EXHIBIT F
NOTICE OF ANNUAL MEETING, PROXY STATEMENT
DATED MARCH 10, 1997, AND PROXY FORM
March 10, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
to be held on Tuesday, April 8, 1997, 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 six directors. The candidates nominated for three-year
terms, all currently serving, are: David J. Dalrymple, Richard H. Evans,
Edward B. Hoffman, John F. Potter, William C. Ughetta and 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 1997.
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 8.
Sincerely yours,
/s/ John W. Bennett
John W. Bennett
Chairman of the Board and
Chief Executive Officer
One Chemung Canal Plaza
P.O. Box 1522
Elmira, New York 14902
Parent Company of
Chemung Canal Trust Company
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
As directed by the Board of Directors of Chemung Financial Corporation,
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of the
Corporation will be held at the Elmira Holiday Inn, One Holiday Plaza, 760
East Water Street, Elmira, New York, Tuesday, April 8, 1997, at 7:00 p.m.
for the following purposes:
To elect six (6) directors, each to hold office for a term of three
years and until their respective successors have been elected and
qualified.
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,
1997, as the record date for determination of Shareholders entitled to
notice of and to vote at this Meeting.
Shareholders are requested to date, sign and mail the enclosed proxy in the
envelope provided at their earliest convenience. A prompt response will be
appreciated and will save the Corporation additional time and expense.
BY ORDER OF THE BOARD OF DIRECTORS
Jerome F. Denton
Secretary
March 10, 1997
CHEMUNG FINANCIAL CORPORATION
ONE CHEMUNG CANAL PLAZA, P.O. BOX 1522, ELMIRA, NEW YORK
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, APRIL 8, 1997
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 its 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 8, 1997, 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 10, 1997.
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, 1997,
are entitled to receive notice of and to vote at the Annual Meeting. As
of February 12, 1997, there were 2,072,214 shares of Common Stock
outstanding and entitled to vote. Each share of Common Stock is entitled
to one vote. There are no cumulative voting rights. Nominees for director
will be elected by a plurality of votes cast at the Annual Meeting by
holders of Common Stock present in person or by proxy and entitled to vote
on such election. Any other matter requires the affirmative vote of a
majority of votes cast at the meeting, except as otherwise provided in the
Corporation's Certificate of Incorporation or By-laws. Only shares
affirmatively voted in favor of a nominee will be counted toward the
achievement of a plurality. Votes withheld (including non-broker votes)
and abstentions are counted as present for the purpose of determining a
quorum but are not counted as votes cast.
The cost of soliciting proxies will be borne by the Corporation and the
Bank. In addition to solicitations by mail, some of the directors,
officers, and regular employees of the Corporation and the Bank may conduct
additional solicitations by telephone and personal contacts without
remuneration. American Stock Transfer & Trust Company, the Corporation's
transfer agent, will aid the Corporation in the solicitation of proxies and
proxy vote tabulations. Nominees, brokerage houses, custodians and
fiduciaries will be requested to forward soliciting material to beneficial
owners of stock held of record and the Corporation will reimburse such
persons for 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. A Shareholder
granting a proxy has the right to revoke it by filing with the Secretary of
the Corporation prior to the time such proxy is voted a duly executed proxy
bearing a later date, by attending the Annual Meeting and voting in person,
or by otherwise notifying the Secretary of the Corporation in writing of
such Shareholder's intention to revoke such proxy prior to the time such
proxy is voted. The Board of Directors does not know of any other business
to be brought before the Annual Meeting, but it is intended that, as to any
such other business, a vote may be cast pursuant to the Proxy in accordance
with the judgment of the person or persons acting thereunder; 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 1997 Annual Meeting of Shareholders is six
(6) for three-year terms, each to serve for such term and until their
respective successors are elected and qualified.
The following table sets forth information concerning the Board of
Directors' nominees for election as directors at the Annual Meeting and
each director continuing in office:
Length of Principal Occupation During
Name and Age Service Past 5 Years
As Director
NOMINEES WITH TERMS
EXPIRING IN 2000
David J. Dalrymple Since 1993 President of Dalrymple Holding
Age 43 Corporation since December 17,
1993, parent company for several
construction companies; formerly
Vice President.
Richard H. Evans Since 1985 Retired since January 1, 1995;
Age 66 formerly Chairman of the Board &
Chief Executive Officer of Chas.
F. Evans Co., Inc., specialists in
commercial roofing.
Edward B. Hoffman Since 1993 Partner with Sayles, Evans,
Age 65 Brayton, Palmer & Tifft law firm.
