March 10, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
to be held on Tuesday, April 8, 1997, at 7:00 p.m. at the Elmira Holiday
Inn, in the City of Elmira, New York. Following the Meeting, desserts,
coffee, tea and other refreshments will be served.
The one item on the agenda requiring Shareholders' vote will be the
election of six directors. The candidates nominated for three-year
terms, all currently serving, are: David J. Dalrymple, Richard H. Evans,
Edward B. Hoffman, John F. Potter, William C. Ughetta and Jan P. Updegraff.
The attached Proxy Statement sets forth in detail information relating to
the nominated candidates as well as those directors continuing in office and
additional information relating to the management of the corporation.
In addition to the above-noted election, we will review our financial
performance for the past year and discuss our plans for 1997.
It is important that you be represented at the Meeting whether or not
you plan to attend in person. Accordingly, we urge you to mark, sign and
date the proxy card enclosed in the mailing envelope sleeve and return it in
the envelope provided. Also, if you plan to attend the Meeting, please mark
the proxy card where indicated and include the number in your group. Your
directors and management look forward to seeing you on April 8.
Sincerely yours,
/s/ John W. Bennett
Chairman of the Board and Chief
Executive Officer
One Chemung Canal Plaza P.O. Box 1522
Elmira, New York 14902
Parent Company of Chemung Canal Trust Company
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
As directed by the Board of Directors of Chemung Financial Corporation,
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of the
Corporation will be held at the Elmira Holiday Inn, One Holiday Plaza, 760
East Water Street, Elmira, New York, Tuesday, April 8, 1997, at 7:00 p.m.
for the following purposes:
1. To elect six (6) directors, each to hold office for a term of three
years and until their respective successors have been elected and
qualified.
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on February 28,
1997, as the record date for determination of Shareholders entitled to notice
of and to vote at this Meeting.
Shareholders are requested to date, sign and mail the enclosed proxy in
the envelope provided at their earliest convenience. A prompt response will
be appreciated and will save the Corporation additional time and expense.
BY ORDER OF THE BOARD OF DIRECTORS
Jerome F. Denton
Secretary
March 10, 1997
CHEMUNG FINANCIAL CORPORATION
ONE CHEMUNG CANAL PLAZA, P.O. BOX 1522, ELMIRA, NEW YORK
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, APRIL 8, 1997
Chemung Financial Corporation and its wholly-owned subsidiary, Chemung
Canal Trust Company, are incorporated under the laws of the State of New
York. For purposes of this proxy statement, financial and other
information is presented on a consolidated basis for Chemung Financial
Corporation ("Corporation") and Chemung Canal Trust Company ("Bank"). The
disclosed information of the Corporation and the Bank should be viewed as
though its pertained to one entity, unless otherwise stated.
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors for use at the Annual Meeting of
Shareholders (the "Annual Meeting") of Chemung Financial Corporation to be
held on Tuesday, April 8, 1997, at 7:00 P.M., at the Elmira Holiday Inn, One
Holiday Plaza, 760 East Water Street, Elmira, New York. This Proxy
Statement and the accompanying Proxy and Notice of Annual Meeting of
Shareholders are being mailed to Shareholders on or about March 10, 1997. A
Shareholder granting a proxy has the right to revoke it by a duly executed
Proxy bearing a later date, by attending the Annual Meeting and voting in
person, or by otherwise notifying the Secretary of the Corporation in
writing prior to the Annual Meeting.
Only Shareholders of record at the close of business on February 28,
1997, are entitled to receive notice of and to vote at the Annual Meeting.
As of February 12, 1997, there were 2,072,214 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled to
one vote. There are no cumulative voting rights. Nominees for director
will be elected by a plurality of votes cast at the Annual Meeting by
holders of Common Stock present in person or by proxy and entitled to vote
on such election. Any other matter requires the affirmative vote of a
majority of votes cast at the meeting, except as otherwise provided in the
Corporation's Certificate of Incorporation or By-laws. Only shares
affirmatively voted in favor of a nominee will be counted toward the
achievement of a plurality. Votes withheld (including non-broker votes) and
abstentions are counted as present for the purpose of determining a quorum
but are not counted as votes cast.
The cost of soliciting proxies will be borne by the Corporation and
the Bank. In addition to solicitations by mail, some of the directors,
officers, and regular employees of the Corporation and the Bank may conduct
additional solicitations by telephone and personal contacts without
remuneration. American Stock Transfer & Trust Company, the Corporation's
transfer agent, will aid the Corporation in the solicitation of proxies and
proxy vote tabulations. Nominees, brokerage houses, custodians and
fiduciaries will be requested to forward soliciting material to beneficial
owners of stock held of record and the Corporation will reimburse such
persons for any reasonable expense.
