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:
[ ] 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 Rule 240. 14a-11 (c) or Rule 240. 14a-12
CANANDAIGUA NATIONAL CORPORATION
(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) (1) and 0-11
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price of other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
CANANDAIGUA NATIONAL CORPORATION
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD MARCH 11, 1998
Notice is hereby given that the Annual Meeting of Stockholders of Canandaigua
National Corporation will be held on Wednesday, March 11, 1998, at the Main
Office of The Canandaigua National Bank and Trust Company, 72 South Main
Street, Canandaigua, New York 14424. The meeting will convene at 2:00 p.m.,
eastern standard time, for the purpose of voting on the following matters:
1. To elect three Class 3 Directors for terms of three years.
2. To consider and act upon a proposal to approve the Canandaigua National
Corporation Stock Option Plan.
3. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The Board of Directors has fixed January 30, 1998, as the record date for the
meeting, and only holders of common stock of record at the close of business
on
that day are entitled to receive notice of and vote at the meeting. All
stockholders are cordially invited to attend the meeting in person, but those
who are unable to do so are respectfully urged to execute and return the
enclosed proxy at their earliest convenience.
If you attend the meeting in person, you may withdraw your proxy and vote
your
shares.
February 25, 1998
By Order of the Board of Directors
/s/ George W. Hamlin, IV
George W. Hamlin, IV
Secretary - Board of Directors
CANANDAIGUA NATIONAL CORPORATION
72 SOUTH MAIN STREET
CANANDAIGUA, NEW YORK 14424
This Proxy Statement is being mailed to holders of common stock, in
connection with solicitation of proxies by the Board of Directors of
Canandaigua National Corporation for use at the Annual Meeting of
Stockholders to be held March 11, 1998 at 2:00 p.m. at the Offices of the
Corporation, 72 South Main Street, Canandaigua, NY 14424 and any adjournment
thereof. Each proxy that is properly executed and returned will be voted at
the meeting and, if a choice is specified therein, will be voted in
accordance with the specification made. If no choice is specified, it will
be voted in favor of the proposals set forth in the notice enclosed herewith.
Any proxy may be revoked by the person giving it at any time prior to its
exercise.
Only stockholders of record as of the close of business on January 30, 1998,
are entitled to notice of, and to vote at, the Annual Meeting. On that date,
there were outstanding and entitled to vote 160,566 shares of common stock,
par value $50 per share. Each share of common stock is entitled to one vote.
A quorum will consist of the holders of not less than a majority of the
shares entitled to vote, present either in person or by proxy.
This Proxy Statement and the accompanying proxy are being mailed by first-
class mail on February 25, 1998.
All expenses incurred in connection with the solicitation of proxies will be
borne by the Corporation. It is estimated that the cost of this solicitation
of security holders will be approximately $4,400.
SHAREHOLDERS OF MANAGEMENT AND OTHERS
Principal Beneficial Owners of Common Stock
A)The following table sets forth, as of January 30, 1998, the name and
address of each person who owns of record or who is known by the Board of
Directors to be the beneficial owner ("beneficial ownership" as used in this
Proxy Statement is defined in Rule 13d-3 under the Securities Exchange Act of
1934) of more than 5% of the Corporation's outstanding common stock, the
number of shares beneficially owned, and the percentage of the Corporation's
outstanding common stock so owned and the percentage of class of the
Corporation's common stock beneficially owned by all Directors and Principal
Officers of the Corporation as a group:
Shares of Common Percent of
Name and Address Stock Owned Class
Arthur S. Hamlin 8,200 (1) 5.11 %
Canandaigua, NY
All Directors and Principal Officers 14,956 (2) 9.31 %
of Corporation as a Group (12 persons)
As of January 30, 1998, the Trust Department of The Canandaigua National Bank
and Trust Company held in various fiduciary capacities 32,836 shares or
20.45% of the outstanding shares. The Trust Department of the bank has the
power to vote 11,242 of these shares.
B)Beneficial Ownership by Directors and Principal Officers: The following
table sets forth as of January 30, 1998, the amount and percentage of the
common stock of the Corporation beneficially owned by each Director and each
Principal
Officer.
Shares of Common Percent of
Name and Address Stock Owned Class
Patricia A. Boland 50 .03 %
Canandaigua, NY
David Hamlin, Jr. 150 (3) .09 %
Bloomfield, NY
Frank H. Hamlin 5,533 3.45 %
Naples, NY
George W. Hamlin, IV 1,703 (4) 1.06 %
Canandaigua, NY
Stephen D. Hamlin 1,510 (5) .94 %
Canandaigua, NY
Paul R. Kellogg 352 (6) .22 %
Canandaigua, NY
Eldred M. Sale 1,500 (7) .93 %
Victor, NY
Caroline C. Shipley 108 .07 %
Canandaigua, NY
Alan J. Stone 3,758 (8) 2.34 %
Honeoye, NY
Gregory S. MacKay 159 (9) .10 %
Canandaigua, NY
Robert G. Sheridan 68 (10) .04 %
Canandaigua, NY
Daniel P. Fuller 65 (11) .04%
Canandaigua,
PROPOSAL NO. 1 ELECTION OF DIRECTORS
The number of Directors to be elected at the 1998 Annual Meeting is three.
Eldred M. Sale, a Class 3 Director, retired from the Board as of January 30,
1998. Directors are elected annually by the stockholders to hold office for
three years and until their successors are elected and qualified. Management
has nominated as Directors, and recommends the election, of the three persons
listed below. Nominee Robert G. Sheridan is a member of the present Board
and was elected by the stockholders of the Corporation at the Annual Meeting
held in 1992. Nominees Patricia A. Boland and Alan J. Stone are also
members of the present Board and were elected by the stockholders of the
Corporation at the Annual Meeting held in 1986. Each nominee has consented
to be named in this Proxy Statement and to serve if elected. If at the time
of the Annual Meeting any of them becomes unavailable for election, the
proxies may exercise discretionary authority to vote for substitutes proposed
by the Board of Directors. Management has no reason to believe that any
substitute nominees will be required.
