<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
Commission
Only (as permitted by Rule
14a-6(e) (2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
Iroquois Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Marianne R. O'Connor
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials:
-----------------------------------------------------------------------
[_] Check box if any part of the fee as provided by Exchange Act Rule 0-
11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
IROQUOIS BANCORP, INC.
115 Genesee Street
Auburn, New York 13021
(315) 252-9521
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997
TO THE SHAREHOLDERS OF IROQUOIS BANCORP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Iroquois
Bancorp, Inc. (the "Company"), will be held at the Holiday Inn, 75 North Street,
Auburn, New York on Thursday, May 8, 1997 at 10:00 a.m., to consider and vote
upon the following matters:
1. The election of three (3) directors to serve for a term of three (3)
years and until their successors have been duly elected and qualified.
2. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending December 31, 1997.
3. The transaction of such other business as may properly come before the
Meeting or any adjournment thereof.
The close of business on March 27, 1997 has been fixed as the record date
for the determination of shareholders who will be entitled to notice of and to
vote at the Annual Meeting.
By Order of the Board of Directors
/s/ James H. Paul
James H. Paul, Secretary
April 1, 1997
THE BOARD OF DIRECTORS REQUESTS THAT YOU MARK, SIGN, AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE POSTPAID ENVELOPE PROVIDED.
<PAGE>
IROQUOIS BANCORP, INC.
115 Genesee Street
Auburn, New York 13021
(315) 252-9521
_______________________
PROXY STATEMENT
_______________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 8, 1997
_______________________________________
SOLICITATION AND VOTING OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Iroquois
Bancorp, Inc. (the "Company") for use in connection with the Annual Meeting of
Shareholders to be held May 8, 1997. The matters to be considered and acted
upon at such meeting are referred to in the preceding notice and are more fully
discussed below. Only if the enclosed proxy card is properly executed and
returned to the Company will the shares represented thereby be voted. If no
choices are specified on the returned card, the shares will be voted for each of
the persons nominated as director and in favor of management's proposals. The
proxy may be revoked by written notice to the Company prior to the meeting or by
written notice to the Secretary at the meeting at any time prior to being voted.
The first date on which this proxy statement and accompanying proxy are being
sent to shareholders is on or about April 1, 1997.
Proxies may be solicited by mail, personal interview, telephone, or
telegraph. Directors, officers, and employees of the Company may solicit
proxies by any such method without additional compensation. Costs of all proxy
solicitation will be paid by the Company, including reimbursement of brokerage
firms and other nominees for expenses of forwarding proxy solicitation material
to the beneficial owners for whom they held the shares.
The common stock of the Company is its only class of voting securities and
each share of common stock entitles the holder thereof to one vote on all
matters to come before the meeting. The Board of Directors has fixed the close
of business on March 27, 1997 as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting. On March 27,
1997, there were 2,373,438 shares of the Company's common stock outstanding.
The presence, in person or by proxy, of at least a majority of the total number
of shares of common stock outstanding and entitled to vote is necessary to
constitute a quorum and in the event there are not sufficient votes, the Annual
Meeting may be adjourned.
Directors shall be elected by a plurality of the eligible votes cast and
the ratification of the appointment of independent auditors will be determined
by a majority of the eligible votes cast. Abstentions, in person or by proxy,
shall be counted toward a quorum, but abstentions under New York
<PAGE>
law are not deemed to be votes cast and therefore abstentions have no effect on
the outcome of the vote, which requires either a plurality or majority of the
eligible votes cast, depending upon the proposal. Votes withheld in connection
with the election of one or more of the nominees for director will not be
counted as votes cast.
All of the items on the agenda for shareholder approval at this Annual
Meeting are deemed "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of beneficial owners who have not furnished voting
instructions within ten days of the Annual Meeting. Accordingly, "broker non-
votes," which occur for "non-discretionary" items on which brokers may not vote
if beneficial owners have not given instruction by proxy, will not be a factor.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The table below indicates as of February 1, 1997 the only holders known to
the Company to be the beneficial owner of more than 5% of the total 2,369,025
issued and outstanding shares of the Company's common stock.
Amount and Nature Percent of
of Outstanding
Name and Address Beneficial Ownership/1/ Common Stock
- ---------------- ----------------------- ------------
The Baird Family 232,556/2/ 9.55%
c/o Brian D. Baird
120 Delaware Avenue
Buffalo, New York 14202
Iroquois Bancorp, Inc. Employee 204,848/3/ 8.41%
Stock Ownership Plan
115 Genesee Street
Auburn, New York 13021
- ------------------------------------
/1/ Except as otherwise noted, such beneficial owner has sole voting and
investment power with respect to the stock.
/2/ Such shares are beneficially owned either directly or as trustees or
custodians for other family members or as trustees of the Cameron
Baird Foundation. The respective beneficial owners have sole
investment and voting power with respect to their shares.
