EXHIBIT F
NOTICE OF ANNUAL MEETING, PROXY STATEMENT
DATED MARCH 5, 1996, AND PROXY FORM
March 5, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders to
be held on Tuesday, April 2, 1996, at 7:00 p.m. at the Elmira Holiday Inn, in
the City of Elmira, New York. Following the Meeting, desserts, coffee, tea and
other refreshments will be served.
The one item on the agenda requiring Shareholders' vote will be the
election of eight directors. The candidates nominated for three-year terms,
all currently serving, are: Robert E. Agan, Donald L. Brooks, Jr., Stephen M.
Lounsberry III, Boyd McDowell II,Thomas K. Meier, Charles M. Streeter, Jr. and
Nelson Mooers van den Blink. The nominated candidate for a one-year term is:
Jan P. Updegraff. The attached Proxy Statement sets forth in detail information
relating to the nominated candidates as well as those directors continuing in
office and additional information relating to the management of the corporation.
In addition to the above-noted election, we will review our financial
performance for the past year and discuss our plans for 1996.
It is important that you be represented at the Meeting whether or not you
plan to attend in person. Accordingly, we urge you to mark, sign and date the
proxy card enclosed in the mailing envelope sleeve and return it in the envelope
provided. Also, if you plan to attend the Meeting, please mark the proxy card
where indicated and include the number in your group. Your directors and
management look forward to seeing you on April 2.
Sincerely yours,
/s/ John W. Bennett
John W. Bennett
Chief Executive Officer
One Chemung Canal Plaza
P.O. Box 1522
Elmira, New York 14902
Parent Company of
Chemung Canal Trust Company
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
As directed by the Board of Directors of Chemung Financial Corporation,
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of the
Corporation will be held at the Elmira Holiday Inn, One Holiday Plaza, 760 East
Water Street, Elmira, New York, Tuesday, April 2, 1996, at 7:00 p.m. for the
following purposes:
1. To elect seven (7) directors, each to hold office for a term of three
years and one (1) director to hold office for a term of one year and
until their respective successors have been elected and qualified.
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on February 28,
1996, as the record date for determination of Shareholders entitled to notice of
and to vote at this Meeting.
Shareholders are requested to date, sign and mail the enclosed proxy in the
envelope provided at their earliest conenience. A prompt response will be
appreciated and will save the Corporation additional time and expense.
BY ORDER OF THE BOARD OF DIRECTORS
Jerome F. Denton
Secretary
March 5, 1996
CHEMUNG FINANCIAL CORPORATION
ONE CHEMUNG CANAL PLAZA, P.O. BOX 1522, ELMIRA, NEW YORK
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, APRIL 2, 1996
Chemung Financial Corporation and its wholly-owned subsidiary, Chemung
Canal Trust Company, are incorporated under the laws of the State of New York.
For purposes of this proxy statement, financial and other information is
presented on a consolidated basis for Chemung Financial Corporation
("Corporation") and Chemung Canal Trust Company ("Bank"). The disclosed
information of the Corporation and the Bank should be viewed as though it
pertained to one entity, unless otherwise stated.
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors for use at the Annual Meeting of Shareholders
(the "Annual Meeting") of Chemung Financial Corporation to be held on Tuesday,
April 2, 1996, at 7:00 P.M., at the Elmira Holiday Inn, One Holiday Plaza, 760
East Water Street, Elmira, New York. This Proxy Statement and the accompanying
Proxy and Notice of Annual Meeting of Shareholders are being mailed to
Shareholders on or about March 5, 1996. A Shareholder granting a proxy has the
right to revoke it by a duly executed Proxy bearing a later date, by attending
the Annual Meeting and voting in person, or by otherwise notifying the Secretary
of the Corporation in writing prior to the Annual Meeting.
Only Shareholders of record at the close of business on February 28, 1996,
are entitled to receive notice of and to vote at the Annual Meeting. As of
February 15, 1996, there were 2,084,611 shares of Common Stock outstanding and
entitled to vote. Each share of Common Stock is entitled to one vote. There
are no cumulative voting rights. Nominees for director will be elected by a
plurality of votes cast at the Annual Meeting by holders of Common Stock present
in person or by proxy and entitled to vote on such election. Any other matter
requires the affirmative vote of a majority of votes cast at the meeting, except
as otherwise provided in the Corporation's Certificate of Incorporation or
By-laws. Only shares affirmatively voted in favor of a nominee will be counted
toward the achievement of a plurality. Votes withheld (including non-broker
votes) and abstentions are counted as present for the purposes of determining
a quorum but are not counted as votes cast.
The cost of soliciting proxies will be borne by the Corporation and the
Bank. In addition to solicitations by mail, some of the directors, officers,
and regular employees of the Corporation and the Bank may conduct additional
solicitations by telephone and personal contacts without remuneration. American
Stock Transfer & Trust Company , the Corporation's transfer agent, will aid the
Corporation in the solicitation of proxies and proxy vote tabulations.
Nominees, brokerage houses, custodians and fiduciaries will be requested to
forward soliciting material to beneficial owners of stock held of record and the
Corporation will reimburse such persons for any reasonable expense.
