SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x][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
[X] Definitive Proxy Statement Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TrustCo Bank Corp NY
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transactions
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)
(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 is offset 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:
Set forth the amount on which the filing fee is calculated
and state how it was determined.
TRUSTCO BANK CORP NY
320 State Street, Schenectady, New York 12305
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Shareholders Of TrustCo Bank Corp NY:
Notice is hereby given that the Annual Meeting of Shareholders of TrustCo
Bank Corp NY ("TrustCo"), a New York corporation, will be held at TrustCo's
Trust Building, 192 Erie Boulevard, Schenectady, New York 12305, on May 17, 1999,15,
2000, at 10:00 a.m. local time for the purpose of voting upon the following
matters:
1. Election of four directors.
2. Adoption of an amendment to the Amended and Restated Certificate of
Incorporation of TrustCo to increase the authorized shares of Common
Stock from 50,000,000 to 100,000,000.
3. Adoption of an amendment to the 1995 TrustCo Bank Corp NY Stock Option
Plan to increase the authorized number of shares of Common Stock
issuable under the Plan in addition to several administrative changes.
4. Ratification of the appointment of independent auditors for 1999.
5.2000.
3. Any other business that properly may be brought before the meeting or
any adjournment thereof.
By Order of the Board of Directors,
William F. Terry
Secretary
April 5, 19993, 2000
YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE,
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT. YOU MAY WITHDRAW YOUR PROXY AT
ANY TIME PRIOR TO THE MEETING, OR AT THE MEETING.
1
TRUSTCO BANK CORP NY
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
May 17, 199915, 2000
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of TrustCo Bank Corp NY ("TrustCo"), a New York
corporation, of proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held at 10:00 a.m. local time on Monday, May 17, 1999,15, 2000,
at TrustCo's Trust Building, 192 Erie Boulevard, Schenectady, New York 12305.
This proxy statement and the form of proxy were first mailed to shareholders on
April 5, 1999.3, 2000. Any shareholder executing a proxy which is solicited hereby has
the power to revoke it. Revocation may be made by giving written notice to the
Secretary of TrustCo at any time prior to the exercise of the proxy.
Proxies will be solicited by mail. They also may be solicited by directors,
officers, and employees of TrustCo and Trustco Bank, National Association,
of Schenectady, New York ("Trustco Bank"), a wholly-owned subsidiary of TrustCo,
personally or by telephone, but such persons will receive no additional
compensation for such services. TrustCo has also retained Regan & Associates,
Inc. to aid in the solicitation of proxies for a solicitation fee of $2,750$4,500 plus
expenses. The entire cost of this solicitation will be paid by TrustCo and
Trustco Bank.
As of March 1, 1999,2000, there were 26,886,14053,454,924 outstanding shares of Common
Stock, $1.00 par value (the "Common Stock"), of TrustCo. Only shareholders of
record of the Common Stock at the close of business on March 29,
1999,27, 2000 are
entitled to notice of and to vote at the Annual Meeting. Each shareholder of
record on that date is entitled to one vote for each share of Common Stock held.
With respect to each matter to be acted upon at the Annual Meeting, abstentions
on properly executed proxy cards will be counted for purposes of determining a
quorum at the meeting; however, such abstentions and shares not voted by brokers
and other entities holding shares on behalf of beneficial owners will not be
counted in calculating voting results on those matters for which the shareholder
has abstained or the broker has not voted.
Full shares of Common Stock held for the account of shareholders
participating in the Dividend Reinvestment and Stock Purchase Program will be
voted in the same manner as those shareholders have authorized their shares held
of record to be voted. If such shareholders fail to instruct how the shares
registered in their names shall be voted, the shares held in their dividend
reinvestment accounts will be voted as stated on the proxy card.
SHAREHOLDER PROPOSALS
Shareholder proposals to be considered for inclusion in a proxy statement
in connection with any forthcoming annual meeting of shareholders of TrustCo
must be submitted to TrustCo on a timely basis. Proposals for inclusion in
TrustCo's proxy statement and form of proxy for the annual meeting of
shareholders to be held in May of 20002001 must meet the requirements established by
the Securities and Exchange Commission (the "S.E.C.") for shareholder proposals
and must be received by TrustCo at its principal executive offices no later than
December 3, 1999.5, 2000. Proposals that are not to be included in TrustCo's proxy
statement will be deemed untimely and will not be considered at the annual
shareholders meeting in 20002001 unless they are received at TrustCo's principal
executive offices not later than February 18, 2000.16, 2001. Any such proposals, together
with any supporting statements, should be directed to the Secretary of TrustCo.
21
THE ANNUAL MEETING
A description of the items to be considered at the Annual Meeting and other
information is set forth below.
Item 1. Election of Directors
The first item to be acted upon at the Annual Meeting is the election of
fourfive (5) directors to serve on the TrustCo Board of Directors (the "TrustCo
Board"), four of whom shall serve for a three (3) year term and one, Joseph
Lucarelli, for a one (1) year term, and until their successors shall have been
duly elected and qualified. The incumbent Directors whose terms are currently
scheduled to expire at the Annual Meeting, and who have been nominated for
reelection as Directors (collectively, the "TrustCo Director Nominees") are as
follows: Lionel O. Barthold, RichardBarton A. Andreoli, Nancy A. McNamara, Dr. James H. Murphy, William J.
Murray, Jr., William D.
Powers,Purdy, and William F. Terry.Joseph Lucarelli.
TrustCo's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") provides that the TrustCo Board shall consist of
not less than seven nor more than twenty members, and TrustCo's Bylaws provide
that the total number of directors may be fixed by resolution of the TrustCo
Board or the shareholders. The Certificate of Incorporation and the Bylaws
require the TrustCo Board to be divided into three classes, as nearly equal in
number as possible, with one class to be elected each year for a term of three
years.
The Bylaws also provide that newly created directorships resulting from an
increase in the number of directors and vacancies occurring in the TrustCo Board
for any reason, may be filled by the vote of a majority of the directors then in
office, although less than a quorum, at any meeting of the TrustCo Board.
Directors who are elected by the TrustCo Board shall hold office until the next
meeting of shareholders at which the election of directors is in the regular
order of business. The affirmative vote of at least a majority of the
outstanding Common Stock is required to elect directors.
The pages that follow set forth information regarding the TrustCo Director
Nominees, as well as information regarding the remaining members of the TrustCo
Board whose terms of office do not expire this year. Proxies will be voted in
accordance with specific instructions contained therein. Shares will be voted
"for" the election of such TrustCo Director Nominees unless contrary
instructions are set forth on the enclosed TrustCo proxy card. If any such
nominee shall be unavailable to serve, the shares represented by all valid
proxies will be voted for the election of such other person as the TrustCo Board
may recommend, or the TrustCo Board may reduce the number of directors to
eliminate the vacancy. Each of the TrustCo Director Nominees has consented to
being named in this Proxy Statement and to serve if elected. The TrustCo Board
has no reason to believe that any TrustCo Director Nominee will decline or be
unable to serve if elected, unless he or she reaches the mandatory retirement
age of 75 during the term of office. In the event a vacancy is created by
retirement or otherwise, the TrustCo Board may fill the vacancy or may reduce
the number of directors to eliminate the vacancy. If the vacancy is filled, the
director so elected shall hold office until the next meeting of shareholders at
which the election of directors is in the regular order of business.
Information with regard to the business experience of each director and the
ownership of Common Stock on December 31, 1998,1999, has been furnished by such
director, or has been obtained from the records of TrustCo. The Common Stock is
the only class of equity security outstanding.
32
INFORMATION ON TRUSTCO DIRECTORS AND NOMINEES
NOMINEES FOR ELECTION AS TRUSTCO DIRECTORS FOR
THREE-YEAR TERM TO EXPIRE IN 20022003
Shares of TrustCo Common Stock
Beneficially Owned
- ---------------------------------------------------------------------- ----------------------- -----------------------
Name and Principal Occupation(1) No. of Shares (2) Percent of Class
- ---------------------------------------------------------------------- ----------------------- -----------------------
Barton A. Andreoli, Age 60, President, Towne Construction & Paving 26,266 *
Corp. Director of TrustCo and Trustco Bank since 1993.
Nancy A. McNamara, Age 50; Executive Officer of TrustCo (Vice 820,465 1.54
President) since 1992 and Trustco Bank (Senior Vice President) since
1988. Joined Trustco Bank in 1971. Director of TrustCo and of
Trustco Bank since 1991.
James H. Murphy, D.D.S., Age 71; Orthodontist. Director of TrustCo 47,818 *
and of Trustco Bank since 1991.
William J. Purdy, Age 65, President, Welbourne & Purdy Realty, Inc. 28,390 *
Director of TrustCo and Trustco Bank since 1991.
NOMINEE FOR ELECTION AS TRUSTCO DIRECTOR FOR
ONE-YEAR TERM TO EXPIRE IN 2001
Shares of TrustCo Common Stock
Beneficially Owned
- ---------------------------------------------------------------------- ----------------------- -----------------------
Name and Principal Occupation(1) No. of Shares (2) Percent of Class
- ---------------------------------------------------------------------- ----------------------- -----------------------
- ---------------------------------------------------------------------- ----------------------- -----------------------
Lionel O. Barthold,Joseph Lucarelli, Age 72; Retired Chairman, Power Technologies, 103,12359, President, Bellevue Builders Supply, Inc. 18,000 *
Inc. Chairman, Cellutech, LLC (research and development). Director
of TrustCo from 1981 through 1985, and from 1989 to present.
Director of Trustco Bank since 1977.
Richard J. Murray, Jr., Age 70; Chief Executive Officer, R. J. Murray 257,327 *
Co., Inc. (air-conditioning and heating distributors).
Director of TrustCo and Trustco Bank since 1985.
William D. Powers, Age 57; Chairman, New York Republican State 8,159 *
Committee. Director of TrustCo and of Trustco Bank since 1995.
William F. Terry, Age 57; Executive Officer of TrustCo (Secretary) 397,757 1.48
since 1990 and of Trustco Bank (Senior Vice President) since 1987.
Director of TrustCo and Trustco Bank since 1991.1999.
See footnotes on page 5.
43
TRUSTCO DIRECTORS CONTINUING IN OFFICE
Shares of TrustCo Common Stock
Beneficially Owned
- ---------------------------------------------------------------------- ----------------------- ----------------------
Name and Principal Occupation(1) No. of Shares (2) Percent of Class
- ---------------------------------------------------------------------- ----------------------- ----------------------
- ---------------------------------------------------------------------- ----------------------- ----------------------
Barton A. Andreoli,Lionel O. Barthold, Age 59; President, Towne Construction & Paving 11,95373, Retired Chairman, Power Technologies, 201,782 *
Corp.Inc. Chairman, Cellutech, LLC (research and development). Director
of TrustCo from 1981 through 1985, and from 1989 to present.
Director of Trustco Bank since 1993.1977.
M. Norman Brickman, Age 73;74; Vice President, D. Brickman, Inc. 301,076 *
(wholesale 158,983 * fruits and produce). Director of TrustCo and Trustco
Bank since 1985.
Anthony J. Marinello, M.D., Ph.D., Age 43,44, Physician. Director of 7,42718,628 *
TrustCo and Trustco Bank since 1996.
Robert A. McCormick, Age 62;63; President of TrustCo and Trustco Bank 1,230,041 4.592,634,327 4.93
since 1982. President and Chief Executive Officer of TrustCo and
Trustco Bank since 1984. Director of TrustCo and Trustco Bank since
1980.
Nancy A. McNamara,Richard J. Murray, Jr., Age 49;71; Chief Executive Officer, of TrustCo (Vice 369,268 1.38
President) since 1992R. J. Murray 526,810 *
Co., Inc. (air-conditioning and Trustco Bank (Senior Vice President) since
1988. Joined Trustco Bank in 1971.heating distributors). Director of
TrustCo and of
Trustco Bank since 1991.
John S. Morris, Ph.D., Age 73; Interim President, New England 46,655 *
College, President Emeritus and Research Professor Philosophy,Union
College, and Former Chancellor, Union University. Director of TrustCo
since 1981 and of Trustco Bank since 1980.
James H. Murphy, D.D.S., Age 70; Orthodontist. Director of TrustCo 22,470 *
and of Trustco Bank since 1991.1985.
Kenneth C. Petersen, Age 62,63, Retired President and Chief Operating 100,250
Officer, 55,798 * Schenectady International, Inc. (chemical manufacturer).
Director of TrustCo and of Trustco Bank since 1982.
William J. Purdy,D. Powers, Age 64; President, Welbourne & Purdy Realty, Inc. 13,13158, Chairman, New York Republican State 18,538 *
Committee. Director of TrustCo and of Trustco Bank since 1995.
William F. Terry, Age 58, Executive Officer of TrustCo (Secretary) 897,354 1.68
since 1990 and of Trustco Bank (Senior Vice President and Secretary)
since 1987. Director of TrustCo and Trustco Bank since 1991.
See footnotes on page 5.
