SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ONBANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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NOTICE OF
ANNUAL MEETING
AND
PROXY STATEMENT
[LOGO]
ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
[LOGO]
March 18, 1997
Dear Fellow Shareholder:
On behalf of your Board of Directors, it is with great pleasure that I
extend to you a cordial invitation to attend the Annual Meeting of Shareholders
of ONBANCorp, Inc. (the "Company"). The Annual Meeting will be held on Tuesday,
April 22, 1997, at 10:00 a.m. at the Marriott Hotel located at 6302 Carrier
Parkway, East Syracuse, New York 13057. Your Board of Directors and management
look forward to greeting personally those shareholders able to attend.
Enclosed please find your Notice of Annual Meeting, Proxy Statement, form of
proxy for voting your shares and copy of the Company's Annual Report. Please
review these materials carefully. At the Annual Meeting you will be asked to
elect a slate of directors, to approve an amendment to the Company's Restated
1987 Stock Option and Appreciation Rights Plan and to ratify the appointment of
the independent auditors. Your Board of Directors has unanimously approved each
of these three proposals and unanimously recommends that you vote FOR them.
Finally, at the Annual Meeting, management will present a report on the
operations and activities of the Company and will be pleased to answer your
questions.
Your vote is very important regardless of the number of shares you own.
Whether or not you expect to attend, please sign, date and mail the enclosed
proxy card as soon as possible so that your shares will be represented.
If you have any questions, please call (315) 424-5995 or 1-800-311-5995.
Thank you for your continued support.
Sincerely,
/s/ Robert J. Bennett
Robert J. Bennett
Chairman, President and Chief
Executive Officer
[LOGO]
101 SOUTH SALINA STREET
SYRACUSE, NEW YORK 13202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of ONBANCorp, Inc. (the "Company") will be held at the Marriott Hotel
located at 6302 Carrier Parkway, East Syracuse, New York 13057, on Tuesday,
April 22, 1997 at 10:00 a.m. for the purpose of considering and voting upon the
following matters:
(1) To elect five directors, each to hold office for a term of three years
or until their successors shall have been duly elected and qualified;
(2) To approve an amendment to the Company's 1987 Stock Option and
Appreciation Rights Plan;
(3) To ratify the appointment by the Board of Directors of the firm of KPMG
Peat Marwick LLP as independent auditors for the Company for the fiscal
year ending December 31, 1997; and
(4) To transact such other business as may properly come before the meeting
or any adjournments or postponements thereof.
Pursuant to the By-Laws, the Board of Directors has fixed February 28, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting. Only holders of common stock of record at the
close of business on February 28, 1997 will be entitled to notice of and to vote
at the meeting or at any adjournment or postponement thereof.
WE URGE EACH SHAREHOLDER TO SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD
WITHOUT DELAY IN THE ENCLOSED POSTAGE PAID ENVELOPE WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING. ANY SHAREHOLDER PRESENT AT THE MEETING MAY REVOKE A
PREVIOUSLY DELIVERED PROXY AND VOTE PERSONALLY ON EACH MATTER.
By Order of the Board of Directors
/s/ David M. Dembowski
David M. Dembowski
Secretary
March 18, 1997
ONBANCORP, INC.
101 SOUTH SALINA STREET
SYRACUSE, NEW YORK 13202
(315) 424-4400
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
APRIL 22, 1997
GENERAL
This Proxy Statement and the accompanying form of proxy are being furnished
to shareholders of ONBANCorp, Inc. ("ONBANCorp" or the "Company"), the holding
company of OnBank & Trust Co. ("OnBank & Trust") and Franklin First Savings Bank
("Franklin," and, together with OnBank & Trust, the "Banks"), in connection with
the solicitation of proxies by the Board of Directors of ONBANCorp for use at
the Annual Meeting of Shareholders (the "Annual Meeting") scheduled to be held
on Tuesday, April 22, 1997 at 10:00 a.m. at the Marriott Hotel located at 6302
Carrier Parkway, East Syracuse, New York 13057 and at any adjournments or
postponements thereof. The Annual Report to Shareholders for the fiscal year
ended December 31, 1996 accompanies this Proxy Statement. This Proxy Statement
is being mailed to shareholders on or about March 18, 1997.
If the enclosed form of proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with the instructions marked thereon.
Executed but unmarked proxies will be voted (i) FOR the election of five
directors for a three-year term; (ii) FOR the approval of an amendment to the
Company's Restated 1987 Stock Option and Appreciation Rights Plan (the "Stock
Option Plan"); and (iii) FOR the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors for the Company for the fiscal year ending
December 31, 1997. If any other matters are properly brought before the Annual
Meeting, the persons named in the accompanying proxy will vote the shares
represented by such proxies on such matters in such manner as shall be
determined by a majority of the Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. However, shareholders may revoke a proxy at any
time prior to its exercise by (i) delivering to the Secretary of the Company a
written notice of revocation bearing a later date than the proxy; (ii)
delivering to the Secretary of the Company a duly executed proxy bearing a later
date; or (iii) attending the Annual Meeting and voting in person.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail,
proxies may also be solicited personally or by mail, telephone or telegraph by
the Company's directors, officers and regular employees, without additional
compensation therefor. The Company 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. ONBANCorp has also retained D.F. King & Co.,
Inc. and Morrow & Co., Inc., two proxy soliciting firms, to assist in the
solicitation of proxies at an aggregate estimated fee of $5,000, plus
reimbursement of certain out-of-pocket expenses authorized by the Company.
Only holders of common stock, par value $1.00 per share, of ONBANCorp
("ONBANCorp Common Stock") may vote at the Annual Meeting. The close of business
on February 28, 1997 has been fixed by the Board of Directors as the record date
(the "Record Date") for determination of shareholders entitled to notice of and
to vote at the Annual Meeting. The number of shares of ONBANCorp Common Stock
outstanding on the Record Date was 13,747,417. Each share of ONBANCorp Common
Stock entitles its owner to one vote on each matter to be voted on at the Annual
Meeting. The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of ONBANCorp Common Stock entitled to vote is
necessary to constitute a quorum at the Annual Meeting. Directors shall be
elected by a plurality of the votes cast at the Annual Meeting. Under applicable
Delaware law, in tabulating the vote, abstentions and broker non-votes will be
disregarded and will have no effect on the outcome of the vote on
the election of directors. The affirmative vote of a majority of the shares of
ONBANCorp Common Stock present in person or represented by proxy at the Annual
Meeting and entitled to vote is required to (i) approve the amendment to the
Stock Option Plan and (ii) ratify the appointment of KPMG Peat Marwick LLP as
the independent auditors of the Company. Under applicable Delaware law, in
determining whether the proposal regarding (i) the approval of the amendment to
the Stock Option Plan and (ii) the appointment of KPMG Peat Marwick LLP has
received the requisite number of affirmative votes, abstentions and broker
non-votes will, in each case, be counted and have the same effect as a vote
against such proposals.
The Company's executive offices are located at 101 South Salina Street,
Syracuse, New York 13202, and its telephone number is (315) 424-4400.
PRINCIPAL OWNERS OF ONBANCORP COMMON STOCK
The following table sets forth the only shareholder known by the Company to
own beneficially or of record more than 5% of ONBANCorp Common Stock and the
nature of its holdings. This information has been obtained from a report filed
pursuant to Regulation 13D-13G of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder.
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS BENEFICIAL OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- --------------------------------------------------------------------------------- ------------------- -----------
Merrill Lynch Global Allocation Fund, Inc........................................ 755,900(1) 6.1%
800 Scudder Mills Road
Princeton, New Jersey 08536
- ------------------------
(1) Information obtained from Schedule 13G dated February 14, 1997. Merrill
Lynch Global Allocation Fund, Inc. (the "Fund") is an investment company and
is the beneficial owner of the reported securities. Merrill Lynch Asset
Management, L.P. ("MLAM") is acting as an investment adviser to the Fund.
Each of Merrill Lynch & Co., Inc., Merrill Lynch Group, Inc. and Princeton
Services, Inc. are parent companies of MLAM within the meaning of the
Exchange Act and disclaim beneficial ownership of the shares reported in the
Schedule 13G. Included in the shares reported are shares of ONBANCorp Common
Stock issuable upon conversion of the 77,900 shares of ONBANCorp's Series B
6.75% Cumulative Convertible Preferred Stock, which the reporting person may
be deemed to beneficially own.
2
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors is divided into three classes with respect to term of
office. Pursuant to the Company's By-Laws (the "ONBANCorp By-Laws"), the number
of directors of the Company is currently set at fifteen. Directors will serve
until their successors are elected and qualified. There are no arrangements or
understandings between the Company and any person pursuant to which such person
has been elected as a director.
THE NAMES OF THE FIVE NOMINEES OF THE BOARD OF DIRECTORS FOR ELECTION AS
DIRECTORS ARE SET FORTH BELOW. If elected as a director, each nominee will have
a 3-year term that is scheduled to expire at the Annual Meeting of Shareholders
to be held in 2000. Certain information concerning the nominees and those
directors whose terms expire in the future is also provided. Management believes
that such nominees will stand for election and will serve if elected as
directors. However, if any person nominated by the Board of Directors fails to
stand for election or is unable to accept election, the proxies may be voted for
the election of such other person or persons as the Board of Directors may
recommend.
INFORMATION ABOUT NOMINEES FOR DIRECTORS
AND DIRECTORS CONTINUING IN OFFICE
NOMINEES FOR DIRECTORS
PRINCIPAL OCCUPATION
NAME AND AGE AND BUSINESS EXPERIENCE
--------------------------- ------------------------------------------------
Robert J. Bennett Chairman of ONBANCorp. and OnBank ("OnBank"),
Served as a Director* since which was recently merged with and into OnBank &
1987. Trust, since May 1, 1989 and President and Chief
Age: 55 Executive Officer of ONBANCorp and OnBank since
January 1989. Chairman and President of OnBank &
Trust since January 1993. Mr. Bennett is a
Director of the Federal Home Loan Bank of New
York and Farmers and Traders Life Insurance
Company. Mr. Bennett is also Chairman of the
Company's Executive Committee and a member of
the Company's Compensation Committee (but not a
member of the Stock Option Committee (as defined
below)).
William J. Donlon Retired Chairman and Chief Executive Officer of
Served as a Director* since Niagara Mohawk Power Corporation. He is a
1981. director of Niagara Mohawk Power Corporation.
Age: 67 Mr. Donlon is a member of the Company's
Executive Committee and Chairman of the
Company's Compensation Committee and Stock
Option Committee.
3
PRINCIPAL OCCUPATION
NAME AND AGE AND BUSINESS EXPERIENCE
--------------------------- ------------------------------------------------
Henry G. Lavarnway, Jr. Private Investor and Business Consultant. From
Served as a Director* since July 1988 through December 1992, Mr. Lavarnway
1983. was Vice President and Chief Financial Officer
Age: 62 of Gaylord Brothers, Inc., a library furniture
manufacturer in Syracuse, New York. Mr.
Lavarnway is a member of the Company's Executive
Committee and Compensation Committee.
T. David Stapleton, Jr. Partner in the law firm of Karpinski. Stapleton
Served as a Director* since & Fandrich, P.C. in Auburn, New York. Mr.
1986. Stapleton is a member of the Company's Executive
Age: 54 Committee and Examining and Audit Committee.
William J. Umphred, Sr. Until September 1993, Mr. Umphred was Chairman
Served as a Director since of Franklin's parent, Franklin First Financial
1993. Corporation ("Franklin Corp."). He retired in
Age: 68 1989 as Senior Vice President, Administration
and External Affairs of C-TEC Corporation of
Wilkes-Barre, Pennsylvania. Mr. Umphred is a
member of the Company's Compensation Committee.
4
DIRECTORS WITH TERMS EXPIRING IN 1998
PRINCIPAL OCCUPATION
NAME AND AGE AND BUSINESS EXPERIENCE
--------------------------- ------------------------------------------------
John D. Marsellus Chairman, Marsellus Casket Company, Syracuse,
Served as a Director* since New York. Mr. Marsellus has been with that firm
1973. since 1964. Mr. Marsellus is a member of the
Age: 58 Company's Examining and Audit Committee.
Peter J. Meier President of G.A. Braun, Inc., Syracuse, N.Y., a
Served as a Director since manufacturer of laundry and textile systems for
1990. hospitals, hotels, commercial laundries and the
Age: 53 textile industry. Mr. Meier has been with that
firm since 1967. Mr. Meier is a member of the
Company's Compensation Committee and the
Executive Committee.
Thomas H. van Arsdale President and Chief Executive Officer of
Served as a Director since Franklin. From 1990 to 1993 Mr. van Arsdale was
1993. Vice-Chairman, President and Chief Executive
Age: 59 Officer of Franklin Corp. and Franklin.
5
PRINCIPAL OCCUPATION
NAME AND AGE AND BUSINESS EXPERIENCE
--------------------------- ------------------------------------------------
John L. Vensel Chairman and Chief Executive Officer of Crucible
Served as a Director since Materials Corporation since 1988, a specialty
1989. steel manufacturing company in Syracuse, New
Age: 61 York. Mr. Vensel is a member of the Company's
Examining and Audit Committee.
