LOGO
ALBANK
Financial Corporation
April 3, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting (the "Meeting") of
the stockholders of ALBANK Financial Corporation ("ALBANK"), the holding company
for ALBANK, FSB, and ALBANK Commercial which will be held on Tuesday May 19,
1998, at 10:00 a.m., at the ALBANK, FSB Operations Center, 833 Broadway, Albany,
New York 12207.
The attached Notice of Annual Meeting and the Proxy Statement describe the
formal business to be transacted at the Meeting. Directors and officers of
ALBANK as well as a representative of KPMG Peat Marwick LLP will be present at
the Meeting to respond to any questions that our stockholders may have.
At the Meeting, stockholders will vote for the election of three directors.
The Board of Directors unanimously recommends a vote "FOR" the Board's nominees
named in the attached Proxy Statement. At the Meeting, stockholders will also
vote with respect to Proposal 2 submitted by the Board of Directors of ALBANK
for the ratification of KPMG Peat Marwick LLP, as independent auditors of ALBANK
for the fiscal year ending December 31, 1998. For the reasons set forth in the
Proxy Statement, the Board unanimously recommends a vote "FOR" Proposal 2.
You are urged to sign, date and mail the enclosed proxy card promptly in
the postage-paid envelope provided. If you attend the Meeting, you may vote in
person even if you have already mailed in your Proxy.
Sincerely yours,
/s/ Herbert G. Chorbajian
Herbert G. Chorbajian
Chairman of the Board,
President and Chief
Executive Officer
ALBANK FINANCIAL CORPORATION
10 North Pearl Street
Albany, New York 12207
(518) 445-2100
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on Tuesday May 19, 1998
----------------
Notice is hereby given that the annual meeting of stockholders (the
"Meeting") of ALBANK Financial Corporation (the "Company") will be held at the
ALBANK, FSB Operations Center, 833 Broadway, Albany, New York 12207, on Tuesday
May 19, 1998, at 10:00 a.m.
A Proxy Statement is attached and a proxy card for the Meeting is enclosed
herewith. The Meeting is for the purpose of considering and voting upon the
following matters:
1. The election of three directors for a term of three years each;
2. The ratification of KPMG Peat Marwick LLP as independent auditors of the
Company for the fiscal year ending December 31, 1998; and
3. Such other matters as may properly come before the Meeting or any
adjournments thereof.
Pursuant to the Bylaws of the Company, the Board of Directors has fixed
March 25, 1998, as the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting, and at any adjournments
thereof. Only recordholders of the common stock of the Company as of the close
of business on that date will be entitled to vote at the Meeting, or any
adjournments thereof. A list of stockholders entitled to vote at the Meeting
will be available for inspection by stockholders at the fourth floor of ALBANK,
FSB, 10 North Pearl Street, Albany, New York 12207, for a period of ten days
prior to the Meeting.
Each stockholder, whether he or she plans to attend the Meeting, is
requested to sign, date and return the enclosed proxy card without delay in the
enclosed postage-paid envelope. For planning purposes, you are requested to
indicate on the proxy card whether you currently intend to attend the Meeting.
(Of course, if your plans change, you may attend even if you do not indicate on
the proxy card that you intend to do so.) Any proxy given by the stockholder may
be revoked at any time before it is exercised by filing with the Secretary of
the Company a written revocation or by delivering to the Company a duly executed
proxy bearing a later date. Any stockholder present at the Meeting may elect to
revoke his or her proxy by voting personally on the matters brought before the
Meeting.
By Order of the Board of Directors
/s/ Freling H. Smith
Freling H. Smith
Secretary
Albany, New York
April 3, 1998
The Board of Directors recommends voting FOR Proposals 1 and 2.
ALBANK Financial Corporation
10 North Pearl Street
Albany, New York 12207
(518) 445-2100
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
Tuesday May 19, 1998
Solicitation and Voting of Proxies
This Proxy Statement is being furnished to stockholders of ALBANK Financial
Corporation ("ALBANK" or the "Company") in connection with the solicitation by
the Board of Directors and management of the Company of proxies to be used at
the Annual Meeting of Stockholders (the "Meeting") to be held on Tuesday, May
19, 1998, at 10:00 a.m., at the ALBANK, FSB Operations Center, 833 Broadway,
Albany, New York 12207, and at any adjournments thereof. The 1997 Summary Annual
Report and the Annual Report Supplement covering the year ended December 31,
1997, including the consolidated financial statements of the Company for the
year ended December 31, 1997, accompany this Proxy Statement. This Proxy
Statement and the accompanying proxy card are first being mailed to stockholders
on or about April 3, 1998.
Regardless of the number of shares of stock owned, it is important that
stockholders be represented by proxy or present in person at the Meeting.
Stockholders are requested to vote by completing the enclosed proxy card and
returning it signed and dated in the enclosed postage-paid envelope.
Stockholders are urged to indicate their vote in the spaces provided on the
proxy card. Proxies solicited by the Board of Directors of ALBANK will be voted
in accordance with the directions given therein. Where no instructions are
indicated, signed proxies will be voted FOR the election of the Board of
Directors' nominees for Directors and FOR the ratification of KPMG Peat Marwick,
LLP as independent auditors.
As of the date of printing of this Proxy Statement, the Board of Directors
knows of no additional matters that will be presented for consideration at the
Meeting. Execution of a proxy, however, confers on the designated proxyholders
discretionary authority to vote the shares in accordance with their best
judgment on such other business, if any, that may properly come before the
Meeting or any adjournments thereof.
A proxy may be revoked at any time prior to its exercise by the filing of a
written notice of revocation with the Secretary of the Company (at the address
above), by delivering to the Company a duly executed proxy bearing a later date,
or by attending the Meeting and voting in person. However, if you are a
stockholder whose shares are not registered in your own name, you will need
appropriate documentation from the recordholder of your shares to vote
personally at the Meeting.
The cost of solicitation of proxies on behalf of management will be borne
by the Company. Proxies will be solicited by mail and may also be solicited
personally or by telephone or telegraph by Directors, officers and regular
employees of the Company, ALBANK, FSB (the "Bank") or ALBANK Commercial
("Commercial") (collectively the "Banks"), without additional compensation
therefor. ALBANK will also request persons, firms and corporations holding
shares in their names, or in the name of their nominees, which are beneficially
owned by others, to send proxy material to and obtain proxies from such
beneficial owners, and will reimburse such holders for their reasonable expenses
in doing so.
Voting Securities
The securities which may be voted at the Meeting consist of shares of
Common Stock of ALBANK ("Common Stock"), with each share entitling its owner to
one vote on all matters to be voted on at the Meeting except as described below.
There is no cumulative voting for the election of Directors.
The close of business on March 25, 1998, has been fixed by the Board of
Directors as the record date ("Record Date") for the determination of
stockholders entitled to notice of and to vote at the Meeting and any
adjournments thereof. The total number of shares of Common Stock outstanding on
the Record Date was 12,846,323 shares.
As provided in the Company's Certificate of Incorporation, recordholders of
Common Stock that is beneficially owned, directly or indirectly, by a person or
entity who beneficially owns in excess of 10% of the outstanding shares of
Common Stock (the "Limit") are not entitled to any vote in respect of the shares
held in excess of the Limit. In general, a person or entity is deemed to
beneficially own shares such person or entity has the right to acquire or over
which such person or entity has investment or voting power (other than pursuant
to certain revocable proxies), shares beneficially owned by an affiliate of such
person or entity, and shares beneficially owned by any group in which such
person or entity participates pursuant to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
shares. For purposes of this provision, the Employee Stock Ownership Plan and
Trust of the ALBANK, FSB Incentive Savings and Employee Stock Ownership Plan is
not deemed to beneficially own the shares of Common Stock held under such plan.
