SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by a Party other than the Registrant |_|
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|_| Preliminary Proxy Statement
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|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
FINANCIAL INSTITUTIONS, INC.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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<PAGE>
FINANCIAL INSTITUTIONS, INC.
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Financial Institutions, Inc. will
be held at the Company's offices at 220 Liberty Street, Warsaw, New York
14569 on May 10, 2000, at 10:00 a.m. for the following purposes:
1. To elect four directors for three-year terms; and
2. To transact such other business as may properly come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 31, 2000
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
It is important that your shares be represented and voted at the Annual
Meeting whether or not you plan to attend. Accordingly, you are requested to
sign, date and mail the enclosed proxy at your earliest convenience.
Thank you for your cooperation.
On Behalf of the Board of Directors
Peter G. Humphrey, President and
Chief Executive Officer
Warsaw, New York
April 10, 2000
Please complete, sign and date the enclosed proxy and return it promptly in the
enclosed envelope, which will require no postage if mailed in the United States.
Financial Institutions, Inc.
220 Liberty Street, P. O. Box 227, Warsaw, New York 14569-0227
<PAGE>
PROXY STATEMENT
This Proxy Statement is furnished in connection with solicitation of the
enclosed proxy on behalf of the Board of Directors of Financial Institutions,
Inc. in connection with the Annual Meeting of Shareholders of the Company to be
held on May 10, 2000.
The principal executive offices of the Company are located at 220 Liberty
Street, Warsaw, New York 14569. The approximate date on which this proxy
statement and the enclosed proxy are being sent to shareholders is April 10,
2000.
The close of business on March 31, 2000 has been fixed as the record date
for determination of the shareholders entitled to notice of, and to vote at, the
meeting. On that date there were outstanding and entitled to vote 11,006,733
shares of Common Stock, each of which is entitled to one vote on each matter at
the meeting.
The enclosed proxy, if properly completed, signed and returned prior to
the meeting, will be voted at the meeting in accordance with the choices
specified thereon and, if no choices are specified, will be voted for the
election as directors of the persons nominated by the Board of Directors. A
shareholder giving a proxy has the right to revoke it at any time before it has
been voted by (i) giving written notice to that effect to the Secretary of the
Company, (ii) executing and delivering a proxy bearing a later date which is
voted at the Annual Meeting, or (iii) attending and voting in person at the
Annual Meeting.
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION OF THE NOMINEES.
The Company's Board of Directors is divided into three equal classes, one
of which is elected at each Annual Meeting for a term of three years and until
their successors have been elected and have qualified. On March 3, 2000, the
Board of Directors increased, by one, the number of Directors serving in the
class with terms of office expiring in 2003. Also, on March 3, 2000, the Board
of Directors elected Samuel M. Gullo a director to serve the remainder of the
term of James R. Hardie, who resigned from the Board in January 2000. The terms
of W.J. Humphrey III, Donald I. Wickham and James H. Wyckoff expire this year.
Mr. Wickham is retiring from the Board and will not stand for reelection. The
Board of Directors has nominated W. J. Humphrey III, James H. Wyckoff, John R.
Tyler, Jr. and Bryan G. vonHahmann for election as directors for three-year
terms. The Board of Directors believes that the nominees will be available and
able to serve as directors, but, if for any reason any of them should not be,
the persons named in the proxy may exercise discretionary authority to vote for
a substitute proposed by the Board of Directors. In 1999, the Board of Directors
held eight meetings.
1
<PAGE>
Directors are elected by a plurality of the votes cast by shareholders
entitled to vote in the election. Proxies indicating abstentions and broker
non-votes are counted for quorum purposes but are not counted for or against the
election of directors. The Company's By-laws govern the methods for counting
votes and vest this responsibility in the inspectors of election appointed to
perform this function.
The Board of Directors has established Audit, Compensation and Nominating
Committees. The Audit Committee reviews the general scope of the audit conducted
by our independent auditors and matters relating to our internal control
systems. In performing its function, the Audit Committee meets separately with
representatives of our independent auditors and with representatives of senior
management. The Audit Committee is comprised of Messrs. Dambra, Gullo, South,
Wickham, and Wyckoff, all of whom are non-employee directors. In 1999, the Audit
Committee held three meetings.
