<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>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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 [LOGO] BANCORP
6 West Second Street
Riverhead, NY 11901
(631) 727-5667 (Voice) - (631) 727-3214 (FAX)
[email protected]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 10, 2000
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 EAST WIND,
Route 25A, Wading River, New York, on Tuesday, April 11, 2000 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. The approval of the Board of Directors' selection of independent
auditors for the year ending December 31, 2000.
3. 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
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<PAGE> 4
SUFFOLK [LOGO] BANCORP
6 West Second Street
Riverhead, NY 11901
(631) 727-5667 (Voice) - (631) 727-3214 (FAX)
[email protected]
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
April 11, 2000
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 11, 2000 at the East Wind, Route 25A, Wading River, New
York. This proxy statement and the form of proxy are first being sent to
shareholders on March 10, 2000. Any shareholder executing a proxy that is
solicited in this statement has the power to revoke it 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. They may be solicited, personally, or by telephone or telegraph, but
these people will receive no additional compensation for their services. 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 3, 2000, there were 6,045,580 shares of common stock, $2.50 par
value, of the Company outstanding. Only stockholders of record at the close of
business on March 3, 2000 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 in a timely fashion.
Proposals for the 2001 annual meeting of the shareholders must be received by
the Company at its principal executive offices no later than November 9, 2000.
Any proposals, as well as any questions about them, 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. The Board, currently consisting
of eleven directors, has fixed the number of directors at nine commencing with
this annual meeting. Directors Hallock Luce 3rd and Raymond A. Mazgulski will
retire at this annual meeting. 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 that 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. Directors shall be elected by a plurality of the votes cast at the
meeting. All proxies received will be voted in accordance with their specific
instructions. In the event any nominee declines or is unable to serve, 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 six 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
Following is information about 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
Owned(3)
Position Served As Present Beneficially
and Offices Business Experience Director Term at % of
Name (1) Age With Company During Past 5 Years (2) Since Expires 3/3/00 Class
- ----------------------------------------------------------------------------------------------------------------------------------
NOMINEES FOR A TERM
OF THREE YEARS:
<S> <C> <C> <C> <C> <C> <C> <C>
Thomas S. Kohlmann 53 President, Chief Executive Vice President and Chief 1999 2000 11,810 0.20%
Executive Officer Lending Officer, The Suffolk
and Director County National Bank
and Suffolk Bancorp
Terence X. Meyer 43 Director Partner, Meyer, Meyer, Mehtli 1999 2000 644 0.01%
& Keneally, Esqs. L.L.P.
(attorneys)
Peter Van de Wetering 68 Director President, Van de Wetering 1985 2000 43,769 0.72%
Greenhouses, Inc.
(wholesale nursery)
DIRECTORS CONTINUING
IN OFFICE:
Edgar F. Goodale 46 Director President, Riverhead 1989 2001 15,382 0.25%
Building Supply, Inc.
J. Douglas Stark 68 Director President, Stark Mobile Homes, 1984 2001 44,238 0.73%
Inc. (manufactured housing
community)
Howard M. Finkelstein 69 Director Partner, Smith, Finkelstein, 1984 2001 57,964 0.96%
Lundberg, Isler, and
Yakaboski, L.L.P. (attorneys and
general counsel for the Bank)
Bruce Collins 69 Director Currently Retired, Former 1994 2002 15,146 0.25%
Superintendent of Public Works
Village of East Hampton, New York
Joseph A. Deerkoski 65 Director President, Neefus-Stype, Inc. 1987 2002 37,480 0.62%
(general insurance)
Edward J. Merz 68 Chairman, Chairman, President and Chief 1984 2002 37,697 0.62%
and Director Executive Officer, The Suffolk
County National Bank and Suffolk
Bancorp; Director, Intervest
Bancshares 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 and Thomas S. Kohlmann have been executive
officers of the Company in the last fiscal year.