ACTION TO BE TAKEN UNDER PROXY:
It is proposed that at the Annual Meeting action will be taken on the
matters set forth in the accompanying Notice of Annual Meeting and described in
this Proxy Statement. Proxies returned by Shareholders and not revoked will be
voted for the election of the nominees for directors unless Shareholders
instruct otherwise on the Proxy. The Board of Directors does not know of any
other business to be brought before the Annual Meeting but it is intended that,
as to any such other business, a vote may be cast pursuant to the Proxy in
accordance with the judgment of the person or persons acting thereunder; and
should any herein-named nominee for the office of director become unable to
accept nomination or election, which is not anticipated, it is intended that the
persons acting under the Proxy will vote for the election in the stead of such
nominee of such other person as the Board of Directors may recommend.
BOARD OF DIRECTORS:
Nominees For Election as Directors
Those persons serving as directors of the Corporation and the Bank, being
the same individuals, normally serve three-year terms of office, with
approximately one-third of the total number of each such Board of Directors to
be elected at each Annual Meeting of each such entity. The number of directors
to be elected at the 1996 Annual Meeting of Shareholders is eight (8); seven (7)
for three-year terms and one (1) for a one-year term, each to serve for such
term and until their respective successors are elected and qualified.
The following table sets forth information concerning the Board of
Directors' nominees for election as directors at the Annual Meeting and each
director continuing in office:
Length of Service Principal Occupation During
Name and Age As Director (1) Past 5 Years
NOMINEE WITH TERM
EXPIRING IN 1997
Jan P. Updegraff Since 1996 (1996) President & COO of the
Age 53 Corporation (elected on
February 14, 1996, to be
effective upon approval by
the Federal Reserve Bank, as
required by law) and
President & COO of the Bank
since February 14, 1996;
formerly Vice President &
Treasurer of the Corporation
and Executive Vice President
of the Bank
NOMINEES WITH TERMS
EXPIRING IN 1999
Robert E. Agan Since 1986 (1986) President, CEO and Director
Age 57 of Hardinge Inc., worldwide
machine tool manufacturer
Donald L. Brooks, Jr. Since 1985 (1972) Physician
Age 67
Stephen M. Lounsberry III Since 1995 (1995) President of Moore & Steele
Age 42 Corporation, manufacturer
of railroad lubrication
systems
Boyd McDowell II Since 1985 (1969) Retired; formerly Chairman
Age 70 of the Board & CEO of the
Corporation and the Bank
Thomas K. Meier Since 1988 (1988) President of Elmira College
Age 55
NOMINEES WITH TERMS
EXPIRING IN 1999
Charles M. Streeter, Jr. Since 1985 (1979) President of Streeter
Age 56 Associates, Inc., general
building contractor
Nelson Mooers van den Blink Since 1985 (1983) Chairman of the Board, Chief
Age 61 Executive Officer and
Treasurer of The Hilliard
Corporation, motion contol
equipment, oil reclaimer
and filter manufacturer
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 1997
David J. Dalrymple Since 1993 (1993) President of Dalrymple
Age 42 Holding Corporation since
December 17, 1993, parent
company for several
construction companies;
formerly Vice President
Richard H. Evans Since 1985 (1981) Retired since January 1,
Age 65 1995; formerly Chairman of
the Board & CEO of Chas. F.
Evans Co., Inc., specialists
in commercial roofing
Edward B. Hoffman Since 1993 (1993) Partner with Sayles, Evans,
Age 64 Brayton, Palmer & Tifft,
law firm
John F. Potter Since 1991 (1991) President of Seneca Beverage
Age 50 Corp., wholesale distributor
of beer, water and soda products
William C. Ughetta Since 1985 (1985) Senior Vice President and
Age 63 General Counsel of Corning
Incorporated, a diversified
manufacturing company
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 1998
John W. Bennett Since 1988 (1988) Chairman of the Board & CEO
Age 62 of the Corporation (elected
on February 14, 1996, to be
effective upon approval by
the Federal Reserve Bank, as
required by law) and Chairman
of the Board & CEO of the Bank
since February 14, 1996;
formerly President & CEO of
the Corporation and the
Bank; also a director of
Hardinge Inc.
Robert H. Dalrymple Since 1995 (1995) Secretary of Dalrymple
Age 45 Holding Corporation, parent
company for several
construction companies
Natalie B. Kuenkler Since 1985 (1976) Director of various community
Age 70 organizations
Ralph H. Meyer Since 1985 (1981) President & CEO of Guthrie
Age 56 Healthcare System, a vertically
integrated healthcare delivery
system
DIRECTORS CONTINUING IN OFFICE
WITH TERMS EXPIRING IN 1998
Samuel J. Semel Since 1993 (1993) President of Chemung
Age 69 Electronics, Inc., retail
electronics store
Richard W. Swan Since 1985 (1984) President of Swan & Sons-
Age 47 Morss Co., Inc., insurance
brokerage agency
William A. Tryon Since 1987 (1987) Chairman of the Board and CEO
Age 65 of Trayer Products,Inc.,
automotive, truck and other
industrial parts manufacturer;
and Chirman of the Board of Perry
and Swartwood, Inc., insurance
brokerage agency; formerly
a director of the Bank from
1964 to 1976
<FN>
<F1>
(1) The date in parentheses reflects the year in which the director was first
elected to the Bank Board.