ACTION TO BE TAKEN UNDER PROXY:
It is proposed that at the Annual Meeting action will be taken on the
matters set forth in the accompanying Notice of Annual Meeting and described
in this Proxy Statement. Proxies returned by Shareholders and not revoked
will be voted for the election of the nominees for directors unless
Shareholders instruct otherwise on the Proxy. A Shareholder granting a
proxy has the right to revoke it by filing with the Secretary of the
Corporation prior to the time such proxy is voted a duly executed proxy
bearing a later date, by attending the Annual Meeting and voting in person,
or by otherwise notifying the Secretary of the Corporation in writing of
such Shareholder's intention to revoke such proxy prior to the time such
proxy is voted. The Board of Directors does not know of any other business
to be brought before the Annual Meeting, but it is intended that, as to any
such other business, a vote may be cast pursuant to the Proxy in accordance
with the judgment of the person or persons acting thereunder; and should any
herein-named nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is intended that the
persons acting under the Proxy will vote for the election in the stead of
such nominee of such other person as the Board of Directors may recommend.
BOARD OF DIRECTORS:
Nominees For Election as Directors
Those persons serving as directors of the Corporation and the Bank,
being the same individuals, normally serve three-year terms of office, with
approximately one-third of the total number of each such Board of Directors
to be elected at each Annual Meeting of each such entity. The number of
directors to be elected at the 1997 Annual Meeting of Shareholders is six
(6) for three-year terms, each to serve for such term and until their
respective successors are elected and qualified.
The following table sets forth information concerning the Board of
Directors' nominees for election as directors at the Annual Meeting and
each director continuing in office:
<TABLE>
<CAPTION>
Length of Principal Occupation During
Name and Age Service Past 5 Years
As Director
<S> <S> <S>
NOMINEES WITH TERMS
EXPIRING IN 2000
David J. Dalrymple Since 1993 President of Dalrymple
Age 43 Holding Corporation since
December 17, 1993, parent company
for several construction
companies; formerly Vice
President.
Richard H. Evans Since 1985 Retired since January 1,
Age 66 1995; formerly Chairman of
the Board & Chief Executive
Officer of Chas. F. Evans Co.,
Inc., specialists in commercial
roofing.
Edward B. Hoffman Since 1993 Partner with Sayles, Evans,
Age 65 Brayton, Palmer & Tifft law
firm.
NOMINEES WITH TERMS
EXPIRING IN 2000 (continued)
John F. Potter Since 1991 President of Seneca
Age 51 Beverage Corporation, a
wholesale distributor of beer,
water and soda products.
William C. Ughetta Since 1985 Senior Vice President and
Age 64 General Counsel of Corning
Incorporated, a diversified
manufacturing company.
Jan P. Updegraff Since 1996 President and Chief
Age 54 Operating Officer of the
Corporation and Bank since
February 14, 1996; formerly Vice
President and Treasurer of the
Corporation and Executive Vice
President of the Bank.
DIRECTORS CONTINUING
IN OFFICE WITH TERMS
EXPIRING IN 1999
John W. Bennett Since 1988 Chairman of the Board and
Age 63 Chief Executive Officer of
the Corporation and Bank since
February 14, 1996; formerly
President and
Chief Executive Officer of the
Corporation and the Bank; also a
director of Hardinge Inc.
Robert H. Dalrymple Since 1995 Secretary of Dalrymple
Age 46 Holding Corporation, a
parent company for several
construction companies.
Natalie B. Kuenkler Since 1985 Director of various
Age 71 community organizations.
Ralph H. Meyer Since 1985 President and Chief
Age 57 Executive Officer of
Guthrie Healthcare System, a
vertically integrated health care
delivery system.
Samuel J. Semel Since 1993 President of Chemung
Age 70 Electronics, Inc., an
electronic and computer
consulting firm.
Richard W. Swan Since 1985 President of Swan & Sons-
Age 48 Morss Co., Inc., an
insurance brokerage agency.
William A. Tryon Since 1987 Chairman of the Board and
Age 66 Chief Executive Officer of
Trayer Products, Inc., an
automotive, truck and other
industrial parts manufacturer;
and Chairman of the Board of
Perry and Swartwood, Inc., an
insurance brokerage agency; also,
formerly a director of the Bank
from 1964 to 1976.
DIRECTORS CONTINUING
IN OFFICE WITH TERMS
EXPIRING IN 1998
Robert E. Agan Since 1986 Chairman of the Board and
Age 58 Chief Executive Officer
since October 21, 1996 of
Hardinge Inc., a world-wide
machine tool manufacturer;
formerly also President of said
Company.
Donald L. Brooks, Jr. Since 1985 Physician.
Age 68
Stephen M. Lounsberry III Since 1995 President of Applied
Age 43 Technology Manufacturing
Corporation since July 17, 1996,
a manufacturer of railroad
lubrication
systems; formerly President of
Moore & Steele Corporation.
Boyd McDowell II Since 1985 Retired; formerly Chairman
Age 71 of the Board and Chief
Executive Officer of the
Corporation and the Bank.
Thomas K. Meier Since 1988 President of Elmira
Age 56 College.
Charles M. Streeter, Jr. Since 1985 President of Streeter
Age 57 Associates, Inc., a general
building contractor.
Nelson Mooers van den Blink Since 1985 Chairman of the Board,
Age 62 Chief Executive Officer and
Treasurer of The Hilliard
Corporation, a motion control
equipment, oil reclaimer and
filter manufacturer.