The Company's Certificate of Incorporation authorizes the Board of Directors (i)
to make all determinations necessary to implement and apply the Limit, including
determining whether persons or entities have any agreements, arrangements or
understandings, and (ii) to demand that any person who is reasonably believed to
beneficially own stock in excess of the Limit to supply information to the
Company to enable the Board to implement and apply the Limit.
The presence, in person or by proxy, of at least a majority of the total
number of shares of Common Stock entitled to vote (after subtracting any shares
in excess of the Limit pursuant to the Company's Certificate of Incorporation)
is necessary to constitute a quorum at the Meeting. In the event there are not
sufficient votes for a quorum or to approve or ratify any proposal at the time
of the Meeting, the Meeting may (subject to applicable laws and regulations of
the Securities and Exchange Commission) be adjourned in order to permit the
further solicitation of proxies. Directors shall be elected by a plurality of
the votes of the shares of Common Stock present in person or represented by
proxy at the Meeting and entitled to vote. The affirmative vote of the majority
of the shares of Common Stock present in person or represented by proxy at the
Meeting and entitled to vote is required to ratify the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company. Under applicable Delaware
law, in determining whether the proposal regarding the appointment of KPMG Peat
Marwick LLP has received the requisite number of affirmative votes, abstentions
will be counted and have the same effect as a vote against such proposal.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information as to those persons
believed by management to be beneficial owners of more than 5% of the
outstanding shares of Common Stock, as disclosed in certain reports regarding
such ownership filed as of December 31, 1997 with the Company and with the
Securities and Exchange Commission (the "SEC"), in accordance with Section 13(g)
of the Securities Exchange Act of 1934 (the "Exchange Act") by such persons and
groups. Other than those persons listed below, the Company is not aware of any
person or group that owned more than 5% of the Common Stock as of March 25,
1998.
Name and Address Number Percentage
Title of Class of Beneficial Owner of Shares of Class<F1>
Common Stock Employee Stock Ownership 914,380 7.12%
Plan and Trust ("ESOP")
of the ALBANK, FSB Incentive
Savings and Employee
Stock Ownership Plan<F2>
10 North Pearl Street
Albany, New York 12207
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<FN>
<F1> Calculated using the total number of shares of Common Stock outstanding on
March 25, 1998 which was 12,846,323 shares.
<F2> The Human Resources Committee of the Board of Directors of the Bank
administers the ESOP. An independent bank, BankBoston, N.A., has been
appointed trustee for the ESOP ("ESOP Trustee") by the Board of Directors.
The Human Resources Committee may instruct the ESOP Trustee regarding
investment of funds contributed to the ESOP. Subject to its fiduciary
duties, the ESOP Trustee must vote all allocated shares held in the ESOP in
accordance with the instructions of the participating employees. Under the
ESOP, again subject to the ESOP Trustee's fiduciary duties, unallocated
shares held in the suspense account will be voted by the ESOP Trustee in a
manner calculated to most accurately reflect the instructions it has
received from participants regarding the allocated Common Stock.
</FN>
Stock Ownership by Management
The following table sets forth information as of March 25, 1998, as to
shares of Common Stock beneficially owned by Directors individually, by the five
most highly compensated executive officers of the Bank including the Chief
Executive Officer individually, and by executive officers and Directors as a
group. Ownership information is based upon information furnished by the
respective individuals.
Shares of Stock
Name Beneficially Owned<F1> Percentage of Class<F2>
Herbert G. Chorbajian 494,692<F3> 3.9%
John E. Maloy, Sr. 70,087<F4> 0.5%
William J. Barr 40,375<F4> 0.3%
Anthony P. Tartaglia 40,441<F5> 0.3%
Susan J. Stabile 15,100<F6> 0.1%
Karen R. Hitchcock 1,100<F7> --
Francis L. McKone 1,000<F7> --
John J. Nigro 250 --
Richard J. Heller 162,874<F8> 1.3%
Barry G. Blenis 159,400<F9> 1.2%
Clifford M. Apgar 64,232<F10> 0.5%
Freling H. Smith 87,127<F11> 0.7%
All executive officers and
Directors of the Bank and
Company as a group
(13 persons) 1,233,518<F12> 9.6%
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<FN>
<F1> Each person or relative of such person whose shares are included herein
exercises sole (or shared with spouse, relative or affiliate) voting or
dispositive power as to the shares reported.
<F2> The total number of shares of Common Stock outstanding on March 25, 1998,
was 12,846,323 shares.
<F3> Includes 343,400 shares subject to outstanding stock options under the
Company's 1992 Stock Incentive Plan for Key Employees, as amended (the
"Stock Incentive Plan"), 60,480 of which became exercisable on each of
April 1, 1993, April 1, 1994, April 1, 1995, April 1, 1996 and April 1,
1997, 16,000 of which became exercisable on each of December 18, 1996 and
December 18, 1997 and 20,000 of which became exercisable on December 2,
1997. On December 8, 1997, 11,000 of said options were exercised.
<F4> Includes 30,000 shares subject to outstanding stock options under the
Company's 1992 Stock Incentive Plan for Outside Directors (the "Directors'
Plan"), 6,000 of which became exercisable on each of April 1, 1993, April
1, 1994, April 1, 1995, April 1, 1996 and April 1, 1997, 3,000 shares
subject to outstanding stock options under the Company's 1995 Stock
Incentive Plan for Outside Directors (the "1995 Directors' Plan"), 1,000
of which became exercisable on each of December 18, 1996 and December 18,
1997 and 1,000 of which became exercisable on December 23, 1997.
<F5> Includes 30,000 shares subject to outstanding stock options under the
Directors' Plan, 6,000 of which became exercisable on each of March 5,
1994, March 5, 1995, March 5, 1996, March 5, 1997, and March 5, 1998,
3,000 shares subject to outstanding stock options under the 1995
Directors' Plan, 1,000 of which became exercisable on each of December 18,
1996 and December 18, 1997 and 1,000 of which became exercisable on
December 23, 1997.
<F6> Includes 12,000 shares subject to outstanding stock options under the
Directors' Plan 6000 of which became exercisable on each of June 26, 1996
and June 26, 1997, 3,000 shares subject to outstanding stock options under
the 1995 Directors' Plan, 1,000 of which became exercisable on each of
December 18, 1996 and December 18, 1997 and 1,000 of which became
exercisable on December 23, 1997.
<F7> Includes 1,000 shares subject to outstanding stock options under the
Directors' Plan which became exercisable on December 23, 1997.
<F8> Includes 116,883 shares subject to outstanding stock options under the
Stock Incentive Plan, 21,600 of which became exercisable on each of April
1, 1993, April 1, 1994, April 1, 1995, April 1, 1996 and April 1, 1997,
3,200 of which became exercisable on each of December 18, 1996 and
December 18, 1997 and 3,333 of which became exercisable on December 2,
1997. On December 30, 1997, 850 of said options were exercised.
<F9> Includes 94,233 shares subject to outstanding stock options under the
Stock Incentive Plan, 18,000 of which became exercisable on each of April
1, 1993, April 1, 1994, April 1, 1995, April 1, 1996 and April 1, 1997,
3,200 of which became exercisable on each of December 18, 1996 and
December 18, 1997 and 3,333 of which became exercisable on December 2,
1997. On May 2, 1997, 3,000 of said options were exercised and on December
31, 1997, 2,500 of said options were exercised.