Joseph N. Walsh, Jr. Vice President retired, Personnel and Training
Served as a Director* since of NYNEX. Mr. Walsh had been with that company
1978. from 1956 through 1993. He is a director of
Age: 62 Unity Mutual Life Insurance Company. Mr. Walsh
is a member of the Company's Examining and Audit
Committee.
DIRECTORS WITH TERMS EXPIRING IN 1999
William F. Allyn Mr. Allyn is President of Welch Allyn
Served as a Director Incorporated, a manufacturer of
since 1991. medical instruments. He has held such
Age: 61 office for more than five years. Mr.
Allyn is a director of Niagara Mohawk
Power Corporation and Oneida Limited,
Inc. Mr. Allyn serves as a member of
the Company's Compensation Committee.
6
PRINCIPAL OCCUPATION
NAME AND AGE AND BUSINESS EXPERIENCE
---------------------- --------------------------------------
Lee H. Flanagan* Ms. Flanagan is President and Chief Executive
Age: 30 Officer of B. G. Sulzle, Inc., a leading
manufacturer of surgical needles. Ms. Flanagan
is a director of the Health Science Center
Foundation at Syracuse, New York and the
Metropolitan Development Association.
Peter O'Donnell Mr. O'Donnell is President and Chief
Served as a Director Executive Officer of Pine Tree
since 1996. Management Corp. He has served as a
Age: 65 director of Franklin since April 1994.
Russell A. King Retired consulting partner and Chief
Served as a Director* Executive Officer of King and King
since 1973. Architects, Syracuse, New York. Mr.
Age: 67 King has been with that firm since
1952. Mr. King serves as a member of
the Company's Compensation Committee.
- ------------------------
* Ms. Flanagan will become a Director effective April 22, 1997.
7
PRINCIPAL OCCUPATION
NAME AND AGE AND BUSINESS EXPERIENCE
---------------------- --------------------------------------
J. Kemper Matt President of Dupli Graphics Corp., Syracuse, New
Served as a Director since York, a typographer and envelope manufacturer.
1993. He has held such office for more than five
Age: 62 years. Mr. Matt has served as a director of
OnBank & Trust since January 1993. Mr. Matt is
Chairman of the Company's Examining and Audit
Committee.
- ------------------------
* The Company was organized as a bank holding company for OnBank in 1989 and,
therefore, the year set forth under the heading "Director since," includes
the director's tenure with OnBank and any term as trustee of OnBank prior to
OnBank's conversion from a mutual to a stock-form savings bank on August 6,
1987.
All of the foregoing, with the exception of Messrs. O'Donnell, Umphred and
van Arsdale, who are directors of Franklin, are also currently directors of
OnBank & Trust. Upon taking office, Ms. Flanagan will also serve as a director
of OnBank & Trust. Mr. Bennett is a director of both of the Banks.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF ALL THE NOMINEES FOR ELECTION AS DIRECTORS.
8
SECURITY OWNERSHIP BY MANAGEMENT
The following table sets forth information with respect to the shares of
ONBANCorp Common Stock beneficially owned by each director and director nominee,
by each non-director executive officer named in the Summary Compensation Table
below and by directors and executive officers of the Company as a group as of
February 28, 1997.
SHARES OF
COMMON STOCK
BENEFICIALLY OWNED AS PERCENTAGE OF
OF COMMON STOCK
NAME FEBRUARY 28, 1997 (1) OUTSTANDING
- ---------------------------------------------------------------------- ---------------------- -----------------
William F. Allyn...................................................... 5,500 *
Chester D. Amond...................................................... 7,790 *
Robert J. Bennett..................................................... 295,894(2) 2.2%
William J. Donlon..................................................... 5,603 *
Lee H. Flanagan....................................................... 1,000 *
Russell A. King....................................................... 23,872(3) *
Henry G. Lavarnway, Jr................................................ 12,278 *
John D. Marsellus..................................................... 6,587 *
J. Kemper Matt........................................................ 4,000 *
Peter J. Meier........................................................ 4,175 *
Peter O'Donnell....................................................... 7,975 *
T. David Stapleton, Jr................................................ 4,167 *
William J. Umphred, Sr................................................ 43,523 .3%
Thomas H. van Arsdale................................................. 15,247 *
John L. Vensel........................................................ 6,000 *
Joseph N. Walsh, Jr................................................... 3,719 *
Howard W. Sharp....................................................... 28,232 *
David M. Dembowski.................................................... 53,908(4) .4%
Lance D. Mattingly.................................................... 3,572 *
All directors and executive officers as a group (24 persons).......... 667,703(5) 4.9%
- ------------------------
* less than .25%
(1) The number of shares includes the number of shares subject to exercise of
stock options which are exercisable within 60 days of the reporting date.
(2) Includes 4,277 shares of which Mr. Bennett's wife is the sole owner. Mr.
Bennett disclaims beneficial ownership of such shares.
(3) Includes 2,798 shares of which Mr. King's wife is the sole owner, and 100
shares of which Mr. King's granddaughter is the sole owner. Mr. King
disclaims beneficial ownership of such shares.
(4) Includes 25 shares of which Mr. Dembowski's daughter is the sole owner. Mr.
Dembowski disclaims beneficial ownership of such shares.
(5) This number includes 18,861 shares held as unallocated shares as of February
28, 1997 in the Company's Employee Stock Ownership Plan which is
administered by a trustee which acts in accordance with the directions of
the Compensation Committee of the Board of Directors.
MEETINGS AND COMMITTEES
The Company's Board of Directors met 13 times during 1996. An Executive
Committee is required by the ONBANCorp By-Laws. A Compensation Committee (and a
subcommittee, the Stock Option Committee) and an Examining and Audit Committee
constitute the standing committees. The entire Board of
9
Directors acts as the Nominating Committee as specified in the ONBANCorp
By-Laws. Shareholders may independently nominate individuals to serve as
directors by following the procedures and providing timely notice to the
Secretary of the Company, as outlined in the ONBANCorp By-Laws. The Board is
authorized to appoint such other committees as it may determine and may
designate each such committee as either a standing committee or an ad hoc
committee. The Board may at any time appoint a director to fill any vacancy on
any committee of the Board. The principal responsibilities of the committees and
the number of meetings held during 1996 appear below.
All directors attended at least 75% of the total number of meetings of the
Board of Directors and the total number of meetings held by all committees on
which the directors served.
EXECUTIVE COMMITTEE. (12 meetings) The Executive Committee currently
consists of four non-employee directors plus the Chairman. The Executive
Committee is authorized to exercise the powers of the Board of Directors between
regular meetings of the Board, with certain exceptions, and has direction of the
general investment policy of the Company. The Executive Committee, a majority of
whom rotate on a trimester basis, presently consists of Mr. Bennett, who serves
as Chairman, and Messrs. Donlon, Matt, Meier and Stapleton.
COMPENSATION COMMITTEE. (4 meetings) The Compensation Committee consists of
eight members. It evaluates management recommendations concerning promotions,
salary administration practices and compensation with respect to the executive
officer staff in particular and officer/exempt staff in general. It reviews both
employee and executive compensation as well as retirement and other employee
benefit plans and makes recommendations to the Board of Directors with regard to
executive compensation. The non-employee members of the Compensation Committee
constitute a subcommittee which administers the Company's stock option plans
(the "Stock Option Committee"). The Compensation Committee consists of Mr.
Donlon, who serves as Chairman, and Messrs. Allyn, Bennett, King, Lavarnway,
Meier, Umphred and Walsh.
EXAMINING AND AUDIT COMMITTEE. (4 meetings) The Examining and Audit
Committee consists of six members, none of whom are officers of ONBANCorp. The
Committee receives and reviews the internal auditor's reports as well as reports
of the Company's independent auditors, and examines and reviews the affairs and
reports of the Company. The Committee consists of Mr. Amond, who serves as
Chairman, and Messrs. Marsellus, Matt, O'Donnell, Stapleton, and Vensel.
DIRECTOR COMPENSATION
Directors, other than those who are also officers of the Company or the
Banks, currently receive an annual retainer of $11,000 plus $700 for each Board
meeting or committee meeting attended. Committee chairmen, other than officers
of the Company or the Banks, receive an additional $100 for each committee
meeting attended. Directors who are also officers of the Company or the Banks do
not receive any compensation as directors.
Directors of both the Company and the Banks may elect to defer fees pursuant
to elections made under the Directors' Deferred Compensation Plans of the
Company and the Banks, respectively. Both the Company and OnBank & Trust have
established irrevocable "rabbi trusts" to provide for the payment of deferred
fees to such trusts in the event of a change of control (as defined in the rabbi
trusts) of the Company (or OnBank & Trust or the Company, in the case of OnBank
& Trust's rabbi trust). The rabbi trusts may be funded at any time prior to a
potential change of control (as defined in the rabbi trusts) of the Company (or
OnBank & Trust or the Company, in the case of OnBank & Trust's rabbi trust) or,
if not funded earlier, within 30 days following a potential change of control.
If a change of control does not occur within the one-year period following the
time such trusts are funded, the funds held in the rabbi trusts will revert to
the Company or OnBank & Trust. Fees deferred pursuant to a director's election
currently
10
accumulate interest at the highest posted deposit rate paid by the Banks on the
first day of each calendar quarter for that quarter.
The 1992 ONBANCorp Directors' Stock Option Plan (the "Director Plan")
provides that each non-employee director who (i) is elected or re-elected at an
annual meeting of the Company or is continuing as a director at the adjournment
of such meeting and (ii) has not previously been granted any option under the
Director Plan, will be granted as of the date of such meeting options to
purchase 3,000 shares of ONBANCorp Common Stock. The exercise price of each
option issued under the Director Plan shall be the fair market value of a share
of ONBANCorp Common Stock on the date of the grant. Options become exercisable
as to one-third of the shares covered by such options on the first anniversary
of the date of the grant if the optionee continues to serve as a director of the
Company on that date, and with respect to an additional one-third of the shares
covered by such options on each of the two succeeding anniversaries of the date
of the grant if the optionee continues to serve as director of the Company on
each such date. All options held by an optionee will become fully exercisable
(to the extent not already exercisable) upon the optionee's termination of
service as a director on account of death, disability or "retirement" (as
defined in the Director Plan). All options granted under the Director Plan, to
the extent not exercised, expire on the earliest of (i) the tenth anniversary of
the date of the grant or (ii) one year following the optionee's termination of
service as a director on account of death, disability or retirement or (iii)
upon the date of the optionee's resignation for cause at the request of the
Board. Pursuant to the Director Plan, each director then in office (other than
Mr. Bennett who is an employee of the Company) received a grant of options on
April 21, 1992 to purchase 3,000 shares of ONBANCorp Common Stock. Subsequently,
new non-employee directors were granted options pursuant to the plan.
EXECUTIVE OFFICERS
The following table lists the executive officers of ONBANCorp and/or OnBank
& Trust and/or Franklin.
POSITION WITH THE OFFICER
NAME AGE COMPANY AND/OR THE BANKS SINCE
- ------------------------------------------------ --- ------------------------------------------------ -----------
Robert J. Bennett............................... 55 Chairman of the Board, President and Chief 1987
Executive Officer of the Company and OnBank &
Trust
Robert J. Berger................................ 50 Senior Vice President, Treasurer and Chief 1978
Financial Officer of the Company and OnBank &
Trust
David M. Dembowski.............................. 59 Executive Vice President and Secretary of the 1967
Company and OnBank & Trust
Thomas F. Ferguson.............................. 63 Senior Vice President/Senior Trust Officer of 1993
OnBank & Trust
William M. Le Beau.............................. 48 Senior Vice President, Loan and Asset Review of 1988
the Company and OnBank & Trust
Lance D. Mattingly.............................. 36 Senior Vice President--Systems and Operations of 1995
OnBank & Trust.
Peter L. Meyers................................. 57 Vice Chairman of OnBank & Trust 1993
Howard W. Sharp................................. 50 Senior Executive Vice President of the Company 1989
and OnBank & Trust
11
POSITION WITH THE OFFICER
NAME AGE COMPANY AND/OR THE BANKS SINCE
- ------------------------------------------------ --- ------------------------------------------------ -----------
Thomas H. van Arsdale........................... 59 President and Chief Executive Officer of 1993
Franklin
Randy J. Wiley.................................. 40 Senior Vice President of Investments and Funds 1984
Management of OnBank & Trust
Robert J. Bennett became Chairman of ONBANCorp and OnBank on May 1, 1989 and
President and Chief Executive Officer of ONBANCorp and OnBank on January 1,
1989. He became Chairman, President and Chief Executive Officer of OnBank &
Trust in January 1993 upon its acquisition by the Company. He had previously
served as President and Chief Operating Officer of OnBank from July, 1987 to
January, 1989. Prior to joining OnBank, he served in various capacities of
Boatmen's Bancshares, Inc. of St. Louis, Missouri and President of Boatmen's
Bancshares of Illinois. Mr. Bennett is a graduate of Babson College and holds an
MBA from the University of Massachusetts and is a graduate of the Harvard
Business School Advanced Management Program.