See footnotes on page 5
54
INFORMATION ON TRUSTCO EXECUTIVE OFFICERS
NOT LISTED ABOVE
Shares of TrustCo Common Stock
Beneficially Owned
- ---------------------------------------------------------------------- ----------------------- -----------------------
Name and Principal Occupation(1) No. of Shares (2) Percent of Class
- ---------------------------------------------------------------------- ----------------------- -----------------------
- ---------------------------------------------------------------------- ----------------------- -----------------------
Robert T. Cushing, Age 43;44, Executive Officer of TrustCo (Vice 198,989497,052 *
President and Chief Financial Officer) and of Trustco Bank (Senior
Vice President and Chief Financial Officer). Joined Trustco Bank in
May, 1994.
Ralph A. Pidgeon,(3) Age 56;57; Executive Officer of TrustCo (Vice 374,835 1.40709,794 1.33
President and Assistant Secretary) since 1995 and of Trustco Bank
(Senior Vice President) since 1978. Joined Trustco Bank in 1964.
See footnotes listed below.on page 5.
TRUSTCO DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS AS A GROUP (15(16 INDIVIDUALS)
BENEFICIALLY OWN 3,255,9166,941,946 SHARES OF COMMON STOCK, WHICH REPRESENT 12.1%13% OF THE
OUTSTANDING SHARES.
(1) Each of the Directors has held, or retired from, the same position or
another executive position with the same employer during the past five
years, except John S. Morris, Ph.D., who accepted the position of Interim
President at New EnglandCazenovia College Henniker, New Hampshire, in 1997.1999.
(2) Each Director and Executive Officer named herein has sole voting and
investment power with respect to the shares listed above, except that
voting and investment power over a total of 6,017532 shares isare shared with their spouses and children,a
parent, and a total of 134,084233,942 are owned by spouses and other family
members. The shares shown include 2,138,9554,610,205 shares of Common Stock with
respect to which certain Directors and Executive Officers have a right to
acquire beneficial ownership within 60 days of December 31, 1998.1999.
(3) Retired January 3, 2000.
* Less than 1%
6.
5
Director Fees, Committees and Attendance
The TrustCo Board held five meetings during 1998.1999. Each Director attended at
least 80% of the TrustCo Board meetings and all of the meetings of the
Committees on which he or she served. Average attendance at both Board and
Committee meetings was 96%.Each96.9%. Each Director who is not an employee of TrustCo or
of Trustco Bank currently receives for his services as Director a fee in the
amount of $2,450$2,600 per meeting attended of TrustCo's and Trustco Bank's Boards of
Directors, and $1,225$1,300 per meeting attended of any TrustCo or Trustco Bank
committee of which he is a member. TrustCo Directors who are not also employees
of TrustCo or its subsidiaries are also eligible to participate in the TrustCo
Bank Corp NY Directors Performance Bonus Plan (the "Directors Performance Bonus
Plan"), which was adopted by the TrustCo Board in 1997. Under the Directors
Performance Bonus Plan, non-employee directors are eligible to be awarded
"units," the value of which is based upon the appreciation in value of Common
Stock between the date of the award and the occurrence of a "change in control"
as defined in the Directors Performance Bonus Plan. The units so awarded vest,
and payments under the Directors Performance Bonus Plan are to be made, only
upon the occurrence of a change in control. Each non-employee director has been
awarded 13,22526,450 units under the Directors Performance Bonus Plan at a base price
of $15.74$7.87 per unit (after adjustment to reflect the 15% stock splits on
November 14, 1997, and November 13, 1998)1998, and a two for one stock split on
November 12, 1999). Directors who are employees of TrustCo or Trustco Bank do
not receive directors' fees or other additional remuneration for TrustCo or
Trustco Bank Board of Directors' meetings or for special assignments. In
accordance with the TrustCo Bank Corp NY Directors' Stock Option Plan, on June
24, 1999 each nonemployee director was awarded 2000 stock options with a strike
price of $13.22, after adjustment to reflect the two for one stock split on
November 12, 1999.
TrustCo's Nominating Committee held no meetingsone meeting in 1998.1999. The four Directors
currently serving on the Nominating Committee are R. McCormick (Chairman),
B. Andreoli, R. Murray, and W. Terry. The function of the Nominating Committee
is to consider and recommend to the TrustCo Board nominees for election to the
TrustCo Board. Each of the nominees slated for election at the Annual Meeting is
an incumbent and was considered and selected by the TrustCo Board without action
by the Nominating Committee. The Nominating Committee will consider written
recommendations by shareholders for nominees for election to the TrustCo Board.
TrustCo's Audit Committee held two meetings in 1998.1999. The four Directors
serving on the Audit Committee are R. Murray, Jr. (Chairman), J. Murphy,
K. Petersen, and W. Purdy. The function of the Audit Committee is to review
TrustCo's and Trustco Bank's internal audit procedures, and also to review the
adequacy of internal accounting controls for TrustCo and Trustco Bank. In
addition, the Audit Committee annually recommends the use of particular external
audit firms by TrustCo in the coming year, after reviewing performance of the
existing vendors and available audit resources.
TrustCo's Stock Option Committee held one meeting in 1998.1999. The threefour
Directors serving on the Stock Option Committee are Dr. J. Morris (Chairman),
B. Andreoli, N. Brickman, and N. Brickman.J. Lucarelli. The function of the Stock Option
Committee is to administer the 1995 TrustCo Bank Corp NY Stock Option Plan (the
"1995 Stock Option Plan") and the Directors Performance Bonus Plan and the
TrustCo Bank Corp NY Performance Bonus Plan (the "Officers Performance Bonus
Plan"), which were adopted by the Board in 1997.
The Personnel Advisory Committee of Trustco Bank held one meeting in 1998.1999.
The threefour Directors serving on the Personnel Advisory Committee are Dr. J. Morris
(Chairman), B. Andreoli, N. Brickman, and N. Brickman.J. Lucarelli. The function of the
Personnel Advisory Committee is to review general compensation practices of
Trustco Bank and to recommend to the Board of Directors of Trustco Bank the
salary and benefits for Trustco Bank's three Executive Officers who are also
Directors of TrustCo, and the two Executive OfficersOfficer of Trustco Bank who areis not Directorsa
Director of TrustCo.
76
TrustCo Executive Officers
The current Executive Officers of TrustCo are President and Chief Executive
Officer Robert A. McCormick, Vice President and Chief Financial Officer
Robert T. Cushing, Vice President Nancy A. McNamara, Vice President and Assistant
Secretary Ralph A. Pidgeon, and Secretary William F.
Terry.
Trustco Bank Executive Officers
The current Executive Officers of Trustco Bank are President and Chief
Executive Officer Robert A. McCormick, Senior Vice President and Chief Financial
Officer Robert T. Cushing, Senior Vice PresidentsPresident Nancy A. McNamara, and Ralph A.
Pidgeon, and Senior
Vice President and Secretary William F. Terry.
TrustCo and Trustco Bank Executive Officer Compensation
The following table sets forth, for the fiscal year ended December 31,
1998,1999, the compensation paid to or accrued on behalf of each of the five most
highly compensated Executive Officers of TrustCo and Trustco Bank. The value of
incidental personal benefits, which may not be directly related to job
performance, has been included, where applicable, according to the S.E.C.'s
required disclosure thresholds. Each of the following ExecutiveOfficersExecutive Officers has an
employment agreement and a supplemental retirement agreement described in
subsequent pages.
87
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
-------------------------------------------------------------------------------------------
------------------ ------------------- -----------------------------------------------------------------------------------------------------------------------------------------
Securities
Other Underlying
Annual Options/
Salary Bonus Compensation SARs
Year ($) ($)(1) ($)(2) (#)(3)
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
Robert A. McCormick(4) 1998 $800,000 $1,120,000 $82,709 115,000McCormick 1999 $850,000 $1,317,500 $93,148 200,000
President and Chief 1998 800,000 1,120,000 82,709 230,000
Executive Officer, 1997 775,000 968,750 62,810 132,250
Executive Officer, 1996 750,000 787,500 66,813 152,087264,500
TrustCo and Trustco Bank
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
Robert T. Cushing 1999 300,000 465,000 20,555 80,000
Senior Vice President, 1998 285,000 399,000 20,346 46,000
Senior Vice President,92,000
Chief Financial Officer, 1997 275,000 343,750 22,552 52,900
Chief Financial Officer, 1996 260,000 273,000 12,481 60,835105,800
Trustco Bank; Vice
President, Chief Financial
Officer, TrustCo
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
Nancy A. McNamara 1999 300,000 465,000 40,306 80,000
Senior Vice President 1998 285,000 399,000 30,005 46,000
Senior92,000
Trustco Bank; Vice President 1997 275,000 343,750 21,211 52,900
Trustco Bank; Vice 1996 260,000 273,000 14,181 60,835105,800
President, TrustCo
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
Ralph A. PidgeonPidgeon(4) 1999 300,000 465,000 27,281 80,000
Senior Vice President 1998 285,000 399,000 28,246 46,000
Senior Vice President 1997 275,000 343,750 27,430 52,90092,000
Trustco Bank; Vice 1996 260,000 273,000 15,892 60,8351997 275,500 343,750 27,430 105,800
President, Assistant
Secretary, TrustCo
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
William F. Terry 1999 300,000 465,000 24,581 80,000
Senior Vice President 1998 285,000 399,000 23,848 46,000
Senior Vice President92,000
and Secretary, Trustco 1997 275,000 343,750 21,857 52,900
and Secretary, TrustCo 1996 260,000 273,000 14,659 60,835105,800
Bank; Secretary,
TrustCo
- ------------------------------------- -------------- ------------------ ------------------- ------------------------------------------------------------- ---------------
(1) Bonus amounts include payments to senior Executive Officers of TrustCo as
short-term incentive compensation pursuant to the incentive program
described in greater detail herein under the caption "Personnel Advisory
Committee Report on Executive Compensation."
(2) Includes amounts reimbursed by TrustCo for the payment of taxes pursuant to
established benefit plans.
(3) Stock Option data has been adjusted to reflect the two for one stock split
on November 12, 1999, and the 15% stock splits on November 13,1998,13, 1998, and
November 14, 1997, and
November 15, 1996.1997.
(4) Does not include distribution under Mr. McCormick's retirement
benefits agreement with Trustco Bank. See
"TrustCo Retirement Plans."
9Pidgeon retired on January 3, 2000.
8
Option/SAR Grants in Last Fiscal Year
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options/SARs Exercise or of Stock Price Appreciation
Underlying Granted to Base Price For Option Term(4)
Options/SARs Employees in ($/Sh)(3) Expiration
Name Granted (#)(1) Fiscal Year(2) Date 5% 10%
- ------------------------------------------------------- --------------------- -------------------- ------------------- ------------- ----------------------------------------------------------- ---------------------------------
Robert A. McCormick 115,000 29.0% $23.03200,000 28.0% $13.22 6/16/2008 $1,665,200 $4,220,50024/2009 $1,662,000 $4,214,000
Robert T. Cushing 46,000 11.6% 23.0380,000 11.2% 13.22 6/16/2008 666,080 1,688,20024/2009 664,800 1,685,600
Nancy A. McNamara 46,000 11.6% 23.0380,000 11.2% 13.22 6/16/2008 666,080 1,688,20024/2009 664,800 1,685,600
Ralph A. Pidgeon 46,000 11.6% 23.0380,000 11.2% 13.22 6/16/2008 666,080 1,688,20024/2009 664,800 1,685,600
William F. Terry 46,000 11.6% 23.0380,000 11.2% 13.22 6/16/2008 666,080 1,688,20024/2009 664,800 1,685,600
(1) Options, which were granted on June 16, 1998,24, 1999, become exercisable in five
annual installments beginning June 16, 1998.24, 1999. Stock Option data has been
adjusted for the 15%two for one stock split on November 13, 1998.12, 1999.
(2) The total number of options granted in 19981999 was 396,175,715,000, of which 299,000 (75.5%520,000
(72.7%) were issued to the Executive group, 11,500 (2.9%20,000 (2.8%) were issued to
the non-Executive Director group, and 85,675 (21.6%175,000 (24.5%) to the non-Executive
Officer group.
(3) Exercise or base price is equal to the mean between the closing dealer bid
and asked price for the Common Stock as quoted by Nasdaq on the date of the
grant.
(4) The amounts included reflect pre-tax gain. The dollar amounts under these
columns are the result of calculations at the 5% and 10% rates set by the
S.E.C. and, therefore, are not intended to forecast possible future
appreciation, if any, of TrustCo's stock price, including any appreciation
in the event of a change in control. TrustCo's per share stock price would
be $37.51$21.53 and $59.73$34.29 if increased 5% and 10% respectively, compounded
annually over the option term.