The Compensation Committee is responsible for making recommendations to
the Board of Directors with respect to the compensation of our executive
officers and for establishing policies to deal with various compensation and
employee benefit matters. The Compensation Committee administers our management
stock incentive plan and grants awards to our key employees under such plan. The
Compensation Committee is comprised of Messrs. Wyckoff, Dambra, Gullo, Donald G.
Humphrey, South, and Wickham, all of whom are non-employee directors. In 1999,
the Compensation Committee held nine meetings.
The Nominating Committee is responsible for nominating individuals to
serve on the Board of Directors. The Nominating Committee is comprised of
Messrs. Wyckoff and Donald G. Humphrey, both of whom are non-employee directors,
and Peter G. Humphrey and W. J. Humphrey, Jr. In 1999, the Nominating Committee
held one meeting.
Directors who are not employed by our subsidiary banks or the Company are
paid an annual retainer of $7,500 of which 50% is paid in cash and 50% in the
Company's stock, and a separate fee for each board or committee meeting that
they attend. The fees for attending a Board meeting are $750 and the fees for
attending Committee meetings are $500 for the committee chairman and $400 for
each other member of the Committee. We do not pay the directors who are employed
by our subsidiary banks or the Company an annual retainer or any compensation
for attending Board or Committee meetings. Under the 1999 Directors Stock
Incentive Plan, our non-employee directors receive options to purchase 1,000
shares of our Common Stock upon their election to the Board of Directors, and
1,000 shares upon each annual anniversary date during their terms. An eligible
director who begins service on a date other than the date of an annual meeting
of shareholders receives a pro rata option grant. In 1999, non-employee
directors received options to purchase 2,000 shares of our Common Stock and will
not receive additional options on the first anniversary of their terms.
2
<PAGE>
The following table sets forth information about the nominees and those
directors whose terms of office will continue after the Annual Meeting.
Principal Occupations and Other
Director Term Directorships Held in Public
Name and Age Since Expires Companies
- ---------------------- -------- ------- ---------------------------------
Nominees:
W.J. Humphrey, III, 49 1982 2003 Senior Vice President, President and
Chief Executive Officer of The
Pavilion State Bank.
Bryan G. vonHahmann, 33 2003 Vice President of Empire Tractor,
Inc., a retailer of agricultural and
construction equipment, recreational
vehicles and lawn and garden
equipment.
John R. Tyler, Jr., 65 2003 Retired. Formerly Partner in Nixon
Peabody LLP, attorneys.
James H. Wyckoff, 48 1985 2003 Associate Professor with the
Departments of Public Administration
and Economics, SUNY Albany.
Other Directors:
Jon J. Cooper, 47 1997 2001 President and Chief Executive
Officer of Wyoming County Bank.
Samuel M. Gullo, 51 2000 2001 Owner, Family Furniture, Inc., a
retail furniture store; and real
estate developer.
W.J. Humphrey, Jr., 76 1948 2001 Chairman of the Board. Formerly
President and Chief Executive
Officer.
Thomas L. Kime, 46 1989 2001 President and Chief Executive
Officer of The National Bank of
Geneva.
Barton P. Dambra, 58 1993 2002 President of Markin Tubing Inc., a
manufacturer of steel tubing.
Donald G. Humphrey, 69 1958 2002 Retired. Formerly Vice President and
Chief Mortgage Officer of Wyoming
County Bank.
Peter G. Humphrey, 45 1983 2002 President and Chief Executive
Officer.
H. Jack South, 74 1998 2002 Retired. Formerly Group Vice
President of Abex Corp.
3
<PAGE>
STOCK OWNERSHIP
The following table sets forth information, based upon reports filed by
such persons with the Securities and Exchange Commission, with respect to the
persons believed by the Company to be the beneficial owners of more than 5% of
its outstanding Common Stock.
Name and Address Number of Shares Percent of Class
- --------------------- ---------------- ----------------
Donald G. Humphrey 627,100 5.7%
3790 West Lake Rd.
Perry, NY 14530
Wyoming County Bank 667,100 6.1%
55 N. Main St.
Warsaw, NY 14569
The following table sets forth information, as of March 3, 2000, with
respect to the beneficial ownership of the Company's Common Stock by (a) each of
the directors and nominees, (b) the Company's Chief Executive Officer and its
four other most highly compensated executive officers as of December 31, 1999,
and (c) all directors and executive officers of the Company as a group.
