2
______________
Notice of 1998 Annual Meeting and Proxy Statement
______________
April 2, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
to be held on Wednesday, May 13, 1998, at 7:00 p.m., local time, 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 three items on the agenda requiring Shareholders' vote will be (1)
to elect seven directors - the candidates nominated for three-year terms,
all currently serving, are: John W. Bennett, Robert H. Dalrymple,
Frederick Q. Falck, Ralph H. Meyer, Samuel J. Semel, Richard W. Swan and
William A. Tryon, (2) to vote on a proposal to amend the corporation's
certificate of incorporation to increase the number of authorized shares of
common stock and to reduce the par value of such stock, and (3) to vote on
a proposal to adopt the Chemung Canal Trust Company Deferred Directors Fee
Plan. The attached Proxy Statement sets forth in detail information
relating to the proposals, the nominated candidates and 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 1998.
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 May 13.
/s/Jan P. Updegraff
President 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, on
Wednesday, May 13, 1998, at 7:00 p.m. for the following purposes:
to elect seven (7) directors, each to hold office for a
term of three years and until their respective successors
have been elected and qualified;
to consider a proposal to amend the corporation's
certificate of incorporation to increase the number of
authorized shares of common stock and to reduce the par value
of such stock;
to consider a proposal to adopt the Chemung Canal
Trust Company Deferred Directors Fee Plan; and
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 April
1, 1998 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
Robert J. Hodgson
Secretary
April 2, 1998
CHEMUNG FINANCIAL CORPORATION
ONE CHEMUNG CANAL PLAZA, P.O. BOX 1522, ELMIRA, NEW YORK
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, MAY 13, 1998
________________________________________________________________________
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,
unless otherwise stated, financial and other information is presented
on a consolidated basis for Chemung Financial Corporation ("Corporation")
and Chemung Canal Trust Company ("Bank").
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 Wednesday, May 13, 1998, at 7:00
p.m., local time, 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 April 2, 1998. 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 April 1,
1998 are entitled to receive notice of and to vote at the Annual Meeting.
As of March 16, 1998, there were 2,061,738 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 their
reasonable expenses.
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, for the proposal to amend the Corporation's
Certificate of Incorporation to increase the number of authorized shares
of common stock and to reduce the par value of such stock and for the
proposal to adopt the Chemung Canal Trust Company Deferred Directors
Fee Plan 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. Should any
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 1998 Annual
Meeting of Shareholders is seven (7) 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 nominees
for election as directors 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 2001
John W. Bennett Since 1988 Chairman of the Board of the
Age 64 Corporation and Bank; formerly
President and Chief
Executive Officer of the
Corporation and Bank; also a
director of Hardinge Inc.
Robert H. Dalrymple Since 1995 Secretary of Dalrymple Holding
Age 47 Corporation, a parent company for
several construction companies.
NOMINEES WITH TERMS
EXPIRING IN 2001
(continued)
Frederick Q. Falck Since 1997 President of L.M. Trading Company,
Age 49 an agricultural investment
corporation; Vice President of
Arnot Realty Corporation; Chairman
of The Rathbone Corporation;
President of the US Foundation of
the Universidad del Valle de
Guatemala and board member since
1986; Treasurer of the Escuela
Agricula Panamerica, an
agricultural college in Honduras
and Board member since 1990.
Ralph H. Meyer Since 1985 President and Chief Executive
Age 58 Officer of Guthrie Healthcare
System, a vertically
integrated health care delivery
system.
Samuel J. Semel Since 1993 President of Chemung Electronics,
Age 71 Inc., an electronic and computer
consulting firm.
Richard W. Swan Since 1985 President of Swan & Sons-Morss Co.,
Age 49 Inc., an insurance brokerage agency.
William A. Tryon Since 1987 Chairman of the Board and Chief
Age 67 Executive Officer of Trayer
Products, Inc., an automotive,
truck and other industrial
parts manufacturer; President of
Perry & Carroll, Inc., an
insurance brokerage agency;
formerly a director of the
Bank from 1964 to 1976.
DIRECTORS
CONTINUING
IN OFFICE WITH
TERMS
EXPIRING IN 1999
Robert E. Agan Since 1986 Chairman of the Board, Chief
Age 59 Executive Officer and President of
Hardinge Inc., a world-wide
machine tool manufacturer.
Donald L. Brooks, Since 1985 Retired physician.
Jr.
Age 69
Stephen M. Since 1995 President of Applied Technology
Lounsberry III Manufacturing Corporation since July
Age 44 17, 1996, a manufacturer of railroad
lubrication systems; formerly President
of Moore & Steele Corporation.