Length of Principal Occupation During
Name and Age Service Past 5 Years
As Director
NOMINEES WITH TERMS
EXPIRING IN 2000
(continued)
John F. Potter Since 1991 President of Seneca Beverage
Age 51 Corporation, a wholesale
distributor of beer, water and
soda products.
William C. Ughetta Since 1985 Senior Vice President and General
Age 64 Counsel of Corning Incorporated, a
diversified manufacturing company.
Jan P. Updegraff Since 1996 President and Chief Operating
Age 54 Officer of the Corporation and
Bank since February 14, 1996;
formerly Vice President and
Treasurer of the Corporation and
Executive Vice President of the
Bank.
DIRECTORS CONTINUING
IN OFFICE WITH TERMS
EXPIRING IN 1999
John W. Bennett Since 1988 Chairman of the Board and Chief
Age 63 Executive Officer of the
Corporation and Bank since
February 14, 1996; formerly
President and Chief Executive
Officer of the Corporation and the
Bank; also a director of Hardinge
Inc.
Robert H. Dalrymple Since 1995 Secretary of Dalrymple Holding
Age 46 Corporation, a parent company for
several construction companies.
Natalie B. Kuenkler Since 1985 Director of various community
Age 71 organizations.
Ralph H. Meyer Since 1985 President and Chief Executive
Age 57 Officer of Guthrie Healthcare
System, a vertically integrated
health care delivery system.
Samuel J. Semel Since 1993 President of Chemung Electronics,
Age 70 Inc., an electronic and computer
consulting firm.
Richard W. Swan Since 1985 President of Swan & Sons-Morss
Age 48 Co., Inc., an insurance brokerage
agency.
Length of Principal Occupation During
Name and Age Service Past 5 Years
As Director
DIRECTORS CONTINUING
IN OFFICE WITH TERMS
EXPIRING IN 1998
Robert E. Agan Since 1986 Chairman of the Board and Chief
Age 58 Executive Officer since October
21, 1996 of Hardinge Inc., a world-
wide machine tool manufacturer;
formerly also President of said
Company.
Donald L. Brooks, Jr. Since 1985 Physician.
Age 68
Stephen M. Lounsberry Since 1995 President of Applied Technology
III Manufacturing Corporation since
Age 43 July 17, 1996, a manufacturer of
railroad lubrication systems;
formerly President of Moore &
Steele Corporation.
Boyd McDowell II Since 1985 Retired; formerly Chairman of the
Age 71 Board and Chief Executive Officer
of the Corporation and the Bank.
Thomas K. Meier Since 1988 President of Elmira College.
Age 56
Charles M. Streeter, Jr. Since 1985 President of Streeter Associates,
Age 57 Inc., a general building
contractor.
Nelson Mooers van den Since 1985 Chairman of the Board, Chief
Blink Executive Officer and Treasurer of
Age 62 The Hilliard Corporation, a motion
control equipment, oil reclaimer
and filter manufacturer.
Directors and Committee Meetings
The Board of Directors of the Corporation held nine (9) regularly scheduled
meetings during the year ended December 31, 1996. 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, 1996.
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 Bank's internal audit and loan review procedures and
recommends to the Board of Directors the engagement and dismissal of
independent auditors. During 1996 this Committee held three (3) meetings.
On December 31, 1996, its members were Messrs. Semel (Chairman), Agan, R.
Dalrymple, Evans, 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 Chairman of the Board of the Corporation at the Corporation's
Main Office, One Chemung Canal Plaza, Elmira, New York 14902. There were
no Committee meetings held in 1996. On December 31, 1996, its members
were Mrs. Kuenkler (Chairman) and Messrs. Agan, Bennett, D. Dalrymple,
McDowell, Potter, Streeter, Swan and Updegraff.
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
eight (8) meetings in 1996 and on December 31, 1996, its members were
Messrs. Meyer (Chairman), Brooks, D. Dalrymple, Evans, Meier, Potter, Swan,
Tryon, and Ughetta.
During the year ended December 31, 1996, 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 exceptions of Mr.
D. Dalrymple who attended 72%, and Mrs. Kuenkler who attended 67%, 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 1996. 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 Bank's
"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 1996 was $256,500. 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 Bank's Pension and Profit-Sharing Plans, under the
Employee Retirement Income Security Act of 1974. The insurance coverage,
which expires in February 1998, costs $18,900 on an annual basis, and has
been paid by the Bank. 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, 1997,
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 Percent of Shares
Beneficial Owner Common Outstanding
Stock Beneficially
Owned
Chemung Canal Trust Company 371,8131 17.9%
One Chemung Canal Plaza
Elmira, NY 14902
Chemung Canal Trust Company
Profit-Sharing, Savings and 232,3422 11.2%
Investment Plan
One Chemung Canal Plaza
Elmira, NY 14902
Mary E. Dalrymple
168 Christian Hollow Road 218,2553 10.5%7
Pine City, NY 14871
David J. Dalrymple
274 Upper Coleman Avenue 190,5234, 6 9.2%7
Elmira, NY 14905
Robert H. Dalrymple
875 Upland Drive 179,4075, 6 8.7%7
Elmira, NY 14905
1 Held by the Bank in various fiduciary capacities, either alone or with
others. Includes 25,613 shares held with sole voting and dispositive
powers, 346,200 shares held with shared power to vote and 184,399 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.
