<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 [X]
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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
SUFFOLK BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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 17, 1997
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 8, 1997 at 1:00 P.M. for the purpose of considering and voting upon the
following matters:
1. The election of four directors to hold office for a term of three
years, such terms to extend until their successors have been duly
elected and qualified.
2. To approve a two-for-one stock split by amending the certificate of
incorporation to change each authorized share of common stock, par
value $5.00 per share, into two shares of common stock, par value $2.50
per share.
3. The approval of the Board of Directors' selection of independent
auditors for the year ending December 31, 1997.
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
THIS PAGE LEFT INTENTIONALLY BLANK
2
<PAGE> 4
SUFFOLK BANCORP
6 West Second Street
Riverhead, New York 11901
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
April 8, 1997
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 8, 1997 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 17, 1997. 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"), which is a wholly owned
subsidiary 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 February 28, 1997, there were 3,242,900 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 February 28, 1997 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 1998 annual shareholders' meeting must be received by
the Company at its principal executive offices no later than November 9, 1997.
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 four 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 eleven. 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 four
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 four 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.
1
<PAGE> 5
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>
Position Served As Present
and Offices Business Experience Director Term
Name (1) Age With Company During Past 5 Years(2) Since Expires
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOMINEES FOR A TERM OF THREE YEARS:
Hallock Luce 3rd 75 Director Director, Lupton & Luce, Inc. 1984 1997
(general insurance)
Raymond A. Mazgulski 73 Vice Chairman Chairman, The Suffolk County 1984 1997
and Director National Bank
Peter Van de Wetering 65 Director President, Van de Wetering 1985 1997
Greenhouses (wholesale nursery)
John F. Hanley 50 Executive Vice Executive Vice President and Chief 1997 1997
President, Chief Administrative Officer, The Suffolk
Administrative, County National Bank.
Officer and
Director(5)
DIRECTORS CONTINUING IN OFFICE:
Edgar F. Goodale 43 Director President, Riverhead 1989 1998
Building Supply, Inc.
J. Douglas Stark 64 Director President, Stark Mobile Homes, 1984 1998
Inc. (manufactured housing
community)
Howard M. Finkelstein 66 Director Partner, Smith, Finkelstein, 1984 1998
Lundberg, Isler, and Yakaboski
(attorneys and general counsel
for the Bank)
Director, Island Computer Corporation
John J. Raynor 48 Director President, John J. Raynor P.E. & 1994 1998
L.S., P.C. (civil engineering/surveying)
Director, Island Computer Corporation
Bruce Collins 66 Director Currently Retired, Former 1994 1999
Superintendent of Public Works
Village of East Hampton, New York
Joseph A. Deerkoski 62 Director President, See Neefus, Inc. 1987 1999
(general insurance)
Edward J. Merz 65 Chairman, President and Chief Executive 1984 1999
President Officer of The Suffolk County
Chief Executive National Bank and Suffolk
Officer Bancorp
</TABLE>
<TABLE>
<CAPTION>
Shares of
Common Stock
Owned
Beneficially at % of
2/28/97 (4) Class
- --------------------------------------------------------------------
<S> <C> <C>
NOMINEES FOR A TERM OF THREE YEARS:
Hallock Luce 3rd 47,507 1.46%
Raymond A. Mazgulski 8,084 0.25%
Peter Van de Wetering 20,060 0.62%
John F. Hanley 6,440 0.20%
DIRECTORS CONTINUING IN OFFICE:
Edgar F. Goodale 6,156 0.19%
J. Douglas Stark 43,133 1.33%
Howard M. Finkelstein 27,449 0.85%
John J. Raynor 4,229 0.13%
Bruce Collins 6,743 0.21%
Joseph A. Deerkoski 17,832 0.55%
Edward J. Merz 18,427 0.57%
</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 and John F. Hanley have been, within the
Company's last fiscal year, executive officers 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. was a bank service
corporation wholly owned by Suffolk Bancorp which supplied computer
services to banks. Its Board of Directors consisted of directors of
Suffolk Bancorp and officers of The Suffolk County National Bank. The
operations of Island Computer were assumed by The Suffolk County
National Bank during 1996.
