each in 1994, 1995 and 1996, which sums will purchase a variable retirement
annuity.
6
<PAGE> 8
The table to the right presents the estimated retirement benefits
payable under the Plan based on selected compensation amounts and years of
service, after deducting Social Security Benefits.
Only those directors who are also executive officers of the Company
participate in the plan.
APPROXIMATE ANNUAL RETIREMENT BENEFITS BASED ON AVERAGE ANNUAL EARNINGS FOR
HIGHEST FIVE CONSECUTIVE YEARS
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
The single plan maximum benefit limit under Internal Revenue Code
Section 415 as of January 1, 1995, $120,000 ($11_,073 under the Normal Form of
Payment for a Single Participant), is reflected in the benefits. The maximum
annual compensation allowed under a qualified plan, $150,000 for 1995, is also
reflected in the calculations.
<TABLE>
<CAPTION>
Name of Officer Capacities In Which Served Years of Creditable Service
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Edward J. Merz President and Chief Executive Officer 20
John F. Hanley Executive Vice President and 24
Chief Administrative Officer
Victor F. Bozuhoski, Jr. Executive Vice President, 30
Treasurer, and Chief Financial Officer
Ronald M. Krawczyk Executive Vice President 11
Augustus C. Weaver President, Island Computer 9
- ---------------------------------------------------------------------------------------------------
</TABLE>
Directors and executive officers of the Company and the Bank, who as a
group total 18, beneficially own _______shares of common stock which is
____percent of the outstanding shares of common stock of the Company as of March
1, 1996.
BENEFICIAL INTEREST OF EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
# of beneficially % of total shares
Name Position Held owned shares outstanding
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Edward J. Merz President, CEO and 000 0.00%
Director
Victor F. Bozuhoski, Jr. Executive Vice President 000 0.00%
Treasurer and CFO
Ronald M. Krawczyk Executive Vice President 000 0.00%
Augustus C. Weaver President, Island Computer 000 0.00%
John F. Hanley Executive Vice President & CAO 000 0.00%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 9
EMPLOYMENT CONTRACTS
The Company has entered into agreements with ten employees, including
Messrs. Merz, Bozuhoski, Krawczyk, Weaver, and Hanley. These agreements provide
for certain benefits in the event of an involuntary termination of the employee
within three years of a "change in control" of the Company or a voluntary
termination by the employee within three years of a "change of control" if there
has been a material change in the employee's salary, function, duties or
responsibilities which causes the employee's position to be of less dignity,
responsibility, importance, or scope than it was immediately prior to the
"change of control," or if there is a significant change in geographic location
of the employee's place of employment. Under the agreements, a "change of
control" occurs if (i) any individual, entity or group acquires 25 percent or
more of the Company's common stock or the outstanding voting securities of the
Company; (ii) the existing directors of the Company and directors approved in
the future by a majority of the existing directors and their approved successors
("Incumbent Directors") cease to comprise a majority of the directors of the
Company; (iii) a reorganization, merger, or consolidation of the Company or sale
or other disposition of all the Company's assets is consummated; or (iv) the
shareholders of the Company approve its liquidation or dissolution. An
acquisition by a corporation otherwise described in (i) above and the events
described in (iii) above do not comprise a "change of control" when or if (a)
the holders of 60 percent of the Company's common stock and voting securities
own substantially the same proportion of common stock and voting securities of
the corporation resulting from such event; (b) no person, entity, or group owns
25 percent or more of the common stock or voting securities of the resulting
corporation except to the extent that such ownership existed prior to the event;
and (c) a majority of the directors of the Board of the resulting corporation
are currently Incumbent Directors or are Incumbent Directors at the time of
action by the Board approving such event. After an "event of termination,"
pursuant to the agreement, an employee shall be entitled to a monthly payment in
the amount of his or her monthly rate of salary immediately prior to such "event
of termination" plus 1/12th of all bonuses paid to the employee in the 12
preceding months. In addition, the employee shall be entitled to receive the
Company's health benefits during the benefit period. Such payments and benefits
shall continue for up to 36 months. These payments and benefits will be reduced
by the amount of salary and benefits the employee receives from other employment
during the benefit period. The agreements are effective for any "change of
control" taking place prior to January 1, 2000.