2 Voted by the Bank as trustee as directed by the Plan participants.
3 Includes 115,255 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).
4 Includes 46,461 shares held directly, 1,904 shares held as custodian for
Mr. Dalrymple's children under the New York State Uniform Gifts to
Minors Act, 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 1,988 shares held by Mr. Dalrymple's spouse.
5 Includes 35,345 shares held directly, 1,904 shares held as custodian for
Mr. Dalrymple's children under the New York State Uniform Gifts to
Minors Act, 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 1,345 shares held by Mr.
Dalrymple's spouse.
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.
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
16.6% of the outstanding shares of Common Stock of the Corporation and
if deemed to be a member of a "group" within the meaning of Section
13(d)(3) of The Exchange Act, such group would be deemed to hold
approximately 16.6% 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.
SECURITY OWNERSHIP OF MANAGEMENT:
As of January 31, 1997, 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 Shares
Ownership Outstanding*
Robert E. Agan 450A *
John W. Bennett 8,821B *
Donald L. Brooks, Jr. 6,250A *
David J. Dalrymple 48,365C 2.33%
Robert H. Dalrymple 37,249C 1.80%
Richard H. Evans 9,352 *
Edward B. Hoffman 1,710A *
Natalie B. Kuenkler 6,706D *
Stephen M. Lounsberry III 3,845A *
Boyd McDowell II 6,418 *
Thomas K. Meier 2,000 *
Ralph H. Meyer 2,595A *
John F. Potter 8,848A, E *
Samuel J. Semel 4,522A *
Charles M. Streeter, Jr. 10,213A, F *
Richard W. Swan 19,188G *
William A. Tryon 12,679 *
William C. Ughetta 9,000A *
Nelson Mooers van den Blink 1,598 *
Jan P. Updegraff 3,676B *
All Directors, Nominees and 220,673H 10.65%
Executive Officers as a group
(25 persons)
* Unless otherwise noted, less than 1% per individual.
A
In addition, Messrs. Agan (4,782), Brooks (290), Hoffman, (1,822),
Lounsberry (964), Meyer (3,298), Potter (3,388), Semel (1,450),
Streeter (989), and Ughetta (2,807) have credited to their accounts
the equivalent of that number of shares shown in parenthesis following
their names, of Common Stock in valuation entry form under the
Corporation's Deferred Directors Compensation Plan. Deferred fees will
be paid solely in cash pursuant to the terms of the Plan and the
election of the participant.
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 7,635 and 3,518 such shares held by
the Plan, respectively. Under the provisions of the Plan, the trustee
holds for the benefit of all employees who participate in the Plan
232,342 shares of the Corporation's Common Stock.
C Includes only shares held directly by Messrs. Dalrymple. See Footnote
7 of the SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS table on page
9 for further explanation of shares beneficially held.
D Includes 4,131 shares held by Mrs. Kuenkler and another as trustees
under the Will of a descendent under which Mrs. Kuenkler is an income
beneficiary and as trustee shares voting and dispositive powers. Does
not include 75,007 shares owned by The Rathbone Corporation, of which
Mrs. Kuenkler is a director.
E Includes 5,899 shares owned by Seneca Beverage Corporation, of which
corporation Mr. Potter is an officer, director and the principal
shareholder.
F Includes 5,418 shares owned by Streeter Associates, Inc., of which
corporation Mr. Streeter is an officer, director and the principal
shareholder.
G Includes 5,850 shares owned by Swan & Sons-Morss Co., Inc., of which
corporation Mr. Swan is an officer, director and one of the principal
shareholders and 205 shares held by Mr. Swan as custodian for his minor
children. Does not include 2,158 shares held by others as trustees for
a trust of which Mr. Swan is an income beneficiary, as to which shares
Mr. Swan disclaims beneficial ownership.
H Does not include 10,747 shares owned by spouses of certain officers and
directors as to which shares such officers and directors disclaim
beneficial ownership.