</FN>
Directors and Committee Meetings
The Board of Directors of the Corporation held eight (8) regularly
scheduled meetings and no special meeting during the year ended December 31,
1995. The Corporation has no standing committees.
The Board of Directors of the Bank held twelve (12) regularly scheduled
meetings and one special meeting during the year ended December 31, 1995. Among
its standing committees, the Board of Directors of the Bank has an Examining
Committee, Nominating Committee and a Personnel Committee.
The Examining Committee makes an annual examination of the Bank as a whole,
reviews the Banks internal audit and loan review procedures and recommends to
the Board of Directors the engagement and dismissal of independent auditors.
During 1995 this Committee held three (3) meetings. On December 31, 1995, its
members were Messrs. Semel (Chairman), Agan, Brooks, R. Dalrymple, Hoffman,
Lounsberry, McDowell, Meier and Meyer.
The Nominating Committee selects and recommends to the Board of Directors
nominees for election to the Board. The Committee will consider written
recommendations by Shareholders for nominees for election to the Board if such
recommendations are mailed to the Chairman of the Nominating Committee or to the
President of the Corporation at the Corporations Main Office, One Chemung Canal
Plaza, Elmira, New York 14902. There was one (1) Committee meeting held in
1995. On December 31, 1995, its members were Messrs. Streeter (Chairman),
Bennett, Brooks, D. Dalrymple, McDowell, Potter, Swan and Mrs. Kuenkler.
The Personnel Committee is responsible for the nomination of officers,
recommendation of Executive Officer compensation plans, and establishment of
guidelines for setting all other officers' salaries. Additional
responsibilities include the review and approval of employee benefit programs
and employee relation policies and procedures. The Committee held seven (7)
meetings in 1995 and on December 31, 1995, its members were Messrs. Meyer
(Chairman), Brooks, D. Dalrymple, Evans, Meier, Potter, Swan, Ughetta, and Mrs.
van den Blink.
During the year ended December 31, 1995, each director of the Corporation
and the Bank attended at least 75% of the aggregate of (1) the total number of
Board Meetings held and (2) the total number of meetings held by all committees
of which such director was a member, with the exception of Mr. Agan who attended
65% of such meetings.
Directors Compensation
Each director of the Bank who is not an officer or employee of the Bank
receives an annual retainer of $5,000 and a fee of $300 for each meeting of the
Board of Directors attended. Those directors who are members of one or more
committees of the Board of Directors also receive a fee of $300 for each meeting
of each committee attended, with the exception of the Chairman of each committee
who receives $350.
Directors who are not officers or employees of the Corporation receive a
fee of $300 for attendance at meetings of the Board of the Corporation which
are held on days when there is no meeting of the Board of Directors of the
Bank. There were no such meetings held during 1995. Otherwise, directors of
the Corporation are not compensated for services rendered by them to the
Corporation. It presently is contemplated that such will continue to be the
policy of the Corporation.
Any director who is entitled to receive a retainer and fees for meetings of
the Board of Directors and of committees thereof attended, may elect to have all
or a portion of said retainer and fees deferred under the Banks Deferred
Directors Fee Plan . Each participating director may designate, in increments
of 10%, the compensation to be deferred, or compensation already deferred, to be
allocated to a memorandum Money Market or a memorandum Unit Value Account, or a
combination of such accounts. The memorandum Money Market Account of each
participating director is credited with the dollar amount of deferral, and
interest is compounded quarterly and added to said account at a rate equal to
the "Applicable Federal Rate" for short-term debt instruments as computed and
published by the Internal Revenue Service for the month immediately preceding
the applicable calendar quarter. The memorandum Unit Value Account of each
participating director is credited with the dollar amount of deferral, with the
aggregate of said deferred amounts being converted to units on a quarterly basis
by dividing the aggregate of said deferred amounts by the closing bid price for
shares of the Common Stock of the Corporation on such trading dates as described
in the Plan. Dividends are credited to said account on the dates and at the
rate per unit at which dividends are paid per share on the Corporation's
outstanding Common Stock and are then converted to units using the same basis
of conversion as for deferred amounts. Within certain time limitations, a
participating director may elect to receive deferred fees either in a lump sum
or in installments.
The aggregate amount of directors retainers and fees paid and deferred
during 1995 was $269,000. No additional compensation was received by any
director for special assignments or services.
Certain Transactions
Some of the directors and officers of the Bank, and some of the
corporations and firms with which these individuals are associated, also are
customers of the Bank in the ordinary course of business, or are indebted to the
Bank in respect to loans of $60,000 or more, and it is anticipated that some of
these individuals, corporations and firms will continue to be customers of and
indebted to the Bank on a similar basis in the future. All loans extended to
such individuals, corporations and firms were made in the ordinary course of
business, did not involve more than normal risk of collectibility or present
other unfavorable features and were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the same time
for comparable bank transactions with unaffiliated persons.
The Bank has purchased insurance from a CNA Company, American Casualty
Company of Reading, Pennsylvania, providing for reimbursement of directors and
officers of the Corporation and the Bank for costs and expenses incurred by them
in actions brought against them for wrongful acts in connection with their
duties as directors or officers, including actions as fiduciaries of the Banks
Pension and Profit-Sharing Plans, under the Employee Retirement Income Security
Act of 1974. The insurance coverage, which expires in February 1997, costs
$18,424 on an annual basis, and has been paid by the Bank. No claims have been
made or paid under this insurance.
The Bank has retained Sayles, Evans, Brayton, Palmer & Tifft, of which Mr.