(4) Included are the following shares in which directors disclaim
beneficial ownership: Joseph A. Deerkoski 3,792 shares owned by
Patricia B. Deerkoski, wife; Howard M. Finkelstein 5,681 shares owned
by Deonne C. Finkelstein, wife; J. Douglas Stark 9,998 shares owned by
Michelle Stark, daughter, and 9,986 shares owned by Tracy Stark,
daughter.
(5) Mr. Hanley currently serves as President and Chief Executive Officer of
Suffolk Bancorp's banking subsidiary, The Suffolk County National Bank.
2
<PAGE> 6
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, 1996, and its Audit Committee met three times.
The Board of The Suffolk County National Bank met thirteen times, and its
Personnel Committee met four times in 1996. 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,
President and Chief Executive Officer, 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.
3
<PAGE> 7
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:
Hallock Luce 3rd, Chairman of the Personnel Committee J. Douglas Stark
Joseph A. Deerkoski Howard M. Finkelstein
The following table sets forth the cash compensation paid to the C.E.O
and each of the four highest paid executive officers of the Company whose salary
and bonus exceeded $100,000 as accrued for the fiscal year ended December 31,
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
----------------------
Annual Compensation Awards Payouts
- ---------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted All Other
Other Annual Stock Options/ LTIP Compen-
Name and Salary Bonus Compensation Award(s) SARs Payouts sations
Principal Position Year ($) ($) ($) ($) (#) ($) ($)(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edward J. Merz, 1996 $258,622 - n/a n/a 5000 n/a 1,803
President and 1995 254,410 24,000 n/a n/a n/a n/a 1,800
Chief Executive Officer 1994 247,000 30,000 n/a n/a n/a n/a 1,847
John F. Hanley 1996 $150,965 - n/a n/a 3700 n/a 1,785
Executive Vice President and 1995 113,492 12,000 n/a n/a n/a n/a 1,506
Chief Administrative Officer 1994 108,501 15,000 n/a n/a n/a n/a 988
Victor F. Bozuhoski, Jr. 1996 $142,083 - n/a n/a 1300 n/a 1,438
Executive Vice President, 1995 140,012 12,000 n/a n/a n/a n/a 1,400
Treasurer, and 1994 132,000 15,000 n/a n/a 449 n/a 1,400
Chief Financial Officer
Ronald M. Krawczyk (2) 1996 $130,731 - n/a n/a 1300 n/a 568
Executive Vice President 1995 130,000 12,000 n/a n/a n/a n/a 520
1994 130,000 11,250 n/a n/a n/a n/a 260
Augustus C. Weaver 1996 $116,454 - n/a n/a 1300 n/a 675
Executive Vice President and 1995 118,831 9,600 n/a n/a n/a n/a n/a
Chief Information Officer 1994 113,619 15,000 n/a n/a n/a n/a n/a
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes (a) above-market or preferential earnings on deferred
compensation, and (b) company contributions to 401(K) plan.
(2) Mr. Krawczyk, while included in the compensation tables, has resigned
as of March 17, 1997.
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 February 28,
4
<PAGE> 8
1997, options for 299,603 shares remain to be granted:. 13,900 options were
granted in 1996, 12,600 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 372 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 1996, executive officers acquired no shares on exercise and no
value was realized. At fiscal year-end 1996, there were 13,900 unexercised
options or stock appreciation rights. However, there was no value at that time
to unexercised in-the-money options or stock appreciation rights.