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 Corporation's knowledge, based on review of the copies of such
reports furnished to the Corporation and written representations that no
other reports were required for the year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its executive officers,
directors and any ten percent shareholder were complied with, except one
filing by Mr. Lounsberry was inadvertently filed late.
MANAGEMENT:
Directors' Personnel Committee Report on Executive Compensation
Under the supervision of the Personnel Committee of the Board of
Directors composed entirely of outside directors, the Bank has developed
and implemented compensation policies which seek to enhance the
profitability of the Bank and the Corporation and thus, Shareholder value
while at the same time providing fair and competitive compensation which
will attract and retain well-qualified executives. Based upon
recommendations of the Personnel Committee, the Board of Directors sets the
annual compensation of the Chief Executive and Chief Operating Officers.
The Committee also reviews and recommends to the Board of Directors
compensation of other senior management as first recommended by the Chief
Executive Officer based upon performance and other relevant factors. Aside
from the fringe benefit programs in which all Bank employees participate,
compensation of all Bank officers and exempt non-officers consists of an
annual salary and a management incentive bonus. The management incentive
bonus is subject to the terms and conditions of the Management Incentive
Plan adopted by the Board of Directors, which provides for the payment of
bonuses to participants in accordance with an allocation formula based in
part on the Corporation's attainment of specific operating objectives and
in part on a subjective review of the participant's individual performance.
Additionally, those officers who play a major role in setting and
implementing long-term strategies, currently being the Chief Executive
Officer and the 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. For 1996, the Committee and Board determined at the
beginning of the year that 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 and an efficiency ratio of 67% or
less, each of which targets were met. For 1996, Messrs. Bennett and
Updegraff received incentive bonuses of $25,000 and $15,000, respectively.
No long-term awards were issued. Senior Officer participants as a group,
including Messrs. Bennett and Updegraff, received incentive bonus awards
totaling $191,205 for 1996.
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 1996 in achieving certain profit, growth, and
operational objectives which were established by the Board of Directors in
the Bank Plan at the beginning of 1996 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 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 and Chief
Operating Officers, the committee periodically reviews reports prepared by
various organizations which provide comparative information on Executive
compensation for a nationwide peer group of independent banks and holding
companies having similar asset size. From this review it was determined
that the performance of the Bank was within the range reported by its peers
and that the compensation paid by the Bank was appropriate in comparison to
the peer group.
In its review of management performance and compensation, the
committee has also taken into account management's consistent commitment to
the long-term success of the Corporation and Bank. The committee has
recognized that profitability in any one year is considerably impacted by
the general economic conditions nationally and in its market areas, over
which management has little or no control, and the committee's policy,
therefore, is to not over-emphasize, either positively or negatively, a
single year's results at the expense of significant, sustained, long-term
earnings growth.
Based on 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 A. Tryon
David J. Dalrymple John F. Potter William C. Ughetta
Comparative Return Performance Graph
Comparison of Five-Year Cumulative Total Return For Fiscal Years
Ending December 31, 1992 - 1996 Among Chemung Financial Corporation,
NASDAQ - Composite Index and NASDAQ - Bank Stocks Index
(OMITTED GRAPHIC MATERIAL - SEE APPENDIX)
1991 1992 1993 1994 1995 1996
Chemung Financial Corporation 100.00 105.83 136.77 157.68 178.45 226.49
NASDAQ - Composite 100.00 116.38 133.60 130.59 184.67 227.16
NASDAQ - Bank Stocks 100.00 145.55 165.99 165.39 246.32 325.60
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, 1991.
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 1996, 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 63 Chairman of the Board and Chief
Executive Officer of the Corporation
and the Bank (1996); formerly President
and Chief Executive Officer of the
Corporation and the Bank (1991); and
prior thereto President and Chief
Operating Officer of the Corporation
and the Bank (1988).
Jan P. Updegraff 54 President and Chief Operating Officer
of the Corporation and the Bank (1996);
formerly Vice President and Treasurer
of the Corporation and Executive Vice
President of the Bank (1990).
Daniel F. Agan1 63 Vice President of the Corporation
(1988) and Senior Vice President of the
Bank (1984).
Robert J. Hodgson 51 Vice President of the Corporation
(1990) and Senior Vice President of the
Bank (1988).
James E. Corey III 50 Vice President of the Corporation
(1993) and Senior Vice President of the
Bank (1993).
Joseph J. Tascone 49 Vice President of the Corporation and
Senior Vice President of the Bank
(1995); and prior thereto Vice
President of the Bank (1987).
Jerome F. Denton 45 Secretary of the Corporation (1986) and
Senior Vice President and Secretary of
the Bank (1996).