</TABLE>
Directors and Committee Meetings
The Board of Directors of the Corporation held nine (9) regularly
scheduled meetings during the year ended December 31, 1996. The
Corporation has no standing committees.
The Board of Directors of the Bank held twelve (12) regularly
scheduled meetings and one special meeting during the year ended December
31, 1996. Among its standing committees, the Board of Directors of the Bank
has an Examining Committee, Nominating Committee and a Personnel Committee.
The Examining Committee makes an annual examination of the Bank as a
whole, reviews the Bank's internal audit and loan review procedures and
recommends to the Board of Directors the engagement and dismissal of
independent auditors. During 1996 this Committee held three (3) meetings.
On December 31, 1996, its members were Messrs. Semel (Chairman), Agan, R.
Dalrymple, Evans, Hoffman, Lounsberry, McDowell, Meier and Meyer.
The Nominating Committee selects and recommends to the Board of
Directors nominees for election to the Board. The Committee will consider
written recommendations by Shareholders for nominees for election to the
Board if such recommendations are mailed to the Chairman of the Nominating
Committee or to the Chairman of the Board of the Corporation at the
Corporation's Main Office, One Chemung Canal Plaza, Elmira, New York 14902.
There were no Committee meetings held in 1996. On December 31, 1996, its
members were Mrs. Kuenkler (Chairman) and Messrs. Agan, Bennett, D.
Dalrymple, McDowell, Potter, Streeter, Swan and Updegraff.
The Personnel Committee is responsible for the nomination of officers,
recommendation of Executive Officer compensation plans, and establishment of
guidelines for setting all other officers' salaries. Additional
responsibilities include the review and approval of employee benefit
programs and employee relation policies and procedures. The Committee held
eight (8) meetings in 1996 and on December 31, 1996, its members were
Messrs. Meyer (Chairman), Brooks, D. Dalrymple, Evans, Meier, Potter, Swan,
Tryon, and Ughetta.
During the year ended December 31, 1996, each director of the
Corporation and the Bank attended at least 75% of the aggregate of (1) the
total number of Board Meetings held and (2) the total number of meetings
held by all committees of which such director was a member, with the
exceptions of Mr. D. Dalrymple who attended 72%, and Mrs. Kuenkler who
attended 67%, of such meetings.
Directors Compensation
Each director of the Bank who is not an officer or employee of the
Bank receives an annual retainer of $5,000 and a fee of $300 for each
meeting of the Board of Directors attended. Those directors who are members
of one or more committees of the Board of Directors also receive a fee of
$300 for each meeting of each committee attended, with the exception of the
Chairman of each committee who receives $350.
Directors who are not officers or employees of the Corporation receive
a fee of $300 for attendance at meetings of the Board of the Corporation
which are held on days when there is no meeting of the Board of Directors of
the Bank. There were no such meetings held during 1996. Otherwise,
directors of the Corporation are not compensated for services rendered by
them to the Corporation. It presently is contemplated that such will
continue to be the policy of the Corporation.
Any director who is entitled to receive a retainer and fees for
meetings of the Board of Directors and of committees thereof attended may
elect to have all or a portion of said retainer and fees deferred under the
Bank's "Deferred Directors Fee Plan". Each participating director may
designate, in increments of 10%, the compensation to be deferred, or
compensation already deferred, to be allocated to a memorandum Money Market
or a memorandum Unit Value Account, or a combination of such accounts. The
memorandum Money Market Account of each participating director is credited
with the dollar amount of deferral, and interest is compounded quarterly and
added to said account at a rate equal to the "Applicable Federal Rate" for
short-term debt instruments as computed and published by the Internal
Revenue Service for the month immediately preceding the applicable calendar
quarter. The memorandum Unit Value Account of each participating director
is credited with the dollar amount of deferral, with the aggregate of said
deferred amounts being converted to units on a quarterly basis by dividing
the aggregate of said deferred amounts by the closing bid price for shares
of the Common Stock of the Corporation on such trading dates as described in
the Plan. Dividends are credited to said account on the dates and at the
rate per unit at which dividends are paid per share on the Corporation's
outstanding Common Stock and are then converted to units using the same
basis of conversion as for deferred amounts. Within certain time
limitations, a participating director may elect to receive deferred fees
either in a lump sum or in installments.
The aggregate amount of directors' retainers and fees paid and
deferred during 1996 was $256,500. No additional compensation was received
by any director for special assignments or services.
Certain Transactions
Some of the directors and officers of the Bank, and some of the
corporations and firms with which these individuals are associated, also are
customers of the Bank in the ordinary course of business, or are indebted to
the Bank in respect to loans of $60,000 or more, and it is anticipated that
some of these individuals, corporations and firms will continue to be
customers of and indebted to the Bank on a similar basis in the future. All
loans extended to such individuals, corporations and firms were made in the
ordinary course of business, did not involve more than normal risk of
collectibility or present other unfavorable features and were made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the same time for comparable bank transactions with
unaffiliated persons.