/3/ Such shares are held in trust for the participants in the plan who are
the beneficial owners and who direct the voting of their allocated
shares in the trust. All unallocated shares in the trust are voted by
the independent trustee.
As of February 1, 1997, no director except Brian Baird and no executive
officer of the Company or any subsidiary beneficially owned more than 5% of any
class of the Company's outstanding stock. All directors and executive officers
as a group (14 persons) beneficially owned 776,391 shares of the Company's
common stock, including exercisable options, representing approximately 33.9% of
the 2,369,025 outstanding shares of common stock plus 65,700 outstanding
exercisable options. Those ownership interests are set forth in the following
table.
2
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent Common
Name Positions Held Beneficial Ownership/1/ Stock Outstanding
---- -------------- ----------------------- -----------------
<S> <C> <C> <C>
Joseph P. Ganey Chairman of the Board 66,412/2/ 2.7%
Richard D. Callahan President and CEO, Director 52,520/3/ 2.2
Brian D. Baird Director 232,556/4/ 9.6
John Bisgrove, Jr. Director 103,452/5/ 4.3
Peter J. Emerson Director 58,365/6/ 2.4
William J. Humes, Jr. Director 9,808 *
Arthur A. Karpinski Director 22,442 *
Henry D. Morehouse Director 9,661 *
Richard J. Notebaert, Jr. Vice President 20,802/7/ *
Marianne R. O'Connor Treasurer and CFO 26,149/8/ 1.1
James H. Paul Executive Vice President, Secretary 35,253/9/ 1.5
Edward D. Peterson Director 8,841 *
Lewis E. Springer, II Director 63,283 2.6
All directors and executive
officers as a group (14 persons) 776,391/10/ 33.9%
</TABLE>
* less than 1%
- ----------------------------------------
/1/ Except as otherwise noted, each beneficial owner listed has sole voting and
investment power with respect to the stock.
/2/ Includes 4,706 shares held jointly with spouse.
/3/ Includes 900 shares held by spouse, and exercisable options to purchase
45,300 shares of common stock.
/4/ Such shares are beneficially owned either directly or as trustees or
custodians for other family members or as trustees of the Cameron Baird
Foundation. The respective beneficial owners have sole investment and
voting power with respect to their shares.
/5/ Includes 3,898 shares held as custodian for minor children and 266 shares
held by spouse.
/6/ Includes 2,000 shares held by spouse, 1,100 shares held by an independent
trustee for a child, and 36,000 shares held by the F.L. Emerson Foundation,
Inc., of which he is a director and officer, and as to which he disclaims
beneficial ownership.
/7/ Includes exercisable options to purchase 7,200 shares under the Stock
Option Plan.
/8/ Includes 214 shares held as custodian for minor children, and exercisable
options to purchase 6,200 shares of common stock.
/9/ Includes exercisable option to purchase 7,000 shares of common stock.
/10/ Includes 58,326 shares held in the ESOP that have not been awarded or
allocated and are therefore voted by the ESOP independent trustee and
exercisable options to purchase 65,700 shares.
3
<PAGE>
The following table sets forth information with respect to the shares of
the Company's Floating Rate Cumulative Preferred Stock, Series A (the "Series A
Preferred Stock"), which is non-voting stock, beneficially owned by each
director and each executive officer named in the Summary Compensation Table on
Page 8 and by all directors and officers as a group as of February 1, 1997. As
of that date, there were 30,159 shares of the Series A Preferred Stock issued
and outstanding.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Series A
Beneficial Preferred
Name Positions Held Ownership/1/ Stock Outstanding
- ---------------------------------- --------------------- ------------- ------------------
<S> <C> <C> <C>
Joseph P. Ganey Chairman of the Board 100 * %
Arthur A. Karpinski Director 700/3/ 2.32%
All directors and executive
officers as a group (14 persons) 800 2.65%
</TABLE>
/1/ Except as otherwise noted, each beneficial owner listed has sole voting and
investment power with respect to the stock.
/2/ All shares held jointly with spouse.
/3/ All shares held by spouse.
The following table sets forth the information with respect to the shares
of the Company's Floating Rate Noncumulative Preferred Stock, Series B (the
"Series B Preferred Stock"), which is non-voting stock, beneficially owned by
each director and executive officer and by all directors and officers as a group
as of February 1, 1997. As of that date there were 18,772 shares of the Series
B Preferred Stock issued and outstanding.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Series A
Beneficial Preferred
Name Positions Held Ownership/1/ Stock Outstanding
---- -------------- ----------- ------------------
<S> <C> <C> <C>
Joseph P. Ganey Chairman of the Board 148 * %
Arthur A. Karpinski Director 520/2/ 2.77
Marianne R. O'Connor Treasurer and Chief Financial 10/3/ *
Officer
James H. Paul Executive Vice President 175/4/ *
All directors and executive
officers as a group (14 persons) 853 4.54%
</TABLE>
* less than one percent
- ----------
/1/ Except as otherwise noted, each beneficial owner listed has sole voting and
investment power with respect to the stock.