DIRECTORS' COMPENSATION
With the exception of directors' fees described below, directors of the
Company are not compensated in any way for their services. All directors of the
Bank receive an annual fee of $16,000 for their services. All directors of the
Bank, except Messrs. Mazgulski and Merz, also receive $800 per meeting of the
Finance Committee and $650 per meeting of any other committee or Island Computer
Corporation of which each may be a member.
The Company maintains a Directors' Deferred Compensation Plan, under
which a director may defer receipt of 50% or 100% of all fees earned by him as a
director of the Bank for five years or ten years or until retirement or age 70.
During the deferral period, amounts deferred earned interest at 2% over the
Bank's money market rate.
Upon the merger of Hamptons Bancshares, Inc. into Suffolk Bancorp, the
Company assumed the retirement plan for the directors of Hamptons Bancshares,
Inc., which had been established in 1988, and covered ten directors who had
served for at least seven consecutive years including Messrs. Collins and
Raynor. These directors, upon attaining age 70, will receive a benefit of $833
per month payable for 120 months, and for which the Company contributes the sum
of $8,000 per month.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS AND ASSOCIATES
Some of the nominees, directors continuing in office, and executive
officers of the Company, as well as members of their immediate families and the
corporations, organizations, trusts, and other entities with which they are
associated, are also customers of the Bank in the ordinary course of business,
or are indebted to the Bank in respect to loans of $60,000 or more, and it is
anticipated that such persons and their associates will continue to be customers
of and indebted to the Bank in the future. All such loans, however, were made in
the ordinary course of business, did not involve more than normal risk of
collectibility or present other unfavorable features, and were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the same time for comparable transactions with unaffiliated
persons. At present, none of these loans to nominees, directors, executive
officers, or their associates is non-performing.
Outside of normal customer relationships, none of the directors or
officers of the Company or their associates currently maintains or has
maintained within the past 12 months any significant business or personal
relationship with the Company or the Bank other than such as arises by virtue of
position or ownership interest in the Company or the Bank except for the
following: The law firm of Smith, Finkelstein, Lundberg, Isler & Yakaboski, of
which Director Finkelstein is a partner, has been employed by the Bank during
the past fiscal year as general counsel and was paid $131,029 for this and
litigation. It is anticipated that the Bank will employ this law firm on a
similar basis in the future. The insurance firm of See Neefus, Inc., in which
Director Deerkoski has an equity interest, was paid $196,468 for insurance
premiums on various commercial and liability policies.
8
<PAGE> 10
PRINCIPAL SHAREHOLDERS OF THE COMPANY
To the knowledge of the Company, the table below presents the total
number of shares and percent beneficially owned by shareholders who own more
than five percent of the Company's common stock as of March 1, 1996:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
- -------------- ------------------- ----------------------- --------
<S> <C> <C> <C>
Common Stock Tweedy Browne Company L.P. 190,801 (Direct) ______
52 Vanderbilt Avenue
New York, New York 10017
</TABLE>
The following table compares the total return to shareholders of Suffolk Bancorp
with the NASDAQ Market Index, and a group of 164 national commercial banks, both
of which Suffolk Bancorp is a part.
ASSUMES $100 INVESTED ON JANUARY 1, 1991
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1995
9
<PAGE> 11
ITEM 2. DIRECTORS' PROPOSAL TO AUTHORIZE INCREASE IN NUMBER OF SHARES
(ITEM 2 ON PROXY CARD)
The Board of Directors recommends an amendment of the Company's
Certificate of Incorporation to increase the number of authorized shares from
7,500,000 shares, consisting of 7,500,000 common shares having a par value of
$5.00 per share ("Common Stock"), to 16,000,000 shares, consisting of 15,000,000
shares of Common Stock and 1,000,000 preferred shares having a par value of
$5.00 per share, with such rights, preferences, and limitations as the Board of
Directors may determine from time to time ("Preferred Stock"). At March 1, 1996,
approximately _______ shares of Common Stock were issued and outstanding.