DIRECTORS
CONTINUING
IN OFFICE WITH
TERMS
EXPIRING IN 1999
(continued)
Thomas K. Meier Since 1988 President of Elmira College.
Age 57
Charles M. Since 1985 President of Streeter Associates,
Streeter, Jr. Inc., a general building contractor.
Age 58
Nelson Mooers van Since 1985 Chairman of the Board, Chief
den Blink Executive Officer and Treasurer of
Age 63 The Hilliard Corporation, a motion
control equipment, oil reclaimer
and filter manufacturer.
DIRECTORS
CONTINUING IN
OFFICE WITH TERMS
EXPIRING IN 2000
David J. Dalrymple Since 1993 President of Dalrymple Holding
Age 44 Corporation, parent company for
several construction companies.
Richard H. Evans Since 1985 Retired since January 1, 1995;
Age 67 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, Brayton,
Age 66 Palmer & Tifft law firm.
John F. Potter Since 1991 President of Seneca Beverage
Age 52 Corporation, a wholesale distributor
of beer, water and soda products.
William C. Ughetta Since 1985 Senior Vice President and former
Age 65 General Counsel of Corning
Incorporated, a diversified
manufacturing company.
Jan P. Updegraff Since 1996 President and Chief Executive
Age 55 Officer of the Corporation and Bank;
formerly Vice President and Treasurer
of the Corporation and Chief Operating
Officer and Executive Vice President
of the Bank.
</TABLE>
PROPOSAL TO AMEND THE CORPORATION'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK AND TO
REDUCE THE PAR VALUE OF SUCH STOCK
The Corporation's Certificate of Incorporation currently
authorizes the issuance of three million (3,000,000) shares of Common
Stock, with a par value of five dollars ($5.00) per share. The
Board of Directors on March 11, 1998 unanimously adopted a
resolution proposing that the Certificate of Incorporation be amended
to increase the authorized number of shares of Common Stock to ten
million (10,000,000), subject to shareholder approval of the
amendment.
The Board of Directors has also unanimously approved a change in
the par value of the Common Stock from $5.00 per share to $0.01 per
share. The purpose of reducing the par value is to reduce the amount of
New York State franchise taxes to be paid by the Corporation upon the
increase in the number of authorized shares. Under applicable New York
State franchise tax law, the Corporation must pay a one-time tax of
one-twentieth of one percent on the amount of the par value of the shares
that are proposed to be newly authorized. Reducing the par value of
the Common Stock as proposed will reduce this tax by approximately
$17,000.
The reduction in the par value per share of the Common Stock
from $5.00 per share to $0.01 per share will not affect the
Corporation's total authorized Common Stock. The reduction in par value
will reduce the par value of the Corporation's Common Stock
account and increase the accumulated paid-in capital account by the same
amount. The overall stock equity balance will not change.
Par value is an arbitrary number that has no correlation with
the actual value of a corporation's common equity. The recommended
change would not change either the aggregate market or book value of
shareholder common equity. The change in par value represents an
accounting change that brings the par value of the Common Stock to a
level similar to that of many other publicly traded companies.
Proposed Stock Split. At the same time that it adopted the
above resolutions, the Board of Directors declared a two-for-one stock
split of the Corporation's Common Stock which would be effected as
a special distribution of one additional share of Common Stock for
each share of Common Stock outstanding (the "Stock Split").
Shareholders are not being asked to vote on the Stock Split, but the
Stock Split will not take place unless the authorized number of shares
of Common Stock is increased as described in this Proposal. Without
this increase in authorized shares, the Corporation would not have
enough authorized but unissued shares of Common Stock to accomplish the
proposed Stock Split. Please note that none of the share-related data
in this Proxy Statement is adjusted to take into account the proposed
Stock Split. If the shareholders approve the increase in authorized
shares, the Stock Split will be effective for shareholders of record at
the close of business on May 29, 1998. If the Board of Directors
maintains its current dividend policy of $.31 per share, the dividend
per share following the proposed Stock Split would be $.155 per share.
Current Use of Shares. As of April 1, 1998, the Corporation had
2,061,738 shares of Common Stock outstanding. Based upon the number
of outstanding shares of Common Stock, the Corporation currently has
938,262 shares remaining available for other purposes.
Proposed Amendment to Certificate of Incorporation
The Board of Directors has adopted resolutions setting forth (i)
the proposed amendment to paragraph 4 of the Corporation's
Certificate of Incorporation (the "Amendment"); (ii) the advisability
of the Amendment; and (iii) a call for submission of the Amendment
for approval by the Corporation's shareholders at the Meeting.