Robert J. Berger became Senior Vice President, Treasurer and Chief Financial
Officer of OnBank on January 23, 1989 and of ONBANCorp on January 31, 1989. He
had previously served as Treasurer of OnBank since 1986 and as Comptroller since
he joined OnBank in 1978. He became Senior Vice President, Treasurer and Chief
Financial Officer of OnBank & Trust in January 1993 upon its acquisition by the
Company. Mr. Berger is a graduate of Hamilton College and holds an MBA in
accounting from Rutgers University Graduate School of Business. He was
previously employed by Price Waterhouse and Co.
David M. Dembowski was named Executive Vice President, Residential Lending
of ONBANCorp effective January 27, 1997 and Senior Vice President and Secretary
of ONBANCorp on January 31, 1989. He has also served as Secretary of OnBank
since 1984. He joined OnBank in 1957 and has served in many capacities,
primarily within the retail lending area. He became Executive Vice President,
Residential Lending and Secretary of OnBank & Trust in January 1993 upon its
acquisition by the Company. Mr. Dembowski is a graduate of Central City Business
Institute, the Graduate School of Mortgage Banking of Northwestern University,
and Income Property Lending Case Study Seminar at the University of Michigan.
Thomas F. Ferguson became Senior Vice President/Senior Trust Officer of
OnBank & Trust in January 1993. Mr. Ferguson previously served since November
1983 as Senior Vice President/Senior Trust officer of The Merchants National
Bank & Trust Co. of Syracuse ("Merchants") prior to the acquisition of that bank
from Midlantic Corp. by the Company. Mr. Ferguson had previously been associated
with Marine Midland Bank, N.A. He is a graduate of Babson College and holds a
MBA degree from Columbia University.
William M. Le Beau was named Senior Vice President, Loan and Asset Review of
the Company and OnBank in January 1991. He became Senior Vice President Loan and
Asset Review of OnBank & Trust in January 1993 upon its acquisition by the
Company. He was Vice President, Loan and Asset Review of the Company and OnBank
from April 1988 to January 1991. Mr. Le Beau served in various bank examination
and liquidation capacities with the FDIC from 1970 until his employment by
OnBank in April 1988. He is a graduate of Bemidji State College and the National
School of Finance and Management at Fairfield University.
Lance D. Mattingly became Senior Vice President--Systems and Operations of
OnBank & Trust in June 1995. Mr. Mattingly served previously as both an account
manager and programming manager for Alltel Financial Services, a leading data
processing company. Mr. Mattingly is a graduate of the University of Arkansas.
12
Peter L. Meyers became Vice Chairman of OnBank & Trust in January 1993. Mr.
Meyers had served as President and Chief Executive Officer of Merchants from
November 1988 until the acquisition of that bank from Midlantic Corp. by the
Company. He had served as Executive Vice President and Chief Operating Officer
of Merchants from February 1988 to November 1988. Mr. Meyers is a graduate of
Syracuse University and the Stonier Graduate School of Banking.
Howard W. Sharp was named Senior Executive Vice President of ONBANCorp. and
OnBank & Trust effective January 27, 1997 having served as Executive Vice
President of the Company since October 1994 and of OnBank since joining OnBank
on November 1, 1989. He became Executive Vice President of OnBank & Trust in
January 1993 upon its acquisition by the Company. He has 25 years of banking
experience, most recently as Regional President of the $3.1 billion Boatmen's
First National Bank of Kansas City and President and Chief Executive Officer of
Boatmen's Bank of Independence, Missouri. Mr. Sharp attended Rockhurst College
and is also a graduate of the Wharton School of Financial Management, the ABA
Graduate School of Commercial Lending and the ABA National Commercial Lending
School, University of Oklahoma, Norman.
Thomas H. van Arsdale has served as President and Chief Executive Officer of
Franklin since November 1990 and was Vice Chairman, President and Chief
Executive Officer of Franklin Corp. from November 1990 to September 1993. Prior
to November 1990 Mr. van Arsdale served as President and Chief Executive Officer
of Dime Savings Bank of New Jersey and as a director of Dime Savings Bank of New
York. Mr. van Arsdale graduated with degrees in business and banking from
Raritan Valley Community College and from Thomas A. Edison State College and is
also a graduate of The National School of Finance & Management at Fairfield
University.
Randy J. Wiley was named Senior Vice President of Investments and Funds
Management of OnBank & Trust effective January 21, 1997 having served as Vice
President of Investments and Funds Management of OnBank since February 1, 1989.
He became Vice President of Investments and Funds Management at OnBank & Trust
in January, 1993 upon its acquisition by the Company. He had previously served
in the funds management, secondary markets, investments and internal audit areas
since joining OnBank in 1980. Mr. Wiley is a graduate of the State University of
New York at Oswego.
MANAGEMENT REMUNERATION
EXECUTIVE COMPENSATION
The following table summarizes the cash and noncash compensation paid by
ONBANCorp and the Banks for services rendered to the Company and its
subsidiaries, during the fiscal years ended December 31, 1994, 1995 and 1996, by
the Company's Chief Executive Officer and four other most highly compensated
executive officers for 1996 (collectively, the "named executive officers"). The
amounts shown in the Summary Compensation Table below include only compensation
earned during the years in which the named executive officers served as
executive officers.
13
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION(3)
----------------------
ANNUAL COMPENSATION
AWARDS
-------------------- ----------- LTIP ALL OTHER
SALARY BONUS OPTIONS/ PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION(1) YEAR ($) ($)(2) SARS SHARES ($) ($)(4)
- ------------------------------------------------------- --------- --------- --------- ----------- --------- ---------------
Robert J. Bennett...................................... 1996 500,000 123,500 35,000 39,000 3,596
Chairman, President and 1995 500,000 -0- -0- 39,200 3,466
Chief Executive Officer 1994 488,079 -0- 50,000 102,200 3,585
Thomas H. van Arsdale ................................. 1996 229,616 33,375 7,500 15,000 4,538
President and Chief Executive Officer 1995 225,004 5,000 3,000 -0- 4,500
of Franklin 1994 220,003 -0- -0- -0- 4,315
Howard W. Sharp........................................ 1996 175,000 26,200 7,500 21,000 4,750
Senior Executive Vice President of the 1995 175,000 -0- 5,000 22,400 4,620
Company and OnBank & Trust 1994 170,827 -0- 7,500 58,400 4,620
David M. Dembowski..................................... 1996 155,000 22,975 7,000 21,000 1,967
Executive Vice President and Secretary of the Company 1995 155,000 -0- -0- 22,400 3,756
and OnBank & Trust 1994 152,377 -0- 7,500 58,400 3,977
Lance D. Mattingly..................................... 1996 137,595 20,950 5,000 -0- 4,123
Senior Vice President - Systems and Operations of 1995 72,692 -0- -0- -0- 2,181
OnBank & Trust 1994 -0- -0- -0- -0- -0-
- ------------------------
(1) See "Executive Officers" for additional positions held by these executives
with the Company and its subsidiaries.
(2) "Bonus" consists of cash amounts earned for the fiscal year in question
under the Company's 1987 Annual Incentive Bonus Plan ("Bonus Plan") (except
for Mr. van Arsdale's bonus for 1995, which was paid at the discretion of
the Board of Directors). Pursuant to the Bonus Plan, participating employees
qualify for bonuses upon satisfaction of certain measurable "target"
performance criteria. Such performance criteria and the amount of the
potential bonus are established at the start of the year by the Board of
Directors or a committee thereof.
(3) No restricted stock awards have been made during each of the past three
fiscal years. No restricted stock awards are outstanding.
(4) "All Other Compensation" received by the named executive officers consisted
of certain perquisites. For each fiscal year in question, the aggregate
amount of perquisites received by each named executive officer was less than
the lesser of $50,000 or 10% of such officer's reported salary and bonus. In
accordance with applicable requirements, no information under the heading
"All Other Compensation" is included. "All Other Compensation" received by
all named executive officers during 1996 consisted of the Company's
contributions under its 401(k) defined contribution plan.
14
OPTION GRANTS IN 1996
The following table contains information concerning the grant of stock
options under the Stock Option Plan during 1996.
POTENTIAL REALIZABLE
VALUE ($) AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------------------------------- STOCK PRICE
% OF TOTAL APPRECIATION
OPTIONS FOR OPTION TERM
OPTIONS GRANTED IN EXERCISE MARKET PRICE ON EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR PRICE($) GRANT DATE($) DATE 5%(2) 10%(3)
- ------------------------------ ------------- ----------- ------------- ----------------- ----------- ---------- ----------
Robert J. Bennett............. 17,500 22.6% 31.75 31.75 1/22/2006 $ 349,430 $ 885,523
17,500 22.6% 34.93 31.75 1/22/2006 293,780 829,873
Thomas H. van Arsdale......... 3,750 4.8% 31.75 31.75 1/22/2006 74,878 189,755
3,750 4.8% 34.93 31.75 1/22/2006 62,953 177,830
Howard W. Sharp............... 3,750 4.8% 31.75 31.75 1/22/2006 74,878 189,755
3,750 4.8% 34.93 31.75 1/22/2006 62,953 177,830
David M. Dembowski............ 3,500 4.5% 31.75 31.75 1/22/2006 69,886 177,105
3,500 4.5% 34.93 31.75 1/22/2006 58,756 165,975
Lance D. Mattingly............ 2,500 3.2% 31.75 31.75 1/22/2006 49,919 126,503
2,500 3.2% 34.93 31.75 1/22/2006 41,969 118,553
- ------------------------
(1) No stock appreciation rights (whether free standing or in tandem with stock
options) were granted during 1996. One-half of the options were granted at
fair market value on January 22, 1996 and one-half of the options were
granted at an exercise price equal to 110% of the fair market value on such
date under the Stock Option Plan. They become exercisable with respect to
one-third of the shares covered by the option beginning at the first
anniversary of the grant date; thereafter they become exercisable with
respect to an additional one-third of the shares covered on each subsequent
anniversary through and including the third anniversary.
(2) Assumes that the market price of ONBANCorp Common Stock appreciates in value
from the date of grant to the end of the option term at 5% per annum.
(3) Assumes that the market price of ONBANCORP Common Stock appreciates in value
from the date of grant to the end of the option term at 10% per annum.
15
AGGREGATED OPTION/SAR EXERCISES IN 1996,
AND 1996 YEAR-END OPTION/SAR VALUES
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during 1996 and the
number and value of unexercised options held as of December 31, 1996.
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS/SARS AT
OPTIONS/SARS AT 1996
SHARES ACQUIRED VALUE 1996 YEAR-END(#) YEAR-END ($)
ON REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#)(1) ($)(2) UNEXERCISABLE UNEXERCISABLE(3)
- ---------------------------------------------- --------------- --------- ----------------- -------------------
Robert J. Bennett............................. -- -- 122,333/51,667 1,388,458/167,979
Thomas H. van Arsdale......................... -- -- 81,437(4)/9,500 1,830,115/56,906
Howard W. Sharp............................... 5,000 112,500 16,833/11,667 126,375/57,469
David M. Dembowski............................ 4,000 104,500 36,000/9,500 669,500/31,825
Lance D. Mattingly............................ -- -- --/5,000 --/18,938
- ------------------------
(1) No stock appreciation rights were exercised in 1996.
(2) Market value of underlying securities at exercise, minus the exercise price.
(3) Market value of underlying securities at 1996 year-end, minus the exercise
or base price.
(4) Mr. van Arsdale received 80,437 of these options in exchange for his options
on shares of common stock of Franklin Corp. in connection with the Company's
acquisition of Franklin.
LONG-TERM INCENTIVE PLAN. The Stock Option Committee administers the 1991
Long-Term Incentive Plan of ONBANCorp, Inc. (the "Long-Term Plan"), selects
participants for the plan and determines the form, size and substance of the
performance grants, the length of each performance cycle and the form of payment
to be made to each participant. Performance grants may include (i) specific
dollar-value target grants, (ii) performance units (valued as determined by the
Stock Option Committee at issuance), and/or (iii) performance shares (valued at
the market value of a share of ONBANCorp Common Stock). The value of each
performance grant may be fixed or may be permitted to fluctuate based upon a
performance factor (e.g., return on equity) selected by the Stock Option
Committee. The Stock Option Committee establishes performance goals that,
depending on the degree to which they have been met, will determine the value of
the performance grants awarded to participants and determines the portion of
each performance grant that is earned by participants based upon ONBANCorp's
performance during the performance cycle in relation to the performance goals
for such cycle. At the discretion of the Stock Option Committee, performance
unit payouts can increase or decrease up to 40% depending on the 1996-1998
percentage change in the Company's stock price plus cumulative dividends.
Additionally, the Stock Option Committee may elect to make no awards if the
Company's return on assets ("ROA") in any of the plan years is less than .50%.
Payments to participants will be made as soon as practicable after the end of
each performance cycle in the forms of cash, options and/or shares issued
pursuant to the Long-Term Plan, as determined by the Stock Option Committee at
the time of the performance grant.