Hoffman is a partner, for legal services during the last two years and expects
to retain Sayles, Evans, Brayton, Palmer & Tifft for legal services during the
current year.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS:
The following table sets forth information, as of January 31, 1996, with
respect to any person who is known by the Corporation to be the beneficial owner
of more than five percent of the Corporation's Common Stock:
Name and Address of Number of Shares of Common Percent of Shares
Beneficial Owner Stock Beneficially Owned Outstanding
Chemung Canal Trust Company 389,168(1) 18.7%
One Chemung Canal Plaza
Elmira, NY 14902
Chemung Canal Trust Company 215,137(2) 10.3%
as trustee of the Chemung
Canal Profit-Sharing,
Savings and Investment Plan
One Chemung Canal Plaza
Elmira, NY 14902
Mary E. Dalrymple 220,221(3) 10.6%
661 Foster Avenue See Footnote 7
Elmira, NY 14905
David J. Dalrymple 188,385(4,6) 9.0%
274 Upper Coleman Avenue See Footnote 7
Elmira, NY 14905
Robert H. Dalrymple 179,062(5,6) 8.6%
875 Upland Drive See Footnote 7
Elmira, NY 14905
<FN>
<F1>
1 Held by the Bank in various fiduciary capacities, either alone or with
others. Includes 31,452 shares held with sole voting and dispositive
powers, 357,716 shares held with shared power to vote and 181,260 shares
held with shared power to dispose. Shares held in a co-fiduciary
capacity by the Bank are voted by the co-fiduciary or fiduciaries in the
same manner as if the co-fiduciary or fiduciaries were the sole
fiduciary. Shares held by the Bank as sole trustee are voted by the Bank
only if the trust instrument provides for voting of the shares at the
direction of the donor or a beneficiary and such direction is in fact
received.
<F2>
2 Voted by the Bank as directed by the Plan participants.
<F3>
3 Includes 117,221 shares held directly and 103,000 shares held by
Dalrymple Family Limited Partnership, of which Mary E. Dalrymple, David
J. Dalrymple and Robert H. Dalrymple are sole general partners (see
footnotes 4 and 5).
<F4>
4 Includes 44,323 shares held directly, 1,904 shares held as custodian for
Mr. Dalrymple's children under the New York State Uniform Gifts to Minors
Act, 103,000 shares held by Dalrymple Family Limited Partnership (see
footnote 3), and 39,158 shares held by Dalrymple Holding Corporation, of
which David J. Dalrymple and Robert H. Dalrymple are officers, directors
and principal shareholders (see footnote 5). Excludes 1,350 shares held
by Mr. Dalrymple's spouse.
<F5>
5 Includes 35,000 shares held directly, 1,904 shares held as custodian for
Mr. Dalrymple's children under the New York State Uniform Gifts to Minors
Act, 103,000 shares held by Dalrymple Family Limited Partnership (see
footnote 3), and 39,158 shares held by Dalrymple Holding Corporation (see
footnote 4). Excludes 1,000 shares held by Mr. Dalrymple's spouse.
<F6>
6 Excludes 15,115 shares held by Susquehanna Supply Company of which David
J. Dalrymple and Robert H. Dalrymple each own 23.1% of the outstanding
common stock.
<F7>
7 Because of the definition of "beneficial ownership" under Section 13 of
The Exchange Act, and the rules and regulations promulgated thereunder,
Mary, David and Robert Dalrymple are listed as beneficial owners of many
of the same shares. Without such multiple counting, Mary, David and
Robert Dalrymples' total aggregate beneficial ownership is approximately
16.4% of the outstanding shares of Common Stock of the Corporation and if
deemed to be a member of a "group" within the meaning of Section 13(d)(3)
of The Exchange Act, such group would be deemed to hold approximately
16.4% of the outstanding shares of Common Stock of the Corporation.
Nothing described herein shall infer or be deemed an admission by such
person that such a group exists.
</FN>
SECURITY OWNERSHIP OF MANAGEMENT:
As of January 31, 1996, each director or nominee and each Executive Officer
named in the Summary Compensation Table herein, individually, and all directors,
nominees and Executive Officers as a group beneficially owned Common Stock as
reported to the Corporation as of said date as follows (unless otherwise
indicated, each of the persons named has sole voting and investment power with
respect to the shares listed):
Directors, Nominees and Amount and Nature Percent of
Executive Officers of Beneficial Ownership Shares Outstanding(A)
Robert E. Agan 450 --
John W. Bennett 8,147(B) --
Donald L. Brooks, Jr. 1,250 --
David J. Dalrymple 46,227(C) 2.22
Robert H. Dalrymple 36,904(C) 1.77
Richard H. Evans 9,352 --
Edward B. Hoffman 1,655 --
Natalie B. Kuenkler 6,706(D) --
Stephen M. Lounsberry III 1,671 --
Boyd McDowell II 7,013 --
Thomas K. Meier 2,000 --
Ralph H. Meyer 2,595 --
John F. Potter 8,564(E) --
Samuel J. Semel 4,376 --
Charles M. Streeter, Jr. 10,213(F) --
Richard W. Swan 19,387(G) --
William A. Tryon 9,619 --
William C. Ughetta 8,500 --
Nelson Mooers van den Blink 1,546 --
Jan P. UpdegraffB 3,257 --
All Directors, Nominees 202,251(H) 9.70
and Executive Officers
as a group (24 persons)