/2/ Includes 500 shares held by spouse.
/3/ All shares as custodian for minor children.
/4/ Includes 82 shares held by spouse.
4
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
In accordance with the rules of the Securities and Exchange Commission
under Section 16(a) of the Securities Exchange Act of 1934, as awarded,
directors, executive officers, and beneficial owners of 10% or more of the
Company's stock must file certain reports of stock ownership and changes of
stock ownership. Based solely upon its review of copies of such reports
received by it, or written representations of certain reporting persons that no
forms were required to be filed, Iroquois believes that for the fiscal year
ended December 31, 1996 all reports required by such reporting persons were
timely filed with the Securities and Exchange Commission.
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of ten (10)
directors. The Board is divided into a total of three classes, with terms
expiring in 1997, 1998, and 1999. At the Annual Meeting, three (3) directors
will be elected for a term of office expiring in 2000 and until the election and
qualification of their successors.
It is intended that, if no contrary specification is made, the persons
named on the proxy card will vote for the nominees named below. The Board
believes that all of the nominees will be available and able to serve as
directors, but if for any reason any of these persons should not be available or
able to serve, the proxies may exercise discretionary authority to vote for a
substitute or substitutes. All nominees for election in 1997 have been
previously elected by the shareholders of the Company with the exception of Mr.
Callahan, who was elected by the Board after his appointment as President and
Chief Executive Officer in 1994 to fill a vacancy on the Board at that time.
There is set forth below certain information about the nominees for
election to the Board of Directors, as well as about those present directors
whose term of office will continue after the meeting. The names of the directors
and nominees below represent a full Board of Directors. Except for Brian D.
Baird, Henry D. Morehouse and Edward D. Peterson, all present directors,
including the nominees, are also serving as directors of the Company's
subsidiary, Cayuga Bank (formerly Cayuga Savings Bank). Mr. Morehouse and Mr.
Peterson also serve on the Board of Directors of the Company's other subsidiary,
The Homestead Savings (FA) ("Homestead Savings"). Pursuant to an arrangement
between the Company and Homestead Savings at the time Homestead Savings was
acquired, the Company undertook to maintain two positions on its Board of
Directors for representation by Homestead Savings. Cayuga Bank and Homestead
Savings are currently the only subsidiaries of the Company (also referred to as
"member banks").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES FOR ELECTION AS
DIRECTORS.
5
<PAGE>
NOMINEES FOR ELECTION AS DIRECTORS FOR TERMS OF OFFICE EXPIRING IN 2000:
- ------------------------------------------------------------------------
BRIAN D. BAIRD, age 46, became a director on July 1, 1990, through an expansion
of the Board, and was thereafter elected by the shareholders at the Company's
next Annual Meeting. He is an attorney with the law firm of Kavinoky and Cook
in Buffalo, New York, where he has practiced law since 1983.
JOHN BISGROVE, JR., age 57, a director of Cayuga Bank since 1978, is the owner
and President of Sunrise Farms with business activity in cattle breeding, horses
and related interests.
RICHARD D. CALLAHAN, age 54, became a director of Iroquois and Cayuga Bank in
1994 after his appointment as Chief Executive Officer and President of both the
Company and Cayuga Savings. Prior to joining Iroquois, he was Regional Executive
Vice President, Regional President, and Senior Executive Vice President of
Operations and Marketing, in that order, for Marine Midland Bank from 1983 to
1993, after 18 years of prior banking experience.
PRESENT DIRECTORS WHOSE TERMS OF OFFICE EXPIRE IN 1999:
- -------------------------------------------------------
WILLIAM J. HUMES, age 67, a director of Cayuga Bank since January, 1987, is
retired, having served as President of a steel manufacturing company, Auburn
Steel Company, Inc. and as Chairman and Chief Executive Officer of Arkansas
Steel Associates, its subsidiary, since 1989.
ARTHUR A. KARPINSKI, age 68, a director of Cayuga Bank since 1969, is now
retired from the practice of periodontics.
HENRY D. MOREHOUSE, age 67, a director of the Homestead Savings since 1968, is
the owner of
Morehouse Appliances, a retail appliance business, where he has been employed
since 1942.
PRESENT DIRECTORS WHOSE TERMS OF OFFICE EXPIRE IN 1998:
- -------------------------------------------------------
PETER J. EMERSON, age 56, a director of Cayuga Bank since 1971, is a Director
and President of the F.L. Emerson Foundation, Inc., a charitable foundation.