109
Aggregated Option/SAR Exercises in Last Fiscal Year, and Fiscal Year-End
Option/SAR Values
Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)(3)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#)(1) Realized($)(2) Unexercisable Unexercisable
- ----------------------------- ------------------------- ---------------------- ---------------------- -----------------------------------------------------------
Robert A. McCormick -- -- 1,010,396/268,686 $19,886,264/3,428,3192,293,529/464,635 $17,635,249/1,210,554
Robert T. Cushing 10,580 $140,783 163,827/101,999 2,828,196/1,274,30323,000 $203,823 402,798/185,854 2,500,162/484,222
Nancy A. McNamara -- -- 258,536/101,999 4,941,160/1,274,303615,216/185,854 4,472,170/484,222
Ralph A. Pidgeon 3,158 64,902 314,288/101,999 6,252,447/1,274,303200,794 2,008,268 711,780/0 4,133,894/0
William F. Terry 3,450 60,525 304,139/101,999 6,013,743/1,274,303120,496 1,206,165 585,926/185,854 4,178,977/484,222
(1) Stock Option data has been adjusted for the two for one stock split on
November 12, 1999, and the 15% stock splits on November 13, 1998, and
November 14, 1997, and November 15, 1996.1997.
(2) The amounts included reflect pre-tax gain. Amounts shown represent the
difference between the stock option grant price and the market value of the
stock on the date of exercise.
(3) The amounts included reflect pre-tax gain. Value of unexercised
in-the-money options and SARs is based on December 31, 1998,1999, closing trade
price of $30.00$13.25.
TrustCo Retirement Plans
Trustco Bank has a defined benefit retirement plan (the "Trustco Bank
Retirement Plan") pursuant to which annual retirement benefits are based on
years of service to a maximum of 30 years and average annual earnings of the
highest five consecutive years during the final ten years of service. The
Trustco Bank Retirement Plan is fully funded by Trustco Bank contributions. In
addition, Trustco Bank has a supplemental retirement plan (the "Trustco Bank
Supplemental Retirement Plan"), which is an actuarial plan, under which
additional retirement benefits are accrued for eligible Executive Officers.
Under the Trustco Bank Supplemental Retirement Plan, the amount of supplemental
retirement benefits is based upon annual contributions which are actuarially
calculated to achieve a benefit at normal retirement which approximates the
differences between (i) the total retirement benefit the participant would have
received under the Trustco Bank Retirement Plan without taking into account
limitations on compensation, annual benefits and years of service; and (ii) the
retirement benefit the participant is projected to receive under the Trustco
Bank Retirement Plan at normal retirement. The Trustco Bank Supplemental
Retirement Plan provides benefits based on years of service to a maximum of 40.
The following table shows the approximate retirement benefits which would
have been payable in 19981999 to salaried employees, under both the Trustco Bank
Retirement Plan and the Trustco Bank Supplemental Retirement Plan, assuming
retirement of such person at age 65, and payment of benefits in the form of a
life annuity. Earnings used in calculating benefits under these Plans are
approximately equal to cash amounts reflected as Salary plus Bonus in the
Summary Compensation Table. These Plans permit service and earnings to continue
to be credited 11
for employment after age 65.
10
The benefits set forth in the following table are in addition to those which may
be received as Social Security benefits. The years of service at normal
retirement age 65 for the Executive Officers (other than Mr. McCormick) named in
the Summary Compensation Table would be as follows: Mr. Cushing, 27 years;
Ms. McNamara, 43 years; Mr. Pidgeon, 44 years; and Mr. Terry, 20 years.
Robert A. McCormick is not a participant in the Trustco Bank Supplemental
Retirement Plan, but has a separate agreement with Trustco Bank under which
additional retirement benefits are accrued. Under the terms of Mr. McCormick's
agreement, benefits are generally calculated on the actuarial basis used in the
Trustco Bank Supplemental Retirement Plan; however, he will be entitled to
benefits equal to those to which he would have been entitled if he had been an
employee of Trustco Bank and a participant under its qualified plans since the
date he joined a former employer. The benefit will be reduced by the amount of
benefits actually paid him under Trustco Bank's qualified plans and by his
former employer's qualified plans. The years of credited service at normal
retirement age 65 for Mr. McCormick would be 47, although Mr. McCormick may
continue to accrue benefits beyond that age.
Pension Plan Table
Annual Benefits for Years of Service
------------------------------------------------------------------------------------------
Remuneration 10 20 30 40
- -------------------------------------------------------------------------------------------------------------------
$200,000 $36,500 $73,800 $112,400 $151,900$73,700 $112,200 $151,800
400,000 76,500 153,100 231,400 311,400153,000 231,300 311,300
600,000 116,500 233,100 351,400 471,400233,000 351,300 471,300
800,000 156,500 313,100 471,400 631,400313,000 471,300 631,300
1,000,000 196,500 393,100 591,400 791,400393,000 591,300 791,300
1,200,000 236,500 473,100 711,400 951,400473,000 711,300 951,300
1,400,000 276,500 553,100 831,400 1,111,400553,000 831,300 1,111,300
1,600,000 316,500 633,100 951,400 1,271,400633,000 951,300 1,271,300
1,800,000 356,500 713,100 1,071,400 1,431,400713,000 1,071,300 1,431,300
2,000,000 396,500 793,100 1,191,400 1,591,400793,000 1,191,300 1,591,300
2,200,000 436,500 873,100 1,311,400 1,751,400873,000 1,311,300 1,751,300
2,400,000 476,500 953,100 1,431,400 1,911,400953,000 1,431,300 1,911,300
2,600,000 516,500 1,033,000 1,551,300 2,071,300
2,800,000 556,500 1,113,000 1,671,300 2,231,300
Generally, an employee who has attained age 55 and has ten years of service
has the right to elect to immediately begin receiving adjusted retirement
benefits less than those indicated in the table upon any separation from service
with Trustco Bank. The Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code"), places a maximum limit on the benefits that can be provided
under qualified retirement plans such as the Trustco Bank Retirement Plan. For
1998,1999, the annual Internal Revenue Code limit for a straight-life annuity benefit
at normal retirement age was $130,000, which amount is actuarially reduced for
participants who retire and begin receiving benefits early.
The Trustco Bank Supplemental Retirement Plan provides that supplemental
benefits will be paid in a single lump sum to a participant who terminates
employment for reasons other than retirement on or after his normal retirement
date.
11
A participant who retires on or after his normal retirement date may elect to be
paid the supplemental benefits upon separation of service from Trustco Bank in
one of the benefit forms provided under the Trustco Bank Retirement Plan or in a
single lump sum or installments over a five-year period. Also under the Trustco
Bank
12
Supplemental Retirement Plan, Trustco Bank, in its discretion, may at any
time elect to make a lump sum distribution of a participant's supplemental
benefit. The amount of this single payment is equal to the participant's
Supplemental Account Balance. Mr. McCormick's separate agreement provides that
Trustco Bank, in its discretion, may at any time elect to make a lump sum
distribution of Mr. McCormick's supplemental benefit. Pursuant to this provision, during 1998
Trustco Bank made a lump sum distribution to Mr. McCormick of $6,480,975. The
amount of this single payment was equal to the balance of Mr. McCormick's
supplemental benefit under his separate agreement.
The Trustco Bank Supplemental Retirement Plan and Mr. McCormick's separate
agreement are unfunded for tax purposes. However, Trustco Bank has established
an irrevocable trust (the "Rabbi Trust") to fund its obligations under these and
other executive compensation plans. Trustco Bank is required to make annual
contributions to the Rabbi Trust. However, the assets of the Rabbi Trust remain
subject to Trustco Bank's general creditors in the event of insolvency.
Personnel Advisory Committee Report on Executive Compensation
The Personnel Advisory Committee of Trustco Bank determines the
compensation of employees and officers of TrustCo and Trustco Bank, including
the named Executive Officers identified in the Summary Compensation Table (the
"Named Executive Officers") which appears elsewhere in this Proxy Statement.
Each of the named Executive Officers in the Summary Compensation Table has an
employment agreement with each of TrustCo and Trustco Bank. These employment
agreements are described elsewhere in this Proxy Statement.
The Personnel Advisory Committee of the Board of Directors of Trustco Bank,
the present members of which are Dr. J. Morris (Chairman), B. Andreoli,
and N. Brickman, and J. Lucarelli (none of whom was an officer of TrustCo or Trustco
Bank during fiscal year 1998)1999), furnished the following report on executive
compensation to the Board of Directors of Trustco Bank, which has been adopted
by the TrustCo Board for the year ended December 31, 1998:1999.
Under the supervision and direction of the Personnel Advisory Committee,
TrustCo and Trustco Bank have developed compensation policies, plans and
programs which seek to enhance profitability of TrustCo and Trustco Bank, and
ultimately shareholder value, by aligning closely the financial interests of
TrustCo's senior management with those of its shareholders. It continues to be
the purpose and intent of the Personnel Advisory Committee to design a
compensation program which reflects the standards of performance of Trustco
Bank, with particular emphasis on setting goals tied to return on shareholder
equity previously defined by the Board of Directors of Trustco Bank.
The function of the Personnel Advisory Committee is to review the general
compensation structure for Executive Officers of Trustco Bank, including the
named Executive Officers, and to recommend to the Board of Directors of Trustco
Bank the salary and benefits of such Executive Officers. The components of
executive compensation for the named Executive Officers include salary, bonus,
stock options, and cash payments under the Trustco Bank Retirement Plan, Trustco
Supplemental Retirement Plan, and Executive Officer Incentive Plan, and in Mr.
McCormick's case, in his separate agreement. The Personnel Advisory Committee
evaluates individual performance and corporate profitability to determine the
level of any compensation adjustment to take effect as of January of the
following year. The Personnel Advisory Committee also identifies persons within
Trustco Bank eligible to participate in the two incentive plans and the Trustco
Supplemental Retirement Plan.
The Personnel Advisory Committee met once during the course of the year, on
October 20, 1998.19, 1999. The Stock Option Committee, whose members are the same as that
of the Personnel Advisory Committee, met separately on 13
June 16, 1998,24, 1999, to
(1) identify eligible participants in the 1995 Stock Option Plan, and (2) award
option grants for the current plan year.
12
The Stock Option Committee considered discussions PricewaterhouseCoopers LLP had
with management regarding general stock option issues and trends when
formulating its final decision on grants awarded under the 1995 Stock Option
Plan. PricewaterhouseCoopers LLP provided information regarding industry trends
for general compensation levels and option levels in the industry.
PricewaterhouseCoopers LLP is not the independent auditor for TrustCo, but
provides various consulting services for TrustCo from time to time. While
TrustCo does not have a target ownership level for equity holdings by its
executives, the Stock Option Committee does take into account the amount and
value of options currently held by eligible participants when granting option
awards. Options may be granted in varying amounts so as to create relative
ownership parity among the Executive Officers participating in the 1995 Stock
Option Plan.
It is the aim of the Personnel Advisory Committee to determine salary and
benefit levels of executive compensation principally upon the basis of overall
corporate performance, although elements of corporate performance may vary from
year to year in the discretion of the Personnel Advisory Committee and among
Executive Officers. In making any such determination, the Personnel Advisory
Committee will consider a number of factors including, among others, TrustCo's
and Trustco Bank's return on equity, attainment of net income goals and total
asset targets, overall profitability from year to year, banking experience of
individual officers, scope of responsibility within the overall organization,
performance and particular contributions to Trustco Bank and TrustCo during the
course of the year, and other relevant factors, including involvement in
community matters which may better position the organization to serve the
immediate needs of Trustco Bank's market. The Personnel Advisory Committee uses
broad discretion when determining compensation levels and considers all of the
above criteria. It does not assign a specific weight to any of these factors
when establishing salary and benefit levels.
The Personnel Advisory Committee may also consider compensation programs
offered to executives performing similar duties for competing depository
institutions and their holding companies, with a particular focus on the level
of compensation paid by comparable institutions. To assist in this evaluation,
an industry group of ten regional bank holding companies, called the Dow Jones
Regional Banks-Eastern U.S. Index , was identified by the Personnel Advisory
Committee for performance and compensation comparisons. This Index is comprised
of a broad-based group of banks on the East Coast and was chosen for comparative
purposes because of its members' geographic proximity to Trustco Bank. This peer
group consists of the same companies that comprise the published industry index
used in the performance graph that follows this report. While Trustco Bank is
comparatively smaller in terms of total asset size than the members of this peer
group, Trustco Bank competes favorably competes with these institutions in terms of
overall corporate performance. TrustCo's return on
asset and return on equity ratios ranked in the top 70% and top 50%,
respectively, when compared to the members of this peer group, yet the base
salary of TrustCo's Chief Executive Officer was below the mean and median base
salary of the peer group members' Chief Executive Officers. The Personnel Advisory Committee further takes
into consideration the unique size of TrustCo's executive group as compared to
other financial institutions. Trustco Bank and TrustCo currently operate with
fivefour Executive Officers, whereas many institutions in this peer group have a
larger pool of Executive Officers.