Number of Shares
Name of Common Stock Percent of Class
---- ---------------- ----------------
W.J. Humphrey, Jr. 488,500 4.4%
Peter G. Humphrey 276,600(1) 2.5
Jon J. Cooper 3,600 *
Barton P. Dambra 8,000 *
Samuel M. Gullo 4,000 *
Donald G. Humphrey 627,100 5.7
W.J. Humphrey, III 359,900(2) 3.3
Thomas L. Kime 7,275 *
H. Jack South 2,000 *
John R. Tyler, Jr. 0 *
Bryan G. vonHahmann 2,325 *
Donald I. Wickham 2,000
James H. Wyckoff 256,600 2.3
Randolph C. Brown 3,740(3) *
Executive officers and
directors as a group (15
persons) 2,708,740(4) 24.6
* Denotes less than 1%
(1) Includes 54,000 shares held as custodian for his son. He disclaims
beneficial ownership of these shares.
(2) Includes 100,000 shares held as custodian for his children. He disclaims
beneficial ownership of these shares.
(3) Includes 50 shares held as custodian for his son. He disclaims beneficial
ownership of these shares.
(4) Includes 667,100 shares held by Wyoming County Bank as Trustee.
4
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION COMMITTEE REPORT
The primary responsibility of the Compensation Committee ("Committee") is
to approve the compensation, incentive and benefit programs of the Company for
all employees. The Committee is composed entirely of outside, non-employee
directors. The Committee approves participants who are eligible for the
Executive Incentive Compensation Plan, sets the Plan targets for each year and
approves payouts thereon, awards stock option grants, approves executive and
senior management compensation, annually reviews the performance of the CEO and
recommends the CEO compensation package to the Board. The objective of the
Company's executive compensation program is to develop and maintain programs
that contribute to the enhancement of shareholder value, while attracting and
retaining key executives who are critical to the long-term success of the
Company. It is expected that total compensation will vary annually, based on
Company and individual performance.
In 1999, the Compensation Committee retained the services of an executive
salary consultant, who is independent and unassociated with the Company, the
CEO, or any member of the Board or management, to assist in setting the total
compensation of the CEO, executives and senior management of the Company,
including stock option grants. The Committee believes it is critical to the
ongoing success of the Company that it is able to attract and retain highly
qualified executives and management with the talent to lead the organization in
the creation of shareholder value. To support that effort, the Committee is
responsible for:
o Development of a total compensation package that includes a base
salary, an annual incentive plan, and a stock option plan that
encourages share ownership that is linked with shareholder interests.
o Set base salaries that is commensurate with each individual's
responsibility, experience, and contribution to the Company.
o Ensure that salaries are competitive within the industry and our
competitive marketplace so as to be able to attract and retain highly
qualified executives and management teams.
o Promote a pay for performance culture.
The Company's executive and management compensation program is made up of
both fixed (base salary) and variable (incentive) compensation elements.
Variable compensation consists of annual cash incentives and stock option
grants. The CEO presents recommendations for senior management compensation to
the Committee each year prior to year-end for their approval. The Committee
annually reviews the CEO's performance with respect to individual and Company
performance.
5
<PAGE>
BASE SALARY. The performance of each executive and the level of responsibility
within their position are considered in establishing base salaries. Salary
ranges have been established and are based upon duties as described in the
position description. To ensure competitive salaries, the Committee annually
reviews the results of compensation surveys to ensure salary ranges reflect
competitive compensation levels within the industry and the local marketplace.
Peter G. Humphrey receives an annual salary of $298,920 for 2000. In determining
Mr. Humphrey's salary, the Committee took into consideration the salaries of
CEO's of similar-sized bank holding companies, individual and Company
performance. For 2000, Messrs. Cooper, Kime, W. J. Humphrey III and Brown
receive an annual salary in the amount of $164,300, $174,900, $130,000,
$114,450, respectively.