The Company has no present plans, understandings, or agreements for the
issuance or use of the proposed shares of Preferred Stock or additional shares
of Common Stock. However, the Board of Directors believes that the proposed
increase is desirable so that, as the need may arise, the Company will have more
financial flexibility and be able to issue shares of the Common Stock or
Preferred Stock, without the expense and delay of a special shareholders'
meeting, in connection with future equity financing, opportunities for expanding
the business through investment or acquisitions, shareholder rights plans,
management incentive and employee benefit plans, and sales to employee savings
plans and dividend reinvestment and stock purchase plans, stock dividends, and
for other purposes.
Authorized but unissued shares of the Company's Common Stock and the
Company's Preferred Stock may be issues at such times, for such purposes and for
such consideration as the Board of Directors may deem to be appropriate without
further authority from the Company's shareholders, except as otherwise required
by applicable law or stock exchange policies.
Although the Board of Directors has no current intention of doing so,
the Company's authorized but unissued Common Stock and Preferred Stock could be
issued, by action of the Board of Directors without further action by the
shareholders, in one or more transactions which would make more difficult or
costly, and less likely, a takeover of the Company if the Board of Directors
were to determine that such an attempt was not in he best interests of the
Company, it's shareholders or other constituencies. For example, additional
shares of Common Stock or Preferred Stock could be sold in private placement
transactions to persons, groups or entities who are considered by the Board of
Directors to support the incumbent Board of Directors or the current management,
to the extent permissible under applicable law, thereby diluting the voting
strength of any person or entity seeking to obtain control of the Company.
Issuance of additional shares would also have the effect of diluting the
percentage voting power of existing shareholders and, depending on the
consideration for which the shares were issued, could dilute earnings per share.
The proposed amendment to then Company's Certificate of Incorporation
is not being recommended in response to any specific effort of which the Company
is aware to obtain control of the Company, nor is the Board of Directors
currently proposing to shareholders any takeover measures.
RELATIONSHIP WITH CERTAIN PRESENT PROVISIONS
The proposed amendment should be considered together with certain other
features of the Company's Certificate of Incorporation and By-Laws which may
have anti-takeover effects.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Section 2 of Article SIXTH of the Certificate of Incorporation and
Section 3 of Article III of the By-Laws provide that the Board of Directors
shall be divided into three classes as nearly equal in number as possible. One
class of directors is elected each year for a three-year term.
The classification of directors has the effect of making it more
difficult to change the composition of the Board of Directors. At least two
shareholder meetings, instead of one, are required to effect a change in a
majority of the Board of Directors.
REMOVAL OF DIRECTORS; FILLING VACANCIES ON THE BOARD OF DIRECTORS
Section 5 of Article SIXTH of the Certificate of Incorporation and
Section 6(b) of Article III of the By-Laws provide that any director or the
entire Board of Directors may be removed at any time, but only for cause.
Section 4 of Article SIXTH of the Certificate of Incorporation and Section 6(a)
of Article III of the By-Laws provide that a vacancy on the Board of Directors,
including as a result of newly created directorships, shall be filled by a
majority vote of the remaining directors of the class in which such vacancy
occurs, or by the sole remaining director of that class if only one director
remains, or by the majority of votes of the remaining directors of the other
classes if there is no remaining member of the class in which then vacancy
occurs.
10
<PAGE> 12
NOTICE OF SHAREHOLDER NOMINATION FOR DIRECTOR
Section 4 of Article III of the By-Laws provides that nominations for
election to the Board of Directors may be made by the Board of Directors or any
shareholder entitled to vote for the election of directors. Such provisions of
the By-Laws further provided that nominations, other than those made by or on
behalf of the existing Board of Directors, shall be made in writing and shall be
delivered or mailed to the President of the Company not less than 14 days nor
more than 50 days prior to any meeting of the shareholders called for the
election of directors; provided, however, that if less than 21 days' notice of
the meeting is given to shareholders, such nomination shall be mailed or
delivered to the President not later than the close of business on the seventh
day following the day on which the notice of the meeting was mailed. Such
shareholder's advanced notice must set forth certain information concerning such
shareholder and his nominees.