In the event of a "change in control" of ONBANCorp (as defined in the
Long-Term Plan) prior to the end of a performance cycle, the Stock Option
Committee shall have the discretion to determine the minimum portion of
performance grants earned by participants. Otherwise, a participant in the
Long-Term Plan generally must be an active employee of ONBANCorp or its
subsidiaries at the end of the performance cycle to receive a payment for such
cycle. However, if termination is on account of death, retirement or disability,
unless otherwise determined by the Stock Option Committee, the participant will
16
be entitled to a pro rata distribution based upon the elapsed portion of the
performance cycle and ONBANCorp's performance over such portion of the cycle.
The third performance cycle under the Long-Term Plan ended on December 31,
1995. Payments for this third cycle were made to participants in the Long-Term
Plan in February 1996.
The following table provides information, with respect to the named
executive officers, concerning threshold, target and maximum award levels
determined in 1996 under the Long-Term Plan for the 3-year performance cycle
beginning 1996 and ending 1998.
LONG-TERM INCENTIVE PLAN AWARDS IN 1996
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE NON-STOCK PRICE
OR OTHER BASED PLANS
PERIOD UNTIL ---------------------------------
NUMBER OF MATURATION THRESHOLD TARGET MAXIMUM
NAME UNITS(#)(1) OR PAYOUT ($)(2)(3) ($)(2)(4) ($)(2)(5)
- ------------------------------------------------------------ ------------- ------------ ----------- --------- ---------
Robert J. Bennett........................................... 6,000 12/31/98 60,000 120,000 180,000
Thomas H. van Arsdale....................................... 3,000 12/31/98 30,000 60,000 90,000
Howard W. Sharp............................................. 3,500 12/31/98 35,000 70,000 105,000
David M. Dembowski.......................................... 3,500 12/31/98 35,000 70,000 105,000
Lance D. Mattingly.......................................... -0- -0- -0- -0- -0-
- ------------------------
(1) No stock or stock rights have been granted in 1996 in connection with the
Long-Term Plan.
(2) Payouts of awards are tied to achieving specified levels of ROA, return on
equity ("ROE"), net interest margin ("NIM") and amount of nonperforming
assets ("NPA"). With respect to ROA, the threshold amount, target amount or
maximum amount, as the case may be, will be earned if 96%, 100% or 109%,
respectively, of the targeted ROA is achieved. With respect to ROE, the
threshold amount, target amount or maximum amount, as the case may be, will
be earned if 96%, 100% or 104%, respectively, of the targeted ROE is
achieved. With respect to NIM, the threshold amount, target amount or
maximum amount, as the case may be, will be earned if 96%, 100% or 104%,
respectively, of the targeted NIM is achieved. With respect to NPA, the
threshold amount, target amount or maximum amount, as the case may be, will
be earned if 108%, 100% or 94%, respectively, of the targeted NPA is
achieved. The actual payouts, if any, are fractionally weighted sums of
payouts with respect to the four performance measures.
(3) Assumes that the threshold amount is earned with respect to each of the four
performance measures. Payouts will be smaller if, for example, the threshold
amount is earned with respect to one performance measure and no amounts are
earned with respect to the remaining performance measures.
(4) Assumes that the target amount is earned with respect to each of the four
performance measures.
(5) Assumes that the maximum amount is earned with respect to each of the four
performance measures.
EMPLOYMENT AND SEVERANCE CONTRACTS. ONBANCorp and OnBank & Trust are
parties to an employment agreement, effective as of September 1, 1990 (the
"Employment Agreement"), with Mr. Bennett, amending and restating Mr. Bennett's
prior employment agreement, in order to secure his continued service. Under the
Employment Agreement, his annual base salary is prescribed by the Board (subject
to a minimum). As of the date of this Proxy Statement, Mr. Bennett's annual base
salary is $550,000. The Employment Agreement provides that if Mr. Bennett's
employment is terminated due to (i) discharge without "cause" (as defined in the
Employment Agreement) or the Board's election (without "cause" from Mr. Bennett)
to stop extending the Employment Agreement, thereby ending the contractual
employment period prior to Mr. Bennett's attaining the age of sixty-five (65),
(ii) Mr. Bennett's voluntary
17
resignation as a result of a reduction in his official position or
responsibilities, (iii) Mr. Bennett's voluntary resignation for any reason
within 180 days following a "change of control" of ONBANCorp or OnBank & Trust
(as defined in the Employment Agreement), or (iv) Mr. Bennett's voluntary
resignation within 120 days after a reduction of his official position,
responsibilities or base salary; or a significant relocation of his principal
place of employment, provided that such reduction or relocation occurs within
three years of a "change of control," then Mr. Bennett will receive the
following special severance amounts: (a) a severance payment equal to three
times the sum of (i) the base compensation in effect at the time of termination
and (ii) the higher of the amount awarded to him under the Bonus Plan for the
most recently ended performance year or the mean average award for the three
most recently ended performance years, (b) a payment equal to the value of all
his outstanding stock options and appreciation rights (whether vested or
unvested), (c) a payment equal to the excess, if any, of the present value of
his benefits under the Retirement Plan (as described below) and the 401(k) Plan
calculated as if he had been employed for an additional three years at his
highest base salary, over the present value of the benefits to which he would
actually be entitled under the Retirement Plan and the 401(k) Plan,
respectively, (d) a continuation of group life, health, accident and dental
insurance benefits for the employment period remaining under the Employment
Agreement, (e) professional outplacement counselling and executive placement
services and (f) to the extent any payments made to him under his Employment
Agreement or otherwise are determined to be either "excess parachute payments"
under Section 280G of the Internal Revenue Code (the "Code") which are subject
to an excise tax pursuant to Section 4999 of the Code or payments subject to any
surtax which is in addition to the income tax imposed under the normal tax
tables or their functional equivalent, an indemnification payment so that Mr.
Bennett's benefit after such indemnification is equal to the amount he would
have received had no excise tax or surtax been imposed upon his payments. The
benefits set forth under clauses (c), (d) and (e) of the preceding sentence will
be subject to reduction in the event that Mr. Bennett obtains alternate
employment during the three years immediately succeeding his termination. Mr.
Bennett is entitled to recover reasonable costs and expenses if he in good faith
institutes an action against ONBANCorp or OnBank & Trust based upon his
Employment Agreement. To ensure that the benefits set forth in his Employment
Agreement will be received without Mr. Bennett incurring litigation costs, the
Employment Agreement provides that, within three business days of written demand
by Mr. Bennett ONBANCorp and/or OnBank & Trust will establish an irrevocable
standby letter of credit providing for $200,000 of credit for Mr. Bennett for
five years. The Employment Agreement is initially effective for a period of
three years commencing September 1, 1990, and is automatically extended for one
year on each anniversary date of its commencement unless either ONBANCorp or
OnBank & Trust or Mr. Bennett gives advance written notice at least sixty days
prior to such anniversary date not to further extend the employment period. Upon
a change of control of ONBANCorp and/or OnBank & Trust, Mr. Bennett's employment
period shall automatically be extended for a three-year period commencing with
the date of such change of control. If Mr. Bennett is discharged for "cause,"
dies, retires, becomes disabled, or voluntarily terminates his employment (in a
manner not described above) he does not become entitled to the severance
payments described above.
Mr. van Arsdale has entered into an Employment Agreement (the "Agreement")
with the Company and with Franklin, pursuant to which Mr. van Arsdale will be
employed by Franklin through December 31, 1997 (the "Employment Period") and
serves as President and Chief Executive Officer of Franklin and a member of the
Board of Directors of Franklin. Under the Agreement, Mr. van Arsdale receives an
annual salary of at least $235,000 subject to annual review, as well as
executive benefits and perquisites. Upon involuntary termination of Mr. van
Arsdale's employment without "cause" or his voluntary termination for Good
Reason, after October 31, 1994 but prior to the end of the Employment Period,
Mr. van Arsdale will be paid as liquidated damages an amount equal to the base
salary he would have earned through the end of the Employment Period and will be
provided with employee benefit coverage through the end of the Employment
Period. Notwithstanding the foregoing, during the Employment Period, if a
"Change in Control" of ONBANCorp (as defined in the Agreement) occurs, the
Agreement will remain in effect for three (3) years thereafter (the "Change in
Control Protective Period"). During the Change in Control
18
Protective Period, if Mr. van Arsdale's employment is terminated involuntarily
for any reason other than "cause" or if Mr. van Arsdale terminates his own
employment after a reduction of his offices and positions, a reduction of his
authority which is not cured within a reasonable time upon notice, a reduction
of his base salary or a relocation of his place of employment of more than fifty
miles, he shall be entitled to the following benefits (in addition to accrued
compensation and normal benefits as a former employee): a lump sum equal to
three (3) times annual base salary plus three (3) times the greater of the bonus
for the year most recently ended or the mean average bonus for the most recent
three years; a right to elect to be paid an amount equal to the excess of the
fair market value (as defined in the Agreement) of the common stock underlying
all his stock options (whether or not vested) over the aggregate exercise price
thereof; and continued life, health, accident and dental insurance for the
balance of the Change in Control Protective Period (which insurance coverage is
subject to offset upon his obtaining alternate employment).
ONBANCorp and OnBank & Trust are parties to severance agreements with
Messrs. Dembowski, Sharp and Berger, which agreements became effective as of
June 30, 1990. OnBank & Trust entered into severance agreements with Mr.
Mattingly, effective as of June 5, 1995, and Mr. McMahon, effective as of
December 23, 1996. Each of the foregoing agreements is referred to herein as a
"Severance Agreement and each of the officers that are parties thereto are
referred to herein as "Executives." The Severance Agreements provide that if the
Executive's employment is terminated within three years following a "change in
control" (as defined in the Severance Agreements) of ONBANCorp and/or OnBank &
Trust, in the case of Messrs. Dembowski, Sharp and Berger, or of OnBank & Trust,
in the case of Messrs. Mattingly and McMahon, due to (i) discharge without
"cause" (as defined in the Severance Agreements), or (ii) the Executive's
voluntary resignation after a reduction of his official position,
responsibilities or base salary, or a non-consensual relocation of his principal
place of employment, or a decrease in his material compensation, pension or
welfare benefits or fringe benefits, then the Executive will receive the
following special severance amounts: (a) severance payment equal to three times
the sum of (i) the base compensation in effect at the time of termination and
(ii) the higher of the amount awarded to him under the Bonus Plan for the most
recently ended performance year or the mean average award for the three most
recently ended performance years, (b) a payment equal to the value of all his
outstanding stock options (other than "incentive stock options") and
appreciation rights (whether vested or unvested), (c) a payment equal to the
excess, if any, of the present value of his benefits under the Retirement Plan
calculated as if he had been employed for an additional three years (at his
highest annual rate of compensation applicable during his last twelve months of
employment) over the present value of the benefits to which he would actually be
entitled under the Retirement Plan, (d) a payment equal to three times the
matching contribution made by ONBANCorp for the Executive's account under the
401(k) Plan during the calendar year immediately preceding termination, (e) a
continuation of employee benefits until the earlier of the third anniversary of
the Executive's termination or such time as the Executive receives comparable
benefits elsewhere, (f) outplacement consulting services upon request, and (g)
to the extent any payments made under the Executive's Severance Agreement or
otherwise are determined to be either "excess parachute payments" under Section
280G of the Code which are subject to an excise tax pursuant to Section 4999 of
the Code or payments subject to any surtax which is in addition to the income
tax imposed under the normal tax tables or their functional equivalent, an
additional payment such that the Executive's benefit after such additional
payments is equal to the amount he would have received had no excise tax or
surtax been imposed upon his payments. The Executive is also entitled to recover
legal fees and expenses incurred as a result of his termination of employment or
his seeking the enforcement of his Severance Agreement. To ensure that the
benefits set forth in the Severance Agreements will be received without the
Executive incurring litigation costs, ONBANCorp and/or OnBank & Trust and the
Executives have entered into related letter agreements which provide that,
within three business days of a written demand by the Executive, ONBANCorp will
establish an irrevocable standby letter of credit providing for $200,000 of
credit for the Executive for five years. The Severance Agreements are initially
effective for a period of three years commencing on the respective dates set
forth above, and are automatically extended for one year on each anniversary
date of their commencement, unless ONBANCorp or OnBank & Trust, in the case of
Messrs. Mattingly and
19
McMahon gives advance written notice (at least thirty days prior to such
anniversary date) not to further extend the Severance Agreement. Upon a change
in control of ONBANCorp and/or OnBank & Trust in the case of Messrs. Dembowski,
Sharp and Berger, or of OnBank & Trust, in the case of Messrs. Mattingly and
McMahon, the term of the Severance Agreements shall automatically be extended
for a three-year period commencing with the date of such change in control. If
the Executive is discharged for "cause," dies, retires, becomes disabled, or
voluntarily resigns without having any of the reasons for resignation described
above, the Executive does not become entitled to the special severance amounts
described above.
RETIREMENT PLAN. The Retirement Plan is a defined benefit pension plan for
the benefit of salaried employees employed by ONBANCorp and its subsidiaries.