<FN>
<F1>
A. Unless otherwise noted, less than 1% per individual.
<F2>
B. Includes all vested shares of Common Stock of the Corporation held for
the benefit of each Executive Officer by the Bank as trustee of the
Bank's Profit-Sharing, Savings and Investment Plan, who may instruct the
trustee as to the voting of such shares. If no instructions are
received, the trustee votes the shares in the same proportion as it votes
all of the shares for which instructions were received from all Plan
participants. The power to dispose of shares is held by Plan
participants subject to certain restrictions. Messrs. Bennett and
Updegraff have a vested interest in 6,998 and 3,104 such shares held by
the Plan,resectively. Under the provisions of the Plan, the trustee
holds for the benefit of all employees who participate in the Plan
215,137 shares of the Corporation's Common Stock.
<F3>
C. Includes only shares held directly by Messrs. Dalrymple. See Footnote 7
of the SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS table on page 8
for further explanation of shares beneficially held.
<F4>
D. Includes 4,131 shares held by Mrs. Kuenkler and another as trustees
under the Will of a decedent under which Mrs. Kuenkler is an income
beneficiary and as trustee shares voting and dispositive powers. Does
not include 75,600 shares owned by The Rathbone Corporation, of which
Mrs. Kuenkler is a director.
<F5>
E. Includes 5,709 shares owned by Seneca Beverage Corp., of which
corporation Mr. Potter is an officer, director and the principal
shareholder.
<F6>
F. Includes 5,418 shares owned by Streeter Associates, Inc., of which
corporation Mr. Streeter is an officer, director and the principal
shareholder.
<F7>
G. Includes 6,000 shares owned by Swan & Sons-Morss Co., Inc., of which
corporation Mr. Swan is an officer, director and one of the principal
shareholders and 254 shares held by Mr. Swan as custodian for his minor
children. Does not includes 2,158 shares held by others as trustees for
a trust of which Mr. Swan is an income beneficiary, as to which shares
Mr. Swan disclaims beneficial ownership.
<F8>
H. Does not include 14,445 shares owned by spouses of certain officers and
directors as to which shares such officers and directors disclaim
beneficial ownership.
</FN>
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors and executive officers, and persons who own more than
ten percent of a registered class of the Corporation's equity securities, to
file with the Securities and Exchange Commission initial reports of ownership,
reports of changes in beneficial ownership, and annual reports involving
security transactions pursuant to one or more rules as set forth under Sections
16(a) and 16(b) of the Securities Exchange Act. Directors, executive officers,
and greater than ten percent shareholders are required by SEC regulation to
furnish the Corporation with copies of all Section 16(a) forms they file.
To the Corporations knowledge, based on review of the copies of such
reports furnished to the Corporation and written representations that no other
reports were required for the year ended December 31, 1995, all Section 16(a)
filing requirements applicable to its executive officers, directors and any ten
percent shareholder were complied with, except that Mr. David J. Dalrymple's
purchase of 1,161 shares of the Corporation's Common Stock on May 13, 1995, was
inadvertently overlooked for timely reporting purposes and was reported on a
Form 4 dated June 20, 1995.
MANAGEMENT:
Directors' Personnel Committee Report on Executive Compensation
Under the supervision of the Personnel Committee of the Board of Directors
which is composed entirely of outside directors, the Bank has developed and
implemented compensation policies which seek to enhance the profitability of the
Bank and the Corporation and thus, Shareholder value while at the same time
providing fair and competitive compensation which will attract and retain well-
qualified executives. Based upon recommendations of the Personnel Committee,
the Board of Directors sets the annual compensation of the Chief Executive
Officer and approves compensation of other senior management which is
recommended by the Chief Executive Officer based upon performance and and other
relevant factors and then approved by the Board of Directors. Aside from the
fringe benefit programs in which all Bank employees participate, compensation
of all Bank officers consists of an annual salary and a management incentive
bonus. The management incentive bonus is subject to the terms and conditions
of a Management Incentive Plan adopted by the Board of Directors on January 11,
1995 which provides for the payment of bonuses based in part by the
Corporation's attainment of specific operating objectives and in part by a
subjective review of individual performance. Additionally, those officers who
play a major role in setting and implementing long-term strategies, currently
being the Chief Executive Officer and the Executive Vice President, may receive
a long-term incentive award. Payment of the long-term incentive award will be
deferred for three years following the accrual year and may be further deferred
at the election of the participant. The incentive bonus may or may not be
deferred at the officer's election. Under the terms and conditions of the Plan,
payment of an incentive bonus or issuance of a long-term award is subject to the
Corporation's attaining or exceeding certain predetermined operating goals and
further considerations which are based on a subjective review of the
individual. For 1995, management incentive bonuses and long-term awards could
not be issued unless the Corporation attained net income (after taxes) equal to
at least a 1.0% return on average assets (ROA) and an efficiency ratio of 67% or
less.