During its meeting in 1998,1999, the Personnel Advisory Committee decided not to
change the current basic salary structure, short-term incentive compensation for
executives or features of other employee benefits plans. The Executive Officer
Incentive Plan was amended to provide for the automatic deferral of awards under
the Plan to the extent that such awards;awards, together with a participant's other
compensation is expected to exceed the limitation on deductible compensation
under Code Section 162(m). In addition, a rabbi trustRabbi Trust has been established to
hold any amounts deferred under this provision of the Executive Officer
Incentive Plan.
14
The Personnel Advisory Committee continues to believe that Trustco Bank is
better able to attract, retain, and motivate Trustco Bank's executives to
achieve superior performance if a relatively large percentage of senior
executive compensation is at risk. In other words, Trustco Bank's compensation
for senior executives, including the named Executive Officers, is designed with
an objective of providing less total compensation when TrustCo's
13
performance is poorer than a peer group of companies, and providing superior
total compensation when performance is superior to that of the peer group.
In evaluating corporate performance for purposes of establishing short-term
incentive compensation awards for Executive Officers, the Personnel Advisory
Committee evaluated TrustCo's performance as compared with TrustCo's profit plan
for the year, and also evaluated financial results (generally return on equity)
as compared with peers for the current year. In the opinion of the Personnel
Advisory Committee, return on equity is the most significant measure of
performance of TrustCo and its relative importance to shareholders. Therefore,
the target pools were established to provide senior executives with an incentive
to increase return on equity performance. The Personnel Advisory Committee then
established a percentage of target pool to be paid as short-term incentive
compensation. The target pool payment would be made to senior executives based
on TrustCo's return on average equity for the year. The range of target returns
on average equity was from 14%, which equates to a 40% payout of base
compensation, to 20% return on average equity, which equates to a 125% payout of
base compensation. In 1997, the Committee amended the incentive plan to
establish a 15 basis point increase in payout for each 1% increase in average
return on equity beyond 20%. Return on average equity in 19981999 was 21.47%22.52%. Senior
executives would receive no incentive compensation award for return on average
equity below 14%.
In consideration of the potential benefits payable under the incentive
program described above, senior executives ceased to be eligible for
contributions to Trustco Bank's Profit Sharing Plan beginning in 1994, which
qualifies for favorable tax treatment, and to which Trustco Bank historically
has made contributions equal to 15% of compensation.
The Personnel Advisory Committee's actions concerning compensation were
ultimately judgementsjudgments based upon the Committee's ongoing assessment and
understanding of TrustCo and its Executive Officers, performance of its
Executive Officers, and whether or not cash payments or incentive payments would
provide an appropriate award or incentive to the Officers' contribution to
TrustCo's past and future performance.
With respect to total compensation paid to Mr. McCormick during 1998,1999, the
Personnel Advisory Committee reviewed, among other criteria noted above, the
consistent growth in performance and shareholder equity since his appointment as
President in 1982 and Chief Executive Officer in 1984, and his ability to
effectively influence and lead the executive team to attain this performance
level. The Personnel Advisory Committee exercises broad discretion when
considering these criteria and does not assign a specific weight to any of these
factors. Mr. McCormick did not participate in the discussions regarding his
compensation.
PERSONNEL ADVISORY COMMITTEE:
John S. Morris, Ph.D.
Barton A. Andreoli M.
Norman Brickman
15Joseph Lucarelli
14
Share Investment Performance
The following graphs show changes over five-year and ten-year periods in
the value of $100 invested in: (1) TrustCo Common Stock; (2) the Standard &
Poor's 500 index; and (3) an industry group of ten other regional bank holding
companies, called the Dow Jones Regional Banks-Eastern U.S. Index. TrustCo
management believes that longer term performance is of greater importance to
TrustCo shareholders. The ten-year period is presented in addition to the
five-year period required by the S.E.C. because it provides additional
perspective. The banks comprising the DowJonesDow Jones Regional Banks-Eastern U.S.
Index are: BankBoston Corp., The Bank of New York Co., Fleet Financial Group
Inc., MBNA Corp., Mellon Bank Corp., Mercantile Bankshares Corp., PNC Bank
Corp., State Street Corp., Summit Bancorp, and Wilmington Trust Corp.
The year-end pre-tax values of each investment are based on share price
appreciation plus dividends paid, with cash dividends reinvested the date they
were paid.
COMPARISON OF 5 YEAR5-YEAR CUMULATIVE TOTAL RETURN*
AMONG TRUSTCO BANK CORP. NY, THE S&P & P 500 INDEX
AND THE DOW JONES REGIONAL BANKS-EASTERNBANKS - EASTERN U.S. INDEX
Trustco Bk NY(TRST)*$100 INVESTED ON 12/31/94 IN STOCK OR INDEX.
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING DECEMBER 31.
TRUSTCO BK CORP N Y
Cumulative
Total Return
- - - - - -
12/93------------------------------------------------------------------------------
12/94 12/95 12/96 12/97 12/98 12/99
TRUSTCO BANK CORP. NY 100 103 142 166 255 336100.00 138.15 161.29 247.87 326.39 300.01
S&P & P 500 100 101 139 171 229 294100.00 137.58 169.17 225.61 290.09 351.13
DOW JONES REGIONAL BANKS-EASTERNBANKS - EASTERN U.S. 100 96 165 228 373 436100.00 170.80 236.14 387.13 452.16 430.76
$100 Invested on 12/31/93 on stock or Index, reinvestment of dividends,
Fiscal year ending December 31.
1615
COMPARISON OF 10 YEAR10-YEAR CUMULATIVE TOTAL RETURN*
AMONG TRUSTCO BANK CORP. NY, THE S&P & P 500 INDEX
AND THE DOW JONES REGIONAL BANKS-EASTERNBANKS - EASTERN U.S. INDEX
Trustco Bk NY(TRST)*$100 INVESTED ON 12/31/89 IN STOCK OR INDEX.
INCLUDING REINVESTMENT OF DIVIDENDS
FISCAL YEAR ENDING DECEMBER 31.
Cumulative Total Return
- - - - - - - - - - -
12/88-------------------------------------------------------------------------------------------
12/89 12/90 12/91 12/92 12/93 12/94 12/95 12/96 12/97 12/98 12/99
TRUSTCO BANK CORP. NY 100 120 122 189 247 347 357 493 576 885 1165100.00 94.54 146.99 191.81 269.55 277.55 383.43 447.67 687.96 905.90 832.69
S&P & P 500 100 132 128 166 179 197 200 275 338 451 580100.00 96.89 126.42 136.05 149.76 151.74 208.77 256.70 342.34 440.17 532.80
DOW JONES REGIONAL BANKS-EASTERNBANKS, EASTERN U.S. 100 102 57 106 152 159 154 262 362 594 694100.00 55.84 103.36 148.71 155.84 150.24 256.62 354.78 581.63 679.34 647.18
$100 Invested on 12/31/88 on stock or Index, reinvestment of dividends,
Fiscal year ending December 31.
Employment Contracts and Termination of Employment Arrangements
TrustCo and Trustco Bank have entered into agreements (individually, a
"TrustCo Employment Agreement" and, collectively, the "TrustCo Employment
Agreements") to engage the services of the named Executive Officers: Robert A.
McCormick, the President and Chief Executive Officer of TrustCo and Trustco Bank
(the "President"); Nancy A. McNamara, Vice President of TrustCo, Ralph A.
Pidgeon, Vice President and Assistant Secretary of TrustCo, William F.
Terry, Secretary of TrustCo, and Robert T. Cushing, Vice President and Chief
Financial Officer of TrustCo, each a Senior Vice President of Trustco Bank as
well (collectively, the "Vice Presidents").
(1) President's TrustCo Employment Agreement
The President's TrustCo Employment Agreement, dated as of January 1, 1992,
and amended as of September 1, 1994, had an initial term expiring on
December 31, 1994. The Agreement automatically renewed on January 1, 1995, and
renews each year thereafter, for a succeeding three-year term until the
President receives a non-renewal notice or he reaches the mandatory retirement
age of 70, or the then mandatory retirement age, whichever is greater.
The President's TrustCo Employment Agreement provides that his annual
compensation shall be his annual base salary plus his executive incentive bonus
("Annual Compensation"). Mr. McCormick's Annual Compensation in future years
will be negotiated with TrustCo and Trustco Bank and shall not be less than his
Annual Compensation for the preceding calendar year. As further compensation,
Mr. McCormick is entitled to participate fully in any
16
disability, death benefit, retirement, executive incentive compensation, or
pension plans maintained by TrustCo
17
and/or Trustco Bank. Notwithstanding the
foregoing, and as described in greater detail herein under the caption
"Personnel Advisory Committee Report on Executive Compensation," Mr. McCormick
has ceased to be eligible to participate in the Trustco Bank Profit Sharing Plan
in consideration of the potential benefits under the short-term incentive plan
described above. In the event there is a termination of the President for any
reason, other than good cause, or retirement, then he shall receive upon his
termination an amount equal to three times his then Annual Compensation, to be
paid at his election either (a) in a single lump sum reduced to its present
value, within ten days of his termination, or (b) in three equal annual payments
each in the amount of the Annual Compensation then in effect with the first
payment to be made within ten days after his termination. The President's
TrustCo Employment Agreement also provides for a gross up payment in the event
that the amounts payable to the President upon his termination under the
President's TrustCo Employment Agreement or any other agreement are subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code.
Upon termination of the President's employment due to retirement or
disability, TrustCo and Trustco Bank shall provide to the President and his
wife, for the life of the President, the same health insurance benefits provided
to retirees by TrustCo and Trustco Bank under their medical insurance plan.
TrustCo and Trustco Bank will also provide to the President for his life the
same life insurance benefits provided to retirees by TrustCo and Trustco Bank
under their life insurance plan.
The President's TrustCo Employment Agreement defines termination to include
(a) any reduction in the President's then current annual compensation (including
executive incentive compensation), disability, death, retirement, pension or
profit sharing benefits (unless such reductions shall be applied to all Trustco
Bank employees as part of a validly adopted plan of cost containment), or his
responsibilities or duties; (b) either TrustCo's or Trustco Bank's relocation or
a change in the President's base location; (c) receipt of a non-renewal notice
pursuant to the President's TrustCo Employment Agreement; or (d) the unilateral
election of the President to terminate his TrustCo Employment Agreement.
Notwithstanding the foregoing, the parties to the President's TrustCo Employment
Agreement have agreed that Mr. McCormick's ineligibility to participate in the
Trustco Bank Profit Sharing Plan, as aforesaid, shall not have effected a
termination of such employment agreement.
(2) Vice Presidents' TrustCo Employment Agreements
The TrustCo Employment Agreements for the Vice Presidents (except for
Robert T. Cushing, whose employment agreement was executed on June 21, 1994)
were restated effective as of June 21, 1994. These employment agreements have
one-year terms that automatically renew on January 1 of each year, unless a Vice
President receives a non-renewal notice or he or she reaches a specified
retirement age. The Vice Presidents' TrustCo Employment Agreements provide that
the annual compensation of each Vice President shall be his or her annual base
salary, which amount may be adjusted as agreed among the parties during each
renewal term. The Vice Presidents are also entitled to participate fully in any
disability, death benefit, retirement, executive incentive compensation, or
pension plans. Notwithstanding the foregoing, and as described in greater detail
herein under the caption "Personnel Advisory Committee Report on Executive
Compensation," the Vice Presidents ceased to be eligible to participate in the
Trustco Bank Profit Sharing Plan in consideration of the potential benefits
under the short-term incentive plan described above.
In the event there is a termination of a Vice President within two years
after a change in control of TrustCo or Trustco Bank, for any reason other than
for good cause, death, retirement at the mandatory retirement age, or
disability, then he or she shall receive, within ten days of his or her
termination, an amount equal to two times the
17
Vice President's annual base salary then in effect. The TrustCo Employment
Agreements for the Vice Presidents
18
also provide for a gross up payment in the
event that the amounts payable to a Vice President upon his or her termination
under such Vice President's TrustCo Employment Agreement or any other agreement
involving such Vice President are subject to the excise tax imposed by Section
4999 of the Internal Revenue Code.
Upon termination of a Vice President's employment due to retirement or
disability, TrustCo and Trustco Bank shall provide to the Vice President and his
or her spouse, for the life of the Vice President, the same health insurance
benefits provided to retirees by TrustCo and Trustco Bank under their medical
insurance plan. TrustCo and Trustco Bank will also provide to the Vice President
for his or her life the same life insurance benefits provided to retirees by
TrustCo and Trustco Bank under their life insurance plan.
The TrustCo Employment Agreements for the Vice Presidents define
termination within two years after a change in control to include: (a) any
reduction in the executive's annual compensation (including executive incentive
compensation), disability, death, retirement, pension or profit sharing benefits
(unless such reductions shall be applied to all Trustco Bank employees as part
of a validly adopted plan of cost containment), responsibilities or duties;
(b) either TrustCo's or Trustco Bank's relocation or a change in the executive's
base location; (c) receipt of a non-renewal notice pursuant to the Vice
President's TrustCo Employment Agreement; or (d) the unilateral election of the
executive to terminate his or her TrustCo Employment Agreement. Notwithstanding
the foregoing, the parties to the Vice Presidents' TrustCo Employment Agreements
have agreed that the Vice Presidents' ineligibility to participate in the
Trustco Bank Profit Sharing Plan, as aforesaid, shall not have effected a
termination of such employment agreements.