The Retirement Plan is administered through the Trust Division of OnBank &
Trust. Eligible employees become participants of the Retirement Plan upon
attainment of age 21 and completion of one year of service. The Retirement Plan
provides a normal retirement benefit for each participant who terminates
employment at the later of age 65 or the fifth anniversary of participating in
the Retirement Plan (the "Normal Retirement Date"). The amount of the normal
retirement benefit, when paid in the form of a single life annuity, is generally
equal to the greater of (A) 2% of the participant's average annual earnings
(defined as annualized amount of base salary over the 36 consecutive months of
highest base salary (which, for the named executive officers, is reportable
under the salary column of the Summary Compensation Table) included in the
participant's final 120 months of creditable service) multiplied by the number
of his years (and any fraction thereof) of creditable service (up to a maximum
of 35 years), reduced by 1-2/3% of the participant's primary Social Security
benefit multiplied by the number of his years (and any fraction thereof) of
creditable service subsequent to April 1, 1983 (up to a maximum of 30 years) or
(B) the participant's total annual benefit accrued as of March 1, 1983 under the
provisions of the Retirement Plan in effect as of such date. In no event may a
normal retirement benefit exceed 60% of a participant's average annual earnings.
The following table sets forth the estimated annual benefit payable upon
retirement at age 65 in calendar year 1996, without regard to any offset in
respect of Social Security benefits, expressed in the form of a single life
annuity, based on the average annual earnings and creditable service
classifications specified.
YEARS OF CREDITABLE SERVICE
----------------------------------------------------------
AVERAGE ANNUAL EARNINGS 15 20 25 30 35
- ------------------------------------- ---------- ---------- ---------- ---------- ----------
$100,000............................. $ 30,000 $ 40,000 $ 50,000 $ 60,000 $ 60,000
125,000............................. 37,500 50,000 62,500 75,000 75,000
150,000............................. 45,000 60,000 75,000 90,000 90,000
175,000............................. 52,500 70,000 87,500 105,000 105,000
200,000............................. 60,000(1) 80,000(1) 100,000(1) 120,000(1) 120,000(1)
225,000............................. 67,500(1) 90,000(1) 112,500(1) 135,000(1) 135,000(1)
250,000............................. 75,000(1) 100,000(1) 125,000(1) 150,000(1) 150,000(1)
300,000............................. 90,000(1) 120,000(1) 150,000(1) 180,000(1) 180,000(1)
400,000............................. 120,000(1) 160,000(1) 200,000(1) 240,000(1) 240,000(1)
450,000............................. 135,000(1) 180,000(1) 225,000(1) 270,000(1) 270,000(1)
500,000............................. 150,000(1) 200,000(1) 250,000(1) 300,000(1) 300,000(1)
- ------------------------
(1) Under applicable provisions of the Code, for the calendar year 1996, (i) the
maximum annual benefit actually permitted to be paid under the Retirement
Plan is $120,000 and (ii) the maximum annual compensation on which benefits
may be calculated ("maximum annual compensation limit") is $150,000. Both
the maximum annual benefit and the maximum annual compensation limit are
subject to annual adjustment to reflect cost of living increases. Messrs.
Bennett, van Arsdale, Sharp and Dembowski currently receive annual
compensation in excess of the Code limitation. Mr. Bennett
20
would be entitled to receive benefits in excess of the Code limitations
pursuant to his Supplemental Employee Retirement Agreement (described
below).
The following table sets forth the years of creditable service as of
December 31, 1996 for each of the individuals named in the Summary Compensation
Table:
CREDITABLE SERVICE
--------------------------
YEARS MONTHS
----- -------------
Robert J. Bennett........................................................ 23 6
Thomas H. van Arsdale.................................................... 6 1
Howard W. Sharp.......................................................... 6 1
David M. Dembowski....................................................... 34 4
Lance D. Mattingly....................................................... 0 6
The "creditable service" of Mr. Bennett reflects the additional credits
provided by his Supplemental Employee Retirement Agreement. A portion of his
aggregate annual benefit under the Retirement Plan and such Agreement of
($28,014) will be paid by a prior employer.
The current compensation covered by the Retirement Plan with respect to the
named executive officers are as follows: Robert J. Bennett ($550,000); Thomas H.
van Arsdale ($235,000); Howard W. Sharp ($235,000); David M. Dembowski
($165,000); and Lance D. Mattingly ($144,500).
SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT. ONBANCorp and OnBank & Trust
are also parties to a Supplemental Employee Retirement Agreement (the
"Supplemental Agreement"), effective as of January 1, 1991, with Mr. Bennett.
The Supplemental Agreement generally provides Mr. Bennett with monthly benefits
(in excess of any limitations imposed by the Code) equal to (a) the normal
retirement benefit he would receive under the Retirement Plan, if such benefit
were to be calculated treating as creditable service under the Retirement Plan
Mr. Bennett's 12 years of service with his previous employer (Boatmen's
Bancshares, Inc. of St. Louis, Missouri) plus his initial year of service with
ONBANCorp in addition to his years of creditable service under the Retirement
Plan less (b) the sum of the monthly normal retirement benefit actually payable
to Mr. Bennett under the Retirement Plan and the monthly retirement benefit
payable to Mr. Bennett commencing at age 65 from the retirement plan of
Boatmen's Bancshares, Inc. The supplemental benefit shall be paid to Mr. Bennett
at the same time and in the same form under which his normal retirement benefit
is payable from the Retirement Plan. Mr. Bennett's rights to his supplemental
retirement benefits vest at a rate of 20% per year of creditable service as
calculated under the Retirement Plan, but shall become 100% vested if his
employment with ONBANCorp and OnBank & Trust is terminated in a manner which
would entitle Mr. Bennett to severance benefits under his Employment Agreement.
Both the Company and OnBank & Trust have authorized the use of an irrevocable
"rabbi trust" substantially identical to those described under "Director
Compensation" to provide for Mr. Bennett's payments under the Supplemental
Agreement in the event of a change in control of the Company or OnBank & Trust
(as defined in the rabbi trust).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION PHILOSOPHY, POLICIES AND PROGRAMS FOR EXECUTIVE OFFICERS
The Company, a bank holding company, is engaged in a highly competitive
business. The prominent leadership position attained by the Company in the
communities it serves in terms of quality of services rendered, market share,
revenue, profitability and rate of growth, has been earned largely through the
selection, training and development of top caliber executive and professional
talent. Ongoing investment in the Company's human capital has produced favorable
long-term returns to Company shareholders. Therefore, it is deemed critical to
the ongoing success of the Company that its executives continue to be
21
among the most highly qualified and talented available to lead the organization
in the creation of shareholder value.
The Compensation Committee (the "Committee") reviews, and makes
recommendations to the Board of Directors with regard to, executive
compensation. The Board of Directors and the Committee have implemented an
executive compensation philosophy that seeks to relate executive compensation to
corporate performance, individual performance, and creation of shareholder
value. This is achieved through compensation programs pursuant to which a
substantial portion of executive officers' compensation is based on the
short-term and long-term results achieved for ONBANCorp and ONBANCorp
shareholders and on the executive officers' individual performances. These
programs are intended to be (1) retrospective, reflecting past individual and
organizational performance, (2) prospective, providing motivation and rewards
for the achievement of future success, and (3) highly competitive in the
marketplace.
In accordance with the Committee's executive compensation philosophy, the
major components of compensation under ONBANCorp executive compensation program
are: (i) base salary, (ii) annual incentive bonus, (iii) long-term incentive
compensation, and (iv) stock option grants.
BASE SALARY. Annual salary reviews are based on current individual and
organizational performance, affordability and competitive marketplace trends.
For the purpose of informing the Committee of competitive marketplace trends,
compensation data (including base salary, incentive bonus, stock option grants
and other long-term incentives) were obtained through a recent survey of
comparable regional financial institution peers conducted by an external
executive compensation consulting firm. Rather than using the same peer group as
is used in the Performance Graph on page 24 below, the surveyed group of
companies was chosen because they are comparable organizations in terms of
either size, performance, type of institution, or national or regional lines of
business and, accordingly, are the companies with whom the Company competes for
executive talent. While there is no specific weighting of these factors,
competitive positioning is the primary consideration in setting the salary
levels. Business and other economic factors such as net income and estimates of
inflation are secondary considerations. Generally, the Company's executive
officer salary ranges are positioned between the median and high end of survey
data given the Company's size and performance relative to the surveyed
companies.
ANNUAL CASH BONUS. Annual cash bonus awards are made pursuant to the Bonus
Plan or at the discretion of the Board of Directors. Participating employees who
in 1996 included all executive officers and certain performance and business
heads qualify for bonuses upon satisfaction of certain measurable "target"
performance criteria which may include ONBANCorp's financial performance
measured by rates of return, increase in net income for the year and other
financial performance measures the Committee determines to be appropriate, as
well as prescribed individual performance goals (such as profitability, asset
quality and expense controls). Such performance criteria and the amount of the
potential bonuses are established at the start of the year and the amounts
payable, if any, are computed at year-end based on the predetermined criteria
without giving any specific weight to any particular factor. Three classes of
awards exist, within which all participants are categorized with predetermined
threshold, target and maximum award percentages. The bonus compensation paid in
respect of 1996 under the Bonus Plan with respect to the named executives are as
follows: Robert J. Bennett ($123,500); Thomas H. van Arsdale ($33,375); Howard
W. Sharp ($26,200); David M. Dembowski ($22,975) and Lance D. Mattingly
($20,950).
STOCK OPTIONS. It is the Committee's strong belief that the continuing
success of the Company is dependent on the effective retention and motivation of
its executives. Accordingly, one component of long-term compensation is designed
to recognize the individual's past cumulative and, more important, future
potential contributions to the organization, and to connect the executive's
financial interests with those of the Company's shareholders by fostering
ownership of the Company's stock. Such equity participation for Company
executives is currently made available through the shareholder-approved Stock
Option Plan that provides for stock option grants, the size of which are based
on the employee's organizational role and
22
performance and the goal of providing a competitive compensation package. The
stock options generally become partially exercisable beginning one year after
the grant date and fully exercisable three years after the grant date. This
methodology further promotes retention of key talent through accumulated
beneficial stock ownership that is at risk.
LONG-TERM INCENTIVE AWARDS. The Company's Long-Term Plan provides
performance-based incentives to the named executive officers and other key
employees who contribute materially to the financial success of the Company.
Most executive officers are eligible to receive an annual grant of performance
units, cash or stock options. The size of the award reflects the financial
performance of the Company and the organizational level and performance of the
individual. Each year, at the beginning of the new performance cycle (which is
currently set at 3 years), performance goals are identified and performance
units, cash or stock options are allocated to participants. To date, the
established performance goals relate to specified levels of return on average
assets, return on equity, net interest margin and nonperforming assets. Payouts
(currently structured in the form of cash awards) will be made only if certain
threshold levels of performance have been achieved. The payouts increase with
performance until preset maxima are reached. The levels established for
threshold, target and maximum awards are intended to encourage performance
levels which the Company believes would enhance shareholder value through
increasing stock price and dividends.
BASIS FOR CEO COMPENSATION
Within the framework described above, both quantitative and qualitative
criteria are applied in assessing the performance of the chairman, president and
chief executive officer of the Company, Robert J. Bennett. The current financial
performance and long-term financial performance of the Company-- information
which is available to all Company shareholders--are major factors in
compensation decisions made by the Committee relative to Mr. Bennett. Comparable
weight is placed on his leadership and the impact of his decision-making on the
long-term health and performance of the Company. Critical aspects considered in
this performance evaluation include: (1) mastery of the market and economic
dynamics of each community served, thus enabling the chief executive officer to
evaluate effectively and approve business strategies in order to exploit
business opportunities; (2) the staffing and effective motivation of executives
at the Company and operating units; (3) leadership in providing perspective and
vision to heads of business segments to foster initiatives that enhance the
value of the Company and its services; and (4) competitive peer compensation
levels.
Total compensation in 1996 for Mr. Bennett included all the components
previously discussed, i.e., base salary, annual cash bonus, stock options and
deferred three-year performance units incentive awards. Mr. Bennett's 1996 cash
compensation is in the median range of cash compensation paid to the chief
executive officers of the surveyed companies. In determining the appropriate
amount of increase, his cash compensation was evaluated relative to those
individuals in similar positions among the surveyed companies. In addition to
seeking to position his cash compensation appropriately in comparison with the
marketplace, the appropriate differential is sought between Mr. Bennett's salary
and those of executives reporting to him. Such a differential is generally a
component in the compensation structure of competitor companies.
Historically, the target grant value of the deferred long-term executive
incentive program has been made in accordance with comparative analyses and
recommendations made by an outside professional compensation consultant.
CERTAIN TAX MATTERS
While the Committee is cognizant of Section 162(m) of the Code and intends
to take any and all appropriate steps to maximize its deductions in compliance
with such section, given the competitive nature
23
of the marketplace, the Committee reserves the right, in conjunction with Board,
to structure its compensation program in a manner which may result in the
payment of non-deductible compensation.
SUMMARY
The Committee believes that ONBANCorp has had, and continues to have, an
appropriate and competitive executive compensation program, and its mix of a
sound base salary position, relatively short-term bonus, options and a suitable
emphasis on long-term incentives forms a foundation which builds stability and
supports the interests of the Company and its shareholders.
William J. Donlon (Chairman)
William F. Allyn Russell L. King Peter J. Meier
Robert J. Bennett Henry G. Lavarnway, Jr. William J. Umphred, Sr.