The following is the text of paragraph 4 of the Certificate
of Incorporation of the Corporation, as proposed to be amended:
The aggregate number of shares which the Corporation shall have
the authority to issue is: Ten Million (10,000,000), all of which
shall be common shares of the par value of one cent ($0.01) each.
Purpose and Effect of the Proposed Amendment
The Board of Directors believes that it is in the Corporation's
best interest to increase the number of shares of Common Stock
that the Corporation is authorized to issue in order to give the
Corporation additional flexibility to maintain a reasonable stock price
with future stock splits and/or stock dividends. As noted above,
the Board of Directors has approved a Stock Split subject to the
approval of the Amendment.
The Board of Directors also believes that the availability
of additional authorized but unissued shares will provide the Corporation
with the flexibility to issue Common Stock for other proper corporate
purposes which may be identified in the future, such as to raise equity
capital, to adopt additional employee benefit plans or reserve
additional shares for issuance under such plans, and to make
acquisitions through the use of stock.
Other than with respect to the foregoing Stock Split and as
permitted or required under the Corporation's employee benefit plans,
the Board of Directors has no immediate plans, understandings,
agreements, or commitments to issue additional Common Stock for any
purposes.
The Board of Directors believes that the proposed increase in
the authorized Common Stock will make available sufficient shares for
use, taking into account the Stock Split, should the Corporation decide
to use its shares for one or more of such previously mentioned
purposes or otherwise. No additional action or authorization by the
Corporation's shareholders would be necessary prior to the issuance of
such additional shares, unless required by applicable law or the
rules of any stock exchange or national securities association
trading system on which the Common Stock is then listed or quoted. The
Corporation reserves the right to seek a further increase in authorized
shares from time to time in the future as considered appropriate by the
Board of Directors.
Under the Corporation's Certificate of Incorporation,
the Corporation's shareholders do not have preemptive rights with respect
to Common Stock. Thus, should the Board of Directors elect to
issue additional shares of Common Stock, existing shareholders would not
have any preferential rights to purchase such shares. In addition, if
the Board of Directors elects to issue additional shares of Common
Stock, such issuance could have a dilutive effect on the earnings per
share, voting power and shareholdings of current shareholders.
The proposed amendment to increase the authorized number of shares
of Common Stock could, under certain circumstances, have an anti-
takeover effect, although this is not the intention of this proposal.
For example, in the event of a hostile attempt to take over control of
the Corporation, it may be possible for the Corporation to endeavor to
impede the attempt by issuing shares of the Common Stock, thereby
diluting the voting power of the other outstanding shares and
increasing the potential cost to acquire control of the Corporation.
The Amendment therefore may have the effect of discouraging unsolicited
takeover attempts. By potentially discouraging initiation of any such
unsolicited takeover attempt, the proposed Amendment may limit the
opportunity for the Corporation's shareholders to dispose of their
shares at the higher price generally available in takeover attempts or
that may be available under a merger proposal. The proposed amendment
may have the effect of permitting the Corporation's current
management, including the current Board of Directors, to retain its
position, and place it in a better position to resist changes that
shareholders may wish to make if they are dissatisfied with the
conduct of the Corporation's business. However, the Board of
Directors is not aware of any attempt to take control of the
Corporation and the Board of Directors has not presented this
proposal with the intent that it be utilized as a type of anti-takeover
device.
Effect of the Stock Split
No change in total shareholders' equity will result from the
Stock Split.
The aggregate amount of capital represented by the outstanding
shares of Common Stock will be increased by $0.01 for each share issued
to effect the Stock Split and the Corporation's capital in excess of par
value account will be reduced by the same amount. After the Stock
Split, purchases and sales of Common Stock by an individual shareholder
may be subject to higher brokerage charges and applicable stock
transfer taxes than on a pre-split transaction of equivalent market
value, due to the greater number of shares of Common Stock involved
after the Stock Split.
In addition, the Corporation will incur certain expenses in connection
with the Stock Split, such as the cost of preparing and
delivering to shareholders new certificates representing existing and
additional shares at the reduced par value.
The Corporation has been advised that, based on current tax law,
the Stock Split should not result in any gain or loss for Federal
income tax purpose. The tax basis of every share held before the Stock
Split will be allocated between the two shares held as a result of the
distribution, and the holding period of the new shares will include the
holding period of the shares with respect to which they were issued.
The laws of jurisdictions other than the United States may impose income
taxes on the issuance of the additional shares and shareholders
subject to such laws are urged to consult their tax advisers.
As noted above, the Stock Split is contingent on shareholder
approval of the Proposal to Amend the Certificate of Incorporation but
shareholders are not being asked to vote on the Stock Split.