EXECUTIVE INCENTIVE COMPENSATION PLAN. The purpose of the current incentive plan
is to maximize the success of the Company's objectives by providing incentive
awards to those employees who attain and sustain consistently high levels of
performance that impacts the profitability of the Company. The Committee
believes the incentive formula ensures a level of award that is competitive with
comparable levels of performance in other banks in order that the Company will
be able to attract, retain and motivate quality executives and encourage
attainment of specific Company goals and objectives. The Committee reviews the
incentive plan annually. The Plan for the senior management group has five
components which determine the potential award with the Plan: Return on Average
Equity, Return on Average Assets, Net Interest Margin, the Ratios of Noninterest
Income to Average Assets, and Noninterest Expense to Average Assets. There are
participative levels within the plan that range from the maximum payout being
60% of salary for the CEO and executive officers and up to 40% of salary for
senior management.
Peter G. Humphrey's incentive award earned in 1999 was $121,717. The
incentive was paid in 2000. As a result of the termination of a deferred
compensation plan, Mr. Humphrey also received a payout of $34,261 representing
the accrued value of his account as of June 30, 1999. Other executives receiving
incentives were evaluated based on comparisons to predetermined corporate and
bank goals. Each officer achieved a majority of their goals and received
incentives consistent with the level of achievement. The incentives were paid in
2000. In addition, each bank CEO also received a payout of the accrued value of
his deferred compensation plan.
STOCK OPTION PLAN. In order to provide long-term incentives to key senior
management employees, including executive officers, to encourage share ownership
by key officers, and to retain and motivate key officers to further shareholder
returns, the Company has a Stock Option Plan. The Committee believes that stock
options, which provide value to participants only when the Company's
shareholders benefit from stock price appreciation, are an important component
of the Company's executive compensation program. The value of stock options
granted is based on a percent of base salary and ranges from 3%-10%.
6
<PAGE>
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL. The Company has entered into
agreements with each of the executives named in the Summary Compensation Table,
providing for severance benefits when termination is without cause and for
payments after a change of control and change of authority. These agreements are
summarized in Defined Benefit Plan and Executive Agreements on page 12.
COMPENSATION COMMITTEE
James H. Wyckoff, Chairman
Barton P. Dambra
Samuel M. Gullo
Donald G. Humphrey
H. Jack South
Donald I. Wickham
7
<PAGE>
STOCK PERFORMANCE GRAPH
The Stock Performance Graph compares the cumulative total return on the
Company's Common Stock against the cumulative total return of the NASDAQ Stock
Market Index of U.S. Stocks and the SNL Securities L.C. ("SNL") $1 Billion - $5
Billion Bank Asset Size Index, for the period since June 25, 1999, when the
Company began trading publicly, through December 31, 1999. The graph assumes
that $100 was invested on June 25, 1999 in the Company's Common Stock and the
indices, and that all dividends were reinvested.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
Period Ending
------------------------------------------------
Index 06/25/99 06/30/99 08/31/99 10/31/99 12/31/99
- ----- -------- -------- -------- -------- --------
Financial Institutions, Inc... 100.00 100.00 85.00 93.91 81.87
NASDAQ - Total US* ........... 100.00 105.17 107.61 115.56 156.17
SNL $1B-$5B Bank Asset-Size
Index ........................ 100.00 102.94 96.99 99.84 94.69
SNL Securities LC
(C) 2000
* Source: CRSP, Center for Research in Security Prices, Graduate School
of Business, The University of Chicago 1999.
Used with permission. All rights reserved. crsp.com.
8
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth certain information about the compensation
received by our Chief Executive Officer and our four other most highly
compensated executive officers (collectively, the "Named Executive Officers") in
the capacities indicated.