Joseph N. Walsh, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of eight members.
The non-employee members of the Compensation Committee constitute the Stock
Option Committee, which administers the Company's stock option plans. Robert J.
Bennett, the Company's Chief Executive Officer, was during the last fiscal year
and is a member of the Compensation Committee but not the Stock Option
Committee. Chairman, President and Chief Executive Officer Bennett does not
participate in the Committee or Board determination of, and does not vote on,
his own compensation.
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on ONBANCorp Common Stock against the
cumulative total return of the S&P Composite--500 Stock Index and the KBW 50
Index. The KBW 50 Index is a published index made up of 50 of the nation's major
banking companies, including all the money center banks and most major regional
banks. According to Keefe, Bruyette & Wood, this index is meant to be
representative of the price performance of the nation's large banks.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
KBW50 S&P 500 ONBK
Dec-91 100.00 100.00 100.00
Dec-92 127.42 107.61 157.60
Dec-93 134.48 118.39 176.45
Dec-94 127.62 119.99 121.25
Dec-95 204.41 164.92 180.84
Dec-96 289.15 202.69 208.40
24
CERTAIN TRANSACTIONS. The current policy of the Banks is to make mortgage
and consumer loans to the Company's officers and employees to the extent
consistent with applicable laws and regulations. Such loans are made in the
ordinary course of business and on substantially the same terms as those
prevailing at the time for comparable transactions with unaffiliated persons,
except for interest rates and origination and application fees, and do not
involve more than the normal risk of collectability or present other unfavorable
features to the Banks. Loans to employees are subject to the same credit
guidelines as those pertaining to all of the Banks' customers. For as long as an
employee of the Banks remains such, and subject to applicable laws and
regulations, the interest rate actually charged on a mortgage loan on such
employee's primary residence may under certain circumstances be 1% below the
stated contract rate (which is equal to the prevailing market rate). Upon
termination of employment for any reason, the loan reverts to the stated
contract rate. Payment of origination and application fees may be waived.
Employees (excluding officers) are eligible for discounts of up to 1% on
selected types of consumer loans. The employee discount is eliminated upon
termination of employment for any reason. The amount of loans outstanding to
executive officers and directors of the Company and their affiliates, as of
December 31, 1996 equaled approximately $5,431,000 or 1.51% of shareholders'
equity.
OnBank & Trust has retained the law firm of Karpinski, Stapleton & Fandrich,
P.C., of which T. David Stapleton, Jr., a director of the Company, is a member,
to provide certain legal services to OnBank & Trust. These services include
providing legal representation for OnBank & Trust at mortgage loan closings in
the Auburn, New York area. OnBank & Trust neither pays any fees to Karpinski,
Stapleton & Fandrich, nor is there any contractual relationship between OnBank &
Trust and Karpinski, Stapleton & Fandrich.
Future transactions, other than transactions in the ordinary course of
business, between the Company and its officers, directors, principal
shareholders or other affiliates will be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties on an
arm's-length basis and will be approved by a majority of the Company's
disinterested directors.
25
PROPOSAL 2. APPROVAL OF AMENDMENT TO RESTATED 1987 STOCK OPTION AND
APPRECIATION RIGHTS PLAN OF ONBANCORP, INC.
The Board has previously adopted the Stock Option Plan. The Board believes
that the Stock Option Plan remains desirable to attract and retain executives
and other key employees of outstanding ability. Under the Stock Option Plan,
options and stock appreciation rights may be granted from time to time to
officers and other employees of the Company or of any of its subsidiaries.
700,000 shares of ONBANCorp Common Stock are reserved for issuance upon
exercise of awards under the Plan as in effect prior to its amendment by the
Board. Of that amount, approximately 20,200 shares are currently available for
distribution in connection with new awards. Because it believes the
replenishment of the Stock Option Plan is in the best interests of the Company
and its shareholders, the Board has approved, subject to the approval of the
shareholders, an amendment to the Stock Option Plan which increases the maximum
number of shares available for distribution under the Stock Option Plan from
700,000 to 1,200,000 shares (an increase of 500,000 shares) in order to permit
future awards under the Stock Option Plan. Approval by the shareholders of an
increase in the maximum number of shares would also constitute approval by the
shareholders of certain Stock Option Plan provisions that would allow awards
granted under the Stock Option Plan to qualify as "performance based
compensation" (within the meaning of Section 162(m) of the Code). Such
provisions include (i) the employees eligible to receive awards under the Stock
Option Plan and (ii) a limitation on the number of shares of ONBANCorp Common
Stock with respect to which options may be granted to any individual in any year
to no more than 100,000.
SUMMARY OF THE STOCK OPTION PLAN
The following is a summary of the terms of the Stock Option Plan. The
summary is qualified by reference to the full text of the Stock Option Plan, a
copy of which is annexed as Exhibit A to this proxy statement.
Under the terms of the Stock Option Plan, if amended, 1,200,000 shares of
ONBANCorp Common Stock are reserved for issuance upon the exercise of options
granted thereunder. The Stock Option Plan is administered by members of the
Committee who are "Disinterested Persons" (as defined in Rule 16b-3 of the
Exchange Act). The Committee is generally empowered to, in its sole discretion
and in accordance with the provisions of the Stock Option Plan, select the
officers and other employees to whom options will be granted, the type of option
granted (incentive stock options ("ISOs") or non-qualified stock options), the
number of shares of ONBANCorp Common Stock to be covered by the option, the
exercise price and the option period. Approximately 17 persons participate in
the Stock Option Plan.
The per share exercise price for options may not be less than 100% of the
fair market value of a share on ONBANCorp Common Stock on the date the option is
granted. As of March 17, 1997, the market value of a share of ONBANCorp Common
Stock was $46.25. No person is eligible to be granted an option under the Stock
Option Plan if, immediately prior to such grant, such person beneficially owns
10% or more of the total combined voting power of all classes of ONBANCorp
Common Stock. Shares purchased under the Stock Option Plan must be paid for in
cash, certified check, money order or bank draft or by delivery of other shares
of ONBANCorp Common Stock.
The Committee may also grant appreciation rights relating to any option.
When granted, an appreciation right entitles the holder to surrender the right
to purchase shares by exercising the option and to receive in return a payment
equal to the excess of the fair market value of the shares subject to the option
surrendered over the exercise price. Payment by the Company may be made in cash,
shares of ONBANCorp Common Stock or a combination thereof, as determined by the
Committee. The exercise of an appreciation right is subject to all of the terms
and conditions of the related option.
26
The Stock Option Plan provides that in the event of reorganization or
recapitalization or other event generally affecting the shares of ONBANCorp
Common Stock, the number of shares covered by each outstanding stock option and
the exercise price of such options, if applicable, shall be adjusted, if such
adjustments are determined to be appropriate by the Committee, to account for
such event.
Options granted pursuant to the Stock Option Plan may be designated as ISOs,
with the attendant tax consequences provided under Section 421 of the Code. The
Stock Option Plan provides that the aggregate fair market value (determined at
the time an ISO is granted) of the shares subject to ISOs becoming exercisable
for the first time by an employee during any calendar year (under all stock
option plans of the Company and its subsidiaries) may not exceed $100,000.
The Board may modify, suspend or terminate the Stock Option Plan, provided
however, that certain material modifications affecting the Stock Option Plan
must be approved by the shareholders, and any change in the Stock Option Plan
that may adversely affect an optionee's rights under an option previously
granted under the Stock Option Plan requires the consent of the optionee.
NEW STOCK OPTION PLAN BENEFITS
The grant of options and appreciation rights under the Stock Option Plan is
at the discretion of the Committee. Accordingly, neither the awards that will be
issued under the amended Plan in the future nor the awards that would have been
issued in 1996 had the amended Stock Option Plan been in effect are reasonably
determinable.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the federal income tax consequences of
awards made under the Stock Option Plan. This summary is not intended to be
exhaustive, and does not describe state or local tax consequences.
An optionee will not be taxed upon the grant of an option. At the time of
exercise of an option other than an ISO, the optionee generally will realize
ordinary income in an amount equal to the excess of the fair market value of the
acquired shares over the option price. The Company generally will be entitled to
a deduction in the same amount. The shares so acquired will have a basis to the
optionee equal to their fair market value. Upon the sale of the shares so
acquired, any gain or loss will be a capital gain or loss measured by the
difference between the optionee's basis and the amount realized on such sale,
provided the shares are a capital asset in the hands of the holder.
At the time of exercise of an ISO, the optionee will not realize ordinary
income. The optionee generally will have an item of tax preference equal to the
excess of the fair market value of the acquired shares at such time over the
option price. Upon the sale of the shares acquired pursuant to the exercise of
an ISO, any gain or loss will generally result in a capital gain or capital loss
(measured by the difference between the amount realized on such sale and the
exercise price), provided the shares sold are a capital asset in the hands of
the holder. However, if at the time of the sale or other disposition of such
shares, the optionee held the shares for less than one year after the exercise
of the option or less than two years after the grant of the option (a
"Disqualifying Disposition"), a portion (or all) of any gain will be taxed as
ordinary income at the time of the disposition. The amount taxed as ordinary
income will be equal to the excess of the fair market value of the shares on the
date of exercise (or if less, the amount realized upon disposition) over the
option price. Generally, the Company is not entitled to a tax deduction in
connection with the grant or exercise of an ISO. However, if the optionee
disposes of the stock acquired upon exercise thereof in a Disqualifying
Disposition, the Company may be entitled to a tax deduction in an amount equal
to the amount of ordinary income, if any, realized by the optionee.
27
If an optionee uses previously acquired shares to pay the exercise price of
an option, the optionee would not ordinarily recognize any taxable income to the
extent that the number of new shares received upon exercise of the option does
not exceed the number of previously acquired shares so used. If nonrecognition
treatment applies to the payment for option shares with previously acquired
shares, the tax basis of the option shares received without recognition of
taxable income is the same as the basis of the shares surrendered as payment. In
the case of an ISO, if a greater number of shares is received upon exercise than
the number of shares surrendered in payment of the option price, such excess
shares will have a zero basis in the hands of the holder. Where an option other
than an ISO is being exercised, the option holder will be required to include in
gross income (and the Company will be entitled to deduct) an amount equal to the
fair market value of the additional shares on the date the option is exercised
less any cash paid for the shares. Moreover, if the shares previously acquired
by exercise of an ISO are transferred in connection with the exercise of another
option, whether or not an ISO, such transfer will be treated as a Disqualifying
Disposition of the shares so transferred unless the holding periods described
above have been satisfied with respect to such shares at the time of such
transfer.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
APPROVAL OF THE AMENDMENT TO THE RESTATED 1987 STOCK OPTION AND APPRECIATION
RIGHTS PLAN OF ONBANCORP, INC.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT
PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of KPMG Peat Marwick LLP to
continue as independent auditors for the Company for the fiscal year ending
December 31, 1997, subject to ratification of such appointment by the
shareholders. Representatives of KPMG Peat Marwick LLP are expected to attend
the Annual 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 shareholders present at the meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS
OF THE COMPANY FOR THE 1997 FISCAL YEAR.
PROPOSAL 4: OTHER MATTERS
As of the date of this Proxy Statement, management and the Board of
Directors do not know of any other matters to be brought before the shareholders
at the Annual Meeting. If any other matters not now known are properly brought
before the Annual Meeting, the proxy holders will vote the shares represented by
all properly executed proxies on such matters in such manner as shall be
determined by a majority of the Board of Directors. Under the Company's By-laws,
shareholders of the Company are required to provide advance notice to the
Company if they wish to nominate persons for election as directors or propose
items of business at an annual meeting of the Company's shareholders. In the
case of an annual meeting of shareholders, this notice must be delivered not
less than 90 days nor more than 120 days prior to the anniversary date of the
Company's proxy statement release to shareholders in connection with the
preceding year's annual meeting of shareholders. A copy of the Corporation's
By-laws specifying the advance notice requirements will be furnished to any
shareholder upon written request to the Secretary of the Corporation.
SHAREHOLDER PROPOSALS
Any proposal which a shareholder wishes to be considered for inclusion in
the Company's proxy materials for the 1998 Annual Meeting must, in addition to
other applicable requirements established by
28
the Securities and Exchange Commission (the "Commission"), be set forth in
writing and filed with the Secretary of ONBANCorp, no later than November 18,
1997.
ANNUAL REPORT
A copy of the Annual Report to Shareholders for the fiscal year ended
December 31, 1996 accompanies this Proxy Statement. The Company is required to
file an annual report on Form 10-K for its fiscal year ended December 31, 1996
with the Commission. Shareholders may obtain, free of charge, a copy of such
annual report excluding exhibits by writing to Mr. Robert J. Berger, Senior Vice
President, Chief Financial Officer and Treasurer, ONBANCorp, 101 South Salina
Street, Syracuse, New York 13202.
IMPORTANT--MAIL YOUR SIGNED PROXY CARD
PLEASE SIGN, DATE AND MAIL YOUR PROXY CARD
29
EXHIBIT A
[LOGO]
PLAN DESCRIPTION
RESTATED 1987 STOCK OPTION AND APPRECIATION RIGHTS PLAN
OF
ONBANCORP, INC.