Vote Required
The affirmative vote of a majority of the outstanding shares of
common stock entitled to vote at the annual meeting is required for
approval of this proposal.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL TO ADOPT THE CHEMUNG CANAL TRUST
COMPANY DEFERRED DIRECTORS FEE PLAN
The Bank's Deferred Directors Fee Plan (the "Plan"), attached
herein as Appendix A, enables the Bank's directors to defer all or any
portion of the fees ("Fees") payable on account of their service as
directors.
The Fees include both the annual retainer fee and fees payable on
account of attendance at various committee meetings held throughout the year.
Participating directors may elect to allocate their deferred Fees
to the Memorandum Money Market Account, the Memorandum Unit Value
Account or any combination of the two. Deferrals to the Memorandum
Money Market Account obtain interest equal to the Applicable Federal
Rate for short-term debt as published by the Internal Revenue Service.
Interest is added to each Director's balance on a quarterly basis.
Fees deferred to the Memorandum Unit Value Account are expressed
in units, the number of which units is determined by dividing the
Fees so allocated by the closing price of the Corporation's common
stock ("Market Value") on the last trading day of each quarter.
Subsequent dividends paid by the Corporation increase the number of
units in each account by the equivalent of the Market Value of the
Corporation's common stock as of the dividend date. The number of units
is also adjusted in the event of stock dividends, stock splits or other
similar recapitalizations effected by the Corporation.
Fees deferred under the Plan are payable at the election of
a participating director, at a specified age or time, upon the
termination of the director's services as a director. Notwithstanding
the above, payments to directors must commence not later than the year
in which the director obtains the age of 72. Deferred Fees may be paid
in either one installment or in a number of installments, as elected by
the director. The value of a director's Memorandum Money Market Account
must be paid in cash. All amounts represented by the Memorandum Unit
Value Account shall be paid only in shares of the Corporation's common
stock (except fractional shares which shall be paid in cash).
Deferred Fees are accounted for as a general unfunded liability of
the Bank and Corporation. Participating directors have neither a
claim nor security interest against any asset of the Bank on account of
such deferred Fees. The Plan, first approved on April 13, 1977, was
amended, effective October 1, 1997 to require that Fees deferred into
units of the Corporation's common stock be paid only in shares of the
Corporation. Formerly, stock units were settled in cash. As of October
1, 1997, the value of deferrals represented by the Memorandum Unit
Value Account may not be reallocated to the Memorandum Money Market
Account.
Vote Required
The affirmative vote of a majority of the outstanding shares of
common stock entitled to vote at the Annual Meeting is required for
approval of this proposal.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THIS PROPOSAL.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
The following table sets forth information, as of January 31,
1998, 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 Shares of Percent of Shares
Beneficial Owner Common Outstanding
Stock Beneficially
Owned
<S> <C> <C>
Chemung Canal Trust 376,2581 18.2%
Company
One Chemung Canal Plaza
Elmira, NY 14902
Chemung Canal Trust Company 227,1152 11%
Profit-Sharing, Savings and
Investment Plan
One Chemung Canal Plaza
Elmira, NY 14902
David J. Dalrymple 308,7783, 5 15.0%6
274 Upper Coleman Avenue
Elmira, NY 14905
Robert H. Dalrymple
875 Upland Drive 297,6624, 5 14.4%6
Elmira, NY 14905
<C> <S>
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, 350,645 shares held with shared power to vote
and 184,717 shares held with shared dispositive power. 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 co-fiduciary
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 43,461 shares held directly, 1,904 shares held as custodian
for Mr. Dalrymple's children under the New York State Uniform
Gifts to Minors Act, 224,255 shares held by Dalrymple Family
Limited Partnership of which David J. Dalrymple and Robert H.
Dalrymple are sole general partners (see footnotes 5 and 6), 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 4). Excludes
1,988 shares held by Mr. Dalrymple's spouse as to which
shares Mr. Dalrymple disclaims beneficial ownership.
4 Includes 32,345 shares held directly, 1,904 shares held as custodian
for Mr. Dalrymple's children under the New York State Uniform
Gifts to Minors Act, 224,255 shares held by Dalrymple Family
Limited Partnership of which David J. Dalrymple and Robert H.
Dalrymple are sole general partners (see footnotes 5 and 6), and
39,158 shares held by Dalrymple Holding Corporation (see
footnote 3). Excludes 1,345 shares held by Mr. Dalrymple's
spouse as to which shares Mr. Dalrymple disclaims beneficial
ownership.
5 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.
6 Because of the definition of "beneficial ownership" under Section 13
of The Exchange Act, and the rules and regulations
promulgated thereunder, David and Robert Dalrymple are each listed
as beneficial owners of 263,413 of the same shares. Without
such multiple counting, David and Robert Dalrymples' total
aggregate beneficial ownership is 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 said percentage
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.