INFORMATION ON DIRECTORS AND NOMINEES
Year First Elected
or Appointed to: Principal Occupation
Name Age Corporation Bank For Past Five Years
Incumbent Class 3 Directors Term Expiring 1998
Robert G. Sheridan 49 1984 1992 Senior Vice President and
Cashier - The Canandaigua
National Bank and Trust
Company - 1989 - present
Patricia A. Boland 62 1986 1986 Retired Educator;
Retired Mayor City of
Canandaigua
Alan J. Stone 57 1986 1986 CEO Stone Construction
Equipment, Inc. until
1986;
Managing Partner - Stone
Properties July 1986 -
present; Chairman of the
Board - Canandaigua
National
Corporation - February
1994 present
Class 2 Directors - Term Expiring 1999
Frank H. Hamlin 92 1984 1948 Bank Director - Investor
Stephen D. Hamlin 61 1984 1973 Chief Executive Officer
Sonnenberg Gardens
February 1996 - present
Paul R. Kellogg 70 1984 1962 Retired Owner - Kellogg's
Pan Tree - Inn
Daniel P. Fuller 46 1996 1996 President and General
Manager Bristol Mountain
Ski Resort - December
1984 present
Class 1 Directors - Term Expiring 2000
David Hamlin, Jr. 54 1993 1993 Farmer;
Retired Colonel, New York
State Air National Guard
Caroline C. Shipley 58 1984 1984 Educator - Director
New York State School
Boards Association
January 1991- present;
Vice President 1995;
President 1996-1997
George W. Hamlin, IV 56 1984 1979 President, CEO, CRA and
Trust Officer - The
Canandaigua National Bank
and Trust Company - April
1979 - present; Director
of the Buffalo, NY
Federal
Reserve Bank 1992 - 1996;
Director of the New York,
NY Federal Reserve Bank
1997 - present
The family relationships between the above-named Directors are as follows:
George Hamlin is the son of Frank Hamlin. Stephen Hamlin is the nephew of
Frank Hamlin and first cousin of George Hamlin. David Hamlin, Jr., is a
first cousin once removed of Frank Hamlin and a second cousin of George and
Stephen Hamlin.
COMMITTEES OF THE BOARD OF DIRECTORS
The Directors of Canandaigua National Corporation and the Directors of The
Canandaigua National Bank and Trust Company are the same persons.
The Corporation does not have standing Audit, Nominating, or Compensation
Committees. These functions are performed by the following committees of The
Canandaigua National Bank and Trust Company:
The Examining Committee consists of five (5) Directors who are not employees
of the subsidiary bank and who are appointed annually by the Board of
Directors.
Members of the Committee are:
Caroline C. Shipley Frank H. Hamlin Paul R. Kellogg
David Hamlin, Jr. Patricia A. Boland
The Examining Committee met six (6) times during 1997 to supervise the
internal audit and compliance activities of the Bank. The function of the
Committee is to make or cause to be made suitable examinations every year and
to insure that the Bank's activities are being conducted in accordance with
the law and the banking rules and regulations established by the Comptroller
of the Currency, other regulatory and supervisory authorities, and in
conformance with established policy. In addition, the Examining Committee
recommends to the Board of Directors the services of a reputable independent
certified public accounting firm, and the Board of Directors then appoints
the independent certified public accounting firm at the annual organizational
meeting of Directors. The Committee receives and reviews the reports of the
independent certified public accounting firm and presents them to the Board
of Directors with comments and recommendations. At least once during each
twelve-month period, this Committee makes audits of the Trust Department or
causes audits to be made and ascertains whether an adequate review of all the
assets in each trust has been made.
The Officer's Compensation Committee consists of three (3) Directors who are
not employees of the subsidiary bank and who are appointed by the Board of
Directors each year. Members of the Committee are as follows:
Daniel P. Fuller Alan J. Stone Caroline C. Shipley
The Officers' Compensation Committee met six (6) times during 1997 to perform
annual reviews of officers' performance. Based on the Committee's reviews,
recommendations on officers' titles and salaries for the upcoming year are
made to the Board of Directors for approval.
The Corporation has no Nominating Committee or other committee performing a
similar function, but the Board of Directors does consider persons suggested
as candidates for election as Corporate Directors. In this connection, the
Board will consider recommendations submitted by stockholders. Any
stockholder wishing to make such a recommendations should submit it to the
Secretary of the Corporation. Notice of intention to make any nominations or
other proposals, other than by the Board of Directors, must be made in
writing and must be received by the Secretary of the Corporation no less than
twenty (20) days prior to any meeting of stockholders called for the election
of Directors. Such notification should contain the following information to
the extent known to the notifying stockholder: (a) the name and address of
each proposed nominee; (b) the principal occupation of each proposed nominee;
(c) the total number of shares of capital stock of the Corporation that will
be voted for each proposed nominee; (d) the number of shares of common stock
of the Corporation owned by the notifying stockholder.
The Board of Directors of the Corporation held twelve (12) regular meetings
during 1997. No incumbent Director of the Bank or of the Corporation
attended fewer than 75% of the aggregate of all the meetings of the Board of
Directors and the Committees of which they were members.
BOARD OF DIRECTORS COMPENSATION
For the years 1997 and 1996, no compensation was paid to members of the Board
of Directors of Canandaigua National Corporation. For the year 1996 members
of the Board of Directors of The Canandaigua National Bank and Trust Company
were compensated at the rate of $300 per meeting attended. For the year
1997, the Chairman of the Board of Directors was compensated at the rate of
$450 per meeting attended and the remaining members were paid at the rate of
$425 per meeting attended.