<F10> Includes 54,733 shares subject to outstanding stock options under the
Stock Incentive Plan, 18,000 of which became exercisable on each of April
1, 1993, April 1, 1994, April 1, 1995, April 1, 1996 and April 1, 1997,
3,200 of which became exercisable on each of December 18, 1996 and
December 18, 1997 and 3,333 of which became exercisable on December 2,
1997. On August 12, 1993, 12,000 of said options were exercised, on May
20, 1994, 6,000 of said options were exercised, on July 18, 1996, 7,000 of
said options were exercised, and on June 23, 1997, 20,000 of said options
were exercised.
<F11> Includes 77,020 shares subject to outstanding stock options under the
Stock Incentive Plan, 18,000 of which became exercisable on each of April
1, 1993, April 1, 1994 and April 1, 1995, April 1, 1996 and April 1, 1997,
2,000 of which became exercisable on each of December 18, 1996 and
December 18, 1997, and 2,000 of which became exercisable on December 2,
1997. On May 20, 1994, 10,200 of said options were exercised, on April 10,
1995, 2,280 of said options were exercised and on September 2, 1997, 6,500
of said options were exercised.
<F12> Includes 884,269 shares (including the shares referred to in footnotes 3,
4, 5, 6, 7, 8, 9, 10 and 11) subject to outstanding stock options under
the Stock Incentive Plan as amended, the Directors' Plan and the 1995
Directors' Plan that became exercisable on April 1, 1993, March 5, 1994,
April 1, 1994, March 5, 1995, April 1, 1995, March 5, 1996, April 1, 1996,
June 26, 1996, December 18, 1996, March 5, 1997 and April 1, 1997, June
26, 1997, December 2, 1997, December 18, 1997, December 23, 1997 and March
5, 1998.
</FN>
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF THREE DIRECTORS OF ALBANK FINANCIAL CORPORATION FOR
THREE YEAR TERMS ENDING 2001.
Pursuant to ALBANK's bylaws, the number of Directors of ALBANK is the
number designated from time to time by the Board of Directors, except that in
the absence of such designation the number will be ten. The Board of Directors
presently has set the number of directors at eight. Each of the members of the
Company's Board of Directors also serves as a Director of the Banks. Directors
are elected for staggered terms of three years each, with a term of office of
only one of three classes of Directors expiring each year. Except in the case of
mandatory retirement, directors serve until their successors are elected and
qualified.
The three nominees proposed by the current Board of Directors of ALBANK for
election at the Meeting are Herbert G. Chorbajian, William J. Barr and Francis
L. McKone. All nominees named are presently Directors of the Company and the
Banks.
In the event that any such nominee is unable to serve or declines to serve
for any reason, it is intended that proxies will be voted for the election of
the balance of those nominees named and (unless the present Board of Directors
reduces the number of Directors pursuant to ALBANK's bylaws) for such other
persons as may be designated by the present Board of Directors. The Board of
Directors has no reason to believe that any of the persons named will be unable
or unwilling to serve.
Unless authority to vote for the Directors is withheld, it is intended that
the shares represented by the enclosed proxy card will be voted for the election
of all nominees proposed by the Board of Directors, as set forth above.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL NOMINEES
NAMED IN THIS PROXY STATEMENT.
Information with Respect to Nominees and Continuing Directors
The following table sets forth the names of the nominees and continuing
Directors, a brief description of their recent business experience, including
occupations and employment, their ages, the year in which each became a Director
of the Bank and Commercial and the year in which their terms as Director of the
Company expires. Unless otherwise indicated, the principal occupation listed for
each person below has been his or her principal occupation for the past five
years.
Name and Principal Director of Director of Expiration
Occupation at Present the Bank Commercial of Current
and for the Past Five Years Age<F1> Since<F2> Since Term
Nominees
Herbert G. Chorbajian 59 1985 1997 1998
Mr. Chorbajian is Chairman,
President and Chief Executive
Officer of the Company. He
commenced his employment with
the Bank in 1984 as Executive
Vice President and Chief
Operating Officer. He became
President in 1985 and has
served as Chairman of the Board,
President, Chief Operating
Officer and Chief Executive
Officer of the Bank since 1990.
William J. Barr 71 1982 1997 1998
Mr. Barr was Senior Vice
Pres ident and Comptroller of
the Bank from 1982 until his
retirement in 1989. Mr. Barr
is currently Chairman of the
Banks' Loan Committees.
Francis L. McKone 63 1996 1997 1998
Mr. McKone has been
President and CEO of
Albany International Corp.
since 1993 and President
since 1984. Mr. McKone is
presently a Director of
Albany International Corp.
Continuing Directors
Anthony P. Tartaglia, M.D. 65 1993 1997 1999
Dr. Tartaglia is a
Professor of Medicine at
the Albany Medical College
with substantial patient
responsibility. He also
serves on a national task
force working on issues of
health care policy in the
United States. Dr.
Tartaglia is currently
Chairman of the Bank's
Executive Committee.
Susan J. Stabile, Esq. 40 1995 1997 1999
Ms. Stabile is a
Professor of Law at
St. John's University
School of Law. An author
of numerous legal
publications, Ms. Stabile
is a member of the
American Bar Asso ciation.
Her other affiliations
include membership in the
Bar Association of the City
of New York and the
American Association of Law
Schools Sections on Labor
and Employment Law and on
Employee Benefits. Ms.
Stabile is currently
chairperson of the
Banks' Audit Committees.
John J. Nigro 55 1997 1997 1999
Mr. Nigro is President
of Nigro Companies, a group
of real estate development
and management companies
he began establishing in 1974.
John E. Maloy, Sr. 74 1976 1997 2000
Mr. Maloy has been
President of J.H. Maloy,
Inc., a construction firm,
since 1990. From 1965 to 1990,
he held the position of
Executive Vice President of
that firm. Mr. Maloy is
currently Chairman of the
Bank's Human Resources
Committee.
Karen R. Hitchcock, Ph.D. 54 1996 1997 2000
Dr. Hitchcock has been
President of the University at
Albany since 1996. From 1991 to
1996, she was Vice President
of Academic Affairs and she
served as interim President until
her appointment as
President in April 1996.
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<FN>
<F1> At December 31, 1997.
<F2> Each person listed, other than Dr. Tartaglia, Ms. Stabile, Ms.
Hitchcock, Mr. McKone, and Mr. Nigro, has been a Director of the Company
since its incorporation in 1991. Dr. Tartaglia became a Director of the
Company on March 5, 1993, Ms. Stabile on June 26, 1995, Ms. Hitchcock on
October 16, 1996, Mr. McKone on December 3, 1996 and Mr. Nigro on June 1,
1997. Director Elliot retired as of January 27, 1998.
</FN>
Meetings of the Board and Committees of the Board
During the year ended December 31, 1997, the Board of Directors of the
Company held 6 meetings. No Director of the Company attended fewer than 75% in
the aggregate of the total number of the Company's board meetings and the total
number of committee meetings on which such Director served (except for Mr.