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT:
As of January 31, 1998, 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 Outstanding*
Ownership
<S> <C> <C>
Robert E. Agan 5,789A *
John W. Bennett 9,344B *
Donald L. Brooks, Jr. 6,895A *
David J. Dalrymple 308,778C 15.00%C
Robert H. Dalrymple 297,662C 14.04%C
Richard H. Evans 9,352 *
Frederick Q. Falck 63,391A, D 3.06%
Edward B. Hoffman 4,023A *
Stephen M. Lounsberry III 5,873A *
Thomas K. Meier 2,000 *
Ralph H. Meyer 6,466A *
John F. Potter 13,004A, E *
Samuel J. Semel 6,143A *
Charles M. Streeter, Jr. 11,659A, F *
Richard W. Swan 19,193G *
William A. Tryon 9,332 *
William C. Ughetta 12,924A *
Jan P. Updegraff 4,055B *
Nelson Mooers van den Blink 1,637 *
All Directors, Nominees and 539,683H 26.18%
Executive Officers as
a group (25 persons)
<C> <S>
* Unless otherwise noted, less than 1% per individual.
A Includes shares that Messrs. Agan (5,339), Brooks (645), Falck
(220), Hoffman, (2,272), Lounsberry (1,379), Meyer (3,871), Potter
(3,941), Semel (1,511), Streeter (1,446), and Ughetta (2,924) 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 Bank's Deferred Directors Fee
Plan. Such deferred fees will be paid solely in shares of the
Corporation's Common Stock pursuant to the terms of the Plan and
the election of the Plan participants. Said share
equivalencies have no voting rights until shares are actually
issued to said directors under the terms of the Plan.
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 8,199 and 3,905 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 227,115 shares of the
Corporation's Common Stock.
C See Footnotes 3 - 6 of the SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS table for further explanation of shares
beneficially owned.
D Includes shares held in various trusts of which Mr. Falck is a
co trustee or income beneficiary. Excludes 74,280 shares owned by
The Rathbone Corporation of which Mr. Falck is an officer,
director and co-trustee of various trusts which are
shareholders of said corporation.
E Includes 6,042 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 210 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 14,916 shares owned by spouses of certain
officers and directors as to which shares such officers and
directors disclaim beneficial ownership and does not include
263,413 shares included under each of David J. Dalrymple and
Robert H. Dalrymple (see footnote 6 under SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS).
</TABLE>
COMPENSATION OF 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 Officer.
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 Chairman
of the Board and the Chief Executive Officer, 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 1997,
Messrs. Bennett and Updegraff received incentive bonuses of $40,000 and
$20,000, respectively. No long-term awards were issued. Senior Officer
participants as a group, including Messrs. Bennett and Updegraff,
received incentive bonus awards totaling $287,140 for 1997.
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 1997 in achieving certain
profit, growth, and operational objectives which were established by the
Board of Directors in the Bank Plan at the beginning of 1997 and
compared the Corporation's financial results against the results reported
by similar banks in New York and Pennsylvania. The financial and operational
measurements considered by the Board were: net profit, return on assets,
return on equity, new market penetration, new product development, cost
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 Chairman of the Board
and Chief Executive Officer, 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 bank 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 their evaluation, 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.
SUBMITTED BY THE DIRECTORS' PERSONNEL COMMITTEE
[S] [S] [S]
Thomas K. Meier, Chairman Richard H. Evans William A. Tryon
Donald L. Brooks, Jr. Ralph H. Meyer William C. Ughetta
David J. Dalrymple Richard W. Swan
Executive Officers
During 1997, 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> <C> <S>
John W. Bennett 64 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 55 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 64 Vice President of the Corporation (1988)
and Senior Vice President of the Bank
(1984).
Robert J. Hodgson 52 Secretary and Corporate Counsel of the
Corporation and the Bank (1997);
formerly Vice President of the
Corporation (1990); and Senior Vice
President of the Bank (1988).
James E. Corey III 51 Vice President of the Corporation (1993)
and Senior Vice President of the Bank
(1993).
Joseph J. Tascone 50 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 46 Vice President of the Corporation (1997);
formerly Secretary (1986); and Senior
Vice President of the Bank (1996).
<C> <S>
1 Mr. Daniel F. Agan is a brother of Board member, Robert E. Agan.
</TABLE>
Executive Compensation
The following information indicates compensation paid or accrued
by the Bank during 1997 for services rendered by each of the Chief
Executive Officer and the highest-paid executive officers of the
Corporation and the Bank whose total compensation exceeded $100,000.
At present, the officers of the Corporation are not
separately compensated for services rendered by them to the Corporation.