The Bank has purchased insurance from a CNA Company, American Casualty
Company of Reading, Pennsylvania, providing for reimbursement of directors
and officers of the Corporation and the Bank for costs and expenses incurred
by them in actions brought against them for "wrongful acts" in connection
with their duties as directors or officers, including actions as fiduciaries
of the Bank's Pension and Profit-Sharing Plans, under the Employee
Retirement Income Security Act of 1974. The insurance coverage, which
expires in February 1998, costs $18,900 on an annual basis, and has been
paid by the Bank. No claims have been made or paid under this insurance.
The Bank has retained Sayles, Evans, Brayton, Palmer & Tifft, of which
Mr. Hoffman is a partner, for legal services during the last two years and
expects to retain Sayles, Evans, Brayton, Palmer & Tifft for legal services
during the current year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
The following table sets forth information, as of January 31, 1997,
with respect to any person who is known by the Corporation to be the
beneficial owner of more than five percent of the Corporation's Common
Stock:
<TABLE>
<CAPTION>
Name and Address of Number of Percent of Shares
Beneficial Owner Shares of Outstanding
Common
Stock
Beneficially
Owned
<S> <C> <C>
Chemung Canal Trust Company
One Chemung Canal Plaza 371,8131 17.9%
Elmira, NY 14902
Chemung Canal Trust Company
Profit-Sharing, Savings and 232,3422 11.2%
Investment Plan
One Chemung Canal Plaza
Elmira, NY 14902
Mary E. Dalrymple
168 Christian Hollow Road 218,2553 10.5%7
Pine City, NY 14871
David J. Dalrymple
274 Upper Coleman Avenue 190,5234, 6 9.2%7
Elmira, NY 14905
Robert H. Dalrymple
875 Upland Drive 179,4075, 6 8.7%7
Elmira, NY 14905
</TABLE>
1 Held by the Bank in various fiduciary capacities, either alone
or with others. Includes 25,613 shares held with sole voting and
dispositive powers, 346,200 shares held with shared power to vote and
184,399 shares held with shared power to dispose. Shares held in a co-
fiduciary capacity by the Bank are voted by the co-fiduciary or
fiduciaries in the same manner as if the cofiduciary or fiduciaries
were the sole fiduciary. Shares held by the Bank as sole trustee are
voted by the Bank only if the trust instrument provides for voting of
the shares at the direction of the donor or a beneficiary and such
direction is in fact received.
2 Voted by the Bank as trustee as directed by the Plan
participants.
3 Includes 115,255 shares held directly and 103,000 shares held by
Dalrymple Family Limited Partnership, of which Mary E. Dalrymple, David
J. Dalrymple and Robert H. Dalrymple are sole general partners (see
footnotes 4 and 5).
4 Includes 46,461 shares held directly, 1,904 shares held as
custodian for Mr. Dalrymple's children under the New York State Uniform
Gifts to Minors Act, 103,000 shares held by Dalrymple Family Limited
Partnership (see footnote 3), and 39,158 shares held by Dalrymple
Holding Corporation, of which David J. Dalrymple and Robert H.
Dalrymple are officers, directors and principal shareholders (see
footnote 5). Excludes 1,988 shares held by Mr. Dalrymple's spouse.
5 Includes 35,345 shares held directly, 1,904 shares held as
custodian for Mr. Dalrymple's children under the New York State Uniform
Gifts to Minors Act, 103,000 shares held by Dalrymple Family Limited
Partnership (see footnote 3), and 39,158 shares held by Dalrymple
Holding Corporation (see footnote 4). Excludes 1,345 shares held by Mr.
Dalrymple's spouse.
6 Excludes 15,115 shares held by Susquehanna Supply Company of
which David J. Dalrymple and Robert H. Dalrymple each own 23.1%
of the outstanding common stock.
7 Because of the definition of "beneficial ownership" under
Section 13 of The Exchange Act, and the rules and regulations
promulgated thereunder, Mary, David and Robert Dalrymple are listed as
beneficial owners of many of the same shares. Without such multiple
counting, Mary, David and Robert Dalrymples' total aggregate beneficial
ownership is approximately 16.6% of the outstanding shares of Common
Stock of the Corporation and if deemed to be a member of a "group"
within the meaning of Section 13(d)(3) of The Exchange Act, such group
would be deemed to hold approximately 16.6% of the outstanding shares
of Common Stock of the Corporation. Nothing described herein shall
infer or be deemed an admission by such person that such a group
exists.