In evaluating the performance and recommending the compensation of the
Chief Executive Officer and the compensation guidelines for the Bank's other
senior management, the committee has taken particular note of management's
ability during 1995 in achieving certain profit, growth, and operational
objectives which were established by the Board of Directors in the Bank Plan at
the beginning of 1995 and compared the Corporation's financial results against
the results reported by similar banking businesses in New York and
Pennsylvania. The financial and operational measurements considered by the
Board were: profits, return on assets, return on equity, new market
penetration, new product development, expense control, asset growth, non-
interest income, asset quality and asset liability management. There is no
specific weight given to any of these factors and there is no formula whereby a
certain performance will result in a certain salary. The committee subjectively
considers total performance and the total financial and operating conditions of
the Bank in making its compensation recommendations.
Also, in considering the compensation of the Chief Executive Officer, the
committee reviewed a report prepared by Ben S. Cole Financial, Inc., an
organization which provides comparative information on CEO compensation for a
nationwide peer group of independent banks and holding companies having similar
asset size. From this review it was determined that the performance of the
Bank was well within the range reported by its peers and that the compensation
paid by the Bank was appropriate in comparison to the peer group.
In its review of management performance and compensation, the committee has
also taken into account management's consistent commitment to the long-term
success of the Corporation and its subsidiary. The committee has recognized
that the Corporation's profitability in any one year is considerably impacted
by the general economic conditions nationally and in its trading areas, over
which management has little or no control, and the committee's policy,
therefore, is to not over-emphasize, either positively or negatively, a single
year's results at the expense of significant, sustained, long-term earning
growth.
Based on its evaluation of these factors, the committee believes that the
executive management of the Corporation is dedicated to achieving significant
improvements in long-term financial performance and that the compensation
policies, plans and programs the committee has implemented and administered have
contributed to achieving this management focus.
SUBMITTED BY THE DIRECTORS' PERSONNEL COMMITTEE
Ralph H. Meyer, Chairman Richard H. Evans Richard W. Swan
Donald L. Brooks, Jr. Thomas K. Meier William C. Ughetta
David J. Dalrymple John F. Potter Nelson Mooers van den Blink
Comparative Return Performance Graph
Comparison of Five-Year Cumulative Total Return For Fiscal Years
Ending December 31, 1991 - 1995 Among Chemung Financial Corporation,
NASDAQ - Composite Index and NASDAQ - Bank Stock Index
(OMITTED GRAPHIC MATERIAL - SEE APPENDIX)
1991 1992 1993 1994 1995
Chemung Financial Corporation 79.25 84.00 108.72 125.52 142.26
NASDAQ - Composite 160.56 186.87 214.51 209.69 296.30
NASDAQ - Bank Stocks 164.09 238.85 272.40 271.41 404.35
The cumulative total return includes (i) dividends paid and (ii) changes in
the share price of the Corporation's Common Stock and assumes that all
dividends were reinvested. The above graph assumes that the value of the
investment in Chemung Financial Corporation and each index was $100 on December
31, 1990.
The NASDAQ - Composite and Bank Stock indices were obtained from the
Center for Research in Security Prices, University of Chicago, Chicago,
Illinois.
Executive Officers
During 1995, the names and positions of the executive officers of the
Corporation and the Bank, all serving one-year terms, were as follows:
Name Age Position (served since)
John W. Bennett (1) 62 Chairman of the Board & CEO of the
Corporation and the Bank (1996); formerly
President & CEO of the Corporation and
the Bank (1991); and prior thereto
President & COO of the Corporation and
the Bank (1988)
Jan P. Updegraff (1) 53 President and COO of the Corporation and
the Bank (1996); formerly Vice President
and Treasurer of the Corporation and
Executive Vice President of the Bank
(1990)
Daniel F. Agan (2) 62 Vice President of the Corporation (1988)
and Senior Vice President of the Bank
(1984)
Robert J. Hodgson 50 Vice President of the Corporation (1990)
and Senior Vice President of the Bank
(1988)
James E. Corey III 49 Vice President of the Corporation (1993)
and Senior Vice President of the Bank
(1993)
Joseph J. Tascone 48 Vice President of the Corporation and
Senior Vice President of the Bank (1995);
and prior thereto Vice President of the
Bank (1987)
<FN>
<F1>
1 Messrs. Bennett and Updegraff were elected on February 14, 1996 by the Board
of Directors to the positions of Chairman of the Board & CEO and President
& COO, respectively, to be effective upon approval by the Federal Reserve
Bank, as required by law.
<F2>
2 Mr. Daniel F. Agan is a brother of board member, Robert E. Agan.
</FN>
Executive Compensation
The following information indicates compensation paid or accrued by the Bank
during 1995 for services rendered by each of the Chief Executive Officer and the
four highest-paid executive officers of the Corporation and the Bank whose
total compensation exceeded $100,000.
At present, the officers of the Corporation are not separately compensated for
services rendered by them to the Corporation. It presently is contemplated that
such will continue to be the policy of the Corporation.
Summary Compensation Table
Name Annual Compensation
and
Principal All Other
Position Year Salary($) Bonus($) (1) Compensation ($) (2)
John W. Bennett (3) 1995 194,000 18,000 8,418
Chairman of the
Board & CEO 1994 185,692 30,000 8,174
of the Corporation
and the Bank 1993 162,885 32,000 6,597
Jan P. Updegraff (3) 1995 95,385 15,000 6,660
President & COO
of the Corporation 1994 90,385 25,000 6,266
and the Bank
1993 84,692 20,000 2,100
<FN>
<F1>
1 Includes amounts allocated for the year indicated, whether paid or deferred,
to such person under the Bank-Wide and Management Incentive Bonus Plans.