PRINCIPAL OFFICERS
The following table sets forth selected information about the Principal
Officers of the Corporation, each of whom is elected by the Board of
Directors and each of whom holds office at the discretion of the Board of
Directors:
Number
Office and of Shares
Position with Beneficially
Name Corporation Held Since Owned Age
George W. Hamlin, IV* President 1984 1,703 (12) 56
Robert G. Sheridan* Secretary 1984 68 (13) 49
Gregory S. MacKay* Treasurer 1988 159 (14) 48
* All of the Principal Officers of the Corporation are officers of the
subsidiary bank and have served as officers of the subsidiary bank for the
past five (5) years.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards Other Compensation
Name and Year Salary Bonus Other Annual SARs Defined ESOP
Principal Compensation PSAs Contribution
Position Plan
George W. 1995 $214,198 $13,099 $6,145 See $21,532 $1,606
Hamlin, IV 1996 226,850 11,343 6,545 Table 21,393 1,495
President 1997 233,201 None 6,993 Below 20,960 1,716
Robert G. 1995 91,896 5,620 3,304 See 13,385 984
Sheridan 1996 97,323 4,866 3,138 Table 14,065 970
Secretary 1997 100,048 None 2,953 Below 14,158 1,073
STOCK APPRECIATION RIGHTS (SAR)
PHANTOM STOCK AWARDS (PSA)
The table set forth below lists the value of the Stock Appreciation Rights
and Phantom Stock Awards as of the date of award using the highest of three
different estimates of value: (1) the book value of the Corporation, (2) the
appraised value of the stock using a third-party appraisal of the
Corporation's stock prepared for the Corporation's Employee Stock Ownership
Plan, and (3) the price at which the Corporation's stock was bought and sold
in private transactions for which the Corporation has information during the
calendar quarter in which the award was made. The Corporation does not have
pricing information regarding all private purchases and sales of the
Corporation's stock, and the shares of the Corporation are not listed on any
national exchange nor traded over the counter. The Stock Appreciation Rights
and Phantom Stock Awards are perpetual. Stock Appreciation Rights are
exercisable after five years from the date of award. Phantom Stock Awards
are exercisable by a recipient upon reaching the age of 55 or upon attaining
15 years of continuous full-time employment with the company.
STOCK APPRECIATION RIGHTS (SAR)
PHANTOM STOCK AWARDS (PSA)
Name Year Number % of Total Base Price Estimated Estimated
Granted SAR/PSAs SARs Only Value as of Value as of
SAR/PSA Granted $/share Date of Award End of Year
SAR/PSAs SAR/PSAs
George W. 1995 101.2/101.2 25% 197.47 $6,314.88 $11,093.54
Hamlin, IV 1995 26,298.84 31,077.51
1996 104.03/104.03 25% 214.55 9,626.93 11,002.21
1996 31,946.57 33,321.85
1997 36.739/36.739 25% 241.99 2,887.69 3,449.06
1997 11,778.16 12,339.53
Robert G. 1995 60.72/60.72 17% 197.47 5,540.09 6,656.13
Sheridan 1995 17,530.47 18,646.51
1996 62.42/62.42 15% 214.55 5,776.35 6,601.54
1996 19,168.56 19,993.75
1997 22.05/22.05 15% 241.99 1,733.13 2,070.55
1997 7,069.01 7,405.93
No Stock Appreciation Rights or Phantom Stock Awards were exercised by the
executive officers during 1997.
Compensation for the executive officer for whom disclosure is required by
Item 402 of Regulation S-K is determined by the Officers' Compensation
Committee consisting of Daniel P. Fuller, Caroline C. Shipley and Alan J.
Stone. The Committee's consideration consists of, but is not limited to,
analysis of the following factors: financial performance of the company,
including Return on Equity, Return on Assets, growth of the company, and
management of assets and liabilities. All of these factors are considered in
the context of the market for the company's products and services, and the
complexity and difficulty of managing business risks in the prevailing
economic conditions and regulatory environment.
In addition, the Officers' Compensation Committee conducts a comparison study
of the company's executive compensation with that of comparable positions in
similar companies within the company's peer group. The Committee also
considers intangible factors such as the scope of responsibility of the
executive, leadership within the company, the community and within the
industry, and whether the company, under the executive's leadership, has been
able to serve worthwhile public purposes while enhancing shareholder value.
PROPOSAL NO. 2 CANANDAIGUA NATIONAL CORPORATION STOCK OPTION PLAN
The Company's Board of Directors has approved, subject to stockholder
approval, the Canandaigua National Corporation Stock Option Plan (the "Option
Plan"). The Board of Directors has historically provided incentive to key
executives of the Company by issuing phantom stock and stock appreciation
rights. The Board now believes that stock option awards will provide the
desired incentives while providing a more favorable accounting treatment of
the awards for the Company. The purpose of the new Option Plan is to enable
the Company more flexibility to award non-qualified stock options and
incentive stock options to attract and retain valued employees and to provide
them with incentives to maintain and enhance the Company's long-term
performance record through increasing the identity of interests between
participants and the stockholders. Implementation of the Option Plan is
subject to the approval of the Company's stockholders.
Summary of Terms
The Option Plan will be administered by a committee of the Company's Board of
Directors (the "Committee"). Under the Option Plan, the Committee is charged
with responsibility for selecting the participants and for determining the
type of options to be award, the number of stock options to be granted to
each participant, the timing of the awards, and any other terms and
conditions applicable to the awards. Non-qualified stock options may be
issued at any exercise price determined by the Committee. Incentive stock
options may only be issued to employees, including officers, of the Company
and must have an exercise price of at least the fair market value of the
underlying shares as of the date of the grant.