SECURITY OWNERSHIP OF MANAGEMENT:
As of January 31, 1997, each director or nominee and each Executive
Officer named in the Summary Compensation Table herein, individually, and
all directors, nominees and Executive Officers as a group beneficially
owned Common Stock as reported to the Corporation as of said date as
follows (unless otherwise indicated, each of the persons named has sole
voting and investment power with respect to the shares listed):
<TABLE>
<CAPTION>
Directors, Nominees and Amount and Nature Percent of
Executive Officers of Beneficial Shares
Ownership Outstanding*
<S> <C> <C>
Robert E. Agan 450A *
John W. Bennett 8,821B *
Donald L. Brooks, Jr. 6,250A *
David J. Dalrymple 48,365C 2.33%
Robert H. Dalrymple 37,249C 1.80%
Richard H. Evans 9,352 *
Edward B. Hoffman 1,710A *
Natalie B. Kuenkler 6,706D *
Stephen M. Lounsberry III 3,845A *
Boyd McDowell II 6,418 *
Thomas K. Meier 2,000 *
Ralph H. Meyer 2,595A *
John F. Potter 8,848A, E *
Samuel J. Semel 4,522A *
Charles M. Streeter, Jr. 10,213A, F *
Richard W. Swan 19,188G *
William A. Tryon 12,679 *
William C. Ughetta 9,000A *
Nelson Mooers van den Blink 1,598 *
Jan P. Updegraff 3,676B *
All Directors, Nominees and 220,673H 10.65%
Executive Officers as a group
(25 persons)
</TABLE>
* Unless otherwise noted, less than 1% per individual.
A In addition, Messrs. Agan (4,782), Brooks (290), Hoffman,
(1,822), Lounsberry (964), Meyer (3,298), Potter (3,388), Semel
(1,450), Streeter (989), and Ughetta (2,807) have credited to their
accounts the equivalent of that number of shares shown in parenthesis
following their names, of Common Stock in valuation entry form under
the Corporation's Deferred Directors Compensation Plan. Deferred fees
will be paid solely in cash pursuant to the terms of the Plan and the
election of the participant.
B Includes all vested shares of Common Stock of the Corporation
held for the benefit of each Executive Officer by the Bank as trustee
of the Bank's Profit-Sharing, Savings and Investment Plan, who may
instruct the trustee as to the voting of such shares. If no
instructions are received, the trustee votes the shares in the same
proportion as it votes all of the shares for which instructions were
received from all Plan participants. The power to dispose of shares is
held by Plan participants subject to certain restrictions. Messrs.
Bennett and Updegraff have a vested interest in 7,635 and 3,518 such
shares held by the Plan, respectively. Under the provisions of the
Plan, the trustee holds for the benefit of all employees who
participate in the Plan 232,342 shares of the Corporation's Common
Stock.
C Includes only shares held directly by Messrs. Dalrymple. See
Footnote 7 of the SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS table
on page 9 for further explanation of shares beneficially held.
D Includes 4,131 shares held by Mrs. Kuenkler and another as
trustees under the Will of a descendent under which Mrs. Kuenkler is an
income beneficiary and as trustee shares voting and dispositive powers.
Does not include 75,007 shares owned by The Rathbone Corporation, of
which Mrs. Kuenkler is a director.
E Includes 5,899 shares owned by Seneca Beverage Corporation, of
which corporation Mr. Potter is an officer, director and the principal
shareholder.
F Includes 5,418 shares owned by Streeter Associates, Inc., of
which corporation Mr. Streeter is an officer, director and the
principal shareholder.
G Includes 5,850 shares owned by Swan & Sons-Morss Co., Inc., of
which corporation Mr. Swan is an officer, director and one of the
principal shareholders and 205 shares held by Mr. Swan as custodian for
his minor children. Does not include 2,158 shares held by others as
trustees for a trust of which Mr. Swan is an income beneficiary, as to
which shares Mr. Swan disclaims beneficial ownership.
H Does not include 10,747 shares owned by spouses of certain
officers and directors as to which shares such officers and directors
disclaim beneficial ownership.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more
than ten percent of a registered class of the Corporation's equity
securities, to file with the Securities and Exchange Commission initial
reports of ownership, reports of changes in beneficial ownership, and annual
reports involving security transactions pursuant to one or more rules as set
forth under Sections 16(a) and 16(b) of the Securities Exchange Act.
Directors, executive officers, and greater than ten percent shareholders
are required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file.
To the Corporation's knowledge, based on review of the copies of such
reports furnished to the Corporation and written representations that no
other reports were required for the year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its executive officers,
directors and any ten percent shareholder were complied with, except one
filing by Mr. Lounsberry was inadvertently filed late.
MANAGEMENT:
Directors' Personnel Committee Report on Executive Compensation
Under the supervision of the Personnel Committee of the Board
of Directors composed entirely of outside directors, the Bank has developed
and implemented compensation policies which seek to enhance the
profitability of the Bank and the Corporation and thus, Shareholder value
while at the same time providing fair and competitive compensation which
will attract and retain well-qualified executives. Based upon
recommendations of the Personnel Committee, the Board of Directors sets the
annual compensation of the Chief Executive and Chief Operating Officers. The
Committee also reviews and recommends to the Board of Directors compensation
of other senior management as first recommended by the Chief Executive
Officer based upon performance and other relevant factors. Aside from the
fringe benefit programs in which all Bank employees participate,
compensation of all Bank officers and exempt non-officers consists of an
annual salary and a management incentive bonus. The management incentive
bonus is subject to the terms and conditions of the Management Incentive
Plan adopted by the Board of Directors, which provides for the payment of
bonuses to participants in accordance with an allocation formula based in
part on the Corporation's attainment of specific operating objectives and in
part on a subjective review of the participant's individual performance.