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
------------------- ----------------------
All Other
Securities Compen-
Underlying sation (1)
Name and Salary Bonus Options/SARS (2) (3)
Principal Position Year ($) ($) (#) Payouts ($)
------------------ ---- ------- ----- ------------ ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Peter G. Humphrey
President & Chief
Executive 1999 $282,000 $121,717 94,000 34,261 $ 41,749
Officer of Financial 1998 249,956 94,012 0 0 41,149
Institutions ........... 1997 231,441 92,346 0 0 41,449
Jon J. Cooper
Senior Vice President
of Financial
Institutions and
President & Chief 1999 $155,000 $ 68,537 51,665 7,750 $ 9,600
Executive Officer of 1998 135,000 52,198 0 0 7,394
Wyoming County Bank .... 1997 120,000 44,952 0 0 0
Thomas L. Kime
Senior Vice President
of Financial
Institutions and
President & Chief
Executive Officer of 1999 $165,000 $ 69,971 55,000 25,006 $ 28,423
The National Bank of 1998 151,672 60,059 0 0 27,423
Geneva ................. 1997 140,438 54,565 0 0 28,823
W.J. Humphrey III
Senior Vice President
of Financial
Institutions and
President & Chief 1999 $125,000 $ 58,209 41,665 17,905 $ 20,994
Executive Officer of 1998 114,000 45,520 0 0 19,594
The Pavilion State Bank. 1997 108,573 34,689 0 0 20,029
Randolph C. Brown
Senior Vice President
of Financial
Institutions and
President & Chief 1999 $109,000 $ 42,207 36,335 12,603 $ 15,219
Executive Officer of 1998 100,000 35,890 0 0 14,237
First Tier Bank & Trust.. 1997 95,000 19,565 0 0 13,430
</TABLE>
1 Includes, for 1999, matching and additional performance contributions made
by us under our 401(k) plan in the amounts of $7,900, $9,600, $8,100,
$7,900, and $4,277 for Messrs. Peter Humphrey, Cooper, Kime, W.J. Humphrey
III and Brown, respectively. Also includes the entire amount of
split-dollar life insurance premiums paid by us (including amounts that
will be recovered by us upon payment of the policy or other events) in the
amounts of $33,849, $19,323, $13,094, and $10,942 for life insurance
policies that cover Messrs. Peter Humphrey, Kime, W.J. Humphrey, III and
Brown, respectively.
2 Includes, for 1998, matching and additional performance contributions made
by us under our 401(k) plan in the amounts of $7,300, $7,394, $8,100,
$6,500 and $3,295 for Messrs. Peter Humphrey, Cooper, Kime, W.J. Humphrey
III and Brown, respectively. Also includes the entire amount of
split-dollar life insurance premiums paid by us (including amounts that
will be recovered by us upon payment of the policy or other events) in the
amounts of $33,849, $19,323, $13,094 and $10,492 for life insurance
policies, which cover Messrs. Peter Humphrey, Kime, W.J. Humphrey, III and
Brown, respectively.
3 Includes, for 1997, matching and additional performance contributions made
by us under our 401(k) plan in the amounts of $7,600, $0, $9,500, $6,935,
and $2,488 for Messrs. Peter Humphrey, Cooper, Kime, W.J. Humphrey III and
Brown, respectively. Also includes the entire amount of split-dollar life
insurance premiums paid by us (including amounts that will be recovered by
us upon payment of the policy or other events) in the amounts of $33,849,
$19,323, $13,094, and $10,942 for life insurance policies that cover
Messrs. Peter Humphrey, Kime, W.J. Humphrey, III and Brown, respectively.