JOSEPH P. GANEY, age 73, a director of Cayuga Bank since 1974, was named
Chairman of the Board of Cayuga Savings Bank in 1985, and remains as Chairman of
the Board of the Company as well. Having served as Chief Executive Officer
since 1976, he retired at the end of 1988. Before joining Cayuga Savings Bank
as Executive Vice President in 1971, Mr. Ganey had 29 years of banking
experience.
EDWARD D. PETERSON, age 62, a director of the Homestead Savings since 1978,
became a director of Iroquois in 1996, having been elected by the board in 1996
to fill the vacancy arising from the retirement of Russel C. Fielding. Mr.
Peterson is retired from General Electric Corporation, where he served for 34
years in a number of positions, including Manager of Employee and Community
Relations for Aerospace Electronic Systems and the Aerospace Operations
Departments.
LEWIS E. SPRINGER II, age 58, a director of Cayuga Bank since January, 1987, has
been President of Creative Electric, Inc. since 1967 and Chairman of its
subsidiary, Andersen Laboratories, since 1989. Both companies manufacture
electronic components for guidance systems and other applications.
6
<PAGE>
There are no family relationships between any director, executive officer,
or any person nominated or chosen by the Board to become a director or executive
officer.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors held 4 regular quarterly meetings during 1996, and
all of the directors attended more than 75% of the aggregate of the total number
of Board meetings and meetings of committees of the Board on which they served
except Mr. Bisgrove, whose absences were excused for good cause. The Board of
Directors currently has three standing committees: Executive, Audit, and
Nominating/Personnel. The Chairman of the Board is a member ex-officio, with
vote, of all committees. The principal responsibilities of the standing
committees, the number of meetings held during 1996, and the present committee
members are set forth below.
Executive Committee: The Executive Committee is authorized to exercise the
powers of the Board of Directors to take action between regular meetings of the
Board. This Committee met 4 times during 1996. The Committee presently consists
of 7 appointed members with Mr. Bisgrove as chairperson, Messrs. Baird,
Callahan, Humes, Morehouse and Springer as appointed members and Mr. Ganey ex-
officio.
Audit Committee: The Audit Committee examines and reviews the accounting,
reporting, and financial practices of the Company. The Committee also receives
reports of the Company's independent auditors, and reviews and approves all non-
audit services performed by the independent auditors. During 1996, the
Committee met 3 times. This Committee presently consists of 4 appointed
members, with Mr. Emerson as chairperson, Messrs. Karpinski, Morehouse and
Peterson as appointed members, and Mr. Ganey ex-officio.
Nominating/Personnel Committee: The Nominating/Personnel Committee reviews
the qualifications of candidates for the Board and recommends a slate of
nominees for election at the annual meeting of shareholders, as well as
considers nominees recommended by shareholders on the same basis as other
persons considered provided such names are submitted in sufficient time for the
Committee to review the potential candidate's qualifications. The Committee is
also responsible for Company policy regarding general management and human
resource matters, including compensation. During 1996, this Committee met 5
times. The Committee presently consists of 6 appointed members, with Mr.
Springer as chairperson, Messrs. Baird, Bisgrove, Callahan, Humes and Peterson
as appointed members, and Mr. Ganey ex-officio. With the exception of Mr.
Callahan, the Nominating/Personnel Committee members serve as the Board's
compensation committee and have been designated the Stock Option Committee to
administer the Company's 1996 Stock Option Plan.
DIRECTOR COMPENSATION
The Company compensates its non-employee directors $1,600 per year in cash
for service on the Board of the Company. Directors who reside beyond a 50 mile
radius of the Company's principal office also receive reimbursement for travel
expenses, and all directors receive a fee of $150 for each committee meeting
attended, with the chairperson presiding at each committee meeting receiving
$175. Directors who serve on the boards of member bank subsidiaries also
receive compensation for such service from the subsidiary in accordance with
policy set by its board of directors. During 1996, 1,600 shares of the
Company's common stock were distributed under the Directors Stock Award Plan to
directors of Cayuga Bank and Homestead Savings for their service as directors of
the member banks. The Directors Stock Award Plan was discontinued effective
January 1, 1997.
7
<PAGE>
The Company maintains a Stock Incentive Program to provide financial
incentives for directors to increase stock ownership and strengthen their
commitment to the Company's success. The Program is also consistent with the
Company's policy that now requires a minimum level of stock ownership by
directors. Under the Program, each director who purchases shares of common
stock of the Company may be reimbursed up to $5,000 of the cost of the shares
purchased during any year.
The Company also maintains a Chairman's Stock Award Program, established in
1989 to award shares of common stock to the Company's Chairman over a period of
time. During 1996, 2,400 shares were distributed for the account of the
Chairman of the Board.