Elliot who has retired and Dr. Hitchcock). The Company does not have standing
audit or nominating committees of the Board of Directors, or committees
performing similar functions. The Company maintains a standing compensation
committee, the members of which are the same as that of the Bank's Human
Resources Committee. The Company does not pay compensation and thus its
compensation committee did not meet in 1997.
The Board of Directors of the Bank has established various committees,
including the Executive, Audit, Human Resources and Loan Committees. The Board
of Directors of Commercial has established an Audit Committee and a Loan
Committee.
The Executive Committee has the authority to approve securities
transactions and to exercise most powers of the Board of Directors in the
intervals between meetings of the Board. Any activities of this Committee are
reported to the Board at its next meeting. The Executive Committee did not meet
in 1997. Prior to January 27, 1998, the Executive Committee consisted of Messrs.
Elliot (Chairman), Maloy, Chorbajian and Barr. On January 27, 1998, Mr. Elliot
retired and Dr. Tartaglia was added to the Committee and serves as its chairman.
The Audit Committee meets quarterly to review the Bank's internal audit
performance and as necessary with the Bank's independent certified public
accountants. The Bank's Audit Committee met five times during the year ended
December 31, 1997. Prior to August 26, 1997, the Audit Committee consisted of
Dr. Tartaglia (chairman), Ms. Stabile and Mr. Barr. On that date Dr. Tartaglia
rotated off the Committee, Mr. Nigro joined the Committee and Ms. Stabile became
chairperson.
The Bank's Human Resources Committee has authority with respect to the
Bank's compensation and benefit plans. The Committee met four times during the
year ended December 31, 1997. Since January 28, 1997, the Human Resources
Committee has consisted of Mr. Maloy (Chairman), Dr. Tartaglia, Ms. Stabile and
Mr. McKone.
The Loan Committee approves all credits to a single borrower in excess of
three million five hundred thousand dollars ($3,500,000). The Loan Committee met
twelve times in 1997. Prior to January 27, 1998, the Loan Committee consisted of
Messrs. Barr (Chairman), Maloy, Dr. Hitchcock and Mr. Elliot. On January 27,
1998 Mr. Elliot retired and Mr. Chorbajian became a member of the committee.
The Board of Directors (as a whole and not as a Committee) considers and
approves the nominees for Directors to stand for election at the Company's
annual meeting of stockholders. The Company's bylaws allow for stockholder
nominations of Directors. These provisions require such nominations to be made
pursuant to timely notice in writing to the Secretary of the Company. Generally,
to be timely, notice must be given to the Company's Secretary at least thirty
days prior to the stockholder meeting. The stockholder's notice of nomination
must contain all information relating to the nominee which is required to be
disclosed by the Company's bylaws and by the Exchange Act. For additional
information, see Notice of Business to be Conducted and Nomination of Directors
at an Annual Meeting on page 26.
Directors' Compensation
Directors' Fees. During 1997, Directors of the Bank who were not officers
received a retainer of $17,000 per year plus $1,000 for each board meeting
attended. Such Directors also received $400 for each committee meeting attended
and all Committee chairpersons received a stipend of $1,500. Directors of
Commercial receive a retainer of $2,500 per year. Directors do not receive a
retainer or any separate fees for services as Directors of the Company.
Directors' Retirement Plan. Since 1988, the Bank has maintained a
non-qualified plan, the Directors' Retirement Plan of ALBANK, FSB, to provide
retirement benefits for Directors of the Bank. A Director who retires from the
Board after at least three years of service (or upon death or disability) is
entitled to receive an annual benefit, commencing with the later of the first
month subsequent to such Director's retirement or the attainment of age 65, of
$500 for each quarter of service as a Director, up to a maximum of 40 quarters,
payable in quarterly installments for life. In the event of a Director's
retirement upon disability, the Board may approve a lump sum disability benefit
payable before age 65 in lieu of normal retirement benefits. The Plan also
provides for payment of annual death benefits to the surviving spouse of a
Director who would have been eligible for a retirement benefit. The Plan is
unfunded, and all obligations arising thereunder are payable solely from the
general assets of the Bank. The Bank has amended the Directors' Retirement Plan
to freeze participation in the Plan to Directors who were participating
Directors in the Plan on January 1, 1992 (that is, Directors who had been
Directors for three years at such time).
Directors' Stock Option Plans. The Board of Directors of the Company has
terminated the Directors' Plan and in its place adopted the 1995 Directors'
Plan. The 1995 Directors' Plan provides for the annual grant of options to
purchase 3,000 shares of Common Stock to members of the Board of Directors who
are not employees of the Bank or the Company. Under the terms of the 1995
Directors' Plan, each member of the Board of Directors of the Company who was a
member on December 18, 1995, and each member of the Board of Directors of the
Company on the fourth Monday of December in each subsequent year who is not an
officer or employee of the Bank or the Company, is to be granted on such date
options to purchase 3,000 shares of Common Stock (together with limited stock
appreciation rights exercisable only upon a change in control of the Company or
the Bank ("Limited Rights")) at an exercise price equal to the fair market value
of the shares on the date of grant. Such options are exercisable on a cumulative
basis in equal installments at a rate of 331 1/43% per year commencing one year
from the date of grant, although the 1995 Directors' Plan provides for
accelerated vesting in certain circumstances. The Company has initially reserved
240,000 shares of Common Stock for issuance under the 1995 Directors' Plan.
Deferred Fee Plan. The Bank maintains a Deferred Compensation Plan for
Directors' Fees (the "Deferred Compensation Plan for Directors"). This is a
non-qualified, unfunded plan that permits a Director to elect to defer receipt
of all or a specified part of his of her fees. Deferred fees may be "invested"
(i.e., accrue interest as though actually invested) at the direction of the
Director in one or more of the following four funds: a Money Market Portfolio, a
Growth and Income Portfolio, a Small Company Growth Portfolio and a Government
Securities Portfolio Fund. Such deferred amounts become payable in five to ten
annual installments upon a Director ceasing to serve as such.
Executive Compensation and Benefits
Summary Compensation Table. The following table sets forth the cash
compensation paid, and other compensation paid or accrued, by the Bank for
services rendered during the years ended December 31, 1997, 1996 and 1995, to
the five highest paid executive officers of the Bank or the Company who received
compensation in excess of $100,000 from the Bank, including the Chief Executive
Officer, in all capacities in which they served. The Company has not paid any
compensation.
Annual
Compensation
Name and Options/ All Other
Principal Position Year Salary Bonus SARs<F1> Compensation<F2>
Herbert G. Chorbajian 1997 $478,062 $186,444 54,000 $331,183
Chairman, President 1996 $454,600 $179,567 60,000 $276,589
and Chief Executive 1995 $430,661 $111,972 48,000 $259,645
Officer
Richard J. Heller 1997 $185,961 $ 61,166 9,000 $ 64,610
Executive Vice 1996 $173,431 $ 57,718 10,000 $ 39,979
President and 1995 $164,061 $ 34,125 9,600 $ 41,150
Chief Financial
Officer
Barry G. Blenis 1997 $185,577 $ 61,166 9,000 $ 83,587
Executive Vice 1996 $170,931 $ 56,886 10,000 $ 41,483
President--Operations 1995 $164,061 $ 34,125 9,600 $ 29,864
and Strategic Planning
Clifford M. Apgar 1997 $180,577 $ 59,518 9,000 $ 39,851
Executive Vice 1996 $168,408 $ 55,373 10,000 $ 26,078
President--Senior Credit 1995 $158,935 $ 33,058 9,600 $ 27,330
Officer
Freling H. Smith 1997 $166,508 $ 48,021 5,400 $ 36,812
Senior Vice 1996 $155,660 $ 45,328 6,000 $ 24,307
President, Secretary 1995 $146,530 $ 22,859 6,000 $ 19,859
and General Counsel
- --------------
<FN>
<F1> This represents incentive stock options to purchase shares of Common Stock
awarded to the named executive officers under the Stock Incentive Plan.