<F2>
2 Includes amounts allocated for the year indicated to such person under the
Bank's Profit-Sharing, Savings and Investment Plan.
<F3>
3 See footnote 1 of the Executive Officer table on page 13.
</FN>
Retirement Plan
The Bank maintains a non-contributory, defined benefit Retirement Plan
trusteed and administered by the Bank. The Plan covers all employees who have
attained age 20 with one or more years of service and who have one thousand
hours of service during the plan year. Under the lan, the annual benefit
payable to qualifying employees upon their retirement is based on the average of
their five highest paid years out of the last ten calendar years of employment.
Normal retirement age under the Plan is 65. The Plan also provides for reduced
benefit payments for early retirement following age 55. Compensation under the
Plan is limited to all of an employees salary, wages, or other regular payments
from the Bank, excluding bonuses, commissions, overtime pay, or other unusual
payments.
The Retirement Plan provides an annual benefit of 1.2% for each year of
credited service to a maximum of 25 years and for each additional year to a
maximum of 10 years, 1% times the above average compensation, plus for each year
of credited service to a maximum of 35 years , .65% of the above average
compensation to the extent it exceeds the average of the taxable wage base in
effect under Section 230 of the Social Security Act for each year in the 35 -
year period ending with the year in which the participant attains social
security retirement age (which base was $25,920 for a participant attaining age
65 in 1995).
The Bank made contributions to the Retirement Plan totaling $262,200 for 1995
and $306,288 for 1993. Due to a full funding limitation, the Bank made no
contribution to the Retirement Plan for 1994.
Additionally, effective January 1, 1994, the Bank established a non-qualified
Executive Supplemental Pension Plan designed to provide a benefit which, when
added to other retirement income, will ensure the payment of a competitive level
of retirement income in order to attract, retain and motivate selected
executives of the Bank. From time to time the Board of Directors may select
executives as participants in the plan. Currently, Mr. Bennett is the only plan
participant.
This Plan provides an annual benefit equal to the amount, if any, that the
benefit which would have been paid under the terms of the Bank's Retirement
Plan, computed as if the basic Retirement Plan benefit formula administered and
payable without regard to the special benefit limitations required to comply
with Sections 415, 401(a)(17) and other governing sections of the Internal
Revenue Code, exceeds the benefit which is payable to the participant under the
terms of the Retirement Plan on the date of the participant's termination.
The following table sets forth the estimated annual benefits under both plans,
based upon a straight-life annuity form of pension, payable on retirement at age
65 by a participating employee, assuming final average earnings as shown.
Employees become fully vested following 5 years of service.
Average Annual Annual Benefits upon Retirement
Earnings with Years of Service Indicated
20 30 35 (1)
$100,000 33,630 49,446 56,853
$120,000 41,030 60,346 69,403
$150,000 52,130 76,696 88,228
$190,000 66,930 98,496 113,328
$200,000 70,630 103,946 119,603
<FN>
<F1>
1 Maximum number of years allowed under the terms of the Retirement Plan.
</FN>
The previously- noted executive officers of the Corporation and the Bank had
the following credited full years of service under the Plan, as of December 31,
1995: John W. Bennett (40) and Jan P. Updegraff (25).
Profit-Sharing, Savings and Investment Plan
The Bank maintains a Profit-Shring, Savings and Investment Plan for the
benefit of all employees with one or more years of service who have attained
one thousand hours of service during the Plan year. The Banks contribution in
any year is paid out of the Banks net profit and, therefore, is subject to
change from year to year. The contribution shall not exceed the maximum amount
deductible for income tax purposes for such year. Annual contributions under
the Plan are allocated pro rata on the basis of participants aggregate covered
compensation, limited, however, to a maximum of 50% of the defined benefit
limit under Code Section 415 (b) (1) (A) in effect as of January 1 of the Plan
Year for which the contribution is made (50% of $120,000 or $60,000 for 1995).
Participants who have earned at least five years of vesting service may make
limited withdrawals from the Plans Trust Fund from account balances accumulated
prior to January 1, 1985. The Plan further provides the opportunity for all
participants to contribute up to 10% of pay on a tax-deferred basis with the
Bank matching 50% of the first 6% of that contribution. Both the Bank's
profit-sharing and matching contributions are invested in the Corporation's
Common Stock to the extent available. Participants' accounts are at all times
100% vested, and benefits are payable upon retirement, death, disability, or
other termination of employment.
The Bank made contributions to the Profit Sharing, Savings and Investment Plan
totaling $499,342 for 1995, $423,161 for 1994, and $406,798 for 1993.
Management Incentive Plan
Effective for 1995, the Board of Directors adopted on January 11, 1995,
Bank-Wide and Management Incentive Plans which provide for the awarding of
incentive bonuses to all Bank employees subject to the Corporation's attaining
or exceeding minimum predetermined operating objectives. Under the terms and
conditions of the Plans, exceeding the minimum operating objectives will result
in an increase in funds available for distribution to the Plans' participants.