It presently is contemplated that such will continue to be the policy
of the Corporation.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation
<S>
Name and Principal All Other
Position Held Year Salary($) Bonus($)1 Compensation($)2
<S> <C> <C> <C> <C>
John W. Bennett 1997 209,308 40,000 9,218
Chairman of the
Board and 1996 200,308 25,000 8,541
Chief Executive
Officer of 1995 194,000 18,000 8,418
the Corporation and
the Bank
Jan P. Updegraff 1997 128,846 20,000 8,463
President and Chief
Operating Officer of 1996 114,039 15,000 7,342
the Corporation and
Bank 1995 95,385 15,000 6,660
<C> <S>
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 person under the Bank's Profit-Sharing, Savings
and Investment Plan.
</TABLE>
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
$29,304 for a participant attaining age 65 in 1997).
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 1997.
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 Earnings Annual Benefits upon Retirement with Years of
Service Indicated
<C> <C>
20 30 351
<C> <C> <C>
$100,000 33,190 48,786 56,083
$120,000 40,590 59,686 68,633
$150,000 51,690 76,036 87,458
$190,000 66,490 97,836 112,558
$200,000 70,190 103,286 118,833
1 Maximum number of years allowed under the terms of the Pension
Plan
</TABLE>
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, 1997: John W. Bennett (42) and Jan P. Updegraff (27).
Employment Contracts
The Bank has employment contracts with twenty 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, 1999,
except for Messrs. Corey, Denton, Tascone and Updegraff whose guaranteed
terms end December 31, 2000, Mr. Bennett whose guaranteed term ends
July 1, 1998 and Mr. Agan whose guaranteed term ends March 1, 1999.
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 and full-time
employees.
The Bank does not maintain any stock option, stock appreciation rights
or stock purchase or award plans for officers or directors.
Comparative Return Performance Graph
Comparison of Five-Year Cumulative Total Returns For Fiscal Years
Ending December 31, 1993 - 1997 Among Chemung Financial Corporation,
CRSP Total Returns Index for NASDAQ Stock Market (US Companies) and NASDAQ
Bank Stocks Index
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Chemung Financial 100.0 129.23 150.23 168.15 213.21 272.3
Corporation 0 8
CRSP NASDAQ Composite 100.0 114.80 112.20 158.70 195.20 239.5
0
0
NASDAQ - Bank Stocks 100.0 114.00 113.60 169.20 223.40 377.4
0
0
</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, 1992.
The CRSP Total Returns Index for NASDAQ Stock Market (US Companies)
and Bank Stocks indices were obtained from the Center for Research in
Security Prices (CRSP), University of Chicago, Chicago, Illinois.
Compensation of Directors and Committee Meetings
The Board of Directors of the Corporation held eight (8) regularly
scheduled meetings during the year ended December 31, 1997. 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, 1997. Among its standing committees, the Board of Directors of the
Bank has an Examining 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 1997 this Committee held three (3)
meetings. On December 31, 1997, its members were Mrs. van den Blink
(Chairperson) and Messrs. Agan, Brooks, R. Dalrymple, Falck, Lounsberry,
Potter, Semel and Streeter.
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 six (6) meetings in 1997 and on December 31, 1997, its
members were Messrs. Meier (Chairperson), Brooks, D. Dalrymple, Evans,
Meyer, Swan, Tryon and Ughetta.
During the year ended December 31, 1997, each director of the
Corporation and the Bank attended at least 75% of the aggregate of the
number of Board Meetings held and the number of meetings held by all
committees of which such director was a member, with the exception of Dr.
Donald L. Brooks, Jr. who attended 67% of such meetings.
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 Chairperson of each committee who receives $350. The
aggregate amount of directors' retainers and fees paid or deferred under
the Deferred Directors Fee Plan during 1997 was $246,800.
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 1997.
Otherwise, directors of the Corporation are not compensated for services
rendered by them to the Corporation and no change is presently
contemplated
in this policy.
Certain Transactions
Some of the Bank's directors and officers, and entities of which they
are associated, 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 directors, officers and
entities will continue to be customers of and indebted to the Bank on
similar terms in the future. All loans to these individuals and entities
are made in the ordinary course of business, involve no more than a normal
risk of collectibility and were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the same
time for comparable transactions with unaffiliated persons.
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 their costs and
expenses for claims based on "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.
The Bank retained Sayles, Evans, Brayton, Palmer & Tifft, a law firm
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.