9
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Exercise Potential Realizable
Securitie Total or Value at Assumed
Underlying Options Base Annual Rate of Stock
Options Granted Price Price Appreciation for
Granted to ($ per Expiration Option Term
Name (#) Employees Share) Date 5% ($) 10% ($)
- ---- ---------- --------- ------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Peter G
Humphrey ......... 94,000 31.5% $14.00 6/25/09 827,625 2,097,365
Jon J. Cooper..... 51,665 17.3% $14.00 6/25/09 454,886 1,152,770
Thomas L. Kime.... 55,000 18.5% $14.00 6/25/09 484,249 1,227,182
W.J. Humphrey
III .............. 41,665 14.0% $14.00 6/25/09 366,841 929,646
Randolph C
Brown ............ 36,335 12.2% $14.00 6/25/09 319,912 810,721
</TABLE>
OPTION EXERCISES IN LAST FISCAL YEAR AND
YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of Unexercised
Aggregate Underlying In-The-Money
Option Unexercised Options Options at Fiscal
Exercises of Fiscal Year End Year End
---------------------- --------------------------- --------------------------
Shares
Acquired
on Value
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C>
Peter G
Humphrey .......... None -- None 94,000 -- --
Jon J. Cooper...... None -- None 51,665 -- --
Thomas L. Kime..... None -- None 55,000 -- --
W.J. Humphrey
III ............... None -- None 41,665 -- --
Randolph C
Brown ............. None -- None 36,335 -- --
</TABLE>
10
<PAGE>
DEFINED BENEFIT PLAN AND EXECUTIVE AGREEMENTS
We maintain a defined benefit retirement plan that covers all of our full-
and part-time employees who satisfy the eligibility requirements. Employees are
eligible to participate in the plan if they have completed one year of
employment and are at least 21 years of age. Participants with five or more
years of service are entitled to annual pension benefits beginning at 62 years
of age. The amount of the retirement benefit is 1.75% of the participant's
highest average five consecutive years' compensation multiplied by the number of
years of service up to 35 years, plus 1.25% of the participant's highest average
five consecutive years' compensation for service in excess of 35 years, not to
exceed 40 years of creditable service, less 0.49% of the average of the
participant's final three years' compensation multiplied by the number of years
of service up to 35 years. If a participant terminates employment with us before
completing five years of service, such person forfeits the right to receive plan
benefits. Total plan expense charged to our operations for 1999, 1998 and 1997
was $209,000, $35,000, and $126,000, respectively, and the market value of the
assets held by the plan at December 31, 1999 was approximately $16.9 million.
The following table sets forth the estimated plan benefits payable upon
retirement for various levels of compensation and years of service:
Years of Service
---------------------------------------------------------
Compensation 15 20 25 30 35
- ------------ -- -- -- -- --
$150,000 $36,945 49,260 61,575 73,890 86,205
$175,000 39,570 52,760 65,950 79,140 92,330
$200,000 39,570 52,760 65,950 79,140 92,330
$250,000 39,570 52,760 65,950 79,140 92,330
$300,000 39,570 52,760 65,950 79,140 92,330
$350,000 39,570 52,760 65,950 79,140 92,330
$400,000 39,570 52,760 65,950 79,140 92,330
$450,000 39,570 52,760 65,950 79,140 92,330
$500,000 39,570 52,760 65,950 79,140 92,330
For purposes of determining benefits under the plan, compensation includes
salary and bonus but cannot exceed $160,000. The benefit computation is based on
a life annuity with a five-year certain. The Social Security Offset (included in
the above figures) is 0.49% times the three-year final average salary up to
covered compensation times the number of years of creditable service up to 35
years. This offset assumes a 2000 benefit for a participant of age 65. The
estimated credited years of service for each of the Named Executive Officers as
of December 31, 1999 was: Peter G. Humphrey, 20; Jon J. Cooper, 2; Thomas L.
Kime, 21; W. J. Humphrey III, 24; Randolph C. Brown, 7.
We maintain a contributory profit sharing plan pursuant to Internal
Revenue Code Section 401(k) covering substantially all employees. At least one
year of service is required to be eligible for employer-matching contributions.
Participants may contribute up to 15% of their compensation to the Plan. Each
year we determine, at our discretion, the amount of matching contributions.
Total plan expense charged to our operations for 1999, 1998 and 1997 was
$480,000, $398,000 and $389,000, respectively.
11
<PAGE>
The Company has an employment agreement with Mr. Peter G. Humphrey
providing for his employment as the Company's President and Chief Executive
Officer. The agreement is for a three-year term and provides for a base salary,
participation in the Company's fringe benefit plans and, at the discretion of
the Company's Compensation Committee, cash bonuses and grants of options under
any of the Company's stock incentive plans. The agreement requires that Mr.
Humphrey devote his entire business time, attention and efforts to the interests
and business of the Company, its subsidiaries and their affiliates. The
employment agreement includes change of control and change of authority
provisions. If Mr. Humphrey's employment is terminated within twelve months
after a change in control and a change of authority (as those terms are defined
in the agreement), Mr. Humphrey will receive an amount equal to the sum of 300%
of the base salary plus the average annual incentive compensation paid by the
Company to him for the most recent three tax years ending before the date on
which the change of control and change of authority occurred. In the event of
termination without cause (as defined in the agreement) Mr. Humphrey will
receive an amount equal to the sum of two years base salary plus the average of
the annual incentive compensation paid for the most recent two tax years ending
before the date on which termination occurred.