Pursuant to the Management Incentive Plan, which covers only Bank Officers
and Exempt Non-Officers, the award of any bonus under either the Bank-Wide or
Management Incentive Plans is subject to the Corporation's attaining all minimum
operation objectives. The minimum objectives established for the fiscal year
1995 were net income (after taxes) equal to at least a 1.0% return on average
assets (ROA) and an efficiency ratio of 67% or less. The amount of the bonus
payment or award to each participant is determined by an allocation formula
based in part on the results of the Corporation's performance and the Division
or Department performance (if applicable), and in part by a subjective review
of the participant's individual performance. Any Senior Officer may defer all
or any portion of the annual incentive award until his or her retirement or
separation from service. Additionally, key officers having responsibilities for
setting and implementing long-term strategies may receive a long-term incentive
award which payment of said long-term award will be deferred for three years
following the accrual year and may be further deferred at the election of the
participant.
The Bank made awards to the Senior Officer participants in the Management
Incentive Plan totaling $160,250 for the accrual year of 1995.
Prior to implementing the Management Incentive Plan, the Bank had instituted
an Incentive Bonus Plan effective for its Senior Officers which provided that
the Bank could award bonuses to key management officers and others in such
amount as the Board of Directors, in its sole discretion, could determine. The
Bank made contributions to the Incentive Bonus Plan totaling $182,500 for 1994
and $171,500 for 1993.
Employment Contracts
The Bank has employment contracts with nineteen of its senior officers, all
vice president level and above. The contracts provide that in the event of
termination of any of these officers' employment without cause, the officer
shall continue to receive his or her salary at the level then existing and the
customary fringe benefits which he or she is then receiving for a period ending
December 31, 1997, except for Messrs. Agan, Cory, Hodgson, Tascone and Updegraff
whose guaranteed terms end December 31, 1998, and Mr. Bennett whose guaranteed
term ends July 1, 1998. The contracts further provide that they may be extended
by the Board of Directors on a year-to-year basis and also may be terminated for
cause upon thirty days' notice.
Other Compensation Agreements
The Bank maintains several contributory and non-contributory medical, life and
disability plans covering all officers, as well as all full-time employees. The
Bank does not maintain any stock option, stock appreciation rights or stock
purchase or award plans for officers or directors.
INDEPENDENT PUBLIC ACCOUNTANTS:
The accounting firm of KPMG Peat Marwick LLP, 113 South Salina Street,
Syracuse, New York 13202 has acted as the Bank's and the Corporation's
independent auditors and accountants since 1990 and will so act in 1996.
Representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting
of Shareholders with the opportunity to make a statement. The representatives
will respond to appropriate questions.
OTHER BUSINESS:
Management knows of no business which will be presented for consideration,
other than the matters described in the Notice of Annual Meeting. If other
matters are properly presented, the persons designated as proxies intend to vote
thereon in accordance with their best judgment.
SHAREHOLDER PROPOSALS:
Qualified Shareholders desiring to present a proposal at the 1997 Annual
Meeting of Shareholders, including a notice of intent to make a nomination at
said Meeting, must submit such proposal to the Corporation on or before November
6, 1996. Such proposals must comply in all respects with the rules and
regulations of the Securities and Exchange Commission.
BY ORDER OF THE BOARD OF DIRECTORS
Jerome F. Denton
Secretary
Date: March 5, 1996
One Chemung Canal Plaza
Elmira, New York 14902
CHEMUNG
FINANCIAL
CORPORATION
Subsidiary, Chemung Canal Trust Company
Notice of
Annual Meeting
and
Proxy Statement
One Chemung Canal Plaza Annual Meeting of
P.O. Box 1522 Shareholders to be held
Elmira, New York 14902 April 2, 1996
APPENDIX
OMITTED GRAPHIC MATERIAL:
The Comparative Return Performance Graph set forth under the heading
"Comparison of Five-Year Cumulative Total Return For Fiscal Years Ending
December 31, 1991 - 1995 Among Chemung Financial Corporation, NASDAQ - Composite
Index and NASDAQ - Bank Stock Index", as required by Item 402(1) of Regulation
S-K has been omitted pursuant to Rule 304(d) of Regulation S-T but will be filed
with the Securities and Exchange Commission in paper form pursuant to Rule
311(b) of Regulation S-T.
PROXY FORM
CHEMUNG FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - APRIL 2, 1996
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF CHEMUNG FINANCIAL CORPORATION
John R. Battersby, Darwin C. Farber, and John B. Hintz, each with power of
substitution and with all the powers and discretion the undersigned would have
if personally present, are hereby appointed the Proxy Agents to represent the
undersigned at the Annual Meeting of Shareholders of Chemung Financial
Corporation, to be held on April 2, 1996 (including any adjournments or
postponements thereof) and to vote all shares of Common Stock of Chemung
Financial Corporation which the undersigned is entitled to vote on all matters
that properly come before the meeting, subject to any directions indicated.
(To be signed on Reverse Side)
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED. IF NO DIRECTIONS
TO THE CONTRARY ARE GIVEN, THE PROXY AGENTS INTEND TO VOTE FOR THE NOMINEES.
NOMINEES
FOR WITHHELD
3-year term: Robert E. Agan
1. Election of Donald L. Brooks, Jr.
Directors. Stephen M. Lounsberry III
Boyd McDowell II
For, except vote withheld Thomas K. Meier
from the following nominee(s): Charles M. Streeter, Jr.
Nelson Mooers van den Blink
1-year term: Jan P. Updegraff
I/We will attend the Meeting
Number in group
SIGNATURE(S) DATE
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, custodian or
guardian, please give full title as such.