INSURANCE
As authorized by law and its Bylaws, the Company maintains insurance for
itself and subsidiaries to indemnify directors and officers. It has obtained
insurance from Progressive Casualty Insurance Company of Lyndhurst, Ohio,
insuring the Company and its subsidiaries against any obligation incurred as a
result of indemnification of their directors and officers and insuring such
persons for liabilities for which they may not be indemnified. This insurance
policy has a three-year term expiring October 30, 1998, with coverage of
$5,000,000 aggregate annual limitation. As of this date, no sums have been paid
under this policy. The current annual premium is $36,114.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table on the following page shows, for the three years ended December
31, 1996, the cash compensation paid to the Company's chief executive officer
and other executive officers of the Company who received total compensation in
excess of $100,000. As explained in the Report on Executive Compensation below,
this compensation is paid by the subsidiary for which each individual also
serves in an executive capacity.
8
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Other
Annual Restricted All Other
Compen- Stock Options LTIP Compen-
Name and Salary Bonus sation Awards SARs Payouts sation
Principal Position Year ($) ($) ($) ($) ($) (#) ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Richard D. Callahan, 1996 195,000 43,366 5,000 -- 13,900 -- 15,630/1/
CEO 1995 181,000 47,965 5,000 -- 17,800 -- 14,542
1994 105,673 -- -- -- 15,000 -- 11,413
James H. Paul, 1996 106,100 17,834 5,000 -- 4,700 -- 13,200/2/
COO 1995 102,000 19,615 5,000 -- 7,000 -- 12,094
1994 95,000 -- 5,000 -- -- -- 10,916
Richard J. Notebaert, Jr., 1996 111,000 27,872 5,000 -- 4,900 -- 16,747/3/
Vice President 1995 105,000 16,916 5,000 -- 7,200 -- 14,901
1994 96,000 18,480 5,000 -- -- -- 14,402
Marianne R. O'Connor, 1996 96,000 16,550 3,242 -- 4,300 -- 11,832/4/
CFO 1995 91,000 19,356 3,823 -- 6,200 -- 9,494
1994 85,000 -- 4,215 -- -- -- 9,779
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ This amount reflects 3 components:
(a) $5,933 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary based formula for all employees.
(b) $4,750 for the employer matching contributions on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $4,947 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/2/ This amount reflects 3 components:
(a) $4,968 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $3,925 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $4,311 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/3/ This amount reflects 3 components:
(a) $8,401 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $3,962 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $4,384 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/4/ This amount reflects 3 components:
(a) $4,362 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $3,558 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $3,912 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
9
<PAGE>
OPTION/SAR GRANTS TABLE
During 1996, the Company granted options pursuant to the Company's
1996 Stock Option Plan. The Table below shows the relevant information
pertaining to the grant of options during 1996.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------- -------------------------
- ------------------------------------------------------------------------------------------- -------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
Options/ SARs
SARs Granted to Exercise or
Granted Employees in Base Price Expiration 5% 10%
Name (#) Fiscal Year ($/Sh) Date ($) ($)
---- --- ----------- ------ ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Richard D. Callahan, 13,900 34.8% 15.35 7/23/03 86,875 202,384
CEO
James H. Paul, 4,700 11.7% 15.35 7/23/03 29,375 68,432
COO
Richard J. Notebaert, Jr., 4,900 12.3% 15.35 7/23/03 30,625 71,349
Vice President
Marianne R. O'Connor, 4,300 10.7% 15.35 7/23/03 26,875 62,608
CFO
</TABLE>
10
<PAGE>
AGGREGATED OPTION/SAR EXERCISES AND VALUES
The Table below shows for all officers named in the Summary
Compensation Table above the total number of options exercised during 1996 and
unexercised options held as of December 31, 1996.
Aggregated Option/SAR Exercises in Last Fiscal Year
---------------------------------------------------
and FY-End Option/SAR Values
----------------------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Acquired FY-End (#) FY-End ($)
on Excercise Value Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercised
---- --- --- ------------- -----------
<S> <C> <C> <C> <C>
Richard D. Callahan, 2,500 10,500 45,300 301,896
CEO exercisable exercisable
13,900 22,935
unexercisable unexercisable
James H. Paul, 0 0 7,000 30,240
COO exercisable exercisable
4,700 7,755
unexercisable unexercisable
Richard J. Notebaert, Jr., 0 0 7,200 31,104
Vice President exercisable exercisable
4,900 8,805
unexercisable unexercisable
Marianne R. O'Connor, 2,000 24,500 6,200 26,784
CFO exercisable exercisable
4,300 7,095
unexercisable unexercisable
</TABLE>
EMPLOYMENT CONTRACTS
The Company is a party to employment agreements with the named executive
officers shown in the Summary Compensation Table on page 9 and certain officers
who do not appear in the Table. These employment agreements, as revised and
effective January 1, 1997, are for a term of one year, subject to renewal by the
Company. Compensation under these agreements remains a primary obligation of
the subsidiary for whom the named executive also serves in an executive
capacity. The Company may in the future agree to become the primary obligor if
the officer's duties for the Company are expanded sufficiently to warrant a
change in the primary compensation obligation.