Options become exercisable at a rate of 331 1/43% per year beginning
December 18, 1996 for awards made in 1995, December 2, 1997 for awards made
in 1996 and December 22, 1998 for awards made in 1997. Options will also
become 100% exercisable upon a change in control of the Bank or the Company
or upon termination of employment due to death or disability. Upon
termination of employment for any other reason, unexercisable options
expire. All options were awarded with Limited Rights.
<F2> The amounts disclosed in this column include:
(a) The Bank's contribution to the Bank's Incentive Savings and
Employee Stock Ownership Plan (the "401(k) Plan"), a defined contribution
plan. Prior to April 1, 1992, the Bank made a cash matching contribution to
the 401(k) Plan. Commencing April 1, 1992, such contributions were made in
the form of an annual allocation of shares of Common Stock ("ESOP Shares")
under the ESOP portion of the 401(k) Plan, the first of which was made as
of December 31, 1992 for the 1992 calendar year. The total value of the
cash contribution and allocation of ESOP Shares for the named individuals
for 1997 is as follows: Mr. Chorbajian, $9,500; Mr.
Heller, $9,500; Mr. Blenis, $9,500; Mr. Apgar, $7,054; and Mr. Smith, $9,500.
(b) Bank allocations under the Bank's Supplemental Deferred
Compensation Plan for 1997 in the following amounts: Mr. Chorbajian,
$29,958, Mr. Heller, $5,098, Mr. Blenis, $5,048, and Mr. Smith, $3,210. The
Supplemental Deferred Compensation Plan is a non-qualified plan that
compensates participants in the 401(k) Plan whose contributions are limited
by the Internal Revenue Code of 1986, as amended (the "Code"). Benefits in
respect of cash allocations under the Supplemental Deferred Compensation
Plan are invested at the direction of the executive in one or more of the
following four funds: a Money Market Portfolio, a Growth and Income
Portfolio, a Small Company Growth Portfolio and/or a Government Securities
Portfolio. Earnings allocated during 1997 for the named executives are as
follows: Mr. Chorbajian, $185,022, Mr. Heller, $4,228, Mr. Blenis, $11,486,
and Mr. Smith $1,296. The Supplemental Deferred Compensation Plan was
amended December 28, 1993 to take into account all limitations on
allocations under tax-qualified retirement plans pursuant to the Code.
Benefits in respect of share allocations take the form of phantom stock.
Shares allocated in 1997 under the Bank's Supplemental Deferred
Compensation Plan and the value based on the closing price per share of the
Common Stock on the Nasdaq National Market System on December 31, 1997 of
$51.4375 are as follows: Mr. Chorbajian, 1,909.549 shares, value of
$98,222; Mr. Heller, 331.177 shares, value of $17,035; Mr. Blenis, 327.651
shares, value of $16,854; Mr. Apgar, 321.044 shares, value of $16,514, and
Mr. Smith, 197.827 shares, value of $10,176.
(c) Imputed income on the value of supplemental life insurance premiums in
the following amounts: Mr. Chorbajian, $4,050; Mr. Blenis, $2,592; Mr. Apgar,
$4,581; and Mr. Smith, $2,550.
(d) Bank payments of premiums under an executive life insurance program
which the Bank offered to its Vice Presidents and more senior officers
effective January 1, 1993. This program provides permanent insurance (as
opposed to term insurance) within the Bank's group term life insurance
program. Participation is voluntary and the Bank pays toward the premium
the amount to which the executive would have been entitled within the group
term program. In Mr. Heller's case, the Bank paid $462 in 1997, which is
included in his salary.
(e) Bank allocations of the following amounts for 1997 in respect of
supplemental retirement arrangements, which are provided for by individual
employment or other agreements or under the Bank's Retirement Restoration Plan
(the "Restoration Plan"): Mr. Chorbajian, $179,653; Mr. Heller, $32,977; Mr.
Blenis, $49,594; Mr. Apgar, $11,702; and Mr. Smith, $11,376. The Restoration
Plan is a non-qualified plan that compensates participants in the Retirement
Plan of ALBANK, FSB (the "Retirement Plan") whose benefits are limited by the
Code.
(f) Bank payments in 1997 in respect of supplemental death and
disability insurance provided by an individual employment agreement with
Mr. Chorbajian in the amount of $9,800.
</FN>
Option/SAR Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
- ---------------------------------------------------------------------------------
Percent
Number of of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted (#) Fiscal Year ($/sh) Date 5% ($) 10% ($)
Herbert G. Chorbajian 54,000 39.08 $48.00 12/22/07 $1,630,095 $4,130,980
Richard J. Heller 9,000 6.51 48.00 12/22/07 271,682 688,497
Barry G. Blenis 9,000 6.51 48.00 12/22/07 271,682 688,497
Clifford M. Apgar 9,000 6.51 48.00 12/22/07 271,682 688,497
Freling H. Smith 5,400 3.90 48.00 12/22/07 163,009 413,098
See footnote <F1> to the Summary Compensation Table for a description of the
material terms of the options granted to the named executive officers.
Option Exercise and Option Value Table. The following table provides
information regarding the exercise of options during 1997 and the value of
unexercised in-the-money options (i.e., options which had a positive spread
between the exercise price and the fair market value of the Common Stock) as of
December 31, 1997. Unexercised options granted in 1995, 1996 and 1997 included
in the table were in-the-money as of December 31, 1997. The closing price per
share of the Common Stock on the Nasdaq National Market System on December 31,
1997 was $51.4375.
Value of Unexercised
Number of Unexercised In-the-Money
Options at Year End Options at Year End
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Herbert G. Chorbajian 11,000 $406,084 343,400 110,000 $13,806,148 $1,387,792
Richard J. Heller 850 35,842 116,883 18,867 4,854,851 245,627
Barry G. Blenis 5,500 198,261 94,233 18,867 3,878,541 245,627
Clifford M. Apgar 20,000 628,588 54,733 18,867 2,175,925 245,627
Freling H. Smith 6,500 194,044 77,020 11,400 3,207,302 149,521
Each option represents the right to acquire one share of Common Stock
Employment Agreements. In 1997, the Company extended the employment
agreements with Messrs. Chorbajian, Heller, Blenis and Smith and the Bank
extended the employment agreements with Messrs. Chorbajian, Heller, Blenis,
Smith and Apgar (the "Employment Agreements" or the "Agreements"). The
Employment Agreements, which were approved by the OTS, are designed to ensure
that the Bank and the Company will be able to maintain a stable and experienced
management base.