SECTION 912 OF THE NEW YORK BUSINESS CORPORATION LAW
Section 912 of the New York Business Corporation Law regulates certain
transactions, including mergers, other business combinations and similar
transactions between the Company and an "interested shareholder" (a beneficial
owner, or an associate or affiliate thereof, of 20% or more of the Company's
outstanding voting stock as described in Section 912) and may have the effect of
discouraging a non-negotiable bid or proposal to acquire the Company. In
general, Section 912 prohibits New York corporations from engaging in business
combinations with any interested shareholder for a period of five years
following the date such shareholder crossed the 20% threshold, unless (I) such
business combination or the crossing of the 20% threshold is approved by the
corporation's board of directors prior to the crossing of the 20% threshold, or
(ii) such business combination meets certain minimum price and procedural
requirements.
RIGHTS PLAN
On October 23, 1995, pursuant to the adoption of a rights plan (the
"Rights Plan"), the Board of Directors declared a dividend distribution of one
Common Stock purchase right (a "Right") for each outstanding share of Common
Stock. These Rights will expire in 2005 unless redeemed earlier and, initially,
will trade with the Common Stock. The Rights are not presently exercisable and
have no voting power. The Rights will detach from the Common Stock and become
exercisable and entitle a holder to buy on-half of one share of the Common Stock
at an exercise price of $70 if one of the following events occurs: (I) a person
or group acquires 20% or more of the Common Stock, (ii) a person or group makes
a tender offer for 20% or more of the Common Stock, or (iii) under certain
circumstances, a person or group acquires 10% or more of the Common Stock. The
exercise price of the Rights is adjustable to prevent dilution.
If a person or group acquires 20% or more of the outstanding Common
Stock, each Right will entitle its holder (other than such person or group) to
purchase a number of shares of Common Stock having a market value of twice the
exercise price of the Right. If the Company is acquired in a merger or other
business combination by a person or group that has previously acquired 10% or
more of the outstanding common Stock, each Right will entitle its holder to
purchase a number of shares of common stock of the acquiring company having a
market value of twice the exercise price of the Right.
At any time after the acquisition by a person or group of 20% or more
(but less than 50%) of the outstanding Common Stock, the Board of Directors may
exchange the Rights (other than those held by such person or group), in whole or
in part, at an exchange ratio of one-half of one share of Common Stock per
Right. Prior to the acquisition by a person or group of 10% or more of the
outstanding Common Stock, and under certain circumstances after the acquisition
by a person or group of 10% or more (but less than 20%) of the outstanding
Common Stock, the Rights are redeemable for $.01 per Right at the option of the
Board of Directors.
CONSIDERATION OF CONSTITUENCIES OTHER THAN SHAREHOLDERS
Section 6 of Article SIXTH of the Certificate of Incorporation provides
that the Board of Directors may oppose a tender offer for shares of the Company
on the basis of factors other than economic benefit to shareholders such as; the
impact the acquisition of control of the Company would have on the community;
the effect of such acquisition upon employees, depositors and customers of the
Company; and the reputation and business practices of the person or group making
such tender offer. The Board of Directors is expressly permitted, but not
required, to take into account the interests of such non-shareholder
constituencies pursuant to Section 717(b) of the New York Business Corporation
Law.
VOTE REQUIRED
Pursuant to Article EIGHTH of the Certificate of Incorporation, the
adoption of the proposed amendment of the Certificate of Incorporation to
increase the number of authorized shares from 7,500,000 shares, consisting of
7,500,000 shares of Common Stock, to 16,000,000 shares, consisting of 15,
000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock, will
require the affirmative vote of the holders of seventy percent of the
outstanding shares of Common Stock.
Your Directors recommend a vote FOR the adoption of the proposed
amendment of the Company's Certificate of Incorporation.
11
<PAGE> 13
ITEM 3. APPROVAL OF INDEPENDENT AUDITORS
(ITEM 3 ON PROXY CARD)
The Board of Directors has selected Arthur Andersen, LLP, independent
auditors, to audit the financial statement of the Company for the fiscal year
ending December 31, 1996, and recommends that shareholders vote for ratification
of the appointment. Notwithstanding the selection, the Board, in its discretion,
may direct the appointment of new independent auditors at any time during the
year, if the Board feels that the change would be in the best interests of the
Company and its shareholders. In the event shareholders vote against
ratification, the Board will reconsider its selection.