Mr. Callahan has an employment agreement with both the Company, as President
and Chief Executive Officer, and with Cayuga Bank, for which he also serves as
President and Chief Executive Officer. Mr. Callahan's employment agreement with
the Company and Cayuga Bank fixed annual base compensation for
11
<PAGE>
1997 in the amount of $211,000. Mr. Notebaert has an employment agreement with
the Company, as Vice President, and Homestead Savings for which he serves as
President and Chief Executive Officer. Mr. Notebaert's agreement provides for
1997 annual compensation in the amount of $121,000.
These employment agreements with Messrs. Callahan and Notebaert contain a
severance provision that allows for a cash payment in the amount of two (2)
times the executive's annual base salary plus target annual incentive for the
year in which termination occurs and the two years immediately preceding the
year of termination, divided by three. The severance provision applies only to
termination by the Company or its subsidiary without cause.
The employment agreements with Messrs. Callahan and Notebaert also contain a
provision regarding a change of control of the Company. Under these agreements
"change of control" occurs if (i) any "person", including a "group" as
determined in accordance with the Section 13(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"), is or becomes the beneficial owner, directly or
indirectly, of securities of Iroquois representing 20% or more of the combined
voting power of the then outstanding securities of Iroquois; (ii) as a result
of, or in connection with, any tender offer or exchange offer, merger or other
business combination (a "Transaction"), the persons who were directors of
Iroquois before the Transaction shall cease to constitute a majority of the
board of directors of Iroquois or any successor of Iroquois, (iii) Iroquois is
merged or consolidated with another corporation and as a result of the merger or
consolidation less than 80% of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the aggregate by the
former shareholders of Iroquois, other than (A) affiliates within the meaning of
the Exchange Act, or (B) any party to the merger or consolidation; (iv) a tender
offer or exchange offer is made and consummated for the ownership of securities
of Iroquois representing 20% or more of the combined voting power of Iroquois'
then outstanding voting securities; or (v) Iroquois transfers substantially all
of its assets to another corporation which is not controlled by Iroquois. If
employment is terminated for any reason within 24 months following a change of
control, the executive will receive a lump-sum cash payment of 2.99 times base
salary and the average annual incentive.
In connection with his retirement scheduled for June 1, 1997, Mr. Paul has
entered into a separate agreement that provides for continuation of his current
base salary and certain fringe benefits through December 31, 1998.
Ms. O'Connor's employment agreement with the Company and Cayuga Bank, where
she also serves as Treasurer and Chief Financial Officer, provides for 1997
annual compensation in the amount of $100,800.00. The employment agreement with
Ms. O'Connor and other officers (except as described above) contain a severance
provision that allows for a cash payment in the amount of the officer's annual
base salary plus target annual incentive for the year in which termination
occurs and the two years immediately preceding the year of termination, divided
by three. The severance provision applies only to termination by the Company or
its subsidiary without cause. These employment agreements also contain a
provision regarding a change of control of the Company (as defined above). If
the officer's employment is (i) terminated involuntarily for any reason other
than death, disability, or just cause or constructively terminated for good
reason during the 24-month period following a change of control, or, (ii)
terminated voluntarily by the executive during the 30-day period beginning on
the first anniversary of the change of control, the officer will receive a lump-
sum cash payment of 2.99 times base salary and the average annual incentive.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Joseph P. Ganey, Chairman of the Board of Directors of the Company and a
member of its Compensation Committee, served as Acting President and Chief
Executive Officer from the time that office became vacant in November, 1993
through May, 1994, when Richard D. Callahan was appointed. Mr. Ganey also served
as President and Chief Executive Officer of Cayuga Savings Bank, as predecessor
to the Company from 1976 through 1988, when he retired from active employment.
REPORT ON EXECUTIVE COMPENSATION
OVERALL COMPENSATION POLICY
During 1996, the Company implemented the executive compensation strategy
developed during the previous year. The compensation policy is intended to
reflect the rationale that the chief executive officer (CEO) and other executive
officers should, as all employees, have appropriate financial rewards and
incentives to encourage long term commitment and high quality performance. The
compensation policy also serves as a guide in developing specific company-wide
procedures and programs that do not vary significantly for the different
entities within the Iroquois family. The executive compensation strategy was
designed to further the Company's key business objectives and incorporate
consideration of current market data relating to compensation levels for
executives at comparable companies. The strategy relies on four elements of
compensation:
. Base salary levels that are targeted below the relevant comparable market
to emphasize the pay for performance strategy and to preserve effective
management of fixed costs.
. Annual incentive compensation that offers awards at to above comparable
annual incentive market for executive performance that exceeds quantitative
targets of financial and operational results.
. Equity compensation to align executives' interests with shareholder
values.