The Employment Agreements with the Bank and the Company provide for a
three-year term in the case of Mr. Chorbajian and for a two-year term in the
case of the other officers. The Human Resources Committee of the Bank conducted
a performance evaluation of each of the officers and, in 1998, recommended their
contracts be extended for an additional year. This recommendation was approved
by the full Board of Directors. The Board of Directors of the Company also
conducted a performance review of the officers who had employment contracts and
extended them for an additional year. Thus, Mr. Chorbajian's contracts have been
extended until March 31, 2001, and the other officers contracts until March 31,
2000. Base salaries are reviewed annually.
In addition to specifying a minimum base salary, the Agreements provide
for, among other things, disability pay and other fringe benefits applicable to
executive personnel generally. The Agreement with Mr. Chorbajian provides for
certain supplemental disability and death benefits to be paid to Mr. Chorbajian
or his beneficiaries and the Agreements with Messrs. Heller, Smith and Apgar
provide for the payment to such individuals of certain supplemental retirement
benefits. The cost to the Bank of providing these benefits is disclosed in the
summary compensation table and footnotes.
The Agreements provide for termination by the Bank or the Company for cause
at any time. In the event the Bank or the Company chooses to terminate the
officer's employment for reasons other than for cause, the officer or, in the
event of his death, his beneficiary, will be entitled to a severance payment
equal to the amounts due under his Agreement for the remainder of its term. In
the event of involuntary termination or the officer's resignation from the Bank
and the Company upon (i) failure to re-elect the officer to his current offices,
(ii) a material change in the officer's functions, duties or responsibilities,
or relocation of his principal place of employment, (iii) a reduction in
compensation or benefits, or (iv) a breach of his Agreement by the Bank or the
Company, in each case, accompanied by a change in control of the Bank or the
Company, the officer or, in the event of death, his beneficiary, will be
entitled to a severance payment equal to approximately three times (in the case
of Mr. Chorbajian) or two times (in the case of the other officers) his annual
compensation. The Bank and the Company will also be required to continue the
executive's life, health, accident, dental and disability coverage for up to
three years (in the case of Mr. Chorbajian) or two years (in the case of the
other officers). A "change in control" is generally defined for purposes of the
Agreements and other plans of the Bank and the Company to include the
acquisition by a person or group of persons having beneficial ownership of 20%
or more of the Common Stock during the term of such Agreement (or other plan) or
a tender offer or exchange offer, merger or other form of business combination,
sale of assets, or contested election of Directors which results in a change of
a majority of the Board of Directors of the Bank or the Company.
If payments made under the Employment Agreements in the event of a change
in control were to constitute an excess parachute payment under Section 280G of
the Code, an excise tax would be imposed on the recipient and the Company and
the Bank would be denied an income tax deduction in respect of such excess
amounts. The Employment Agreements provide that benefits payable to the officer
upon a change in control will be reduced by an amount necessary to prevent
imposition of such excise tax and the denial of such deduction.
Severance Policy. The Bank has a severance pay policy that provides
benefits to all full-time employees, including officers, with at least one year
service in the event of certain circumstances. Under the policy, an eligible
employee is entitled to benefits in the event he or she is terminated without
cause or resigns after refusing to accept transfer to a location outside of a
50-mile radius of his or her existing location. Under such circumstances, an
eligible employee who is an officer would be entitled to bi-weekly severance pay
equal to his or her bi-weekly rate of salary (determined without regard to
bonus, overtime and supplemental payments) for four weeks plus two weeks for
each full year of service, up to a maximum of 52 weeks (the "Severance Period").
Additionally, in the event of involuntary termination without cause or voluntary
termination without cause due to a reduction of salary, benefits or
responsibilities within three years of a merger or consolidation in which the
Bank is not the surviving entity, or the sale or exchange of a significant
portion of the Bank's business, after the expiration of the Severance Period, an
eligible employee is entitled to receive 2/3 of his severance payment for a
second period equal in length to the Severance Period, and 1/3 of his
severance payment for a third period equal in length to the Severance Period.
Retirement Plan and Supplemental Retirement Benefits. The Bank maintains
the Retirement Plan for the benefit of salaried employees of the Bank. The
Retirement Plan is a non-contributory defined benefit pension plan. Salaried
employees of the Bank who have attained age 21 and have completed one year of
service are eligible to participate. The Bank contributes an amount to the
Retirement Plan necessary to fund the actuarially determined minimum funding
requirements in accordance with the Employee Retirement Income Security Act of
1974 and Section 412 of the Code.
Upon the attainment of normal retirement age at or after age 65, a
participant hired before October 1, 1985 (which would include each of Messrs.
Chorbajian and Blenis) will be entitled to an annual normal retirement benefit
equal to 3% of the average of his three consecutive years of highest
compensation (as defined in the Retirement Plan to include all salary including
salary reduction contributions under the 401(k) Plan) for each of his first 15
years of credited service, plus 1% of such average compensation for each year of
his credited service in excess of 15, the aggregate not to exceed 60%. A
participant hired after October 1, 1985 (which would include Messrs. Heller,
Smith and Apgar) will be entitled to 2% of the average of his five consecutive
years of highest compensation for each year of credited service (up to 30
years). Except in cases of certain long-service employees, the sum of the
amounts calculated under both formulas is reduced by 1 2/3% of the
participant's primary social security benefit for each year of credited service
after October 1, 1985 (up to 30 years).
Under the Retirement Plan, benefits are also payable for retirement due to
disability or early retirement and upon death. Upon termination of employment
for any other reason, participants receive the present value of their vested
benefit, in the form of a lump sum, provided that such amount does not exceed
$3,500. If the present value of their vested benefit exceeds $3,500,
distribution will generally be made upon attainment of normal retirement age,
attainment of age 60 or attainment of a combined age and employment equal to 75.
The following table sets forth, in straight line annuity amounts using the
formula applicable to Messrs. Chorbajian and Blenis, but without regard to the
Social Security offset, the estimated annual benefits payable upon retirement at
age 65 in calendar year 1997, expressed in the form of a single life annuity,
for the average compensation and credited service classification specified.
Credited Service
Average Annual Earnings 15 20 25 30<F1>
$100,000 $ 45,000 $ 50,000 $ 55,000 $ 60,000
$150,000 $ 67,000 $ 75,000 $ 82,500 $ 90,000
$200,000<F2> $ 90,000<F2> $100,000<F2> $110,000<F2> $120,000<F2>
$250,000<F2> $112,500<F2> $125,000<F2> $137,500<F2> $150,000<F2>
$300,000<F2> $135,000<F2> $150,000<F2> $165,000<F2> $180,000<F2>
$350,000<F2> $157,500<F2> $175,000<F2> $192,500<F2> $210,000<F2>
$400,000<F2> $180,000<F2> $200,000<F2> $220,000<F2> $240,000<F2>
$450,000<F2> $202,500<F2> $225,000<F2> $247,500<F2> $270,000<F2>
$500,000<F2> $225,000<F2> $250,000<F2> $275,000<F2> $300,000<F2>
$550,000<F2> $247,000<F2> $275,000<F2> $302,000<F2> $330,000<F2>
$600,000<F2> $270,000<F2> $300,000<F2> $330,000<F2> $360,000<F2>
- -----------------------
<FN>
<F1> The maximum benefit under the Retirement Plan is 60% of average annual
earnings.
<F2> The Code limits both the amount of compensation that may be used for
purposes of calculating a participant's Retirement Plan benefit and the
maximum annual benefit payable to a participant under the Retirement Plan.