(3) General Provisions
In addition to termination payments for the President and Vice Presidents
described above, all TrustCo Employment Agreements provide for (a) the payment
in full of each employee's compensation due, including retirement, pension and
profit sharing plans, through the termination date, (b) the continuation of
health and group life insurance benefits for at least one year following
termination, and (c) the cost of any legal expenses as a result of such
termination.
Performance Bonus Plan
Under the Officers Performance Bonus Plan, officers and key employees of
TrustCo are eligible to be awarded units, the value of which is based upon the
appreciation in value of Common Stock between the date of the award and the
occurrence of a "change in control" as defined in the Officers Performance Bonus
Plan. The units so awarded vest, and payments under the Officers Performance
Bonus Plan are to be made, only upon the occurrence of a change in control or
upon a participant's termination of employment with TrustCo within the year
prior to a change of control. In 1997, Mr. McCormick was awarded 529,0001,058,000 units, and Mr.
Cushing, Ms. McNamara, Mr. Pidgeon, and Mr. Terry were each awarded 198,375396,750
units, all at a base price of $15.74$7.87 per unit (after adjustment for the 15% stock
splits on November 14, 1997 and November 13, 1998)1998, and the two for one stock
split on November 12, 1999).
THE TRUSTCO BOARD RECOMMENDS A VOTE FOR THE ELECTION OF
THE TRUSTCO DIRECTORNOMINEESDIRECTOR NOMINEES AS TRUSTCO DIRECTORS, WHICH
IS ITEM 1 ON THE TRUSTCO PROXY CARD
1918
Item 2. Amendment of TrustCo's Amended and Restated Certificate of Incorporation
to Increase the Number of Authorized Shares
The TrustCo Board has unanimously approved certain amendments to
Section 4.1 of TrustCo's Amended and Restated Certificate of Incorporation (the
"Certificate") and has voted to recommend that the TrustCo shareholders adopt
the amendment (the "Certificate Amendment"). The Certificate Amendment will
increase the number of authorized shares of Common Stock from 50,000,000 to
100,000,000 shares. As of March 1, 1999, there were 28,126,167 shares of Common
Stock issued, including 1,240,027 treasury shares.
Reasons For and Effect of the Certificate Amendment
The increase in authorized shares will provide authorized Common Stock
for issuance from time to time as may be necessary in connection with future
financings, investment opportunities, acquisitions of other companies, the
declaration of stock dividends or stock splits, other distributions, or for
other corporate purposes. TrustCo has no present plans, understandings or
agreements for issuing the additional shares to be authorized by the proposed
Certificate Amendment, but it is necessary to have authorization for additional
shares in order to enable TrustCo, as the need may arise, to take prompt
advantage of market conditions and the availability of favorable opportunities
without the delay and expense incident to the holding of a special meeting of
shareholders of TrustCo.
The issuance of additional shares of Common Stock of TrustCo may dilute
the equity ownership position of current TrustCo shareholders. Shareholders do
not possess preemptive rights and thus will not have a first right of refusal to
purchase the additional shares. Unless required by applicable law, no further
authorization or vote of the TrustCo shareholders will be solicited for the
issuance of the additional shares of Common Stock.
Although the Certificate Amendment is being proposed by the TrustCo
Board for reasons other than as an "anti-takeover" device, the additional
authorized shares, if issued, could make it more difficult for a person to
acquire the requisite amount of stock needed to control TrustCo. The issuance of
additional shares thus could have the effect of making it more difficult to
remove incumbent management. TrustCo's Certificate of Incorporation, and the
Bylaws contain provisions which may be viewed as having an "anti-takeover"
effect. Article 10 of TrustCo's Certificate of Incorporation, which provides
that a "business combination," as defined in that Article (including mergers,
consolidations and acquisitions of substantially all assets), involving TrustCo
and any entity owning more than 5% of TrustCo's voting stock, may not be
consummated even if the normal statutory requirements are met, unless the
business combination also (i) involves payment of a "fair consideration" to
TrustCo's shareholders as described in TrustCo's Certificate of Incorporation,
(ii) is approved by at least two-thirds (66-2/3%) of the disinterested directors
of TrustCo, or (iii) is approved by at least two-thirds (66-2/3%) of the
outstanding voting shares of TrustCo. This "fair consideration" provision was
included in TrustCo's Certificate of Incorporation to make it more likely that
any acquisition of TrustCo will involve payment of a fair price to all
shareholders of TrustCo.
TrustCo's Certificate of Incorporation and Bylaws also provide for a
classified Board of Directors, under which one-third of the directors are
elected to three-year terms at each annual shareholders' meeting. In effect, the
existence of a classified board may increase the time required for any one or
more persons owning a majority or controlling block of stock to elect a majority
of the directors. Without a classified board, a change in control can be
accomplished at a single annual shareholders' meeting; with a classified board,
at least two successive annual shareholders' meetings may be required. A
classified board may help to moderate the pace of any change in control of the
TrustCo Board, and by increasing the stability of the TrustCo Board, may also
increase its effectiveness. On the other hand, the extension of time required to
obtain control of the TrustCo Board also tends to discourage a tender offer or
takeover bid.
20
At the present time, there are no plans to issue additional shares of
Common Stock, other than as contemplated under existing TrustCo stock option
plans.
Vote Required
The Certificate Amendment will be adopted if approved by the
affirmative vote of the holders of at least two-thirds (2/3) of the Common
Stock. The TrustCo Board believes the adoption of the Certificate Amendment will
be in the best interests of the TrustCo shareholders. Dissenting votes give rise
to no rights on the part of dissenters.
THE TRUSTCO BOARD RECOMMENDS THAT TRUSTCO
SHAREHOLDERS VOTE FOR THIS PROPOSAL, WHICH IS
ITEM 2 ON THE TRUSTCO PROXY CARD.
Item 3. Amendments to the 1995 TrustCo Bank Corp NY Stock Option Plan to
Increase the Number of Plan Shares
The third item to be acted upon at the TrustCo Annual Meeting is a
proposal seeking shareholder approval of amendments to the 1995 Stock Option
Plan to (i) increase the aggregate number of shares of Common Stock available to
be issued pursuant to the 1995 Stock Option Plan from 1,825,050 (which reflects
the 15% stock splits on November 13, 1998, November 14, 1997, November 15, 1996,
and the six-for-five stock split on August 24, 1995 (the "Stock Splits")) to
3,000,050; and (ii) provide that the maximum aggregate number of shares of
Common Stock with respect to which stock options may be granted in a calendar
year to any single employee shall be 500,000 shares, in accordance with Section
162(m) of the Internal Revenue Code. Options have been granted with respect to
1,786,481 of the shares previously authorized by the shareholders.
The TrustCo Board, at its regular meeting duly called and held on
February 16, 1999, approved resolutions adopting the foregoing proposed
amendments to the 1995 Stock Option Plan, conditioned upon shareholder approval
and regulatory approval.
The purpose of the Stock Option Plan is to assist TrustCo in obtaining
and maintaining its executive force at the most efficient level.
The following is a brief description of the material features of the
1995 Stock Option Plan:
Administration
The 1995 Stock Option Plan is administered by the Stock Option
Committee of TrustCo's Board. The Stock Option Committee is appointed from time
to time by the TrustCo Board and is composed of three or more members of the
TrustCo Board who were not eligible to receive options under the 1995 Stock
Option Plan within the one year period immediately preceding their appointment.
The Stock Option Committee selects the employees eligible to receive stock
options and stock appreciation rights pursuant to the 1995 Stock Option Plan,
grants the stock options and stock appreciation rights, and determines when the
stock options and stock appreciation rights will be granted, the number of
shares of Common Stock to be granted to any individual, the option price and
term of each stock option, and all of the other terms and conditions of each
stock option and stock appreciation right granted. The terms and conditions of
stock options and stock appreciation rights granted under the 1995 Stock Option
Plan are reflected in individual option agreements and may not be changed after
execution except to the extent that the agreement may by its terms be so
amended. The Stock Option Committee is also authorized to determine, for
purposes of the 1995 Stock Option Plan, the duration and purpose of any leave of
absence which may be granted to an eligible employee without constituting a
termination of employment, and if Common Stock
21
previously acquired by an optionee may be used in payment of an option price. No
Stock Option Committee member or other member of the TrustCo Board may
participate in a decision to award any stock option or stock appreciation right
under the 1995 Stock Option Plan to himself or herself. The Stock Option
Committee has full authority to interpret and regulate the 1995 Stock Option
Plan and stock options and stock appreciation rights granted thereunder and to
establish, amend, and rescind rules and regulations relating to the operation of
the 1995 Stock Option Plan. All determinations by the Stock Option Committee are
conclusive. The TrustCo Board reserves the right to prospectively terminate any
and all powers delegated to the Stock Option Committee by written resolution, in
which event all powers of the Stock Option Committee revert to the TrustCo
Board.
Participants
Stock options and stock appreciation rights may be granted to any
person who, at the time of the grant, is a full-time, salaried executive or
other key managerial employee of TrustCo or a participating subsidiary. The
individuals and number of persons who may be selected to participate in the 1995
Stock Option Plan in the future are at the discretion of the Stock Option
Committee and, therefore, are not determinable at this time. (Please refer to
"Item 1. Election of Directors - TrustCo and Trustco Bank Executive Officer
Compensation" for a discussion of the past participation in the 1995 Stock
Option Plan by the TrustCo Executive Officers named herein.) Likewise, the
number of stock options and stock appreciation rights that will be granted to
eligible employees pursuant to the 1995 Stock Option Plan (if amended as
proposed hereby) are not determinable at this time.
Stock Subject to the 1995 Stock Option Plan
If the 1995 Stock Option Plan is amended as proposed 3,000,050 shares
of Common Stock, which may be either authorized but unissued shares or treasury
shares, will be available for issuance under the 1995 Stock Option Plan (subject
to adjustment for future stock dividends, stock splits and other changes in
capitalization as described in the 1995 Stock Option Plan). The market value of
the shares of Common Stock underlying the options available for grant under the
1995 Stock Option Plan if the proposed amendments are approved would be
$33,947,371 as of March 1, 1999, which is the amount TrustCo would receive upon
exercise if all such remaining options were issued as of that date. Currently,
there is no maximum or minimum number of shares for which a stock option may be
granted. Under the proposed amendments, however, the maximum number of shares of
Common Stock with respect to which stock options may be granted in a calendar
year to any single employee shall be 500,000 shares. This new limit is being
imposed to further ensure that the stock options granted under the 1995 Stock
Option Plan are treated as performance-based compensation, which can be excluded
in calculating the $1,000,000 limitation in Section 162(m) of the Internal
Revenue Code on tax deductions for compensation paid to the executives named in
the Summary Compensation Table. Stock options and SARs may qualify as
performance-based compensation if granted pursuant to a plan approved by
shareholders that, among other things, imposes a maximum limit on the number of
shares underlying such awards that may be granted to any participant over a
specified period. TrustCo does not expect to change its practices with respect
to determining grants of options and SARs. The 1995 Stock Option Plan also
currently provides that the aggregate fair market value of stock, determined as
of the time of the grant, with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year under the
1995 Stock Option Plan, or any other plan maintained by TrustCo which grants
incentive stock options, may not exceed $100,000.
Option Price
The price at which shares may be purchased pursuant to each stock
option may not be less than 100% of the fair market value thereof on the date on
which the option is granted. If, however, any incentive stock option is
22
granted to an eligible employee who at the time of the grant owns more than 10%
of the combined voting power of all classes of TrustCo's stock or of its
subsidiary companies (a "Shareholder-Employee"), the option price may not be
less than 110% of the fair market value of the stock on the date on which the
option is granted.
Option Period
Options may be exercised at such times and for such number of shares as the
Stock Option Committee may determine. The period during which an option may be
exercised may not exceed ten years from the date of grant of such option or five
years from the date of grant if to a Shareholder-Employee. Any stock options or
stock appreciation rights granted under the 1995 Stock Option Plan will
accelerate and become exercisable immediately upon a "change in control" of
TrustCo. A "change of control" is considered to have occurred if, among other
things, (i) a contract is executed providing for a merger or consolidation of
TrustCo with or into another entity (unless TrustCo is the surviving entity and
the merger does not affect the TrustCo shareholders' stock interest) or for a
sale of substantially all the assets of TrustCo, (ii) a single entity or
individual (including any related parties to such entity or individual) acquires
20% or more of the outstanding TrustCo Common Stock, or (iii) within any
consecutive 12-month period, there is a change in a majority of the TrustCo
Board members unless the nomination or election of each new director was
approved by at least two-thirds of the TrustCo Board in office at the beginning
of the 12-month period. Upon the occurrence of a dissolution or liquidation of
TrustCo, a proposed sale of substantially all of TrustCo's assets or a merger or
consolidation in which TrustCo is not the survivor, each outstanding stock
option and stock appreciation right will terminate as of a date determined by
the TrustCo Board and optionees must be given not less than 30 days notice of
such termination date during which time the option may be exercised.