The eligible persons under the Option Plan are key employees of the Company
or its subsidiaries. Approximately ten employees will be eligible to
participate in the Option Plan. The Committee has not yet selected the
participants nor determined the number, nature or timing of any stock option
awards for the upcoming year.
The aggregate number of shares of the Company's Common Stock available for
awards under the Option Plan is 16,000 shares. The number of shares subject
to the Plan, any outstanding options and any awards granted pursuant to the
Option Plan will be automatically adjusted to prevent dilution or enlargement
in the event of any stock dividend, stock split, reorganization or other
event affecting the common stock. The Common Stock is not listed on any stock
exchange and there is no active trading market for the Common Stock. As of
December 31, 1997, the book value of the Common Stock was $254.92 per share.
Under the Option Plan, the Committee possesses the authority, in its
discretion, (a) to determine the employees of the Company to whom, and the
time or times at which options are granted; (b) to determine at the time of
grant whether an option will be a non-qualified option or an incentive stock
option, the number of shares to be subject to each option and the price at
which such option will be exerciseable; (c) to prescribe the form of the
option agreements and any appropriate terms and conditions applicable to the
options and to make any amendments to such agreements or options; (d) to
interpret the Plan and the options agreements; (e) to make and amend rules
and regulations relating to the Plan; (f) to make all other determinations
necessary or advisable for the administration of the Plan; and to (g) amend
or modify the Plan or any option or option agreement, except as otherwise
provided below. The Committee's determinations shall be conclusive and
binding. No member of the Committee shall be liable for any action taken or
decision made in good faith relating to the Plan or any option granted
hereunder.
The Option Plan may from time to time be amended, modified or terminated by
the Committee. No amendment, modification or termination of the Option Plan
will be effective without stockholder approval if such approval is required
under any applicable law, rule or regulation. The exercisability of any
award will terminate if the committee determines that the participant is
engaged in competition with the Company or has been terminated for "cause" as
defined in the Option Plan.
Federal Tax Consequences
Non-Qualified Stock Options. No income is recognized by a participant at the
time of grant of a non-statutory option, nor is the Company entitled to a tax
deduction at that time. The rules for recognizing income upon exercise of a
non-qualified stock option depend on whether or not the participant is an
"insider", i.e, the participant's sale or purchase of Common Stock may give
rise to suit under Section 16(b) of the Securities Exchange Act of 1934, as
amended ("Section 16(b)"). In the case of a non-insider, ordinary income
will be recognized by the participant on the date he or she exercises a non-
statutory option in an amount equal to the excess of the fair market value of
the shares on the date of exercise over the exercise price. The holding
period for capital gain and loss purposes will begin on the date of exercise.
In the case of an insider, ordinary income will be recognized by the
participant on the first day on which a sale of the Common Stock at a profit
would not expose the participant to Section 16(b) liability (the "date of
taxation") in an amount equal to the excess of the fair market value of the
shares on the date of taxation over the exercise price. The holding period
for capital gain and loss purposes will begin on the date of taxation. An
insider may elect to be taxed according to the rules applicable to non-
insiders by filing an election with the Internal Revenue Service under
Section 83(b) of the Internal Revenue Code within 30 days from the date of
exercise. The Company will be entitled to a deduction at the time the
participant is required to recognize income from the exercise of the non-
statutory option. The deduction will be equal to the amount which is taxable
to the participant as ordinary income as a result of the exercise. If the
exercise price of a non-statutory option is paid by surrendering Common Stock
of the Company, the participant will recognize no gain or loss on the shares
that he or she surrenders to pay the exercise price (the "surrendered
shares"). The number of shares that the participant receives upon exercise
of the option in excess of the surrendered shares are considered "additional
shares." The participant will recognize ordinary income upon the exercise
equal to the fair market value of the additional shares on the date of
exercise, less any cash paid towards the exercise price. The basis of the
additional shares will be equal to their fair market value on the date of
exercise, and their holding period will begin on that date. The shares that
the participant receives upon exercise equal to the surrendered shares will
have a basis and holding period equal to that of the surrendered shares.The
basis of shares acquired pursuant to the exercise of a non-statutory option
will be the amount included in ordinary income due to receipt of those
shares. When the participant disposes of shares acquired pursuant to a non-
statutory option, any amount realized in excess of the basis of the shares
will be treated as long-term or short-term capital gain, depending on the
holding period of the shares. If the amount realized is less than the basis
of the shares, the loss will be treated as a long-term or short-term capital
loss, depending on the holding period of the shares.
Incentive Stock Options. A participant receiving an incentive stock option
will not be subject to income tax upon either the grant of the incentive
stock option or its subsequent exercise. The spread between the exercise
price and the fair market value on the date of exercise will, however, be
included in the participant's alternative minimum taxable income for purposes
of determining the participant's liability, if any, for the alternative
minimum tax. If the participant holds the shares acquired upon exercise for
more than one year after exercise (and two years after grant), then the
difference between the amount realized on a subsequent sale or other taxable
disposition of the shares and the exercise price will constitute long-term
capital gain or loss at the time of sale. The Company will not be entitled
to a federal income tax deduction with respect to the grant or exercise of an
incentive stock option. If the options cease to be incentive stock options
for any reason, they will be treated as non-statutory options. For example,
if the participant sells the shares before the expiration of the requisite
holding periods, he or she will be deemed to have made a "disqualifying
disposition" of the shares and will realize ordinary income in the year of
the disposition. In the event of a disqualifying disposition, the Company
will be entitled to a federal income tax deduction in the year of disposition
of the shares in the amount of the ordinary income realized by the
participant.