. Benefits tied to market for comparable positions in comparable companies
in the same industry group.
These four elements are structured to work together for an effective strategy
that has the following characteristics:
. Balanced reinforcement of decision making for short term and long term
corporate objectives.
. Total executive compensation within the range for the same industry
category and for comparably sized companies to ensure compensation remains
comparable and competitive for the relevant market.
This strategy seeks to provide total compensation for executives that will
attract, retain, and motivate executives and that will promote results for
shareholders. For each element of total compensation, the following sections
summarize the analysis and recommendations of the Committee for executive
compensation during 1996.
13
<PAGE>
BASE SALARY
EXECUTIVE OFFICERS COMPENSATION. Base salaries for executive officers were
established by the chief executive officer or the appropriate member bank Board
in conjunction with the established performance-based compensation philosophy
and market information provided by the Company's independent consultant. The
Committee reviewed the analysis and base salary recommendations and determined
they were consistent with the base salary element of the Company's overall
strategy. The determination of base salary began with information from the
Company's independent consultant on the ranges of salaries for executive
officers at companies of similar size in the same industry group. In accordance
with the Company's compensation strategy, the market ranges were then reduced by
10% to establish a below market base salary range for executive officers. Each
individual executive officer was then evaluated based upon performance and
experience and base salary compensation was awarded within the established
range.
CEO COMPENSATION. Mr. Callahan's base salary was determined directly by the
Committee based upon the same criteria and using the same process as for all
executive officers described above. A base salary range was derived from market
information on chief executive officer salaries at companies within the
financial services industry and of similar asset size to Iroquois and his salary
was then fixed within that range, taking into consideration both experience and
performance.
ANNUAL INCENTIVE COMPENSATION
EXECUTIVE OFFICERS COMPENSATION. Annual incentive compensation played a
critical role as intended in the Company's compensation strategy because it was
used to reward executives upon achievement of key operating and financial
results. Incentive compensation was used to reinforce the pay for performance
goal and place a portion of the executive's compensation for the year at risk if
either Company or individual performance goals were not achieved. The Company's
1996 incentive awards rewarded executives for the achievement of both subsidiary
bank and individual performance goals, where the weight allocated between the
performance achieved for those two components varied, with greater weight
attached to overall bank performance for higher levels of responsibility.
Overall bank performance is determined according to pre-tax net income. Under
the Annual Management Incentive Plan, the executives were awarded for
performance in 1996 within a range of 9% to 25% of base salary based on the
level of achievement of the established performance goals.
Targeted incentive award percentages under the Annual Management Incentive Plan
were established based on market information provided by the Company's
independent consultant for companies of similar size and in the same industry
group.
CEO COMPENSATION. Annual incentive compensation was awarded to Mr. Callahan
during 1996 under the Company's Annual Management Incentive Plan described above
based upon his individual performance and the performance of Cayuga Bank, for
which he also serves as Chief Executive Officer. The Committee determined that
no additional incentive compensation was necessary for holding company
responsibilities independent of the subsidiary, which comprises the Company's
primary asset and operations. This determination is in accordance with the
Company's compensation philosophy that compensation be paid and primary
performance be measured at the operating subsidiary level until the complexion
of the holding company warrants a change.
14
<PAGE>
EQUITY BASED INCENTIVE COMPENSATION
Long term goals were implemented in 1996, as intended, to provide balance to the
short term pay for performance strategy achieved through annual incentive
compensation. Long term goals of increasing shareholder value are intended to
be reinforced with equity based compensation, to align executives' interests
more closely with those of the shareholders. Awards for 1996 were granted in
the form of stock options under the Company s 1996 Stock Option Plan. The
options were awarded to top management as determined by the Stock Option
Committee as provided in the 1996 Stock Option Plan. The option award
allocations made in 1996 were based on the executive's level within the Company
as well as the return on equity (ROE) of the Company attained for 1995. The
multiple was based on market level long-term incentive opportunities within
similar sized financial institutions. Options granted in 1996 vest over a two-
year period and expire if not exercised within their term of seven years.
IROQUOIS BANCORP, INC.
COMPENSATION COMMITTEE
Lewis E. Springer II, Chairperson
Brian D. Baird
John Bisgrove, Jr.
Joseph P. Ganey
William J. Humes
Edward D. Peterson
15
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return on its common stock to (a) the cumulative
return of the Nasdaq Stock Market (National Market - US Companies) index and to
(b) the cumulative return of the Nasdaq Bank Stocks index. The graph and
tabular explanation of the graph assume that $100 was invested on December 31,
1991 in each of Iroquois common stock, the Nasdaq Stock Market (National Market
- - US Companies) Index and the Nasdaq Stock Market Bank Stocks Index, and that
all dividends were reinvested. The data was furnished by the Center for
Research in Security Prices (CRSP).