Upon the exercise of a stock option during the 60-day period from and
after a change in control of TrustCo, the optionee exercising such option may,
in lieu of receiving stock, elect by written notice to TrustCo to receive an
amount in cash equal to the excess of the aggregate value of the shares of stock
covered by the option or the portion thereof which is surrendered over the
aggregate exercise price of such option. However, if the end of the 60-day
period is within six months of the date of a grant of an option held by an
optionee who is an officer of TrustCo, such option will be canceled in exchange
for a cash payment to the optionee equal to the aggregate spread on the day
which is six months and one day after the date of the grant of such option.
Stock will be substituted for the cash payable as described immediately above if
any right granted in connection with this paragraph would make a change of
control transaction ineligible for pooling of interests accounting under APB No.
16.
Termination of Employment
Upon termination of an optionee's employment for any reason other than
death, disability or retirement, any stock option granted to such optionee will
terminate three months after the date his employment terminates. If an optionee
terminates employment as a result of disability or retirement, any stock option
granted to such optionee will terminate upon the date the option otherwise
terminates. In the case of death, any option previously granted will terminate
upon the date prescribed by the Stock Option Committee, provided that no such
option shall be exercisable after the applicable ten-year or five-year time
period noted above. Furthermore, if an optionee's employment terminates by his
death, disability, or retirement, the vesting of each stock option will
accelerate and become exercisable in full upon such termination. The period
during which an option may be exercised upon such termination is as discussed
above.
If an optionee's employment terminates due to disability or retirement, the
tax treatment available pursuant to Section 422 of the Internal Revenue Code
upon the exercise of any incentive stock option will not be available to
23
an optionee who exercises any incentive stock option more than (a) three months
after the date of termination of employment due to retirement, or (b) twelve
months after the date of such termination of employment due to disability.
Transferability
Stock options and any related stock appreciation rights issued under
the 1995 Stock Option Plan are not transferable by the optionee except by will
or by the laws of descent and distribution. During the lifetime of an optionee,
the option may be exercised only by the optionee and after his death only by his
heirs, legatees or personal representatives who succeed to his interest under
the option agreement. Notwithstanding the foregoing, in addition to
non-transferable stock options, the Stock Option Committee may grant
nonqualified stock options that are transferable, without payment of
consideration, to (i) revocable trusts for the benefit of immediate family
members which qualify as grantor trusts for Federal income tax purposes, (ii) by
gift to immediate family members, and (iii) to partnerships whose only partners
are immediate family members. The Stock Option Committee may also amend
outstanding nonqualified stock options to provide for such transferability.
Notwithstanding the foregoing, in the event that a transferable nonqualified
stock option is transferred as hereinbefore discussed, such nonqualified stock
option may be exercised by such transferee. The transferee of a transferable
nonqualified stock option is subject to all of the conditions applicable to the
transferable nonqualified stock option prior to its transfer.
Rights as a Shareholder
No optionee shall have any rights of a shareholder in respect of any
shares subject to option until certificates for such shares have been issued to
such optionee.
Method of Exercise
Stock options and stock appreciation rights are exercisable in the
manner set forth in the option agreements. The option price for a stock option
may be paid in cash, certain cash equivalents, or, if the Stock Option Committee
so determines, in whole or in part by an exchange of Common Stock previously
acquired by the optionee based upon the fair market value of such stock as of
the date of exchange or by the simultaneous exercise of a stock option and the
sale of the stock represented thereby, as the Stock Option Committee may allow
in its discretion. If the optionee acquired the stock to be exchanged by an
exercise of an incentive stock option, said optionee must have held such stock
for more than two years after the date the previous option was granted and for
more than one year after the date the previous option was exercised in order to
retain the favorable tax treatment afforded incentive stock options. In an
effort to encourage ownership of Common Stock by executives, the Stock Option
Committee may, in certain cases, grant "reload" options to optionees who have
undertaken "cashless" option exercises in which the optionee sells a portion of
the option shares to pay the exercise price and the taxes thereon. The reload
options are intended to replace options exercised and option shares sold to pay
the exercise price. The Stock Option Committee may, in its discretion, withhold
shares upon the exercise of a stock option under the 1995 Stock Option Plan in
respect to any tax or similar liability incurred with respect to such exercise.
Changes in Capitalization
If there is any change in the shares of TrustCo by reason of stock
dividends, stock splits or other changes in capitalization, the number of shares
subject to the 1995 Stock Option Plan, the number of shares subject to any
outstanding option or stock appreciation right, and the price thereof, shall be
adjusted by the Stock Option Committee.
24
Amendment and Termination
The 1995 Stock Option Plan may be amended, suspended, terminated, or
reinstated, in whole or in part, at any time by the TrustCo Board. However, no
modification may be made without the approval of the TrustCo shareholders which
would (i) increase the maximum number of shares subject to options issued under
the 1995 Stock Option Plan, except for adjustments due to changes in
capitalization as noted above, (ii) extend the maximum period during which a
stock option may be exercised, (iii) extend the maximum period during which
incentive stock options may be granted under the 1995 Stock Option Plan, or (iv)
change the class of eligible employees.
Federal Income Tax Consequences of the Plan
Upon exercise of a non-qualified stock option, an optionee will
realize income in the year of exercise equal to the difference between the
exercise price and the value of the shares acquired, and TrustCo may deduct an
amount equal to the income recognized by the optionee. TrustCo will not receive
a tax deduction at the time of a grant or exercise of an incentive stock option,
and no income is recognized by an optionee when an incentive stock option is
granted or exercised pursuant to the 1995 Stock Option Plan. When an incentive
stock option is exercised, the difference between fair market value at the date
of exercise and the exercise price will be an item of adjustment for purposes of
calculating the optionee's alternative minimum tax for the year of exercise.
If the incentive stock option shares are disposed of after the later
of two years from the date of option grant or one year after the transfer of the
shares to the optionee (the "holding period") any gain or loss upon disposition
of the shares will be treated for federal income tax purposes as long-term
capital gain or loss, as the case may be. A disposition includes a sale,
exchange, gift, or other transfer of legal title. In general, an optionee's
basis in the shares received upon exercise of an incentive option will be the
exercise price paid by him for the shares. If the option shares are disposed
before the expiration of the holding period, all or part of the gain, if any,
will be characterized as ordinary income depending upon the relative amount of
the sale price of the shares as compared with the exercise price of the shares,
provided that the amount of ordinary income realized by an employee in a sale or
exchange with respect to which a loss would be recognized is limited to the
excess of the amount realized on the sale or exchange over the stock's adjusted
basis.
Ordinary income received on account of a disposition of shares within
the holding period will be taxable as additional compensation, and TrustCo may
treat such income as a deductible expense for federal income tax purposes.
Vote Required
The affirmative vote of a majority of all the issued and outstanding
shares of Common Stock is required to approve the foregoing amendments to the
1995 Stock Option Plan. Dissenting votes give rise to no rights on the part of
dissenters.
The TrustCo Board believes the 1995 Stock Option Plan, as so amended,
will be in the best interests of TrustCo and its shareholders.
THE TRUSTCO BOARD RECOMMENDS THAT TRUSTCO SHAREHOLDERS VOTE FOR THIS
PROPOSAL, WHICH IS ITEM 3 ON THE TRUSTCO PROXY CARD.
25
Item 4. Ratification of the Appointment of Independent Auditors
KPMG LLP ("KPMG"), certified public accountants, were the independent
auditors for TrustCo for the year ended December 31, 1998,1999, and the TrustCo Board
has again selected and appointed them as the independent auditors for the year
ending December 31, 1999.2000. A resolution will be presented at the Annual Meeting
to ratify their appointment as independent auditors. The independent auditors
will report on the consolidated financial statements of TrustCo for the current
calendar year and will perform such other non-audit services as may be required
of them. Representatives of KPMG are expected to be present at the Annual
Meeting to make a statement if they so desire and are also expected to be
available to respond to appropriate questions that may be raised.
During the year ended December 31, 1998,1999, KPMG provided various audit and
non-audit professional services to TrustCo. Audit services so provided included
examination of the consolidated financial statements of TrustCo, review,
assistance, and consultation in connection with the filing of the Form 10-K
Annual Report with the S.E.C., and assistance with accounting and financial
reporting requirements. Non-audit services so provided included the preparation
and planning of corporate tax returns.
Vote Required
The affirmative vote of a majority of all of TrustCo's issued and
outstanding shares of Common Stock is required to ratify the appointment of KPMG
as TrustCo's independent auditors for the year ending December 31, 1999.2000.
Dissenting votes give rise to no rights on the part of dissenters.
THE TRUSTCO BOARD RECOMMENDS THAT TRUSTCO SHAREHOLDERS VOTE FOR THIS
PROPOSAL, WHICH IS ITEM 42 ON THE TRUSTCO PROXY CARD.
Item 5.3. Other Matters
The TrustCo Board is not aware of any other matters that may come before
the Annual Meeting. However, the proxies may be voted with discretionary
authority with respect to any other matters that may properly come before the
Annual Meeting.
S.E.C. FORM 10-K:
TrustCo will provide without charge a copy of its annual report on Form
10-K upon written request. Requests and related inquiries should be directed to:
William F. Terry, Secretary, TrustCo Bank Corp NY, P.O. Box 1082, Schenectady,
New York 12301-1082.
Ownership of TrustCo Common Stock by Certain Beneficial Owners
TrustCo is not aware of any person who, as of the date hereof, is the
beneficial owner of more than 5% of the Common Stock.
At March 1, 1999,2000, the Trust Department of Trustco Bank held 1,808,9104,902,142
shares of Common Stock as executor, trustee and agent (6.8%(9.17% of outstanding
shares) not otherwise reported in this Proxy Statement. Neither TrustCo nor
Trustco Bank has any beneficial interest in these shares.
2619
Transactions with TrustCo and Trustco Bank Directors, Executive Officers and
Associates
Some of the Directors and Executive Officers of TrustCo and Trustco Bank,
and some of the corporations and firms with which these individuals are
associated, are also customers of Trustco Bank in the ordinary course of
business, or are indebted to Trustco Bank in respect to loans of $60,000 or
more, and it is anticipated that they will continue to be customers of and
indebted to Trustco Bank in the future. All such loans, however, were made in
the ordinary course of business, did not involve more than normal risk of
collectibility, do not present other unfavorable features, and were made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the same time for comparable Trustco Bank transactions with
unaffiliated persons. As of March 1, 19992000, the total amount of such loans
represented 1.64%1.88% of shareholders' equity of TrustCo.
During the previous calendar year, Trustco Bank has had commercial
transactions in the ordinary course of business with companies with which
certain of TrustCo's Directors are affiliated. No significant business or
personal relationship with Trustco Bank existed by virtue of a person's position
in TrustCo or in Trustco Bank, or ownership interest in TrustCo.
Insurance for Indemnification of Officers and Directors
TrustCo renewed insurance for the indemnification of its Executive Officers
and Directors and Executive Officers and Directors of Trustco Bank from the CNA
Insurance Companies effective for the one-year period from October 10, 19981999 to
October 10, 1999.2000. The cost of this insurance was $87,480,$68,250, and coverage is
provided to all Executive Officers and Directors of TrustCo and Trustco Bank.
The TrustCo Board has no knowledge of any claims made or sum paid pursuant to
such insurance policy during 1998.1999.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
TrustCo's Directors and Executive Officers, and persons who own more than 10% of
a registered class of TrustCo's equity securities ("Reporting Persons") to file
initial reports of ownership and reports of changes of ownership in Common Stock
and other equity securities with the S.E.C. Reporting Persons are required by
S.E.C. regulations to furnish TrustCo with copies of all Section 16(a) reports
they file.
To TrustCo's knowledge, basedBased solely on a review of the copies of such reports furnished to
TrustCo, and written representations that no other reports were required, during
the fiscal year ended December 31, 1998,1999, all Section 16(a) filing requirements
have been met.met, except that 1,000 shares purchased by Mr. Cushing in July 1999
were not reported by the Bank on his behalf until January 2000. In addition,
purchases of 1,031 shares by trusts related to Mr. Brickman in April of 1997,
January, February and July of 1998 were not reported by the Bank until August
1999.
TRUSTCO SHAREHOLDERS
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, PLEASE SIGN,
DATE AND PROMPTLY RETURN THE ACCOMPANYING TRUSTCO PROXY CARD IN THE ENVELOPE
PROVIDED. IF YOU PLAN TO ATTEND THE ANNUAL MEETING AND ARE A SHAREHOLDER OF
RECORD, PLEASE MARK THE PROXY CARD APPROPRIATELY AND RETURN IT. HOWEVER, IF YOUR
SHARES ARE NOT REGISTERED IN YOUR OWN NAME, PLEASE ADVISE THE SHAREHOLDER OF
RECORD (YOUR BANK, BROKER, ETC.) THAT YOU WISH TO ATTEND. THAT FIRM MUST PROVIDE
YOU WITH EVIDENCE OF YOUR OWNERSHIP, WHICH WILL ENABLE YOU TO GAIN ADMITTANCE TO
THE ANNUAL MEETING.