If the exercise price of an incentive stock option is paid by surrendering
Common Stock of the Company, the Internal Revenue Service treats such
exchange as if there were two transactions. The first transaction is treated
as a non-taxable exchange of the previously-acquired Common Stock for an
equal number of shares of new Common Stock, both having the same market
value. The basis of the new shares will be the same basis as the shares
surrendered and the holding period will include the holding period of the
shares surrendered. The second transaction concerns the additional shares
that a participant will receive pursuant to the exercise. This exchange also
results in no gain or loss being recognized at the time of the exchange.
However, the basis of these additional shares will equal zero (i.e., the
participant is treated as having paid nothing for these shares). The holding
period for the additional shares begins on the date of the exchange.
New Plan Benefits
No determination has been made at this time as to the persons to whom options
will be issued during this calendar year, nor the amount or nature of any
such awards.
Reasons for Adoption
The Board of Directors believes that it is desirable and in the best
interests of the Company and its stockholders to provide employees and
directors with incentives to maintain and enhance the Company's long-term
performance record. The Option Plan serves the Company's interests by
providing the Committee with discretion to awards incentive stock options and
in selecting the participants, the number, type and timing of awards, and the
terms and conditions applicable to the awards.
Vote Required
In accordance with applicable New York law, approval of Proposal No. 2 to
adopt the Option Plan requires the affirmative vote of the holders of a
majority of the shares entitled to vote and present in person or represented
by proxy at the meeting voting together as a single class.
The Board of Directors recommends that the stockholders approve the Option
Plan and accordingly recommends that you vote FOR Proposal No. 2.
PERFORMANCE GRAPH
The following performance graph is required to be set forth in the Proxy
Statement by Item 402 (1) of Regulation S-K. The theory incorporated into
this requirement is that all corporations have organized orderly markets in
which to exchange their securities. The graph is provided so that
stockholders and prospective stockholders can compare market results with
peer companies or with indexes of companies in similar businesses or having
similar capitalization, e.g., those companies which are listed on the NASDAQ
or NYSE.
THE CORPORATION'S COMMON STOCK IS NOT LISTED WITH A NATIONAL SECURITIES
EXCHANGE, NOR IS IT TRADED IN THE OVER-THE-COUNTER MARKET. THE CORPORATION'S
COMMON STOCK IS NOT ACTIVELY TRADED; LESS THAN 1% OF THE CORPORATION'S
OUTSTANDING SHARES HAVE BEEN BOUGHT AND SOLD IN ANY YEAR REPRESENTED IN THE
GRAPH. DUE TO THE EXTREMELY LIMITED NUMBER OF TRANSACTIONS, THE AVERAGE SALE
PRICE OF THE CORPORATION'S COMMON STOCK USED IN THE GRAPH MAY NOT BE
INDICATIVE OF THE ACTUAL MARKET VALUE OF THE CORPORATION'S COMMON STOCK. THE
GRAPH SET FORTH BELOW DEPICTS THE AVERAGE SALE PRICE OF THE CORPORATION'S
COMMON STOCK BASED ONLY UPON TRANSACTIONS FOR WHICH THE CORPORATION HAS PRICE
INFORMATION. THERE ARE PURCHASES AND SALES OF THE CORPORATION'S COMMON STOCK
FOR WHICH THE CORPORATION HAS NO PRICE INFORMATION; THEREFORE, THE ACTUAL
AVERAGE SALE PRICE OF ALL SHARES BOUGHT AND SOLD IN ANY QUARTER MAY BE
DIFFERENT THAN SET FORTH IN THE GRAPH.
(Omitted Graph Material)
The following is the data table for the graph:
Period Ending
Index 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
Canandaigua Nat. Corp.100.00 108.25 137.31 166.43 175.55 193.04
SNL Mid-Atl. Index 100.00 116.30 113.06 180.94 259.66 369.03
SNL <$500M Bank Index 100.00 130.56 140.42 192.09 247.24 421.47
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick as independent
certified public accountants of Canandaigua National Corporation until the
Annual Meeting held in 1998. Representatives are expected to be present at
the meeting and to be available to respond to appropriate questions. They
will be given the opportunity to make a statement if they so desire.
FINANCIAL INFORMATION
Incorporated by reference and made a part hereof is the Annual Report of
Canandaigua National Corporation for the year ending December 31, 1997.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
1998 Annual Meeting of Stockholders. However, if other matters should come
before the meeting, it is the intention of each person named in the Proxy to
vote it in accordance with his or her judgment on such matters.
By Order of the Board of Directors
/s/ George W. Hamlin, IV
George W. Hamlin, IV
Secretary - Board of Directors
February 25, 1998
Endnotes
1 Includes 1,200 shares in the Estate of Mary D. Hamlin, of which he is the
executor.
2 Includes 40 shares owned individually by Robert G. Sheridan, 18 shares
owned by Robert G. Sheridan as custodian for his three children under New
York Uniform Gifts to Minors Act, and 10 shares owned by his IRA held by
subsidiary bank. Includes 42 shares owned individually by Gregory S. MacKay,
42 shares owned individually by his spouse, 59 shares owned by his IRA held
by subsidiary bank and 16 shares owned by his two children.
3 Includes 70 shares in his Self Directed IRA held by subsidiary bank.
4 Includes 111 shares owned individually by his spouse.
5 Includes 385 shares owned individually by his spouse.
6 Includes 312 shares owned individually by his spouse.
7 Includes 700 shares owned individually by his spouse.
8 Includes 475 shares owned by his IRA held by subsidiary bank, 50 shares
owned individually by his spouse, 83 shares owned by her IRA held by
subsidiary bank and 280 shares owned by his three children under the New York
Uniform Gifts to.Minors Act.