1 Mr. Daniel F. Agan is a brother of Board member, Robert E. Agan.
Executive Compensation
The following information indicates compensation paid or accrued by
the Bank during 1996 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 $100,000.
At present, the officers of the Corporation are not separately
compensated for services rendered by them to the Corporation. It presently
is contemplated that such will continue to be the policy of the
Corporation.
Summary Compensation Table
Annual Compensation
All Other
Name and Principal Year Salary($) Bonus($)1 Compensation($)2
Position Held
John W. Bennett 1996 200,308 25,000 8,541
Chairman of the Board and
Chief Executive Officer of 1995 194,000 18,000 8,418
the Corporation and the
Bank
1994 185,692 30,000 8,174
Jan P. Updegraff 1996 114,039 15,000 7,342
President and Chief
Operating Officer of the 1995 95,385 15,000 6,660
Corporation and the Bank
1994 90,385 25,000 6,266
1 Includes amounts allocated for the year indicated, whether paid or
deferred, to such person under the Bank-Wide and Management Incentive
Bonus Plans.
2 Includes amounts allocated for the year indicated to such person under
the Bank's Profit-Sharing, Savings and Investment Plan.
Pension Plan
The Bank maintains a non-contributory, defined benefit Pension Plan
trusteed and administered by the Bank. The Plan covers all employees who
have attained age 20 with one or more years of service and who have one
thousand hours of service during the plan year. Under the Plan, the annual
benefit payable to qualifying employees upon their retirement is based on
the average of their five highest paid consecutive years out of the last
ten calendar years of employment. Normal retirement age under the Plan is
65. The Plan also provides for reduced benefit payments for early
retirement following age 55. Compensation under the Plan is limited to all
of an employee's salary, wages, or other regular payments from the Bank,
excluding bonuses, commissions, overtime pay, or other unusual payments.
The Pension Plan provides an annual benefit of 1.2% for each year of
credited service to a maximum of 25 years and for each additional year to a
maximum of 10 years, 1% times the above average compensation, plus for each
year of credited service to a maximum of 35 years, .65% of the above
average compensation to the extent it exceeds the average of the taxable
wage base in effect under Section 230 of the Social Security Act for each
year in the 35 - year period ending with the year in which the participant
attains social security retirement age (which base was $27,576 for a
participant attaining age 65 in 1996).
The Bank made contributions to the Pension Plan totaling $262,200 for 1995.
Due to a full funding limitation, the Bank made no contribution to the
Pension Plan for the years 1996 and 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 Pension
Plan, computed as if the basic Pension Plan benefit formula administered
and payable without regard to the special benefit limitations required to
comply with Sections 415, 401(a)(17) and other governing sections of the
Internal Revenue Code, exceeds the benefit which is payable to the
participant under the terms of the Pension Plan on the date of the
participant's termination.
The following table sets forth the estimated annual benefits under both
plans, based upon a straight-life annuity form of pension, payable on
retirement at age 65 by a participating employee, assuming final average
earnings as shown. Employees become fully vested following 5 years of
service.
Average Annual Earnings Annual Benefits upon Retirement with
Years of Service Indicated
20 30 351
$100,000 33,415 49,123 56,476
$120,000 40,815 60,023 69,027
$150,000 51,915 76,373 87,852
$190,000 66,715 98,173 112,951
$200,000 70,415 103,623 119,226
<FN>
<FN1>
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, 1996: John W. Bennett (41) and Jan P. Updegraff (26).
Profit-Sharing, Savings and Investment Plan
The Bank maintains a Profit-Sharing, 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 Bank's
profit-sharing contribution in any year is determined by the Board of
Directors in its discretion. 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 1996). Participants who have
earned at least five years of vesting service may make limited withdrawals
from the Plan's 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 $550,854 for 1996, $499,342 for 1995 and $423,161 for 1994.
Employment Contracts
The Bank has employment contracts with twenty-one 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, 1998, except for Messrs. Agan,
Corey, Tascone and Updegraff whose guaranteed terms end December 31, 1999,
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 1997.
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 1998 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 7, 1997. 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
Date: March 10, 1997
One Chemung Canal Plaza
Elmira, NY 14902
Jerome F. Denton
Secretary
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 8, 1997
CHEMUNG FINANCIAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - APRIL 8, 1997
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 8, 1997
(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:
3-year term:
FOR WITHHELD David J. Dalrymple
1. Election of Richard H. Evans
Directors Edward B. Hoffman
John F. Potter
William C. Ughetta
Jan P. Updegraff
For, except vote withheld from the following nominee(s):
__________________________________________________________
I/We will attend the Meeting
Number in group ____
DATE Date
Signature Signature If Held Jointly
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.