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 1998. 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 1999
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 December 3, 1998. Such proposals must comply in all respects
with the rules and regulations of the Securities and Exchange Commission.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, certain executive officers, and more than ten
percent owners of a registered class of the Corporation's equity
securities, to file with the Securities and Exchange Commission initial
reports of ownership and changes in beneficial ownership. 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,
1997, all Section 16(a) filing requirements applicable to its executive
officers, directors and any ten percent shareholder were met.
OTHER MATTERS:
Financial statements for the Corporation and its consolidated
subsidiaries are included in Chemung Financial Corporation's Annual
Report to stockholders for the year 1997 which was mailed to the
stockholders beginning April 2, 1998.
A COPY OF CHEMUNG FINANCIAL CORPORATION'S 1997 ANNUAL REPORT ON FORM
10K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS AVAILABLE WITHOUT
CHARGE TO THOSE STOCKHOLDERS WHO WOULD LIKE MORE DETAILED INFORMATION
CONCERNING THE CORPORATION. TO OBTAIN A COPY, PLEASE WRITE TO: ROBERT J.
HODGSON, SENIOR VICE PRESIDENT, CORPORATE COUNSEL AND SECRETARY, CHEMUNG
CANAL TRUST COMPANY, ONE CHEMUNG CANAL PLAZA, ELMIRA, NY 14902.
BY ORDER OF THE BOARD OF DIRECTORS
Robert J. Hodgson
Secretary
Date: April 2, 1998
One Chemung Canal Plaza
Elmira, New York 14902
Appendix A
PROPOSAL TO ADOPT THE
CHEMUNG CANAL TRUST COMPANY DEFERRED DIRECTORS
FEE PLAN CHEMUNG CANAL TRUST COMPANY Deferred
Directors Fee Plan
Any Director may elect from time to time that payment of all or
any part of the annual retainer thereafter payable to him or her and
that payment of all or any part of the fees thereafter earned by him or
her for attendance at subsequent meetings of the full Board of
Directors and at subsequent meetings of committees of the Board of
Directors (such annual retainer and fees for attendance being
hereinafter collectively referred to as "fees") be deferred on the
following terms and conditions:
1) ELECTION -- All elections must be in writing and signed by
the Director and must designate the time and manner of payment of all
fees
deferred pursuant thereto.
Provided such amendment is made before the year in which payment
of deferred fees would have commenced under the Director's existing
election, an election as to the time and manner of payment of deferred
fees may be amended to further defer the commencement of payment or
to extend the period of payment but no amendment may accelerate the
commencement of payment or shorten the period of payment.
2) PERIOD OF ELECTIONS -- Each election shall continue in effect as
to all fees thereafter earned as above provided by the electing Director
until revoked by written instrument signed by such Director.
3) SUCCESSIVE ELECTIONS -- A Director who revokes an election may
make a new election at any time thereafter as to fees to be so earned
after such new election but the prior revoked election shall govern
the time and manner of payment of all fees deferred pursuant
thereto, except as otherwise specifically allowed hereunder.
4) ACCOUNTING FOR DEFERRED FEES -- Deferred fees shall be a
general unfunded liability of Chemung Canal Trust Company ("the
Bank"). No separate fund shall be set aside or earmarked for their payment.
Neither shall any Director have a right or security interest in any
asset of the Bank and no trust or security interest shall be
implied as a result thereof. A 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,
provided, however, that effective October 1, 1997, amounts allocated to
the Memorandum Unit Value Account as of October 1, 1997 or thereafter and
earnings thereon may not thereafter be transferred to the Memorandum
Money Market Account. Any change in such designation may be made no
later than the last day of each March, June, September and December
during the deferral period to be effective on the date next following
such notification that compensation would have been paid in accordance
with the Bank's normal practice but for the election to defer.
A-1
a) Memorandum Money Market Account -- A memorandum
account shall be kept of the deferred fees by each Director with
the balance in said memorandum account to be credited with interest
compounded quarterly on the average balance during each such
calendar quarter at a rate during each calendar quarter 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 calendar quarter for which
the interest computation is being made.
b) Memorandum Unit Value Account -- The amount, if any,
in or allocated to the Director's deferred compensation Unit
Value Account on the dates compensation would have been
paid in accordance with the Bank's normal practice but for
the election to defer, shall be expressed in units on a
quarterly basis, the number of which shall be calculated as of
the last trading day of each quarter and shall be equal to
the sum of the quarterly retainer plus the Director's
allocated fees other than the Director's quarterly retainer
received by the Director in such quarter divided by the
closing bid price for shares of the Bank's Common Stock
(hereinafter referred to as "Market Value") on such date. On
each date that the Bank pays a regular cash dividend on shares
of its Common Stock outstanding, the Director's account shall
be credited with a number of units equal to the amount of such
dividend per share multiplied by the number of units in the
Director's account on such date divided by the Market Value
on such dividend date. The value of the units in the
Director's Unit Value Account on any given date shall be
determined by reference to the Market Value on such date. For
the purposes of this Plan, the term "Bank Common Stock"
shall mean the common stock of Chemung Financial Corporation,
the parent company of Chemung Canal Trust Company. If a valuation
date shall not be a trading day, the Market Value on such valuation date
shall be deemed to be the Market Value on the trading day next preceding
such date.