2720
APPENDIX A
TRUSTCO BANK CORP NY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
May 17, 199915, 2000
The Board of Directors recommends a vote "FOR" proposals 1 2, 3 and 42 below.
1. Election of Directors (Page 2)
[ ] FOR
[ ] WITHHELD
* FOR ALL EXCEPT the following nominees:
2. Adopt Amendment to Restated Certificate of Incorporation to Increase
Authorized Shares (Page 19)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. Adopt Amendment to 1995 Stock Option Plan to Increase Shares Issuable and
Approve Other Changes (Page 19)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
4. Ratification of the Appointment of Independent Auditors (Page 24)19)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
SPECIAL NOTES
[ ] I plan to attend meeting. [ ] # attendingI plan to bring a guest.
[ ] Comments on reverse side
SIGNATURES___________________________________ DATE_______________, 19992000
Please sign and date this proxy card exactly as your name(s) appears
above and return it promptly whether or not you plan to attend the
meeting. If signing for a corporation or partnership or as an agent,
attorney or fiduciary, indicate the capacity in which you are signing.
If you do attend the meeting and decide to vote by ballot, such vote
will supersede this proxy.
This Proxy is solicited on behalf of the Board of Directors of TrustCo
Bank Corp NY ("TrustCo") for the Annual Meeting of shareholders to be
held at TrustcoTrustCo Bank CorpCorp. NY, Trust Building, - 6th Floor, 192 Erie
Boulevard, Schenectady, New York, on May 17, 1999.15, 2000.
The undersigned hereby appoints Harry E. Whittingham, Jr. and Anthony
M. Salerno, and each of them, the proxy or proxies of the undersigned,
with full power of substitution, to vote all shares of common stock of
TrustCo which the undersigned is entitled to vote at the Annual Meeting,
and at any adjournments or postponements thereof.
This proxy will be voted as directed, but if no direction is indicated,
it will be voted FOR proposals 2,3 and 4proposal 2 and in the discretion of the
proxies on such other matters as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
Your vote for election of Directors may be indicated on the other side.
Nominees are - Lionel O. Barthold, Richard J. Murray, Jr., William D.
Powers,Barton A. Andreoli, Nancy A. McNamara, Dr. James H. Murphy,
and William F. Terry.J. Purdy for three years terms, and Joseph Lucarelli
for a one year term.
Please sign and date this proxy card on the reverse side and mail
promptly in the enclosed postage-paid envelope. If you do not sign
and return a proxy or attend the meeting and vote by ballot, your shares
cannot be counted.
Comments:__________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
(If you have written in the above space, please mark the "Comments"
box on the other side of this card.)
28
APPENDIX B
1995 TRUSTCO BANK CORP NY
STOCK OPTION PLAN
WHEREAS, TrustCo Bank Corp NY (the "Company") desires to establish the
1995 TrustCo Bank Corp NY Stock Option Plan (the "Plan");
NOW, THEREFORE, the Company does hereby establish the Plan as follows:
SECTION 1: PURPOSE
This 1995 Stock Option Plan (the "Plan") has been established by
TrustCo Bank Corp NY (the "Company") to advance the interests of the Company and
its stockholders by providing to certain key employees an opportunity to acquire
equity ownership in the Company and the incentive advantages inherent in that
equity ownership.
SECTION 2: DEFINITIONS
When capitalized and used in this Plan, each of the following terms or
phrases has the indicated meaning, unless a different meaning is clearly implied
by the content:
"Adoption means the date this plan is duly adopted by the
Date" Board.
"Board means the Company's Board of Directors.
"Code" means the Internal Revenue Code of 1986,as amended.
"Committee" means the Committee to be appointed by the Board
from time to time and to consist of three or more
members of the Board who have not been eligible to
receive options under the Plan at any time within
a period of one year immediately preceding the
date of their appointment to such Committee.
"Company" means TrustCo Bank Corp NY and its subsidiaries.
"Disability" means a Participant's termination of employment by
the Company or a Participating Subsidiary by
reason of his permanent and total disability, as
defined in Code Section 22(e)(3).
"Eligible means any executive or other key managerial
Employee" employee of the Company or any Participating
Subsidiary who has been designated by the Board as
eligible to participate in the Plan and who is a
full-time, salaried employee of the Company or any
Participating Subsidiary, provided he is so
employed at the date any Stock Option is granted
to him.
29
"Fair Market Value" means the current fair market value of any Stock subject to
a Stock Option. During such time as the Stock is not listed on an established
stock exchange, fair market value per share shall be the mean between the
closing dealer "bid" and "ask" prices for the Stock as quoted by NASDAQ for the
day of the grant and if "bid" and "ask" prices are quoted for the day of the
grant, the fair market value shall be determined by reference to such prices on
the next preceding day on which such prices were quoted. If the Stock is listed
on an established stock exchange or exchanges, the fair market value shall be
deemed to be the highest closing price of the Stock on such stock exchange or
exchanges on the day the option is granted or, if no sale of Stock has been made
on any stock exchange on that day, the fair market value shall be determined by
reference to such price for the next preceding day on which a sale occurred. In
the event that Stock is not traded on an established stock exchange, and no
closing dealer "bid" and "ask" prices are available, then the purchase price
shall be 100 percent of the fair market value of one share of Stock on the day
the option is granted, as determined by the Committee in good faith. The
purchase price shall be subject to adjustment only as provided in Section 9 of
the Plan.
"Incentive Stock Option" Means an option granted to a Participant under this
Plan to purchase the Company's Stock, which is designated as an Incentive Stock
Option and which satisfies the requirements of Code ss.422, as amended.
"Nonqualified Stock Option" means an option granted to a Participant under this
Plan to purchase the Company's Stock and which is not an Incentive Stock Option.
"Option Agreement"means the written agreement executed between the participant
and the Company evidencing the award of Stock Options under this Plan, as more
particularly described in Section 7.
"Participant" means any Eligible Employee who has been awarded and Stock
Option(s) under this Plan and his heirs, legatees, or personal representatives
who may succeed to his interests under any Option Agreement at his death.
30
"Participating Subsidiary" means a Subsidiary some or all of whose employees
have been designated as Eligible Employees by the Board.
"Plan" means the 1995 TrustCo Bank Corp NY Stock OptionPlan as embodied in this
document including all amendments to this document made from time to time.
"Shareholder Employee" means any Eligible Employee who at the time an Incentive
Stock Option is to be granted to him under this Plan owns (within the meaning of
Code Section 422(b)(6)and (c)(5)) more than 10 percent of the combined voting
power of all classes of the Company's Stock or of its parent or subsidiary
companies (if any).
"Stock" means shares of the Company's common stock, which may be either
authorized but unissued shares or treasury shares.
"Stock Appreciation Right" means a right, granted to a Participant concurrently
with the grant of a Nonqualified Stock Option, to receive a cash payment from
the Company upon the partial or complete cancellation of that option by a
Participant. Each Option Agreement may provide that the Participant may from
time to time elect to cancel all or any portion of the Option then subject to
exercise, in which event the Company's obligation in respect of such Option may
be discharged by payment to the Participant of an amount in cash equal to the
excess, if any, of the Fair Market Value at the time of cancellation of the
shares subject to the Option or the portion thereof so canceled, over the
aggregate purchase price for such shares as set forth in the Option Agreement.
In the event of such a cancellation, the number of shares as to which such
Option was canceled shall not become available for use under the Plan.
"Stock Option"or "Option" means a right granted under this Plan to purchase
Company Stock, including a Nonqualified Stock Option or an Incentive Stock
Option.
"Subsidiary" means a corporation of which stock possessing 50% or more of the
total combined voting power of all
31
classes of its stock entitled to vote generally in the election of directors is
owned in the aggregate by the Company directly or indirectly through one or more
Subsidiaries.
SECTION 3: PLAN ADMINISTRATION
The Plan is to be administered by the Committee except as otherwise
provided in the Plan. Subject to all other Plan provisions, the Committee is
expressly empowered to:
1. select the Eligible Employees who are to receive Stock Options and
Stock Appreciation Rights under this Plan from time to time and grant those
Options and Stock Appreciation Rights;
2. determine the time(s) at which Stock Options and Stock Appreciation Rights
are to be granted;
3. determine the number of shares of Stock to be subject to a Stock option
granted to any Participant;
4. determine the option price and term of each Stock Option granted under this
Plan (including whether it is to be an Incentive Stock Option or Nonqualified
Stock Option) and all other terms and conditions to be included in the Option
Agreement relating to any Stock Options under this Plan;
5. determine the
duration and purposes of leaves of absence which may be granted to a Participant
without constituting a termination of employment or service for purposes of the
Plan;
6. determine all matters of interpretation of the Plan and any Option
Agreement, and the Committee's decision is to be binding and conclusive on all
persons;
7. determine, in its sole discretion, whether the Company is to accept
Stock previously acquired by a Participant as payment of the option price for
Stock Options granted under this Plan or whether the Company will permit payment
via the simultaneous exercise of Stock Options and sale of the Stock acquired
pursuant thereto;
8. prescribe, amend and rescind all rules and regulations
relating to the Plan and its operations;
9. in the event of the Company's or a
Participating Subsidiary's merger, consolidation, dissolution or liquidation,
accelerate the exercise date and expiration date for any unexercised Stock
Options then outstanding; and
32
10. make all other determinations and decisions and take all further actions
deemed necessary or advisable for the Plan's administration.
Notwithstanding any conflicting Plan provision, the Board reserves the
right, by written resolution duly adopted by the Board, to terminate from time
to time any and all powers delegated to the Committee by the express Plan
provisions and, in that event, those Committee powers so terminated by the Board
shall revert to and be fully exercisable by the Board to the same extent as they
were exercisable by the Committee, provided that no termination of the
Committee's powers shall be retroactively effective. Any termination of the
Committee's powers under this Plan shall not be deemed a Plan amendment. No
Committee or Board member may participate in the decision to award any Stock
Option or Stock Appreciation Right under this Plan to himself. Neither the Board
nor the Committee may, without the Participant's consent, change the terms and
conditions of any Option Agreement after its execution, except to the extent
that the Agreement may, by its terms, be so amended.
SECTION 4: PLAN EFFECTIVE DATE AND DURATION
This Plan is effective as of the Adoption Date, subject, however, to
the Plan's approval by the Company's shareholders either on or before the
Adoption Date or within the 12-month period following the Adoption Date. If
shareholder approval is not so obtained, all Stock Options, Stock Appreciation
Rights and Option Agreements granted under this Plan shall automatically be null
and void, ab initio. No Stock Option may be granted under this Plan at any date
which is 10 years or more after the Adoption Date.
SECTION 5: AMENDMENTS AND TERMINATIONS
This Plan may be amended, suspended, terminated or reinstated, in
whole or in part, at any time by the Board; provided, however, that without the
approval of the Company's stockholders, the Board may not:
1. except as provided in Section 9, increase the number of shares of Stock
subject to Stock Options issued under this Plan;
2. extend the maximum period during which a Stock Option may be exercised;
3. extend the maximum period during which Incentive Stock Options may
be granted under this Plan; or
4. change the class of Eligible Employees.
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SECTION 6: SHARES SUBJECT TO THE PLAN
The total number of shares available for grants of Stock Options under
this Plan is 1,000,000, subject to the adjustments under Section 9. The shares
may be either authorized but unissued shares or treasury shares. If a Stock
Option or a portion thereof expires or terminates for any reason without being
exercised in full, the unpurchased shares covered by the Option are to be
available for future Stock Option grants under this Agreement.
SECTION 7: GRANTS OF OPTIONS
1. Nonqualified Stock Options may be granted to any Eligible Employee,
at the time(s) and upon such terms and conditions as may be selected by the
Committee. At the time of grant of a Nonqualified Stock Option, the Committee
may, in its discretion, also grant to the Eligible Employee Stock Appreciation
Rights for the total number of shares subject to that Option. The grant of a
Nonqualified Stock Option and, if appropriate, Stock Appreciation Rights shall
be evidenced by an Option Agreement between the Eligible Employee and the
Company containing any terms and conditions specified by the Committee, but
including the terms described in Section 8.
2. Incentive Stock Options may be granted to any Eligible Employee, at
the time(s) and upon such terms and condition as may be selected by the
Committee, subject, nevertheless to the following:
(a) The aggregate Fair Market Value, determined at the time the
Incentive Stock Option is granted, of the shares with respect
to which Incentive Stock Options are exercisable for the
first time by an Eligible Employee during any calendar year
(under all stock option plans of the Company and its
Subsidiaries to which the provisions of Section 422 of the
Code apply) shall not exceed $100,000.