(AS AMENDED NOVEMBER 26, 1990)
Adopted May 4, 1987
Amended: December 28, 1987
December 19, 1988
December 18, 1989
November 26, 1990
TABLE OF CONTENTS
PAGE
---------
Preamble.................................................................................................. A-1
ARTICLE I--Purpose........................................................................................ A-1
1.1 General Purpose of the Plan............................................................ A-1
ARTICLE II--Definitions................................................................................... A-1
2.1 Appreciation Right..................................................................... A-2
2.2 Board of Directors..................................................................... A-2
2.3 Code................................................................................... A-2
2.4 Committee.............................................................................. A-2
2.5 Conversion Price....................................................................... A-2
2.6 Corporation............................................................................ A-2
2.7 Disability............................................................................. A-2
2.8 Eligible Board Member.................................................................. A-2
2.9 Eligible Employee...................................................................... A-2
2.10 Exercise Price......................................................................... A-2
2.11 Fair Market Value...................................................................... A-2
2.12 Incentive Stock Options................................................................ A-3
2.13 Non-Qualified Stock Option............................................................. A-3
2.14 ONBANCorp.............................................................................. A-3
2.15 Onondaga............................................................................... A-3
2.16 Option................................................................................. A-3
2.17 Option Period.......................................................................... A-3
2.18 Plan................................................................................... A-3
2.19 Share.................................................................................. A-3
ARTICLE III--Administration............................................................................... A-3
3.1 Committee.............................................................................. A-3
3.2 Committee Action....................................................................... A-3
3.3 Committee Responsibilities............................................................. A-4
ARTICLE IV--Stock Options................................................................................. A-4
4.1 In General............................................................................. A-4
4.2 Available Shares....................................................................... A-5
4.3 Size of Option......................................................................... A-5
4.4 Exercise Price......................................................................... A-5
4.5 Option Period.......................................................................... A-5
4.6 Method of Exercise..................................................................... A-6
4.7 Limitations on Options................................................................. A-6
4.8 Additional Restrictions on Incentive Stock Options..................................... A-7
ARTICLE V--Appreciation Rights............................................................................ A-7
5.1 In General............................................................................. A-7
5.2 Exercise of Appreciation Rights........................................................ A-8
5.3 Limitations on Exercise................................................................ A-8
5.4 Automatic Cancellation of Option(s) or Appreciation Right(s)........................... A-8
A-i
PAGE
---------
ARTICLE VI--Amendments and Termination.................................................................... A-9
6.1 Termination............................................................................ A-9
6.2 Amendment.............................................................................. A-9
6.3 Adjustments in the Event of Reorganization or Recapitalization......................... A-9
6.4 Consent of Grantee..................................................................... A-10
ARTICLE VII--Miscellaneous Provisions..................................................................... A-10
7.1 Status as an Employee Benefit Plan..................................................... A-10
7.2 No Right to Continued Employment....................................................... A-10
7.3 Construction of Language............................................................... A-10
7.4 Governing Law.......................................................................... A-10
7.5 Headings............................................................................... A-10
7.6 Non-Alienation of Benefits............................................................. A-10
7.7 Taxes.................................................................................. A-11
7.8 Notices................................................................................ A-11
7.9 Effective Date......................................................................... A-11
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PLAN DESCRIPTION
RESTATED 1987 STOCK OPTION AND APPRECIATION RIGHTS PLAN OF ONBANCORP, INC.
PREAMBLE
Pursuant to an Agreement and Plan of Reorganization dated as of January 31,
1989, Onondaga Savings Bank and ONBANCorp, Inc. ("ONBANCorp") agreed to a
reorganization whereby ONBANCorp, Inc. would become the holder of all the
outstanding stock of Onondaga Savings Bank and the holders of Onondaga Savings
Bank common stock immediately prior to the reorganization would become the
owners of all the issued and outstanding common stock of ONBANCorp, Inc.
Section 4.2 of the Agreement and Plan of Reorganization provided that, at
the time of reorganization, the 1987 Stock Option and Appreciation Rights Plan
of Onondaga Savings Bank (1987 ONBANK Stock Option Plan) would be continued and
become a Stock Option Plan of ONBANCorp, Inc. (1987 ONBANCorp Stock Option
Plan).
The 1987 ONBANK Stock Option Plan was approved by the shareholders of the
Bank on April 19, 1988. Pursuant to regulations applicable to the Bank, the
Superintendent of Banks of the New York State Banking Department also approved
the 1987 ONBANK Stock Option and all subsequent amendments. The shareholders of
the Bank and the Superintendent of Banks of the New York State Banking
Department approved the Agreement and Plan of Reorganization on April 18, 1989
and July 13, 1989, respectively. This contained the above referenced section 4.2
providing for the transfer of the stock option plan to the Corporation.
Effective upon the reorganization, dated September 18, 1989, the stock option
plan was amended as approved by action of the Board of the Corporation which
directed the appropriate officers to amend the stock option plan to reflect the
reorganization. Accordingly, the 1987 ONBANCorp Stock Option Plan (formerly 1987
ONBANK Stock Option Plan) is hereby restated and shall hereafter be construed to
reflect the fact that it is the Restated 1987 Stock Option and Appreciation
Rights Plan of ONBANCorp, Inc.
ARTICLE I--PURPOSE
1.1 GENERAL PURPOSE OF THE PLAN
The purpose of the plan is to promote the growth and profitability of the
Corporation and to provide certain key executives of the Corporation with an
incentive to achieve corporate objectives, to attract and retain key executives
of outstanding competence and to provide such executives with an equity interest
in the Corporation.
ARTICLE II--DEFINITIONS
The following definitions shall apply for purposes of the Plan, unless a
different meaning is plainly indicated by the context:
2.1 Appreciation Right ("SAR") means a right granted pursuant to section 5.1.
2.2 Board of Directors means the Board of Directors of ONBANCorp.
2.3 Code means the Internal Revenue Code of 1986 (including the corresponding
provisions of any succeeding law).
2.4 Committee means the Committee described in section 3.1.
2.5 Conversion Price means, with respect to a Share, the price per Share at
which Shares were offered for sale to the depositors of Onodaga in the
subscription offering of such Shares that was made in connection with the
conversion of Onodaga from a New York mutual savings bank to a New York
stock-form savings bank.
2.6 Corporation means ONBANCorp, its wholly owned subsidiary Onondaga, and any
other subsidiary of ONBANCorp, which, with the prior approval of the Board of
Directors and subject to such terms and conditions as the Board of Directors may
impose, shall adopt this Plan.
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2.7 Disability means a condition of total incapacity, mental or physical, to
engage in any substantial gainful activity which the Committee shall have
determined, on the basis of competent medical evidence, is likely to be
permanent, is likely to result in death or has lasted, or can be expected to
last, for a continuous period of at least twelve months.
2.8 Eligible Board Member means a member of the Board of Directors who is not
currently and has not at any time during the immediately preceding one-year
period been an Eligible Employee and is a "Disinterested Person" as such term is
defined in Rule 16b-3 of the Securities Exchange Act of 1934.
2.9 Eligible Employee means an officer or an employee of the Corporation,
including a member of the Board of Directors of the Corporation who is an
officer or an employee of the Corporation, whom the Committee determines to be
in a key executive position in the Corporation.
2.10 Exercise Price means the price per Share at which Shares subject to an
Option may be purchased upon exercise of the Option, determined in accordance
with section 4.4.
2.11 Fair Market Value means, with respect to a Share on a specified date:
(a) the average of the high and low quoted sales prices on the date in
question (or, if there is no reported sale on such date, on the last
preceding date on which any reported sale occurred) on the principal United
States securities exchange on which the Shares are listed or admitted to
trading; or
(b) if the Shares are not listed or admitted to trading on any such
exchange, the closing bid quotation with respect to a Share on such date on
the National Association of Securities Dealers, Inc., Automated Quotation
System, or, if no such quotation is provided, on another similar system,
selected by the Committee, then in use; or
(c) if sections 2.11(a) or (b) are not applicable, the Fair Market Value
of a Share as the Committee may determine, taking into account, among other
things, the difference between the market value and the book value of the
shares of common stock of financial institutions comparable to the
Corporation and the trend of the Corporation's earnings and its book capital
account.
2.12 Incentive Stock Options means a right to purchase Shares that is granted
pursuant to section 4.1 that is designated by the Committee to be an Incentive
Stock Option and is intended to satisfy the requirements of section 422A of the
Code.
2.13 Non-Qualified Stock Option means a right to purchase Shares that is granted
pursuant to section 4.1 that is designated by the Committee to a Non-Qualified
Stock Option and is not intended to satisfy the requirements of section 422A of
the Code.
2.14 ONBANCorp means ONBANCorp, Inc. and any successor thereto.
2.15 Onondaga means Onondaga Savings Bank ("OnBank") and any successor thereto.
2.16 Option means either an Incentive Stock Option or a Non-Qualified Stock
Option.
2.17 Option Period means the period during which an Option or an Appreciation
Right may be exercised, determined in accordance with section 4.5.
2.18 Plan means the Restated 1987 Stock Option and Appreciation Rights Plan of
ONBANCorp. Inc.
2.19 Share shall mean a share of common stock of ONBANCorp.
ARTICLE III--ADMINISTRATION
3.1 COMMITTEE. The Plan shall be administered by a Committee consisting of the
members of the Compensation and Stock Option Committee ("Compensation Committee"
or "Committee") of the Board of Directors who are Eligible Board Members (e.g.
"Disinterested Persons" as such term is defined in Rule 16b-3 of the Securities
Exchange Act of 1934). If fewer than five members of the Compensation Committee
are Eligible Board Members, then the Board of Directors shall appoint to the
Committee such additional Eligible Board Members as shall be necessary to
provide for a Committee consisting of at least five Eligible Board Members.
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3.2 COMMITTEE ACTION. The Committee shall hold meetings, at least annually, and
make such administrative rules and regulations as it may deem proper. The
greater of (a) five members of the Committee or (b) a majority of the members of
the Committee shall constitute a quorum, and the action of two-thirds of the
members of the Committee present at a meeting at which a quorum is present, as
well as actions taken pursuant to the unanimous written consent of all of the
members of the Committee without holding a meeting shall be deemed to be actions
of the Committee. All actions of the Committee shall be final and conclusive and
shall be binding upon the Corporation and all other interested parties. Any
person dealing with the Committee shall be fully protected in relying upon any
written notice, instructions, direction or other communication signed by the
secretary of the Committee and one member of the Committee, by two members of
the Committee or by a representative of the Committee authorized to sign the
same in its behalf.
3.3 COMMITTEE RESPONSIBILITIES. Subject to the terms and conditions of the
Plan, the Committee shall be responsible for the overall management and
administration of the Plan and shall have such authority as shall be necessary
or appropriate in order to carry out its responsibilities, including, without
limitation, the authority:
(a) to interpret and construe the Plan, and to determine all questions
that may arise under the Plan as to eligibility for participation in the
Plan, the amount of Options and Appreciation Rights, if any, to be granted,
and the terms and conditions thereof.
(b) to adopt rules and regulations and to prescribe forms for the
operation and administration of the Plan; and
(c) to take any other action not inconsistent with the provisions of the
Plan that it may deem necessary or appropriate.
ARTICLE IV--STOCK OPTIONS
4.1 IN GENERAL. Subject to the limitations of the Plan, the Committee may, in
its discretion, grant to an Eligible Employee an Option to purchase Shares. Any
such Option shall be evidenced by a written agreement (the "Option Agreement")
which shall:
(a) designate the Option as either an Incentive Stock Option or a
Non-Qualified Stock Option;
(b) specify the number of Shares covered by the Option;
(c) specify the Exercise Price, determined in accordance with section
4.4, for the Shares subject to the Option;
(d) specify the Option Period, determined in accordance with section
4.5, for the Option;
(e) set forth specifically or incorporate by reference the applicable
provisions of the Plan; and
(f) contain such other terms and conditions not inconsistent with the
Plan as the Committee may, in its discretion, prescribe.
The Committee may grant pursuant to this Plan Options which would satisfy
awards earned by Eligible Employees under the 1991 Long Term Incentive Plan of
ONBANCorp, Inc. The Option Agreement shall specify whether the Options granted
are to satisfy such awards.
4.2 AVAILABLE SHARES. Subject to section 6.3, the maximum aggregate number of
Shares with respect to which Options may be granted at any time shall be equal
to the excess of:
(a) 700,000 shares; over
(b) the sum of:
(i) the number of Shares with respect to which previously granted
Options may then or may in the future be exercised; plus
(ii) the number of Shares with respect to which previously granted
Options have been exercised.
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For purposes of this section 4.2, an Option shall not be considered as
having been exercised to the extent that such Option terminates by reason other
than the purchase of the related Shares.
4.3 SIZE OF OPTION. Subject to sections 4.2, 4.7 and 4.8, and such limitations
as the Board of Directors may from time to time impose, the number of Shares as
to which an Eligible Employee may be granted Options shall be determined by the
Committee in its discretion.