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 Included are the following shares in which directors disclaim
beneficial ownership: Joseph A. Deerkoski 8,084 shares owned by
Patricia B. Deerkoski, wife; Howard M. Finkelstein 12,294 shares owned
by Deonne C. Finkelstein, wife.
2
<PAGE> 6
The primary business of the Company is the operation of The Suffolk County
National Bank. The directors of the Company met fifteen times during the fiscal
year ended December 31, 1999, and its Audit Committee met four times. The Board
of The Suffolk County National Bank met fifteen times, and the Personnel
Committee met six times in 1999. No director serving currently 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. Edgar F. Goodale, Joseph A. Deerkoski,
Hallock Luce 3rd, and Terence X. Meyer. 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. J. Douglas Stark, Hallock Luce 3rd,
Joseph A. Deerkoski, and Howard M. Finkelstein. This committee reviews salaries,
benefits, and employment policies of the Company and the Bank at least annually,
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 Directors who are not employees as well as the President and
Chief Executive Officer. Members of the Bank's management attend Committee
meetings regularly to provide information about personnel policies and programs,
along with their cost. Management's participation in this Committee plays an
important part in the development and continuation of benefit plans, and in
determining appropriate compensation. The Committee holds discussions with
management in attendance to ensure that decisions affecting both return to
shareholders and the Bank's 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 the shareholders. It is to
this end that the Company has established a program that 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
ongoing commitment to our shareholders. Management remains diligent in its
pursuit of new and innovative ways to determine compensation.
COMPONENTS OF COMPENSATION
The Committee examines three components of compensation annually: 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 permits valuable comparisons.
The Company also participates in comparison surveys conducted by independent
consulting firms that 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 contributed successfully
to the Company's profitability during the business year. Over the years,
differing methods have been used to determine these awards. Recent methods have
included a formula based strictly on net earnings, prorating by base salary, and
ratings matrices based on individual performance and position. The Company has
investigated alternatives and retained an outside consulting firm. Long-term
incentives take the form of stock options. The Committee acknowledges the value
of using such incentives as they tie the executives' interest to the
shareholders'. The purpose of executive compensation, in general, is to provide
incentives to increase the net worth of the Company, and ultimately
3
<PAGE> 7
shareholders' wealth. It should be noted that the Company has no long-term
contracts in effect for its Executive Officers other than contracts that would
become effective only if a change in control of the Company occurs.
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: J. Douglas Stark, Chairman of the Committee
Hallock Luce 3rd
Joseph A. Deerkoski
Howard M. Finkelstein
The following table sets forth the cash compensation paid to each person who
served as C.E.O. during the fiscal year ended December 31, 1999, and each of the
other four highest paid executive officers of the Company whose salary and bonus
exceeded $100,000 as accrued for the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------------- --------------------------------
Awards Payouts
-------------------- --------- All
Name Restricted Other
and Other Annual Stock Options/ LTIP Compen-
Principal Position Year Salary Bonus Compensation Award(s) SARs Payouts sation
($) ($) ($) ($) (#) ($) ($)(1)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Hanley (deceased) 1999 122,000 58,950 25,385 n/a 5,000 n/a 7,156
President and 1998 200,000 43,013 n/a n/a n/a n/a 8,272
Chief Executive Officer 1997 185,000 34,781 n/a n/a 5,000 n/a 2,026
Thomas S. Kohlmann 1999 154,844 25,361 n/a n/a 1,500 n/a 3,790
President and 1998 129,067 22,282 n/a n/a n/a n/a 6,383
Chief Executive Officer 1997 125,004 20,405 n/a n/a 1,500 n/a 1,745
Victor F. Bozuhoski, Jr. 1999 159,043 29,259 n/a n/a 1,500 n/a 7,204
Executive Vice President 1998 148,900 25,707 n/a n/a n/a n/a 11,054
1997 146,170 25,972 n/a n/a 1,500 n/a 3,426
Augustus C. Weaver 1999 138,359 25,361 n/a n/a 1,500 n/a 3,777
Executive Vice President & 1998 129,066 22,282 n/a n/a n/a n/a 7,106
Chief Information Officer 1997 125,003 21,184 n/a n/a 1,500 n/a 1,154
Robert C. Dick 1999 107,033 16,169 n/a n/a n/a n/a 3,037
Senior Vice President &
Chief Lending Officer
J. Gordon Huszagh 1999 102,629 15,754 n/a n/a 1,500 n/a 3,914
Executive Vice President & 1998 98,102 14,136 n/a n/a n/a n/a 3,787
Chief Financial Officer
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes above-market or preferential earnings on deferred
compensation, and company matching contributions to 401(K) plan.