9 Includes 42 shares owned individually by his spouse, 59 shares owned by his
IRA held by subsidiary bank and 16 shares owned by his two children.
10 Includes 18 shares owned as custodian for his three children under New
York Uniform Gifts to Minors Act and 10 shares owned by his IRA held by
subsidiary bank.
11 Includes 10 shares owned individually by his spouse and 30 shares owned as
custodian for his two children under New York Uniform Gift to Minors Act.
12 Includes 111 shares owned individually by his spouse.
13 Includes 18 shares owned as custodian for his three children under New
York Uniform Gifts to Minors Act and 10 shares owned by his IRA held by
subsidiary bank.
14 Includes 42 shares owned individually by his spouse, 59 shares owned by
his IRA held by subsidiary bank and 16 shares owned by his two children.
CANANDAIGUA NATIONAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
MARCH 11, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
CANANDAIGUA NATIONAL CORPORATION
The undersigned hereby appoints Robert J. Craugh and James A. Avery, jointly
and severally, proxies, with power of substitution, to represent and to vote
at the Annual Meeting of Stockholders (including adjournments) of CANANDAIGUA
NATIONAL CORPORATION, to be held on March 11, 1998, at 2:00 p.m. at the
Offices of the Corporation, 72 South Main Street, Canandaigua, New York ,
with all powers the undersigned would possess if personally present, as
specified on the ballot below and in accordance with their discretion for any
other business that may come before the meeting or any adjournment thereof,
and the undersigned hereby revokes all proxies previously given by the
undersigned with respect to the shares of common stock covered hereby.
Unless a contrary choice is specified, this proxy will be voted "FOR" Items
1, 2 and 3. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" DIRECTORS'
PROPOSALS TO:
1. Elect three Class 3 Directors for terms of three years.
NOMINEES: Patricia A. Boland, Robert G. Sheridan, and Alan J. Stone
[ ] FOR [ ] AGAINST [ ] ABSTAIN
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, DRAW A SINGLE LINE THROUGH THE
NAME OF THAT NOMINEE.
2.To approve the adoption of the Canandaigua National Corporation Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Transact such other business as may properly come before the meeting or
any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" ITEMS 1, 2 AND 3. THE PROXIES WILL USE THEIR
DISCRETION WITH RESPECT TO ALL MATTERS REFERRED TO IN ITEM 3.
When shares are held by joint owners, both should sign. When signing as
attorney, executor, administrator, trustee, guardian or other fiduciary or in
a representative capacity, please add your title as such. If signing as
power of attorney or in any other representative capacity, please provide
proof of such capacity. If a partnership, please sign in partnership name by
authorized person. If a corporation, please sign in full corporate name by
authorized officer, giving title.
Receipt of the Notice of the Annual Meeting of Stockholders, the Proxy
Statement dated February 25, 1998, and the 1997 Annual Report is hereby
acknowledged.
Date
Signature
Signature if held jointly
Please sign, date, and promptly return the proxy in the enclosed envelope.
CANANDAIGUA NATIONAL CORPORATION
STOCK OPTION PLAN
1.BACKGROUND AND PURPOSE
Canandaigua National Corporation (the "Company") hereby establishes the
Canandaigua National Corporation Stock Option Plan (the "Plan"). The purpose
of this Plan is to enable the Company to retain executive officers and other
key employees and provide them with an incentive to maintain and enhance the
Company's long-term performance. The Company believes that this purpose will
be enhanced by granting eligible employees non-qualified stock options
("NSOs") and incentive stock options ("ISOs") under this Plan pursuant to the
rules set forth in the Internal Revenue Code of 1986, as amended (the
"Code").
2.ADMINISTRATION
The Plan shall be administered by a Committee of the Company's Board of
Directors (the "Compensation Committee"). This Committee shall consist of at
least two members of the Company's Board of Directors with such
qualifications as the Board of Directors deems necessary and desirable from
time to time, taking into consideration applicable provisions of the federal
securities laws (including Rule 16b-3 promulgated under the Securities and
Exchange Act of 1934) and the Code. The Committee shall possess the
authority, in its discretion, (a) to determine the employees of the Company
to whom, and the time or times at which, NQSOs and/or ISOs (collectively,
"options") shall be granted; (b) to determine at the time of grant whether an
option will be an ISO or a NQSO and the number of shares to be subject to
each option and the price at which such option will be exerciseable; (c) to
prescribe the form of the option agreements and any appropriate terms and
conditions applicable to the options and to make any amendments to such
agreements or options; (d) to interpret the Plan and the options agreements;
(e) to make and amend rules and regulations relating to the Plan; (f) to make
all other determinations necessary or advisable for the administration of the
Plan; and (g) to amend or modify the Plan except as otherwise provided in
Section 13.. The Committee's determinations shall be conclusive and binding.
No member of the Committee shall be liable for any action taken or decision
made in good faith relating to the Plan or any option granted hereunder.
3.ELIGIBLE EMPLOYEES
Options may be granted under the Plan only to employees of the Company and
its subsidiaries (which shall include all corporations of which at least
fifty percent of the voting stock is owned by the Company directly or through
one or more corporations at least fifty percent of the voting stock of which
is so owned) who have the capability of making a substantial contribution to
the success of the Company. Employees may be granted any type of award
offered under the Plan.
4.SHARES AVAILABLE
The total number of shares of the Company's Common Stock (par value of $50.00
per share) available in the aggregate for options under this Plan is 16,000.
Shares to be granted may be authorized and unissued shares or may be treasury
shares.
If an option expires, terminates or is canceled without being exercised or
becoming vested, new options may thereafter be granted under the Plan
covering such shares unless otherwise required under applicable laws, rules
or regulations. No option may be granted more than 10 years after the
effective date of the Plan.