STOCK OPTION TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS Potential Realizable
- --------------------------------------------------------------------------------------- Value At Assumed Alternative To
Annual Rate Of Stock (f) And (g):
Percent of Price Appreciation Grant Date
Number of Total For Option Term Value
Securities Options/SAR's **
Underlying Granted to Exercise of ------------------------------------------
Options/SAR's Employees Base Price Expiration Grant Date
Name Granted (#) in Fiscal Year ($/Sh) Date 5% ($) 10% ($) Present Value $
(a) (b) (c) (d) (e) (f) (g) (h)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Edward J. Merz 5000 36% $39.00 12/23/2006 $65,500
----------------------------------------------------------------------------------------------------------
John F. Hanley 3700 25% $39.00 12/23/2006 $48,470
----------------------------------------------------------------------------------------------------------
Victor F. Bozuhoski, Jr. 1300 9% $39.00 12/23/2006 $17,030
----------------------------------------------------------------------------------------------------------
Ronald M. Krawczyk 1300 9% $39.00 12/23/2006 $17,030
----------------------------------------------------------------------------------------------------------
Augustus C. Weaver 1300 9% $39.00 12/23/2006 $17,030
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
**The weighted-average, fair value of the options granted during 1996 was
$13.10. The fair value of each option was estimated on the date granted using
the Black-Scholes option pricing model. The following weighted average
assumptions were used for grants in 1996: risk-free interest rate of 6.3%;
expected dividend yield of 3.5%; expected life of ten years; and expected
volatility of 32.2%.
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 1996 was $356,000.
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.
5
<PAGE> 9
The following table presents the estimated retirement benefits payable
under the Plan based on selected compensation amounts and years of service,
after deducting Covered Compensation. 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
<TABLE>
<CAPTION>
Years of Creditable Service
Annual Average -----------------------------------------------------------
Compensation 15 25 35
-----------------------------------------------------------
<S> <C> <C> <C>
$50,000 11,098 18,497 25,896
100,000 24,223 40,372 56,521
150,000 37,348 62,247 87,146
200,000 37,348 62,247 87,146
250,000 37,348 62,247 87,146
300,000 37,348 62,247 87,146
</TABLE>
The single plan maximum benefit limit under Internal Revenue Code
Section 415 as of January 1, 1996, $120,000 (117,073 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 1996, 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 & Chief Executive Officer 20
John F. Hanley Executive Vice President & Chief Administrative Officer 24
Victor F. Bozuhoski, Jr. Executive Vice President, Treasurer, & Chief Financial Officer 30
Ronald M. Krawczyk Executive Vice President 13
Augustus C. Weaver Executive Vice President & Chief Information Officer 9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Directors and executive officers of the Company and the Bank, who as a
group total 16, beneficially own 229,500 shares of common stock which is 7.08
percent of the outstanding shares of common stock of the Company as of February
28, 1997.
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 18,427 0.57%
Director
John F. Hanley Executive Vice President & CAO 6,440 0.20%
Victor F. Bozuhoski, Jr. Executive Vice President, 5,677 0.18%
Treasurer and CFO
Ronald M. Krawczyk Executive Vice President 10,374 0.32%
Augustus C. Weaver Executive Vice President & CIO 2,156 0.07%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 10
EMPLOYMENT CONTRACTS
The Company has entered into agreements with thirteen employees,
including Messrs. Merz, Hanley, Bozuhoski, Krawczyk, and Weaver. 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 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 $115,608 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 $210,584 for insurance
premiums on various commercial and liability policies.
7
<PAGE> 11
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 February 28, 1997:
<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. 224,101 (Direct) 6.91
52 Vanderbilt Avenue
New York, New York 10017
</TABLE>
The following table compares the total return to shareholders of Suffolk Bancorp
with a group of 164 national commercial banks, and the NASDAQ Composite Index,
both of which Suffolk Bancorp is a part.
[LINE GRAPH]
<TABLE>
<CAPTION>
December 31, 1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Suffolk Bancorp 100 228.68 271.55 316.19 431.28 496.02
Industry Index 100 138.87 154.71 152.19 241.80 339.64
Broad Market 100 100.98 121.13 127.17 164.96 204.98
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1992
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1996
8
<PAGE> 12
ITEM 2. DIRECTORS' PROPOSAL TO AUTHORIZE INCREASE IN NUMBER OF SHARES
(ITEM 2 ON PROXY CARD)
The Board of Directors recommends the approval of a proposal to
reclassify each share of the Company's common stock, par value $5.00, to two
shares, par value $2.50, and to amend the Company's Certificate of
Incorporation to effect a two-for-one stock split, by changing 7,500,000
shares, $5.00 par value, of Common Stock presently into 15,000,000 shares,
$2.50 par value. Accordingly, it is proposed to amend the first paragraph of
Article Fifth of the Company's Certificate of Incorporation to read as follows:
"Article Fifth: The aggregate number of shares which this
corporation shall have authority to issue is 15,000,000 shares, par
value $2.50 each, which shall be known as 'common stock.'"