4
<PAGE> 8
STOCK OPTION AND OTHER PLANS
The Company adopted a 1999 Stock Option Plan for its employees and employees of
its subsidiaries which was approved by the shareholders. The Option Plan
provides for incentive stock options and non-qualified stock options. Under the
Option Plan, options to purchase up to 600,000 shares of Common Stock may be
issued. As of December 31, 1999, options for 600,000 shares remained to be
granted: 11,000 options were granted in 1999 to the persons named in the summary
compensation table under a previous plan. During 1999, executive officers
acquired no shares on exercise and no value was realized. At December 31, 1999,
there were 45,700 unexercised options or stock appreciation rights outstanding,
of which 34,700 had vested and may be exercised. As of December 31, 1999, the
difference between the market value of the Common Stock and the exercise price
of unexercised in-the-money options or stock appreciation rights was $174,625.
Under the Plan, key employees are granted options to purchase Common Stock of
the Company at a price equal to the fair market value of the shares on the date
that the option is granted. Almost all of the Company's approximately 400
employees could qualify as key employees. The Personnel Committee of the Board
of Directors determines the optionee, the number of shares covered by the
options, and the exercise price of options granted under the Plans. When
granted, options expire after a time determined by the Personnel Committee, but
in no event longer than ten years, or on termination of the employment of the
optionee unless the termination resulted from death, disability, or retirement.
In those events, the option expires in two years, one year, and three months
after termination of employment, respectively. The exercise price may be paid
either in cash or by delivery of shares of the Company's Common Stock, valued at
the market price. Optionees may also be given stock appreciation rights in
connection with the option. The Personnel Committee may, in its discretion,
establish provisions for the exercise of stock options different from those
described in this paragraph. Copies of the Plans are available upon shareholder
request.
<TABLE>
<CAPTION>
STOCK OPTION TABLE
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------
Percent of
Number of Total
Securities Options/SAR's
Underlying Granted to Exercise of
Options/SAR's Employees Base Price Expiration Grant Date
Name Granted (#) in Fiscal Year ($/Sh) Date Present Value $
(a) (b) (c) (d) (e) (h)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John F. Hanley (deceased) 5,000 45% $26.25 10/3/01 $26,300
Victor F. Bozuhoski, Jr. 1,500 14% $26.25 1/22/09 $7,890
Thomas S. Kohlmann 1,500 14% $26.25 1/22/09 $7,890
Augustus C. Weaver 1,500 14% $26.25 1/22/09 $7,890
J. Gordon Huszagh 1,500 14% $26.25 1/22/09 $7,890
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(**)The weighted-average, fair value of the options granted during 1999
was $5.26. 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 during 1999: risk-free interest rate of 4.63%;
expected dividend yield of 3.42%; expected life of ten years; and expected
volatility of 20.70%.
COMPENSATION PURSUANT TO PLANS
The Company has a defined-benefit pension plan. It is the only form of
contingent remuneration. It is noncontributory and is applicable to all officers
and employees after one year of eligible 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 creditable service from employment. The total pension plan
expense for all officers and employees for 1999 was $180,460.