Additionally, those officers who play a major role in setting and
implementing long-term strategies, currently being the Chief Executive
Officer and the President, may receive a long-term incentive award. Payment
of the long-term incentive award will be deferred for three years following
the accrual year and may be further deferred at the election of the
participant. The incentive bonus may or may not be deferred at the
officer's election. For 1996, the Committee and Board determined at the
beginning of the year that incentive bonuses and long-term awards could not
be issued unless the Corporation attained net income (after taxes) equal to
at least a 1.0% return on average assets and an efficiency ratio of 67% or
less, each of which targets were met. For 1996, Messrs. Bennett and
Updegraff received incentive bonuses of $25,000 and $15,000, respectively.
No long-term awards were issued. Senior Officer participants as a group,
including Messrs. Bennett and Updegraff, received incentive bonus awards
totaling $191,205 for 1996.
In evaluating the performance and recommending the compensation of the
Chief Executive Officer and the compensation guidelines for the Bank's other
senior management, the committee has taken particular note of management's
ability during 1996 in achieving certain profit, growth, and operational
objectives which were established by the Board of Directors in the Bank Plan
at the beginning of 1996 and compared the Corporation's financial results
against the results reported by similar banking businesses in New York and
Pennsylvania. The financial and operational measurements considered by the
Board were: profits, return on assets, return on equity, new market
penetration, new product development, expense control, asset growth, non-
interest income, asset quality and asset liability management. There is no
specific weight given to any of these factors and there is no formula
whereby a certain performance will result in a certain salary. The
committee considers total performance and the total financial and operating
conditions of the Bank in making its compensation recommendations.
Also, in considering the compensation of the Chief Executive and Chief
Operating Officers, the committee periodically reviews reports prepared by
various organizations which provide comparative information on Executive
compensation for a nationwide peer group of independent banks and holding
companies having similar asset size. From this review it was determined
that the performance of the Bank was within the range reported by its peers
and that the compensation paid by the Bank was appropriate in comparison to
the peer group.
In its review of management performance and compensation, the committee
has also taken into account management's consistent commitment to the long-
term success of the Corporation and Bank. The committee has recognized that
profitability in any one year is considerably impacted by the general
economic conditions nationally and in its market areas, over which
management has little or no control, and the committee's policy, therefore,
is to not over-emphasize, either positively or negatively, a single year's
results at the expense of significant, sustained, long-term earnings growth.
Based on its evaluation of these factors, the committee believes that
the executive management of the Corporation is dedicated to achieving
significant improvements in long-term financial performance and that the
compensation policies, plans and programs the committee has implemented and
administered have contributed to achieving this management focus.
<TABLE>
<CAPTION>
SUBMITTED BY THE DIRECTORS' PERSONNEL COMMITTEE
<S> <S> <S>
Ralph H. Meyer, Chairman Richard H. Evans Richard W. Swan
Donald L. Brooks, Jr. Thomas K. Meier William A. Tryon
David J. Dalrymple John F. Potter William C. Ughetta
</TABLE>
Comparative Return Performance Graph
Comparison of Five-Year Cumulative Total Return For Fiscal Years Ending
December 31, 1992 - 1996 Among Chemung Financial Corporation,
NASDAQ - Composite Index and NASDAQ - Bank Stocks Index
(OMITTED GRAPHIC MATERIAL - SEE APPENDIX)
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Chemung Financial Corporation 100.00 105.83 136.77 157.68 178.45 226.49
NASDAQ - Composite 100.00 116.38 133.60 130.59 184.67 227.16
NASDAQ - Bank Stocks 100.00 145.55 165.99 165.39 246.32 325.60
</TABLE>
The cumulative total return includes (i) dividends paid and (ii)
changes in the share price of the Corporation's Common Stock and assumes
that all dividends were reinvested. The above graph assumes that the
value of the investment in Chemung Financial Corporation and each index was
$100 on December 31, 1991.
The NASDAQ - Composite and Bank Stock indices were obtained from the
Center for Research in Security Prices, University of Chicago, Chicago,
Illinois.
Executive Officers
During 1996, the names and positions of the executive officers of the
Corporation and the Bank, all serving one-year terms, were as follows:
<TABLE>
<CAPTION>
Name Age Position (served since)
<S> <S> <S>
John W. Bennett 63 Chairman of the Board and Chief
Executive Officer of the Corporation and
the Bank (1996); formerly President and
Chief Executive Officer of the Corporation
and the Bank (1991); and prior thereto
President and Chief Operating Officer of
the Corporation and the Bank (1988).
Jan P. Updegraff 54 President and Chief Operating Officer of
the Corporation and the Bank (1996);
formerly Vice President and Treasurer of
the Corporation and Executive Vice
President of the Bank (1990).
Daniel F. Agan1 63 Vice President of the Corporation (1988)
and Senior Vice President of the Bank
(1984).
Robert J. Hodgson 51 Vice President of the Corporation (1990)
and Senior Vice President of the Bank
(1988).
James E. Corey III 50 Vice President of the Corporation (1993)
and Senior Vice President of the Bank
(1993).