Graphical Representation of the following data:
- --------------------------------------------------------------------------------
1991 1992 1993 1994 1995 1996
- --------------------------------------------------------------------------------
Iroquois Bancorp,
Inc. $100.0 161.0 237.9 237.0 391.5 499.0
- --------------------------------------------------------------------------------
Nasdaq Stock
Market (National Market -
US Companies) $100.0 116.4 133.6 130.6 184.7 227.2
- --------------------------------------------------------------------------------
Nasdaq Bank
Stocks $100.0 145.6 166.0 165.4 246.3 325.6
- --------------------------------------------------------------------------------
16
<PAGE>
CERTAIN TRANSACTIONS
From time to time, Cayuga Bank and The Homestead Savings (FA) make loans to
their directors and officers and those of the Company, as well as to other
companies and businesses with which directors of the Company and its
subsidiaries may be affiliated. Included are loans that may be secured by a
mortgage on the officer's or director's primary residence. All loans to
directors and executive officers and to any affiliated business are specifically
approved in writing by the lending institution's Board of Directors, and are
made on substantially the same terms, including interest rates and collateral,
as those for comparable transactions with other persons prevailing at the time,
and do not involve more than the normal risk of collectability or present other
unfavorable features.
------------------------------
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP to
serve as independent auditors of the Company for the fiscal year ending December
31, 1997, subject to ratification of such appointment by the shareholders of the
Company. KPMG Peat Marwick LLP, and its predecessors, have served as auditors
of Cayuga Bank and the Company for more than 23 years. Representatives of KPMG
Peat Marwick LLP will be present at the Annual Meeting of Shareholders and will
have the opportunity to make a statement, if they so desire, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1997.
------------------------------
17
<PAGE>
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
All proposals of shareholders intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Company at the address on the
cover of this proxy statement no later than December 2, 1997 in order to be
included in the proxy statement and form of proxy for the 1998 Annual Meeting.
All such proposals shall be subject to the requirements of the Securities and
Exchange Commission adopted under the Securities Act of 1934, as amended.
OTHER MATTERS
As of this date, the Board of Directors does not know of any business to be
brought before the Annual Meeting other than as specified above. If any other
matters properly come before the Meeting, however, it is the intention of the
persons named in the enclosed proxy to vote such proxy in accordance with their
judgment on such matters.
A copy of the Annual Report to Shareholders of the Company containing
consolidated financial statements prepared in conformity with generally accepted
accounting principles for the year ended December 31, 1996 accompany this proxy
statement being mailed to shareholders and is incorporated by reference, and
made a part of this proxy statement. Additional copies of the Annual Report to
Shareholders may be obtained without charge from the Secretary of the Company,
115 Genesee Street, Auburn, New York 13021.
By Order of the Board of Directors
/s/ James H. Paul
James H. Paul, Secretary
Auburn, New York
April 1, 1997
THE COMPANY WILL FURNISH, WITHOUT CHARGE, TO ANY RECORD HOLDER OR BENEFICIAL
OWNER OF ITS COMMON STOCK AT ANY TIME AFTER MARCH 30, 1997 A COPY OF THE
COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K.
WRITTEN REQUESTS SHOULD BE DIRECTED TO IROQUOIS BANCORP, INC., TO THE ATTENTION
OF JAMES H. PAUL, 115 GENESEE STREET, AUBURN, NEW YORK 13021.
18
<PAGE>
APPENDIX TO PROXY STATEMENT
REVOCABLE
PROXY IROQUOIS BANCORP, INC.
COMMON STOCK
ANNUAL MEETING OF SHAREHOLDERS MAY 8, 1997
The undersigned holder of common stock of Iroquois Bancorp, Inc.
hereby appoints James H. Paul and Marianne R. O'Connor and each of them his/her
attorneys, agents and proxies to represent the undersigned and to vote and act
upon the shares of common stock standing in the name of the undersigned which
he/she would be entitled to vote if personally present, as specified below, at
the Annual Meeting of Shareholders to be held on Thursday, May 8, 1997 at 10:00
a.m. or at any adjournment thereof, with full power of substitution and
revocation.
BALLOT
1. ELECTION OF DIRECTORS FOR THREE YEAR TERMS EXPIRING IN 2000
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the for all nominees listed below
contrary below)
Class of 1997: Brian D. Baird; John Bisgrove, Jr.; Richard D. Callahan
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
<PAGE>
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Signature on reverse side required)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE
OTHER SIDE OF THIS CARD. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR
PROPOSALS 1 AND 2.
Date: ___________________________________
Signed __________________________________
(Name of shareholder should be signed exactly
as it appears to the left) Please mark, sign,
date and return this proxy card promptly in the
enclosed postpaid envelope. This will save your
Company the cost of a follow-up solicitation.
Do you plan to attend the meeting? ____ YES ____ NO