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>
ANNUAL AVERAGE YEARS OF CREDITABLE SERVICE
------------------------------------
COMPENSATION 15 25 35
- -------------------------------------------------------------------------
<S> <C> <C> <C>
$50,000 10,695 17,825 24,955
100,000 23,820 39,700 55,580
150,000 36,945 61,575 86,205
200,000 39,750 65,950 92,330
250,000 39,750 65,950 92,330
300,000 39,750 65,950 92,330
- -------------------------------------------------------------------------
</TABLE>
The single plan maximum benefit limit under Internal Revenue Code Section 415 as
of January 1, 1999, $130,000 ($126,829 under the Normal Form of Payment for a
Single Participant), is reflected in the benefits. The maximum annual
compensation allowed under a qualified plan, $160,000 for 1999, is also
reflected in the calculations.
YEARS OF CREDITABLE SERVICE
<TABLE>
<CAPTION>
Name of Officer Capacities In Which Served Years of Creditable Service
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Thomas S. Kohlmann President & Chief Executive Officer 7
Victor F. Bozuhoski, Jr. Executive Vice President 33
Augustus C. Weaver Executive Vice President & Chief
Information Officer 12
Robert C. Dick Senior Vice President & Chief
Lending Officer 19
J. Gordon Huszagh Executive Vice President & Chief
Financial Officer 16
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
BENEFICIAL INTEREST OF EXECUTIVE OFFICERS
as of March 3, 2000
<TABLE>
<CAPTION>
# of Shares (***) % of Fully-
Name Position Held Owned Diluted Shares
Beneficially Outstanding
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
John F. Hanley (deceased) President & Chief Executive Officer 22,858 0.38%
Thomas S. Kohlmann President & Chief Executive Officer 11,810 0.19%
Victor F. Bozuhoski, Jr. Executive Vice President 14,957 0.25%
Augustus C. Weaver Executive Vice President & Chief Information Officer 7,453 0.12%
Robert C. Dick Senior Vice President & Chief Lending Officer 1,879 0.03%
J. Gordon Huszagh Executive Vice President & Chief Financial Officer 3,667 0.06%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(***) includes options currently exercisable
Directors and executive officers of the Company and the Bank who as a group
total 15 own beneficially 413,649 shares of common stock or 6.80 percent of the
fully diluted shares of the company outstanding as of March 3, 2000, excluding
5,456 shares and 17,400 options owned by the estate of John F. Hanley.
EMPLOYMENT CONTRACTS
The Company has entered into agreements with thirteen employees, including
Messrs. Bozuhoski, Dick, Huszagh, Kohlmann, Merz, and Weaver . These agreements
provide for certain benefits in the event that the employee is terminated
involuntarily within three years of a "change of control" of the Company. It
also provides benefits if the employee leaves voluntarily
6
<PAGE> 10
within three years of a "change of control" if there has been a material change
in the employee's salary, function, duties or responsibilities that causes the
employee's position to be of less dignity, responsibility, importance, or scope
than it was immediately before the "change of control." It further applies 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 current
directors of the Company and directors approved in the future by a majority of
the current directors and their approved successors ("Incumbent Directors")
cease to comprise a majority of the directors of the Company; (iii) the
reorganization, merger, or consolidation of the Company or sale or other
disposition of all the Company's assets; 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 who did
not own more than 25 percent before 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 the action by the board
approving the event. After an event of termination following a change in
control, an employee shall be entitled to a monthly payment in the amount of his
or her monthly rate of salary immediately before the " event of termination,"
plus 1/12 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. The 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, 2005.
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 $19,500 for their services. All directors of the Bank,
except Messrs. Kohlmann, Mazgulski, and Merz, also receive $1,100 for four
meetings during the month of service on the Finance Committee and $700 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 his fees as a director of the Bank until
retirement or age 72, termination of service, or death. During the deferral
period, amounts deferred earn interest at 1% less than the prime 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 Mr. Collins. These directors, upon
attaining age 70, 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.
They may also have taken loans from the Bank of $60,000 or more. It is
anticipated that these people 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. They were made on
substantially the same terms as those prevailing at the time for comparable
transactions with unaffiliated persons, including interest rates and collateral.