Joseph J. Tascone 49 Vice President of the Corporation and
Senior Vice President of the Bank (1995);
and prior thereto Vice President of the
Bank (1987).
Jerome F. Denton 45 Secretary of the Corporation (1986) and
Senior Vice President and Secretary of the
Bank (1996).
</TABLE>
1 Mr. Daniel F. Agan is a brother of Board member, Robert E. Agan.
Executive Compensation
The following information indicates compensation paid or accrued by
the Bank during 1996 for services rendered by each of the Chief Executive
Officer and the four highest-paid executive officers of the Corporation
and the Bank whose total compensation exceeded $100,000.
At present, the officers of the Corporation are not separately
compensated for services rendered by them to the Corporation. It presently
is contemplated that such will continue to be the policy of the
Corporation.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
Name and Principal All Other
Position Held Year Salary($) Bonus($)1 Compensation($)2
<S> <C> <C> <C> <C>
John W. Bennett 1996 200,308 25,000 8,541
Chairman of the Board and
Chief Executive Officer of 1995 194,000 18,000 8,418
the Corporation and the
Bank
1994 185,692 30,000 8,174
Jan P. Updegraff 1996 114,039 15,000 7,342
President and Chief
Operating Officer of the 1995 95,385 15,000 6,660
Corporation and the Bank
1994 90,385 25,000 6,266
</TABLE>
1 Includes amounts allocated for the year indicated, whether paid or
deferred, to such person under the Bank-Wide and Management Incentive
Bonus Plans.
2 Includes amounts allocated for the year indicated to such personunder
the Bank's Profit-Sharing, Savings and Investment Plan.
Pension Plan
The Bank maintains a non-contributory, defined benefit Pension Plan
trusteed and administered by the Bank. The Plan covers all employees who
have attained age 20 with one or more years of service and who have one
thousand hours of service during the plan year. Under the Plan, the annual
benefit payable to qualifying employees upon their retirement is based on
the average of their five highest paid consecutive years out of the last
ten calendar years of employment. Normal retirement age under the Plan is
65. The Plan also provides for reduced benefit payments for early retirement
following age 55. Compensation under the Plan is limited to all of an
employee's salary, wages, or other regular payments from the Bank, excluding
bonuses, commissions, overtime pay, or other unusual payments.
The Pension Plan provides an annual benefit of 1.2% for each year of
credited service to a maximum of 25 years and for each additional year to a
maximum of 10 years, 1% times the above average compensation, plus for each
year of credited service to a maximum of 35 years, .65% of the above average
compensation to the extent it exceeds the average of the taxable wage base
in effect under Section 230 of the Social Security Act for each year in the
35 - year period ending with the year in which the participant attains
social security retirement age (which base was $27,576 for a participant
attaining age 65 in 1996).
The Bank made contributions to the Pension Plan totaling $262,200 for
1995. Due to a full funding limitation, the Bank made no contribution to
the Pension Plan for the years 1996 and 1994.
Additionally, effective January 1, 1994, the Bank established a non
qualified Executive Supplemental Pension Plan designed to provide a benefit
which, when added to other retirement income, will ensure the payment of a
competitive level of retirement income in order to attract, retain and
motivate selected executives of the Bank. From time to time the Board of
Directors may select executives as participants in the plan. Currently, Mr.
Bennett is the only plan participant.
This Plan provides an annual benefit equal to the amount, if any, that
the benefit which would have been paid under the terms of the Bank's Pension
Plan, computed as if the basic Pension Plan benefit formula administered and
payable without regard to the special benefit limitations required to comply
with Sections 415, 401(a)(17) and other governing sections of the Internal
Revenue Code, exceeds the benefit which is payable to the participant under
the terms of the Pension Plan on the date of the participant's termination.
The following table sets forth the estimated annual benefits under both
plans, based upon a straight-life annuity form of pension, payable on
retirement at age 65 by a participating employee, assuming final average
earnings as shown. Employees become fully vested following 5 years of
service.
<TABLE>
<CAPTION>
Average Annual Annual Benefits upon Retirement with Years of
Earnings Service Indicated
20 30 351
<S> <C> <C> <C>
$100,000 33,415 49,123 56,476
$120,000 40,815 60,023 69,027
$150,000 51,915 76,373 87,852
$190,000 66,715 98,173 112,951
$200,000 70,415 103,623 119,226
</TABLE>
1 Maximum number of years allowed under the terms of the Retirement
Plan
The previously-noted executive officers of the Corporation and the Bank
had the following credited full years of service under the Plan, as of
December 31, 1996: John W. Bennett (41) and Jan P. Updegraff (26).
Profit-Sharing, Savings and Investment Plan
The Bank maintains a Profit-Sharing, Savings and Investment Plan for
the benefit of all employees with one or more years of service who have
attained one thousand hours of service during the Plan year. The Bank's
profit-sharing contribution in any year is determined by the Board of
Directors in its discretion. The contribution shall not exceed the maximum
amount deductible for income tax purposes for such year. Annual
contributions under the Plan are allocated pro rata on the basis of
participants' aggregate covered compensation, limited, however, to a maximum
of 50% of the defined benefit limit under Code Section 415 (b) (1) (A) in
effect as of January 1 of the Plan Year for which the contribution is made
(50% of $120,000 or $60,000 for 1996). Participants who have earned at
least five years of vesting service may make limited withdrawals from the
Plan's Trust Fund from account balances accumulated prior to January 1,
1985.