For the 1997 plan year, (i) a participant's compensation in excess of
$160,000 is disregarded for purposes of determining average compensation,
and (ii) the maximum annual Retirement Plan benefit permitted under the
Code is $125,000. The numbers presented in the table disregard these
limitations because the Bank maintains the Restoration Plan, which provides
participants with a supplemental retirement benefit to compensate them for
the limitation on benefits imposed by the Code. Therefore, the numbers
presented represent the sum of the benefit payable under the Retirement
Plan and the benefit payable under the Restoration Plan.
</FN>
The following table sets forth the years of credited service as of December
31, 1997 for each of the individuals named in the cash compensation table.
Credited Service
Years Months
Herbert G. Chorbajian 13 7
Richard J. Heller 6 9
Barry G. Blenis 33 3
Freling H. Smith 6 2
Clifford M. Apgar 5 10
Certain other supplemental retirement arrangements are described in the
footnotes to the Summary Compensation Table.
Human Resources Committee Report to Shareholders
Background and Compensation Philosophy
Compensation of the senior executive officers of the Banks continues to be
comprised primarily of three components: base pay, short-term incentives (in the
form of an annual cash bonus) and long-term incentives (in the form of stock
options). The relationship among the three components of pay reflects the
philosophy of the Committee and the Board of providing a compensation mix that
places a heavier emphasis on performance-based compensation than on base pay and
that aligns executive pay with the goals and interests of shareholders. The goal
of the Committee and the Board is to provide a total compensation package that
is sufficiently competitive to attract and retain superior executives, while at
the same time linking a meaningful portion of compensation to performance based
incentives that are consistent with the creation of shareholder gain and the
Company's long-term goals. It is the belief of the Committee that this approach
to compensation best serves the interest of shareholders.
The specific compensation components paid to Bank officers are described in
the following paragraphs.
Base Pay
Salaries for the Chief Executive Officer and the other named executive
officers are reviewed on an annual basis by the Committee, which then makes
recommendations to the Board of Directors. The Committee evaluates the
performance of the Chief Executive Officer and makes a determination as to a
recommended salary increase based on his performance, Bank performance and the
pay of chief executives of comparable institutions. Salaries paid to executive
officers other than the Chief Executive Officer are reviewed annually by the
Chief Executive Officer based upon his assessment of the nature of the position
and the contribution of the executive officer. The Committee discusses with the
Chief Executive Officer his recommendations and makes a recommendation to the
Board that is based upon the Chief Executive Officer's recommendation, Bank
performance and the competitive pay range for each executive.
Effective February 22, 1998, based upon the recommendation of the
Committee, the Board of Directors increased the salary of the Chief Executive
Office to $500,000, an increase of 3.82%.The increase reflected the Committee's
satisfaction with the Chief Executive Officer's contributions to the increased
earnings of the Bank for the 1997, his acquisition strategy and his leadership
of the Company as it expands into commercial banking operations.
The base salary of each of the other executive officers named in the
Summary Compensation Table was increased effective February 22, 1998. As
explained above, the increases, which were based on recommendations by the
Committee that were made upon consultation with the Chief Executive Officer,
reflect the Committee's assessment of the individual's performance, level of
experience, and competitive market data for similar positions at peer banks, and
upon the Bank's performance.
Annual Incentive Program
The Bank has in place an annual incentive plan that grants awards to
participants based on performance measures that are the key drivers of
shareholder value enhancement. Each year, in setting the award incentive levels
for the following year, the Committee solicits the advice of an independent
consultant and considers what performance measures should be used, how each
performance measure should be weighted, and what should be the target
performance levels for each of the measures chosen in order to receive bonus
payments. As a general matter, it is the Committee's belief that, absent a
compelling reason otherwise, each performance measure should be equally weighted
in determining the final bonus award payment. The CEO's bonus payment is
calculated solely on the basis of corporate performance. In the case of the
other named executive officers, 80% of their potential bonus payment is based on
corporate performance and the other 20% is discretionary and based on individual
performance.
The award incentive levels for 1997, as stated in the Summary Compensation
Table, were based on a comparison between actual and target performance levels
as measured by four factors: growth in Earnings per Share, Return on Average
Equity, ratio of Operating Expenses to Average Assets, and the ratio of
Nonperforming Assets to Average Assets. Each factor was evenly weighted in the
determination of actual awards.
As in 1996, target performance levels for each of the four measures were
set based on both the Bank's performance in the last year and the average
performance of the comparably sized peer group of banks. The target awards
reflected average performance for both the peer group and the Bank. This
approach reflects the Committee's belief that awards should reflect how the Bank
has performed both against itself in prior years and against other comparable
institutions.
At the end of 1997, the actual performance levels for the year were
compared with the four target award measures within the context of a 5-point
scale. After comparing each of the four measures to the scale independently, a
composite number was calculated based on averaging each of the four measures.
Based on the Bank's achievement relative to the four performance measures
noted previously, the Committee recommended and the Board approved, a 1997
annual bonus in the amount of $186,444 for the Chief Executive Office, resulting
in 78% of the target award. Each of the named executive officers received a 1997
award bonus as set forth in the Summary Compensation Table.
Executive Stock Option Program
The Company's stock option plan allows for the award of options at times
determined by the Committee. Options granted under the plan vest over a three
year period.
Based upon the recommendations made by the outside compensation consultant
retained by the Committee, the Committee authorized the award of 54,000 options
to the Chief Executive Officer and the number of options to each of the other
named executive officers as set forth in the Summary Compensation Table. The
number of options granted was based on the Committee's determination that each
officer should receive a certain value of options granted. The value of options
granted to each individual was based on both competitive analysis using peer
banks and on Bank and individual performance.
This report is submitted by the Bank's Human Resources Committee:
John E. Maloy, Sr., Chairman
Anthony P. Tartaglia, M.D.
Susan J. Stabile, Esq.
Francis L. McKone
Shareholder Return Performance Presentation
Set forth below is a line graph for the five year period ending December
31, 1997 comparing the cumulative total shareholder return on ALBANK Common
Stock with the cumulative total shareholder return of (i) the total return
industry index for NASDAQ bank stocks and (ii) the total return for the NASDAQ
U.S. Stock Market. Total return assumes the reinvestment of cash dividends.
COMPARISON OF TOTAL RETURN DECEMBER 31, 1992-DECEMBER 31, 1997
ALBANK COMMON STOCK, NASDAQ BANK STOCK INDEX AND NASDAQ STOCK MARKET INDEX
ALBANK NASDAQ Banks NASDAQ Market
12/31/92 100 100 100
12/31/93 133.05 114.80 114.04
12/31/94 160.45 112.21 113.63
12/31/95 210.66 169.22 158.70
12/31/96 269.05 223.41 195.19
12/31/97 448.42 377.44 239.53
Indebtedness of Management and Transactions with Certain Related Persons
The Company intends that all transactions between the Company and the Bank,
on the one hand, and executive officers or Directors of the Bank or the Company,
holders of 10% or more of the shares of Common Stock and controlled entities of
the foregoing (collectively, "insiders"), on the other, will contain terms no
less favorable to the Company or the Bank than could have been obtained by it in
arm's-length negotiations with unaffiliated persons and will be approved by a
majority of independent outside Directors of the Company or the Bank, as the
case may be, not having any interest in the transaction in circumstances where
law or regulation requires such approval.