5.TERMS AND CONDITIONS FOR NQSOS
Each NQSO granted under the Plan shall be evidenced by a NQSO option
agreement in such form as the Committee shall approve from time to time,
which agreement shall conform to this Plan and contain such terms and
conditions as the Committee may prescribe, including, without limitation, the
exercise price of the option, which shall be at, below or above the fair
market or book value of the Common Stock on the date of grant as the
Committee shall determine and the duration, transferability, vesting and such
other terms and conditions the Committee deems appropriate at the time of
grant.
6.TERMS AND CONDITIONS OF ISOS
Each ISO granted under the Plan shall be evidenced by an ISO option agreement
in such form as the Committee shall approve from time to time, which
agreement shall conform with this Plan and contain the following terms and
conditions:
(a)Exercise Price. The exercise price under each option shall equal the fair
market value of the Common Stock at the time such option is granted. If an
option is granted to an officer or employee who at the time of grant owns
stock possessing more than ten percent of the total combined voting power of
all classes of stock of the Company (a "10-percent Shareholder"), the
purchase price shall be at least 110 percent of the fair market value of the
stock subject to the option. To the extent an option initially designated as
an ISO exceeds the value limit of Section 6(e), it shall be deemed a NQSO and
shall otherwise remain in full force and effect.
(b)Duration of Option. Each option by its terms shall not be exercisable
after the expiration of ten years from the date such option is granted. In
the case of an option granted to a 10-percent Shareholder, the option by its
terms shall not be exercisable after the expiration of five years from the
date such option is granted.
(c)Options Nontransferable. Each option by its terms shall not be
transferable by the participant otherwise than (i) by will or the laws of
descent and distribution, (ii) pursuant to a qualified domestic relations
order, or (iii) to the extent permitted under the option agreement or
interpretation of the Committee and under Rule 16b-3, by gift to family
members or entities beneficially owned by family members or other permitted
transferees under Rule 16b-3, and shall be exercisable, during the
participant's lifetime, only by the participant, the participant's guardian
or the participant's legal representative, the participant's transferee under
a qualified domestic relations order or other permitted transferee under this
section. To the extent required for the option grant and/or exercise to be
exempt under Rule 16b-3, options (or the shares of Common Stock underlying
the options) must be held by the participant for at least six months
following the date on which the option was granted (the "Date of Grant").
(d)Exercise Terms. Each option granted under the Plan shall vest over a ten-
year period beginning on the Date of Grant, with 50% of the shares vesting on
the fifth anniversary of the Date of Grant and 10% of the shares vesting on
each annual anniversary of the Date of Grant in years six through ten or such
other vesting terms as the Committee shall determine as of the Date of Grant.
Options may be partially exercised from time to time during the period
extending from the time they first become exercisable until the tenth
anniversary (fifth anniversary for a 10-percent Shareholder) of the Date of
Grant.
(e)Maximum Value of ISO Shares. No ISO shall be granted to an employee under
this Plan or any other ISO plan of the Company or its subsidiaries to
purchase shares as to which the aggregate fair market value (determined as of
the Date of Grant) of the Common Stock which first become exercisable by the
employee in any calendar year exceeds $100,000. To the extent an option
initially designated as an ISO exceeds the value limit of this Section 6(e),
it shall be deemed a NQSO and shall otherwise remain in full force and
effect.
(f)Payment of Exercise Price. An option shall be exercised upon written
notice to the Company accompanied by payment in full for the shares being
acquired. The payment shall be made in cash or by check or by delivery of
previously owned shares. Any such shares so delivered shall be deemed to have
a value per share equal to the fair market value of the shares on such date.
For this purpose, fair market value shall equal the closing price of the last
sale of Common Stock by the Company.
7.GENERAL RESTRICTION ON ISSUANCE OF STOCK CERTIFICATES
The Company shall not be required to deliver any certificate upon the grant,
vesting or exercise of any option until it has been furnished with such
opinion, representation or other document as it may reasonably deem necessary
to ensure compliance with any law or regulation of the Securities and
Exchange Commission or any other governmental authority having jurisdiction
under this Plan. Certificates delivered upon such grant, vesting or exercise
may bear a legend restricting transfer absent such compliance. Each option
shall be subject to the requirement that, if at any time the Committee shall
determine, in its discretion, that the listing, registration or qualification
of the shares subject to such option upon any securities exchange or under
any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such options or the issue or purchase of
shares thereunder, such options may not vest or be exercised in whole or in
part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee in the exercise of its reasonable judgment.
8.IMPACT OF TERMINATION OF EMPLOYMENT
(a) Options
If the employment of a participant terminates by reason of death or
disability (as determined by the Committee), any option may be exercised by
the participant or, in the event of the participant's death, by the
participant's personal representative any time prior to the earlier of the
expiration date of the option or the expiration of one year after the date of
termination, but only if, and to the extent that, the participant was
entitled to exercise the option at the date of such termination. Upon
termination of the participant's employment for any reason other than death
or disability, any vested option that was exercisable immediately preceding
termination may be exercised at any time prior to the earlier of the
expiration date of the option or the expiration of three months after the
date of such termination for ISOs and six months after the date of
termination of employment for NQSOs. In the event of retirement, the period
specified in the preceding sentence shall be extended to one year in the case
of NQSOs. Furthermore, upon retirement of a participant, the Committee has
the discretionary authority to accelerate vesting of options under the Plan.
Notwithstanding the foregoing, an option may not be exercised after
termination of employment if the Committee reasonably determines that the
termination of employment of such participant resulted from willful acts or
failure to act by the participant detrimental to the Company or any of its
subsidiaries.
(b)Miscellaneous Termination Provisions
Unless otherwise determined by the Committee, an authorized leave of absence
shall not constitute a termination of employment for purposes of this Plan.