The Plan further provides the opportunity for all participants to
contribute up to 10% of pay on a tax-deferred basis with the Bank matching
50% of the first 6% of that contribution. Both the Bank's profit-sharing
and matching contributions are invested in the Corporation's Common Stock to
the extent available. Participants' accounts are at all times 100% vested,
and benefits are payable upon retirement, death, disability, or other
termination of employment.
The Bank made contributions to the Profit Sharing, Savings and
Investment Plan totaling $550,854 for 1996, $499,342 for 1995 and $423,161
for 1994.
Employment Contracts
The Bank has employment contracts with twenty-one of its senior
officers, all vice president level and above. The contracts provide that in
the event of termination of any of these officers' employment without cause,
the officer shall continue to receive his or her salary at the level then
existing and the customary fringe benefits which he or she is then receiving
for a period ending December 31, 1998, except for Messrs. Agan, Corey,
Tascone and Updegraff whose guaranteed terms end December 31, 1999, and Mr.
Bennett whose guaranteed term ends July 1, 1998. The contracts further
provide that they may be extended by the Board of Directors on a year-to-
year basis and also may be terminated for cause upon thirty days' notice.
Other Compensation Agreements
The Bank maintains several contributory and non-contributory medical,
life and disability plans covering all officers, as well as all full-time
employees. The Bank does not maintain any stock option, stock appreciation
rights or stock purchase or award plans for officers or directors.
INDEPENDENT PUBLIC ACCOUNTANTS:
The accounting firm of KPMG Peat Marwick LLP, 113 South Salina Street,
Syracuse, New York 13202 has acted as the Bank's and the Corporation's
independent auditors and accountants since 1990 and will so act in 1997.
Representatives of KPMG Peat Marwick LLP will be present at the Annual
Meeting of Shareholders with the opportunity to make a statement. The
representatives will respond to appropriate questions.
OTHER BUSINESS:
Management knows of no business which will be presented for
consideration, other than the matters described in the Notice of Annual
Meeting. If other matters are properly presented, the persons designated as
proxies intend to vote thereon in accordance with their best judgment.
SHAREHOLDER PROPOSALS:
Qualified Shareholders desiring to present a proposal at the 1998
Annual Meeting of Shareholders, including a notice of intent to make a
nomination at said Meeting, must submit such proposal to the Corporation on
or before November 7, 1997. Such proposals must comply in all respects with
the rules and regulations of the Securities and Exchange Commission.
BY ORDER OF THE BOARD OF DIRECTORS
Jerome F. Denton
Secretary
Date: March 10, 1997
One Chemung Canal Plaza
Elmira, New York 14902
CHEMUNG
FINANCIAL
CORPORATION
Subsidiary, Chemung Canal Trust Company
Notice of
Annual Meeting
and
Proxy Statement
One Chemung Canal Plaza Annual Meeting of
P.O. Box 1522 Shareholders to be held
Elmira, New York 14902 April 8, 1997
APPENDIX
OMITTED GRAPHIC MATERIAL:
The comparative Return Performance Graph set forth under the heading
"Comparison of Five-Year Cumulative Total Return For Fiscal Years Ending
December 31, 1992 - 1996 Among Chemung Financial Corporation, NASDAQ
Composite Index and NASDAQ - Bank Stock Index", as required by Item 402(1) of
Regulation S-K has been omitted pursuant to Rule 304(d) of Regulation S-T but
will be filed with the Securities and Exchange Commission in paper form
pursuant to Rule 311(b) of Regulation S-T.
PROXY FORM
CHEMUNG FINANCIAL CORPORATION ANNUAL MEETING OF SHAREHOLDERS - APRIL 8, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF CHEMUNG FINANCIAL CORPORATION
John R. Battersby, Darwin C. Farber, and John B. Hintz, each with power of
substitution and with all the powers and discretion the undersigned would
have if personally present, are hereby appointed the Proxy agents to
represent the undersigned at the Annual Meeting of Shareholders of Chemung
Financial Corporation, to be held on April 8, 1997 (including any
adjournments or postponements thereof) and to vote all shares of Common
Stock of Chemung Financial Corporation which the undersigned is entitled to
vote on all matters that properly come before the meeting, subject to any
directions indicated.
(To be signed on Reverse Side)
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO
DIRECTIONS TO THE CONTRARY ARE GIVEN, THE PROXY AGENTS INTEND TO VOTE FOR
THE NOMINEES.
NOMINEES
FOR WITHHELD
1. Election of 3-year term: David J. Dalrymple
Directors. Richard H. Evans
Edward B. Hoffman
John F. Potter
William C. Ughetta
Jan P. Updegraff
I/We will attend the Meeting
Number in group
SIGNATURE(S) DATE
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee,
custodian or guardian, please give full title as such.