At present, none of these loans to nominees, directors, executive officers or
their associates is non-performing.
Other than normal relationships as customers or by virtue of position or
ownership in the Company, none of the directors or officers of the Company or
their associates now maintains, or has maintained, any significant business or
personal relationship with the Company or the Bank during 1999, except for the
following. The law firm of Smith, Finkelstein, Lundberg, Isler & Yakaboski, LLP,
of which Director Finkelstein is a partner, has been employed by the Bank as
general counsel and was paid $92,061 for legal services. It is anticipated that
the Bank will employ this law firm in the future. The insurance firm of
Neefus-Stype, Inc., of which Director Deerkoski serves as President, was paid
$159,167 in premiums on various commercial and liability insurance policies for
current and future coverage, and other fees. Management and the board of
directors of the Company have determined that these amounts are fair and
competitive for the services provided.
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 March 3, 2000.
<TABLE>
<CAPTION>
Name and Address of Amount, Nature and Percent
Title of Class Beneficial Owner of Beneficial Ownership of Class
- -------------- ------------------- --------------------------------
<S> <C> <C>
Common Stock Private Capital Management 402,220 (Direct) 6.65
3003 Tamiami Trail
Naples, Florida 34103
</TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN OF SUFFOLK BANCORP,
INDUSTRY INDEX AND BROAD MARKET INDEX.
The following table compares the total return to shareholders of Suffolk Bancorp
with national commercial banks, and the NASDAQ Composite Index, both of which
Suffolk Bancorp is a part.
[LINE GRAPH]
Comparison of Cumulative Total Return of Suffolk Bancorp, Industry Index, and
Broad Market
<TABLE>
<CAPTION>
1/1/95 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Suffolk Bancorp 100 136.40 156.87 250.53 239.32 234.54
Commercial Banks 100 158.88 223.17 331.90 358.36 304.55
NASDAQ 100 129.71 161.18 197.16 278.08 490.46
</TABLE>
ASSUMES $100 INVESTED ON JANUARY 1, 1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING DECEMBER 31, 1999
ITEM 2. APPROVAL OF INDEPENDENT AUDITORS
(Item 2 on Proxy Card)
The Board of Directors has selected Arthur Andersen, LLP, independent auditors,
to audit the financial statements of the Company for the fiscal year ending
December 31, 2000, 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.
8
<PAGE> 12
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, 2000.
The Board of Directors recommends a vote FOR this proposal, which is Item 2 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 1999 its executive officers, directors, and beneficial owners of more of
the stock complied with all applicable filing requirements of section 16(a).
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 10, 2000
By Order of the Board of Directors
DOUGLAS IAN SHAW
Corporate Secretary
9
<PAGE> 13
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10
<PAGE> 14
SUFFOLK BANCORP
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS - APRIL 11, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint HAROLD E. BURNS, Jr. and DAVID A. KANDELL 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 March 3, 2000 at the annual meeting
of shareholders to be held on April 11, 2000, or any adjournment thereof. The
undersigned hereby revokes any proxy previously given.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE> 15
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
SUFFOLK BANCORP
APRIL 11, 2000
| |
V Please Detach and Mail in the Envelope Provided V
- -------------------------------------------------------------------------------
A [X] Please mark your
votes as in this
example.
FOR WITHHOLD
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.
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write such name or names in the space provided below.)
_______________________________________________________________
NOMINEES: Thomas S. Kohlmann
Terence X. Meyer
Peter Van de Wetering
FOR AGAINST ABSTAIN
3. The Approval of the Board of Directors' selection [ ] [ ] [ ]
of independent auditors for the year ending
December 31, 2000.
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 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.
I WILL I WILL NOT
ATTEND THE [ ] ATTEND THE [ ]
MEETING MEETING
SIGNATURE ________________________________________ DATE: ______________, 2000
SIGNATURE ________________________________________ DATE: ______________, 2000
(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.)
- --------------------------------------------------------------------------------