On June 26, 1995, the Company dismissed KPMG Peat Marwick as its
principal independent accountant and engaged Arthur Andersen, LLP. The decision
to change accountants was recommended by the Examination and Audit Committee of
the Board of Directors, and approved by the full Board. The audit reports of
KPMG Peat Marwick on the financial statements for the fiscal year ended December
31, 1994 and 1993 did not contain an adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope or accounting
principles. In connection with the audits of the fiscal years ended December 31,
1994 and 1993, and through the period ended June 26, 1995, there were no
disagreements with KPMG Peat Marwick with respect to accounting principles or
practices, financial statement disclosure, or audit scope or procedure. During
fiscal years ended December 31, 1994 and 1993, and through June 26, 1995, the
Company did not consult Arthur Andersen, LLP with respect to accounting
principles.
Representatives of Arthur Andersen, LLP are expected to be present at
the annual meeting of the shareholders. They will have the opportunity to make a
statement if they so desire, and are expected to be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote is required for approval
of the Board of Directors' selection of independent auditors for the year ending
December 31, 1996. The Board of Directors recommends a vote FOR this proposal,
which is Item 3 on the proxy card.
FILING OF S.E.C. REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors, and persons who beneficially own more than 10 percent of
the stock of the Company to file initial reports of ownership and reports of
changes in ownership. Such persons are also required by S.E.C. regulations to
furnish the Company with copies of these reports. Based solely on a review of
the copies of such reports furnished to the Company, the Company believes that
during 1995 its executive officers, directors, and greater than 10 percent
beneficial owners complied with all applicable section 16(a) filing
requirements.
OTHER MATTERS
The Board of Directors of the Company is not aware of any other matters
that may come before the meeting. However, the proxies may be voted with
discretionary authority with respect to any other matters that may properly come
before the meeting.
Date: March 8, 1996
By Order of the Board of Directors
DOUGLAS IAN SHAW
Corporate Secretary
12
<PAGE> 14
SUFFOLK BANCORP
6 West Second Street
Riverhead, New York 11901
NOTICE OFANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the annual meeting of shareholders of Suffolk
Bancorp, a New York corporation (the "Company"), will be held at the FOX HILL
GOLF & COUNTRY CLUB, Oakleigh Avenue, Baiting Hollow, New York, on Tuesday,
April 9, 1996 at 1:00 P.M. for the purpose of considering and voting upon the
following matters:
(PLEASE SIGN AND DATE THE PROXY ON THE REVERSE SIDE)
<PAGE> 15
/ X / PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. The Election of three directors to hold ofice for a term of three years,
such terms to extend until their successors have been duly elected and
qualified.
FOR WITHHOLD
/ / / /
(INSTRUCTION: To withold authority to vote for any individual nominee, write
such name or names in the spacec provided below.)
- ----------------------------------------------------------------------------
NOMINEES: Bruce Collins
Joseph A. Deerkoski
Edward J. Merz
2. Amending the Certificate of Incorporation to increase the authorized
shares of Common Stock from 7,500,000 to 15,000,000 and authorization of the
issuance of 1,000,000 shares of Preferred Stock.
FOR AGAINST ABSTAIN
/ / / / / /
3. The Approval of Approval of the Board of Directors' selection of independent
auditors for the year ending December 31, 1996.
FOR WITHHOLD EXCEPTION(S)
/ / / / / /
4. Any other business which may be properly brough before the meeting and any
adjournment thereof.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS QUICKLY AS POSSIBLE, WHETHER YOU
PLAN TO ATTEND THE MEETING IN PERSON OR NOT. YOU MAY WITHDRAW YOUR PROXY AT
ANY TIME PRIOR TO THE EXERCISE OF THE PROXY AT THE MEETING BY GIVING WRITTEN
NOTICE TO THE SECRETARY OF THE COMPANY.
SIGNATURE DATED: ,1996
------------------------------- -----------
SIGNATURE DATED: ,1996
------------------------------- -----------
(SIGNATURE IF HELD JOINTLY)
NOTE: (Please sign exactly as shown on your stock certificate and on the
envelope in which this proxy was mailed. When signing as partner, corporate
officer, attorney, executor, administrator, trustee, guardian or in any other
representative capacity, give full title as such and sign your own name as
well. If stock is held jointly, each joint owner should sign.