c) Recapitalization -- The number of units in the
Director's Unit Value Account shall be proportionally
adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Bank resulting from a
subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend or other increase
or decrease in such shares, effected without receipt of
consideration by the Bank, or any distribution or spin-off of
assets (other than cash to the stockholders of the Bank).
5) TIME OF PAYMENT -- At the election of an electing
Director, deferred fees shall be paid to him or her, or payment thereof
to him or her, shall commence either:
a) at a specified age, or
b) at a specified time, or
c) at the termination of his or her services as a Director;
A-2
provided, however, that payment must be made or commenced not later
than the year in which the Director attains the age of 72 years, and
provided further that except in the case of death, retirement or
disability, no payment from a Unit Value Account shall be made until
at least six (6) months after the last credit of units to the Account.
6) MANNER OF PAYMENT -- A Director may elect to receive
the compensation deferred under the Plan in either (a) a lump sum, or
(b) a number of annual installments as specified by the Director on the
election form. All amounts distributed to a Director, his or
her personal representatives or beneficiaries in the Director's Money
Market Account shall be paid in cash and, effective October 1, 1997,
all amounts in the Director's Unit Value Account shall be paid in the
form of shares of the Bank's Common Stock.
7) DEATH -- At the death of an electing Director, the entire
balance of his or her account shall be paid in a lump sum to his or her
personal representatives or, if the Director has named a beneficiary
and such beneficiary survives the Director, in a lump sum or in
installments of not more than 10 years as the Board of Directors
may determine after consultation with the beneficiary.
8) TOTAL AND PERMANENT DISABILITY -- Upon the request of an
electing Director, together with satisfactory proof of his or her
total and permanent disability, the Board of Directors may direct the
payment of the entire balance of his or her account to the Director or
the commencement of installment payments to him or her.
9) TRANSFER, PLEDGE OR SEIZURE -- Title to deferred fees shall
not vest in a Director until actual payment thereof is made by the
Bank in accordance with the provisions of this Plan. A Director may not
transfer, assign, pledge, hypothecate or encumber in any way any
interest in such deferred fees prior to the actual receipt thereof.
If a Director attempts to transfer, assign or encumber any interest in
his or her deferred fees, or any part thereof, prior to the payment or
distribution thereof to him or her, or if any transfer or seizure of such
deferred fees is attempted to be made or brought about through the
operation of any bankruptcy or insolvency law or other legal procedure,
the rights of the Director taking such action or concerned therein or
affected thereby or who would, but for
this provision, be entitled to receive such deferred fees, shall
forthwith and ipso facto terminate and the Bank may thereafter, in
its absolute discretion at such time or times and in such manner as it
deems proper, cause the whole or any part of the balance of the
Director's account to be paid to any person or persons, including
any spouse or child of the Director, as the Bank in its uncontrolled
discretion shall deem advisable.
10) AMENDMENT OR REPEAL -- This Plan may be amended or repealed in
whole or in part at any time by the Bank, but no such amendment or
repeal shall alter the time or manner of the payment of fees, the payment
of which has theretofore been deferred pursuant hereto, except as
expressly allowed herein.
A-3
APPENDIX B
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 - 1997 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 ST but will be filed with the Securities and Exchange
Commission in paper form pursuant to Rule 311(b) of Regulation S-T.
PROXY FORM
ANNUAL MEETING OF SHAREHOLDERS - MAY 13, 1998
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 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 May 13, 1998 (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 and any
adjournment thereof, subject to any directions indicated.
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 IDENTIFIED IN ITEM (1) AND FOR ITEMS (2) AND (3).
NOMINEES FOR WITHHELD
1. Election of Directors. 3-year term: John W. Bennett
Robert H. Dalrymple
Frederick Q. Falck
Ralph H. Meyer
Samuel J. Semel
Richard W. Swan
William A. Tryon
FOR/AGAINST/ABSTAIN
2. Approval to increase the number of authorized shares of common stock and
reduce the par value of such stock.
(To be signed on Reverse Side)
FOR/AGAINST/ABSTAIN
3. Approval of the Chemung Canal Trust Company Deferred Directors
Fee Plan.
I/We will attend the Meeting
Number in group
SIGNATURE(S)
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.