Each of the executive officers of the Company is also the CEO of a
subsidiary bank. The bank has an employment agreement providing for his
employment as the bank's President and Chief Executive Officer. The agreement is
for a three-year term and provides for a base salary, participation in the
Company's fringe benefit plans, and at the discretion of the Company's
Compensation Committee cash bonuses and grants of options under any of the
Company's stock incentive plans. The agreement requires that the executive
devote his entire business time, attention and efforts to the interests and
business of the Company, its subsidiaries and their affiliates. The employment
agreement includes change of control and change of authority provisions. If the
executive's employment is terminated within twelve months after a change in
control and a change of authority (as those terms are defined in the agreement),
the executive will receive an amount equal to the sum of 200% of the base salary
plus the average annual incentive compensation paid by the Company to him for
the most recent two tax years ending before the date on which the change of
control and change of authority occurred. In the event of termination without
cause (as defined in the agreement) the executive will receive an amount equal
to the sum of one year base salary and the annual incentive compensation paid
for the most recent tax year ending before the date termination occurred.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
As previously indicated, Donald G. Humphrey, a former Vice President of
Wyoming County Bank, is a member of the Compensation Committee.
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
Our directors, executive officers and many of our substantial shareholders
and their associates are also our customers. "Associates" include corporations,
partnerships and other organizations in which they are officers or partners, or
in which they and their immediate families have at least a 5% interest. During
1999, we made loans in the ordinary course of business to many of our directors,
executive officers, principal shareholders and their associates. All of these
loans were on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
persons unaffiliated with us. Also, the loans did not involve more than the
normal risk of collectibility or present other unfavorable features. On December
31, 1999, the aggregate principal amount of loans to our directors, named
executive officers and their associates was $3,272,000 and the principal amount
of loans to all of the directors and officers of the Company and our subsidiary
banks, and their associates was $14,912,000. Loans to directors, executive
officers and substantial shareholders are subject to limitations contained in
the Federal Reserve Act, which requires that such loans satisfy certain
criteria. We expect to have such transactions or transactions on a similar basis
with our directors, executive officers, principal shareholders and their
associates in the future.
W.J. Humphrey, Jr. and Donald G. Humphrey are brothers. W.J. Humphrey,
Jr. is the father of Peter G. Humphrey and W.J. Humphrey III. James H. Wyckoff
is the son of Margaret Wyckoff, the sister of W.J. Humphrey, Jr. and Donald G.
Humphrey.
The Company has a Director and Officers Liability Insurance Policy issued
by the Fidelity and Deposit Company of Maryland. In June 1999, the Company paid
an annual premium of $48,878 for this policy.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than 10% of
a registered class of the Company's equity securities to file with the
Securities and Exchange Commission reports of ownership of Common Stock of the
Company. Officers, directors and greater than 10% shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file. To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports are required, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% beneficial owners were complied with
during the fiscal year ended December 31, 1999.
SHAREHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy statement and
form of proxy for next year's Annual Meeting, shareholder proposals that action
be taken at the meeting must be received at the Company's principal executive
offices by December 12, 2000, and to be eligible for consideration at the
meeting, must be so received not less than 60 nor more than 90 days prior to the
scheduled date of the meeting and satisfy certain other requirements provided in
the Company's By-laws.
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OTHER MATTERS
The Board of Directors of the Company knows of no other matters to be
presented at the meeting. However, if any other matters properly come before the
meeting, the persons named in the enclosed proxy will vote on such matters in
accordance with their best judgment.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, some officers and employees of the Company
may, without extra compensation, solicit proxies personally or by telephone or
telegraph and the Company will request brokerage houses, nominees, custodians
and fiduciaries to forward proxy materials to beneficial owners and will
reimburse their expenses.
SHAREHOLDERS MAY RECEIVE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE ON REQUEST
TO THE SECRETARY, FINANCIAL INSTITUTIONS, INC., 220 Liberty Street, Warsaw, New
York 14569.
April 10, 2000
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