(b) The grant shall be evidenced by an Option Agreement between
the Company and the Eligible Employee containing any terms
and conditions specified by the Committee, except that those
terms and conditions must conform with Section 8 and must be
consistent with the requirements for an "incentive stock
option" as described in Code Section 422(b).
SECTION 8: TERMS OF OPTIONS AGREEMENT
All Option Agreements issued under this Plan must include terms that are
consistent with the following:
1. The Participant shall be entitled to purchase the number of shares subject to
the Stock Option, upon his exercise of that
34
Option, at a price no less than 100% of the Stock's Fair Market Value at the
date of the grant; provided, however, that in the case of an Incentive Stock
Option granted to a Shareholder-Employee, the option price is to be no less than
110% of that Fair Market Value.
2. At the option's exercise, the option price may be paid in cash or
cash equivalent--that is, by certified check, bank draft or postal or express
money orders made payable to the Company's order in U.S. dollars. Alternatively,
in the Committee's sole discretion, the option price may be paid, in whole or in
part, by the Participant's exchange of Company Stock previously acquired by him,
based on that Stock's Fair Market Value at the date of exchange or via the
simultaneous exercise of Stock Options and sale of the Stock acquired pursuant
thereto. However, no Company Stock may be accepted in payment of the option
price upon exercise of an Incentive Stock Option, if that Stock was acquired by
the Participant's previous exercise of an Incentive Stock Option unless that
Stock has been held by the Participant for more than 2 years after the date that
previous Option was granted and more than 1 year after the date that previous
Option was exercised.
3. The Option may not be exercisable after the earlier of the
following dates:
(a) If (I) the Option is an Incentive Stock Option but the
Participant is not a Shareholder-Employee at the date of
grant, or (ii) the Option is not an Incentive Stock Option,
the date 10 years after the date of grant;
(b) If the Participant is a Shareholder-Employee at the date of
grant and the Option is an Incentive Stock Option, the date 5
years after the date of grant;
(C) If the Participant's employment terminates for reasons other
than his death or Disability or retirement, the date three
months after the date his employment terminates.
(d) If the Participant terminates employment as a result of
Disability or retirement, the date described in Item 3(a) or
3(b), whichever is applicable.
(e) If the Participant dies, the date prescribed by the
Committee, except that no Option shall be exercisable after
the date described in Item 3(a) or 3(b) of Section 8,
whichever is applicable.
If the Option is an Incentive Stock Option and the Participant's employment
terminates due to Disability or retirement, the tax treatment available pursuant
to Code Section 422 upon the exercise of an Incentive Stock Option will not be
available to a Participant who exercises any Incentive Stock Option more than
(a) three months
35
after the date of the termination of employment due to retirement or (b) twelve
months after the date of termination of employment due to Disability. If the
Option is an Incentive Stock Option and the participant dies, the tax treatment
available pursuant to Code Section 422 upon the exercise of an Incentive Stock
Option will not be available to the participant's estate or any person who
acquires the Option by bequest or inheritance or by reason of the death of the
participant unless the Participant was eligible for such tax treatment at the
time of his death.
Notwithstanding the foregoing, the committee, in its discretion, may
further limit the period during which all or any portion of a Stock Option may
be exercised and may accelerate the time at which an Option maybe exercised.
4. Acceleration and the immediate right to exercise options in full
will occur upon a change in control of the Company, which is defined to include
any one or more the following:
(a) a contract providing for a merger or consolidation of the
Company with or into another entity (except in the case where
the Company is the surviving entity and the merger does not
affect the stock interest of the stockholders of the Company)
or a sale of substantially all the assets of the Company is
executed;
(b) a single entity or individual (including any related parties
to such entity or individual) acquires 20% or more of the
outstanding stock of the Company; or
(C) a situation occurs in which, during any period of 12
consecutive months, individuals who at the beginning of such
period were members of the Board cease for any reason to
constitute at least a majority of the Board, unless the
nomination or election of each new director was approved by
at least two-thirds of the directors then still in office who
were directors at the beginning of such period.
Upon exercise of an Option during the 60-day period from and after the
date of a change of control, the Participant exercising the Option may, in lieu
of the receipt of Stock upon the exercise of the Option, elect by written notice
to the Company to receive an amount in cash equal to the excess of the aggregate
Value (as defined below) of the shares of Stock covered by the Option or portion
thereof surrendered determined on the date the Option is exercised, over the
aggregate exercise price of the Option (such excess is referred to herein as the
"Aggregate Spread"); provided, however, and notwithstanding any other provision
of this Plan, if the end of such 60-day period from and after the date of a
change of control is within six months of the date of grant of an Option held by
a Participant who is an officer of the Company (for
36
purposes of Section 16(b) of the Exchange Act), such Option shall be canceled in
exchange for a cash payment to the participant equal to the Aggregate Spread on
the day which is six months and one day after the date of grant of such Option.
As used in this Section 12(a)(iii) the term "Value" means the higher of (i) the
highest Fair Market Value during the 60-day period from and after the date of a
change of control, and (ii) if the change of control is the result of a
transaction or series of transactions described in paragraphs (a) or (b) above,
the highest price per share of the Stock paid in such transaction or series of
transactions (which in the case of paragraph (b) shall be the highest price per
share of the Stock as reflected in a Schedule 13D by the person having made the
acquisition). Notwithstanding the foregoing, if any right granted pursuant to
this paragraph would make a change of control transaction ineligible for pooling
of interests accounting under APB No. 16 that but for this paragraph would
otherwise be eligible for such accounting treatment, Stock (having a Fair Market
Value equal to the cash otherwise payable hereunder) shall be substituted for
the cash payable hereunder.
5. The Stock Option(s) and any related Stock Appreciation Rights may
be exercised during such Participant's lifetime, only by the Participant and,
after his death, only by his heirs legatees or personal representatives who
succeed to his interest under the Option Agreement. The Option Agreement, the
Stock Options and the Stock Appreciation Rights issued under this Plan shall not
be transferable by the Participant other than by will or by the laws of descent
and distribution; provided, however, in addition to non-transferable Stock
Options, the Committee may grant Nonqualified Stock Options that are
transferable, without payment of consideration, to (i) revocable trusts for the
benefit of immediate family members which qualify as grantor trusts for Federal
income tax purposes, (ii) by gift to immediate family members, and (iii) to
partnerships whose only partners are immediate family members. The Committee may
also amend outstanding Nonqualified Stock Options to provide for such
transferability. Notwithstanding the foregoing, in the event that a transferable
Nonqualified Stock Option is transferred as permitted herein, such Nonqualified
Stock Option(s) may be exercised by such transferee. The transferee of a
transferable Nonqualified Stock Option is subject to all conditions applicable
to the transferable Nonqualified Stock Option prior to its transfer.
6. The aggregate Fair Market Value (determined at the time the Option
is granted) of the stock with respect to which Incentive Stock Options are
exercisable for the first time by such individual during any calendar year
(under all such plans of the individual's employer corporation and its parent
and subsidiary corporation) shall not exceed $100,000.
37
7. The acceleration provisions of Section 8, Items 4 and 8 of the Plan shall
override restrictions contained in Section 8, Item 6.
8. If a Participant's employment terminates by his death, Disability
or retirement, the exercise of each Option shall accelerate and become
exercisable in full upon such termination, and shall remain exercisable
throughout the period permitted for exercise as described in Item 3 of this
Section 8.
9. If a Participant dies during the period which he or she could have exercised
an Option under Item 3 of Section 8 of the Plan, then the Option may be
exercised by the executors or administrators of the Participant's estate, or by
any person or persons who may have acquired the Option, directly from the
Participant by bequest or inheritance within a period prescribed by the
Committee after the Participant's death, except that no Option shall be
exercisable after its expiration date as defined in Item 3(a) or 3(b) of Section
8, whichever is applicable.
SECTION 9: RECAPITALIZATION
The number of shares of Stock subject to this Plan, the number of
shares of Stock covered by each outstanding Option (and any corresponding Stock
Appreciation Rights), and the price per share in each Option, are to be
proportionately adjusted for any increase or decrease in the number of issued
shares of Company Stock resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the Company's common stock) or
any other increase or decrease in the number of those shares effected without
receipt of consideration by the Company.
Subject to any required action by the Stockholders if the Company
shall be the surviving corporation in any merger or consolidation, each
outstanding Stock Option (and any corresponding Stock Appreciation Rights) shall
pertain to and apply to the securities to which a holder of the number of shares
of stock subject to that Option would have been entitled. A dissolution or
liquidation of the Company, a proposed sale of substantially all of the assets
of the Company, or a merger or consolidation in which the Company is not the
surviving Corporation, shall cause each outstanding Option (and any
corresponding stock Appreciation Rights) to terminate as of a date to be fixed
by the Board; provided that no less than 30 days written notice of the date so
fixed shall be given to each Optionee, and each Optionee shall have the right,
during the period of 30 days preceding such termination, to exercise his option
as to all or any part of the shares covered thereby, including shares as to
which such option would not otherwise be exercisable.
The foregoing adjustments shall be made by the Committee. Fractional shares
resulting from any adjustment in options pursuant
38
to this Section 9 may be settled as the Committee or the Board (as the case may
be) shall determine.
SECTION 10: GOVERNMENT AND OTHER REGULATIONS
No Option shall be exercisable, no Stock shall be issued, no
certificate for shares of Stock shall be delivered, and no payment shall be made
under this Plan except in compliance with all applicable federal and state laws
and regulations. The Company shall have the right to rely on the opinion of its
counsel as to such compliance. Any share certificate issued to evidence Stock
for which an Option is exercised may bear such legends and statements as the
Committee may deem advisable to assure compliance with federal and state laws
and regulations. No Option shall be exercisable, no Stock shall be issued, no
certificate for shares shall be delivered, and no payment shall be made under
this Plan until the Company has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
SECTION 11: INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification that they may have
as officers or directors, the Committee members shall be indemnified by the
Company against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the Plan's administration and the
defense of any action, suit, or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reasons of any action
taken or failure to act under or in connection with the Plan or any Option or
Stock Appreciation Right granted thereunder. The Committee members are also to
be indemnified against all amounts paid by them in settlement thereof (provided
that settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such Committee member is liable for gross
negligence or willful misconduct in the performance of his/her duties; provided
that within 60 days after institution of any such action, suit or proceeding a
Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
SECTION 12: MISCELLANEOUS
The adoption of this Plan, its operation, or any documents describing
or referring to this Plan (or any part thereof) shall not confer upon any
employee any right to continue in the employ of the Company or in any way affect
any right and power of the Company to terminate the employment of any employee
at any time with or without assigning a reason thereof.
39
This Plan, insofar as it provides for grants, shall be unfunded, and
the Company shall not be required to segregate any assets that may at any time
be represented by grants under the Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations which may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
The Plan shall be administered in the State of New York and the
validity, construction, interpretation, administration and effect of the Plan
shall be determined solely in accordance with the laws of that State.
IN WITNESS WHEREOF1 the Company has caused this Plan to be executed on
this 17th day of May , 1995.
TRUSTCO BANK CORP NY
By:/s/ William F. Terry
William F. Terry
40
APPENDIX C
AMENDMENT NO. 1
TO
1995 TRUSTCO BANK CORP NY
STOCK OPTION PLAN
WHEREAS, TrustCo Bank Corp NY, (hereinafter called "the Company"),
established the
1995 TrustCo Bank Corp NY Stock Option Plan (hereinafter called "Plan"); and
WHEREAS, the Company desires to amend said Plan effective as of May 17, 1999;
NOW,THEREFORE, the Company does hereby amend the Plan effective May 17, 1999
so that it will read as follows:
I.
Section 6 of the Plan is hereby deleted in its entirety and the following is
substituted in lieu there of:
"SECTION 6: SHARES SUBJECT TO THE PLAN
1. The total number of shares available for grants of
Stock Options under this Plan is 3,000,050, subject
to the adjustments under Section 9. The shares may
either authorized but unissued shares or treasury
shares. If a Stock Option or a portion thereof
expires or terminates for any reason without being
exercised in full, the unpurchased shares covered by
the Option are to be available for future Stock
Option grants under this plan.
2. The maximum aggregate number of shares of Stock with
respect to which Stock Options may be granted in any
one fiscal year to any single Employee shall be
500,000."
II.
The following new section 13 is hereby added immediately following Section 12 of
the Plan:
"SECTION 13: WITHHOLDING
The company shall deduct from any payment, or otherwise
collect from the recipient, any taxes required to be withheld by federal, state
or local governments in
41
connection with any Stock Option. The recipient may elect, subject to approval
by the Committee, to have shares of Stock withheld by the Company in
satisfaction of such taxes, or to deliver other shares of Stock owned by the
recipient in satisfaction of such taxes. The number of shares to be withheld or
delivered shall be calculated by reference to the Fair Market of the appropriate
class or series of Stock on the date that such taxes are determined."
IN WITNESS WHEREOF,The Company has caused this Amendment No. 1 to be executed by
its duly authorized officer this day of , 1999.
TRUSTCO BANK CORP NY
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