If the proposed amendment is adopted, the Company plans to file a
Certificate of Amendment of the Certificate of Incorporation to be effective no
later than May 1, 1997. Each share of Common Stock, $5.00 par value, held of
record as of the close of business on the effective date will be changed into
two shares of Common Stock, $2.50 par value. Outstanding certificates
representing shares of Common Stock, $5.00 par value, will thereafter represent
the same number of shares of Common Stock, $2.50 par value, and new certificates
representing the additional shares of capital stock, $2.50 par value, will be
mailed to shareholders entitled thereto as soon as practicable thereafter.
Currently outstanding shares of Common Stock should be retained by the holders
and should NOT be forwarded to the Company or the Transfer Agent.
The proposed stock split will increase the number and change the par
value of the outstanding shares, but will not affect the relative rights of
shareholders.
The Board of Directors believes that a two-for-one stock split is in
the best interests of shareholders because it will place the market price of the
Common Stock in a range more attractive to individual investors and should
broaden public interest in such stock.
As off February 28, 1997, of the 7,500,000 authorized shares of Common
Stock, a total of 3,242,900 shares were outstanding, 562,310 were held in the
Company's treasury and 299,603 were reserved for issuance for stock options. The
additional shares to be authorized for issuance, apart from the stock split,
would be available for other corporate purposes but no specific transaction is
now contemplated which would result in the issuance of additional shares.
In the opinion of counsel for the Company, the adoption of the proposed
amendment and the issuance of the additional shares in connection with the stock
split will result in no gain or loss or any other form of taxable income for
United States federal income tax purposes. The laws of jurisdictions other than
the United States may impose income taxes on the issuance of the additional
shares in connection with the stock split, and shareholders subject to those
laws are urged to consult their tax advisors.
The affirmative vote of the holders of a seventy percent of the
outstanding shares of Common Stock authorized to vote thereon is required for
adoption of the proposed amendment.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO ADOPT A TWO-FOR-ONE STOCK SPLIT BY AMENDING THE CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK AND TO DECREASE
THE PAR VALUE PER SHARE OF SUCH STOCK.
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, 1997, 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.
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, 1997. The Board of Directors recommends a vote FOR this proposal,
which is Item 3 on the proxy card.
9
<PAGE> 13
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 1996 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 17, 1997
By Order of the Board of Directors
DOUGLAS IAN SHAW
Corporate Secretary
10
<PAGE> 14
SUFFOLK BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - APRIL 8, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) HAROLD E. BURNS, Jr. And LEO STERNLICHT as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated on the matters shown on the reverse
side in the manner directed, and upon any other matter which may properly come
before the meeting, all the shares of common stock of Suffolk Bancorp held on
record by the undersigned on February 28, 1997 at the annual meeting of
shareholders to be held on April 8, 1997, or any adjournment thereof. The
undersigned hereby revokes any proxy previously given.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
11
<PAGE> 15
A Please mark your votes as in this example.
FOR WITHHOLD
Nominees: Hallock Luce 3rd
1 The election of Raymond A. Mazgulski
four directors to Peter Van de Wetering
hold office for a John F. Hanley
term of three years. Such terms to extend
until their successors have been duly
elected and qualified.
(INSTRUCTION: To withhold authority to vote
for any individual nominee, write such name or names
In the space provided below:
_______________________________________________________
FOR AGAINST ABSTAIN
2. To approve a two-for-one stock split by amending the certificate of
incorporation to change each authorized share of common stock, par value
$5.00 per share, into two shares of common stock, par value $2.50
per share.
3. The approval of the Board of Directors selection of independent auditors
for the year ending December 31, 1997.
4. Any other business which may be properly brought before the meeting or
any adjournment thereof.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS QUICKLY AS 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__________________________________DATE ________________,1997
SIGNATURE__________________________________DATE ________________, 1997
(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.)
12