For purposes of this section, retirement means that a participant terminates
employment at or after the date on which the participant reaches any normal
retirement age specified in any policy adopted by the Board or, in the
absence of such policy, age 65.
9.ADJUSTMENT OF SHARES
In the event of any change in the Common Stock of the Company by reason of
any stock dividend, stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination, or exchange of shares, or of any
similar change affecting the Common Stock, the number and kind of shares
authorized under Section 4, the number and kind of shares which thereafter
are subject to options under the Plan and the number and kind of unexercised
options shares set forth in awards under outstanding agreements and the price
per share shall be adjusted automatically consistent with such change to
prevent substantial dilution or enlargement of the rights granted to, or
available for, participants in the Plan.
10.WITHHOLDING TAXES
All stock issuable or payable to a participant upon exercise of any stock
option under the terms of this Plan is subject to such federal, state and
local income and employment tax withholdings as payments of this type are
normally subject. Whenever the Company proposes or is required to issue or
transfer shares of Common Stock under the Plan, the Company shall have the
right to require the recipient to remit to the Company an amount of cash
sufficient to satisfy any federal, state and/or local income and employment
withholding tax requirements prior to the delivery of any certificate or
certificates for such shares or to take any other appropriate action to
satisfy such withholding requirements. Notwithstanding the foregoing, the
recipient may satisfy such obligation in whole or in part by electing to have
the Company withhold shares of Common Stock from the shares to which the
recipient is otherwise entitled.
11.RESTRICTIONS ON EXERCISE; NO EMPLOYMENT RIGHTS
No outstanding option may be exercised by any person if the employee to whom
the option is granted is, or at any time after the Date of Grant has been, in
competition with the Company. The Committee has the sole discretion to
determine whether an employee's actions constitute competition with the
Company or an affiliated company. The Committee may impose such other terms
and conditions on the exercise of options as it deems appropriate to serve
the purposes for which this Plan has been established.
The Plan and any options granted under the Plan shall not confer upon any
participant any right with respect to continuance as an employee of the
Company or any subsidiary, nor shall they interfere in any way with the right
of the Company or any subsidiary to terminate the participant's position as
an employee at any time.
12.RIGHTS AS A SHAREHOLDER
The recipient of any option under the Plan shall have no rights as a
shareholder with respect thereto unless and until certificates for the
underlying shares of Common Stock are issued to the recipient.
13.AMENDMENT AND DISCONTINUANCE OF PLAN
This Plan may be amended, modified or terminated by the Committee or by the
shareholders of the Company, except that the Committee may not, without
approval of a majority of the shareholders present in person or by proxy,
materially increase the benefits accruing to participants under the Plan,
materially increase the maximum number of shares as to which options may be
granted under the Plan, change the minimum exercise price of options, change
the class of eligible persons, extend the period for which options may be
granted or exercised, or withdraw the authority to administer the Plan from
the Committee or another committee of the Board of Directors.
Notwithstanding the foregoing, to the extent permitted by law, the Committee
may amend the Plan without the approval of shareholders, to the extent it
deems necessary to cause the Plan to comply with Rule 16b-3 or any successor
rule, as it may be amended from time to time or as otherwise permitted under
Rule 16b-3 promulgated under the Exchange Act and the Code. Except as
required by law, no amendment, modification, or termination of the Plan may,
without the written consent of a participant to whom any option shall
theretofore have been granted, adversely affect the rights of such
participant under such option.
14.CHANGE IN CONTROL
(a) Notwithstanding other provisions of the Plan, in the event of a change
in control of the Company (as defined in subsection (c) below), all options
shall become immediately vested and exercisable in full, unless directed
otherwise by a resolution of the Committee adopted prior to and specifically
relating to the occurrence of such change in control.
(b) In the event of a change in control each participant holding an
exercisable option (i) shall have the right at any time thereafter during the
term of such option to exercise the option in full notwithstanding any
limitation or restriction in any option agreement or in the Plan, and (ii)
may, after written notice to the Company within 60 days after the change in
control, require the Company to redeem such options for cash at a price equal
to the difference between the fair market value of the stock immediately
after such change of control was publicly announced and the exercise price
per share of the option.
(c) For purposes of this section, "change in control" means:
1)there shall be consummated
i)any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which any shares of the
Company's common stock are to be converted into cash, securities or other
property, provided that the consolidation or merger is not with a corporation
which was a wholly-owned subsidiary of the Company immediately before the
consolidation or merger; or
ii)any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets
of the Company (other than to one or more directly or indirectly wholly-owned
subsidiaries of the Company); or
2)the shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; or
3)any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, of 30% or more of the
Company's then outstanding common stock, provided that such person shall not
be a wholly-owned subsidiary of the Company immediately before it becomes
such 30% beneficial owner; or
4)individuals who constitute the Company's Board of Directors on the date
hereof (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least three quarters of the
directors comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named
as a nominee for director, without objection to such nomination) shall be,
for purposes of this clause (4), considered as though such person were, and
shall be deemed to be, a member of the Incumbent Board.
15. EFFECTIVE DATE
The effective date of the Plan is the date of shareholder approval of the
Plan..
16. DEFINITIONS
Any terms or provisions used herein which are defined in Sections 162(m),
421, or 422 of the Code, or the regulations thereunder or corresponding
provisions of subsequent laws and regulations in effect at the time awards
are made hereunder, shall have the meanings as therein defined.
17. GOVERNING LAW
To the extent not inconsistent with the provisions of the Code that relate to
awards, this Plan and any award agreement adopted pursuant to it shall be
construed under the laws of the State of New York.
Approved by Shareholders __________, 1998.
CANANDAIGUA NATIONAL CORPORATION
Signature
Title