Pursuant to restrictions imposed by Federal law and regulation, all loans
or extensions of credit by the Bank to insiders must be made on substantially
the same terms, including interest rates and collateral, as and following credit
underwriting procedures that are not less stringent than those prevailing at the
time for comparable transactions with the general public and must not involve
more than the normal risk of repayment or present other unfavorable features. In
addition, loans made to insiders in excess of the greater of $25,000 or 5% of
the Bank's capital and surplus (or in any event in excess of $500,000) must be
approved in advance by a majority of the disinterested members of the Board of
Directors of the Bank. Loans to insiders are also subject to limits individually
and in the aggregate. The Bank is also prohibited from extending credit to its
executive officers, except (i) to finance the executive's residence or the
education of the executive's children, or (ii) for any other purpose if the loan
does not exceed at any one time the higher of $25,000 or 2.5% of the
institution's unimpaired capital and unimpaired surplus, not to exceed $100,000.
All outstanding loans by the Bank to Directors, executive officers and/or
family members were made in the ordinary course of business, on substantially
the same terms, including interest rates and collateral, and following credit
underwriting procedures that are not less stringent than those prevailing at the
time for comparable transactions with other persons, and did not, and do not,
involve more than the normal risk of collectibility or present other unfavorable
features.
-----------------
PROPOSAL 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Bank's independent auditors for the fiscal year ended December 31,
1997, were KPMG Peat Marwick LLP. The Company's Board of Directors has
reappointed KPMG Peat Marwick LLP to continue as independent auditors for the
Bank and the Company for the fiscal year ending December 31, 1998 subject to
ratification of such appointment by the stockholders.
Representatives of KPMG Peat Marwick LLP will be present at the Meeting.
They will be given an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from stockholders
present at the Meeting.
Unless marked to the contrary, the shares represented by the enclosed Proxy
will be voted FOR ratification of the appointment of KPMG Peat Marwick LLP as
the independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
-----------------
ADDITIONAL INFORMATION
Certain Exchange Act Filings
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company by its directors and officers, the following failed to
file on a timely basis: Mr. Maloy, one Form 4 representing one transaction, and
Mr. Vaselewski, one Form 4 representing one transaction.
Stockholder Proposals
To be considered for inclusion in the proxy statement and proxy relating to
the Annual Meeting of Stockholders to be held in 1999, a stockholder proposal
must be received by the Secretary of the Company at the address set forth on the
first page of this Proxy Statement, not later than December 3, 1998. Any such
proposal will be subject to SEC Rule 14a-8 under the Exchange Act.
Notice of Business to be Conducted and Nomination of Directors at an Annual
Meeting
The bylaws of the Company provide an advance notice procedure for certain
business to be brought before an Annual Meeting. In order for a stockholder to
properly bring business before an Annual Meeting, the stockholder must give
written notice to the Secretary of the Company not less than 30 days before the
time originally fixed for such meeting; provided, however, that in the event
that less than 40 days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the close of business on the tenth day following
the day on which such notice of the date of the Annual Meeting was mailed or
such public disclosure was made. The notice must include the stockholder's name
and address, as it appears on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business at
the Annual Meeting, the number of shares of Common Stock that are beneficially
owned by such stockholder and any material interest of such stockholder in the
proposed business. The same advance notice requirements are applicable to
stockholder nominations of persons for election as a Director. In the case of
nominations to the Board, the information that is required to be disclosed in
solicitations for proxies for elections of Directors under the rules of the SEC
must also be provided. Nothing in this paragraph will be deemed to require the
Company to include in its proxy statement and proxy relating to the 1999 Annual
Meeting any stockholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
Other Matters Which May Properly Come Before the Meeting
The Board of Directors knows of no business which will be presented for
consideration at the Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Meeting, it is the intention of the persons named in the accompanying proxy
to vote the shares represented thereby on such matters in accordance with their
best judgment.
Whether or not you intend to be present at the Meeting, you are urged to
return your proxy promptly. If you are present at the Meeting and wish to vote
your shares in person, your proxy may be revoked by voting at the Meeting.
A copy of the Company's Annual Report on Form 10-K (without exhibits) for
the year ended December 31, 1997, as filed with the SEC will be furnished
without charge to stockholders of record upon written request to ALBANK
Financial Corporation, Attention: Freling H. Smith, 10 North Pearl Street,
Albany, NY 12207.
By Order of the Board of Directors
/S/ Freling H. Smith
Freling H. Smith
Secretary
Albany, New York
April 3, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND PROMPTLY RETURN
THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
(This page is intentionally left blank.)
Please mark
your votes
like this X
The Board of Directors recommends a vote FOR Proposals 1&2
FOR ALL WITHHELD
NOMINEES* FOR ALL
Election of
Directors
Herbert G. Chorbajian
William J. Barr
and Francis L. McKone
*(To withhold authority to vote for any individual nominee write that nominee's
name on the line provided below.)
____________________________________________
2. Ratification of independent auditors
FOR AGAINST ABSTAIN
Receipt is hereby acknowledged of ALBANK Financial
Corporation Notice of Meeting and Proxy Statement
Signature(s)_______________________________Date______________________
NOTE: Please sign exactly as name appears. For joint
account, each owner should sign.
FOLD AND DETACH HERE
ALBANK FINANCIAL CORPORATION
10 North Pearl Street
Albany, New York 12207
This Voting Instruction is Solicited on Behalf of the Board of Directors
and Management
This voting instruction is sought by the Trustee of the ALBANK, FSB Incentive
Savings and Employee Stock Ownership Plan in connection with a Proxy that is
Solicited on Behalf of
the Board of Directors and management.
The Trustee of the aforementioned plan will cast votes on each of the
following matters, as set forth in the Proxy Statement, in accordance with the
voting instructions designated below, and upon such other matters properly
coming before the meeting.
If this voting instruction is signed, but no direction is given, the Trustee
will cast the votes represented hereby For Proposals 1 & 2.
(Continued and to be signed on other side)
FOLD AND DETACH HERE
Please mark
your votes
like this X
The Board of Directors recommends a vote FOR Proposals 1&2
FOR ALL WITHHELD
NOMINEES* FOR ALL
1. Election of
Directors
Herbert G. Chorbajian
William J. Barr
and Francis L. McKone
*(To withhold authority to vote for any individual nominee write that nominee's
name on the line provided below.)
____________________________________________
2. Ratification of independent auditors
FOR AGAINST ABSTAIN
I WILL ATTEND THE
ANNUAL MEETING
COMMENTS/ADDRESS CHANGE
Please mark this box if you have
written comments/address change
on the reverse side
Receipt is hereby acknowledged of ALBANK Financial
Corporation Notice of Meeting and Proxy Statement
NOTE: Please sign exactly as name appears. For joint
account, each owner should sign.
Signature(s)_________________________________Date______________________
FOLD AND DETACH HERE
ALBANK FINANCIAL CORPORATION
10 North Pearl Street
Albany, New York 12207
This Proxy is Solicited on Behalf of the Board of Directors and Management
P The undersigned hereby appoints MARK L. HELLER and MARGARET A.
OUELLETTE and each of them proxies with power of substitution, to
R represent and to vote as designated below, on behalf of the undersigned
at the Annual Meeting of Stockholders of the Corporation to be held on
O May 19, 1998 and at any adjournment thereof on each of the following
matters, as set forth in the Proxy Statement, and upon such other
X matters properly coming before this meeting.
Y This proxy when properly executed will be voted in the manner directed
by the stockholder. If no direction is given, this proxy will be voted
For Proposals 1 & 2.
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
FOLD AND DETACH HERE