4.4 EXERCISE PRICE. The price per Share at which an Option may be exercised
shall be determined by the Committee, in its discretion; provided, however, that
the Exercise Price established for any Option shall not be less than:
(a) the Fair Market Value of a Share on the date on which the Option is
granted; or
(b) if less and such Option is granted no later than the date of the
first meeting of the Board of Directors held following the conversion of
Onondaga from a New York mutual savings bank to a New York stock-form
savings bank, the Convention Price.
4.5 OPTION PERIOD. The Option Period during which an Option may be exercised
shall commence one year after the date on which the Option is granted and shall
expire on the earliest of:
(a) the date specified by the Committee in the Option Agreement;
(b) in the case of an Incentive Stock Option, the last day of the
three-month period commencing on the date of the Option holder's termination
of employment with the Bank other than on account of death or Disability;
(c) in the case of an Incentive Stock Option, the last day of the
one-year period commencing on the date of the Option holder's death or
Disability; and
(d) the last day of the ten-year period commencing on the date on which
the Option was granted.
4.6 METHOD OF EXERCISE
(a) Subject to the limitations of the plan and the Option Agreement, an
Option holder may, at any time during the Option Period, exercise his right
to purchase all or any part of the Shares to which the Option relates;
provided, however, that the minimum number of Shares which may be purchased
shall be twenty (20), or, if less, the total number of Shares relating to
the Option which are then available for purchase. An Option holder shall
exercise an Option to purchase Shares by:
(i) giving written notice to the Committee or its designate, in such
form and manner as the Committee may prescribe, of his intent to exercise
the Option;
(ii) delivering to the Committee or its designate full payment for
the Shares as to which the Option is to be exercised; and
(iii) satisfying such other conditions as may be prescribed in the
Option agreement.
Payment shall be made (1) in United States dollars in cash or by
certified check, money order or bank draft drawn payable to the order of
ONBANCorp, or (2) by delivering a certificate or certificates evidencing
the Option holder's ownership in Shares having a Fair Market Value
equaling the Exercise Price of the Shares to be acquired.
(b) When the requirements of section 4.6(a) have been satisfied, the
Committee or its designate shall take such action as is necessary to cause
ONBANCorp to issue a stock certificate evidencing the Option holder's
ownership of such Shares. The person exercising the Option shall have no
right to vote or to receive dividends, nor have any other rights with
respect to the Shares, prior to the date as of which such Shares are
transferred to such person on the stock transfer records of ONBANCorp, and
no adjustments shall be made for any dividends or other rights for which the
record date is prior to the date as of which such transfer is effected,
excepted, except as may be required under section 6.3.
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4.7 LIMITATIONS ON OPTIONS
(a) Shares acquired in connection with the exercise of an Option shall
not be assignable or transferable, other than by will or by the laws of
descent and distribution, during the six-month period commencing on the date
of acquisition.
(b) An Option by its terms shall not be assignable or transferable by
the Option holder other than by will or by the laws of descent and
distribution, and shall be exercisable, during the lifetime of the Option
holder, only by the Option holder.
(c) No person shall be granted an Option to the extent that the number
of Shares subject to such Option, when added to the total number of Shares
subject to other Options then outstanding to him and the number of Shares
owned by him, represent more than 10% of the total combined voting power of
all classes of stock of ONBANCorp.
(d) The Corporation's obligation to deliver Shares with respect to an
Option shall, if the Committee so requests, be conditioned upon the receipt
of a representation as to the investment intention of the Option holder to
whom such Shares are to be delivered, in such form as the Committee shall
determine to be necessary or advisable to comply with the provisions of
applicable federal, state or local law. It may be provided that any such
representation shall become inoperative upon a registration of the Shares or
upon the occurrence of any other event eliminating the necessity of such
representation. The Corporation shall not be required to deliver any Shares
under the Plan prior to (i) the admission of such Shares to listing on any
stock exchange on which Shares may then be listed, or (ii) the completion of
such registration or other qualification under any state or federal law,
rule or regulation as the Committee shall determine to be necessary or
advisable.
4.8 ADDITIONAL RESTRICTIONS ON INCENTIVE STOCK OPTIONS. In addition to the
limitations of section 4.7, an Option designated by the Committee to be an
Incentive Stock Option shall be subject to the following limitations:
(a) no Incentive Stock Option shall provide any person with a right to
purchase Shares that first becomes exercisable during a prescribed calendar
year if the sum of:
(i) the Fair Market Value (determined as of the date of grant) of the
Shares subject to such Incentive Stock Option which first become
available for purchase during such calendar year, plus
(ii) the Fair Market Value (determined as of the date of grant) of
all Shares subject to other Incentive Stock Options previously granted to
such person (pursuant to this Plan or any other plan of the Corporation)
which first become available for purchase during such calendar year;
exceeds $100,000.
ARTICLE V--APPRECIATION RIGHTS
5.1 IN GENERAL. If the Committee grants to an Eligible Employee an Incentive
Stock Option or a Non-Qualified Stock Option, it may, in its discretion,
simultaneously or thereafter grant to such Eligible Employee an Appreciation
Right ("SAR") relating to all or any portion of the Shares relating to such
Option. Any such stock Appreciation Right shall be evidenced by a written
agreement which shall:
(a) identify the Option to which the Appreciation Right relates;
(b) specify the number of Shares covered by the Appreciation Right;
(c) specify the Exercise Price at which the Appreciation Right may be
exercised; and
(d) contain such other terms and conditions not inconsistent with the
Plan as the Committee may, in its discretion, prescribe.
Except as provided otherwise in this Article V, Appreciation Rights shall be
exercisable in accordance with and subject to the terms and conditions imposed
under the Plan and the relevant Option Agreement.
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5.2 EXERCISE OF APPRECIATION RIGHTS. A holder of an Appreciation Right who
desires to exercise such Appreciation Right shall do so by delivering to the
Committee or its designate advance written notice, in the form and manner which
may be prescribed by the Committee, of his intent to exercise the Appreciation
Right and of the proposed date of exercise. On the date of exercise or as soon
thereafter as is practicable, the Corporation shall pay to the person exercising
the Appreciation Right an amount equivalent to the excess of (a) the Fair Market
Value of the Shares on the date of exercise, over (b) the Exercise Price of such
Shares. Payment may, in the Committee's discretion, be made in cash (including
check, bank draft or money order), in Shares equivalent in value to the excess
of such Fair Market Value over such Exercise Price, or in a combination of cash
and Shares which, together, are equivalent in value to the excess of such Fair
Market Value over such Exercise Price.
5.3 LIMITATIONS ON EXERCISE. In the discretion of the Committee, an
Appreciation Right may not be exercisable, and the written agreement governing
such Appreciation Right may provide that such Appreciation Right shall not be
exercised, except in the event of a "change in control" of ONBANCorp. For
purposes of this section 5.3, the term "change in control" of ONBANCorp shall
means:
(a) the reorganization, merger or consolidation of ONBANCorp with one or
more banks, savings banks, savings and loan associations or other financial
institutions, other than a transaction as a result of which at least 51% of
the ownership interests of the institutions resulting from such transaction
are owned by individuals, who, prior to such transaction, owned as least 51%
of the outstanding voting shares of ONBANCorp;
(b) the acquisition of substantially all of the assets of ONBANCorp or
of more than 35% of the voting shares of ONBANCorp by any person or entity,
or by any persons or entities acting in concert; or
(c) if at any time during a period of twenty-four (24) consecutive
months, individuals who at the beginning of such period constitute the Board
of Directors cease for any reason to constitute at least the majority
thereof unless the election, or the nomination for election by ONBANCorp's
stockholders, of each new director was approved by a vote of at least
two-thirds (2/3) of the directors still in office who were directors at the
beginning of such twenty-four (24) month period except if the approval of
the election or nomination for election of such new director was in
connection with an actual or threatened election contest.
5.4 AUTOMATIC CANCELLATION OF OPTION(S) OR APPRECIATION RIGHT(S).
(a) Upon the exercise of an Appreciation Right granted in connection
with an Option, the Option shall be cancelled to the extent of the number of
shares as to which the Appreciation Right is exercised, and conversely.
(b) upon the exercise of an Option granted in connection with an
Appreciation Right, the Appreciation Right shall be cancelled to the extent
of the number of shares as to which the Option is exercised.
ARTICLE VI--AMENDMENTS AND TERMINATION
6.1 TERMINATION. Subject to section 6.4, the Board of Directors may suspend or
terminate the Plan in whole or in part at any time prior to April 30, 1997 by
giving written notice of such suspension or termination to the Committee. Unless
sooner terminated, the Plan shall terminate automatically on April 30, 1997.
6.2 AMENDMENT. Subject to section 6.4, the Board of Directors may amend or
revise the Plan in whole or in part at any time; provided, however, that,
subject to section 6.3, the following amendments or revisions shall be subject
to approval by the holders of at least a majority of the outstanding voting
stock of ONBANCorp:
(a) an increase in the number of Shares as to which Options may be
granted;
(b) a decrease in the Exercisable Price for an Option previously
granted;
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(c) an extension of the term of the Plan or an extension of the Option
Period beyond the last day of the ten-year period commencing on the date on
which the Option was granted for an Option previously granted;
(d) a change in the class of employees eligible to be granted Options;
(e) any other amendment which would materially increase the benefits
accruing to participants in the Plan within the meaning of section 16b-3 of
the Securities Exchange Act of 1934; and
(f) any change which requires an amendment of ONBANCorp's certificate of
organization.
6.3 ADJUSTMENTS IN THE EVENT OF REORGANIZATION OR RECAPITALIZATION.
(a) In the event of any merger, consolidation, or other business
reorganization in which ONBANCorp is the surviving entity, and in the event
of any stock split, stock dividend or other event generally affecting the
Shares held by each person who is then a holder of record of Shares, the
Committee shall determine the appropriate adjustments, if any, to the
maximum number of Shares with respect to which Options or Appreciation
Rights may be granted under the Plan, the number of Shares as to which
Options or Appreciation Rights have been granted under the Plan, and the
Exercise Price therefor, if applicable, to preserve but not to increase the
benefits under the plan.
(b) In the event of any merger, consolidation, or other business
reorganization in which ONBANCorp is not the surviving entity:
(i) Any Option or Appreciation Rights granted under the Plan which
remain outstanding may be cancelled by the Board upon written notice to
each Option holder given at least 30 days in advance of the effective
date of such merger, consolidation, business reorganization, liquidation
or sale; and
(ii) Any Option or Appreciation Rights which are not cancelled
pursuant to section 6.3(b)(i) shall be adjusted in such manner as the
Committee shall deem appropriate to account for such merger,
consolidation or other business reorganization.
6.4 CONSENT OF GRANTEE. No amendment, suspension or termination of the plan
shall be made that would materially adversely affect any grant previously made
under the Plan without the consent of the grantee.
ARTICLE VII--MISCELLANEOUS PROVISIONS
7.1 STATUS AS AN EMPLOYEE BENEFIT PLAN. This Plan is not intended to satisfy
the requirements for qualification under section 401(a) of the Code or to
satisfy the definitional requirements for an "employee benefit plan" under
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.
It is intended to be a non-qualified incentive compensation program that is
exempt from the regulatory requirements of the Employee Retirement Income
Security Act of 1974, as amended. The Plan shall be construed and administered
so as to effectuate this intent.
7.2 NO RIGHT TO CONTINUED EMPLOYMENT. Neither the establishment of the Plan nor
any provisions of the Plan nor any action of the Board of Directors or the
Committee with respect to the Plan shall be held or construed to confer upon any
Eligible Employee any right to a continuation of employment by the Corporation.
The Corporation reserves the right to dismiss any Eligible Employee or otherwise
deal with any Eligible Employee to the same extent as though the Plan had not
been adopted.
7.3 CONSTRUCTION OF LANGUAGE. Whenever appropriate in the Plan, words used in
the singular may be read in the plural, words used in the plural may be read in
the singular, and words importing the masculine gender may read as referring
equally to the feminine or the neuter. Any reference to an article or section
number shall refer to an article or section of this Plan, unless otherwise
indicated.
7.4 GOVERNING LAW. The Plan shall be construed and enforced in accordance with
the laws of the State of Delaware, except to the extent that such laws are
preempted by the federal laws of the United States of America.
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7.5 HEADINGS. The headings of articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.
7.6 NON-ALIENATION OF BENEFITS. The right to receive a benefit under the Plan
shall not be subject in any manner to anticipation, alienation or assignment,
nor shall such right be liable for or subject to debts, contracts, liabilities,
engagements or torts.
7.7 TAXES. The Corporation shall have the right to deduct from all amounts paid
by the Corporation in cash with respect to an Option or an Appreciation Right
under the Plan any taxes required by law to be withheld with respect to such
Option or Appreciation Right. Where any persons is entitle to receive Shares
pursuant to the exercise of an Option, the Corporation shall have the right to
require such person to pay the Corporation the amount of any tax which the
Corporation is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a sufficient number of Shares to
cover the amount required to be withheld.
7.8 NOTICES. Any notice required or permitted to be given to a party under the
Plan shall be deemed given if personally delivered or if mailed, postage
pre-paid, by certified mail, return receipt requested, to the party at the
address listed below, or at such other address as one such party may be written
notice specify to the other:
(a) if to the Committee:
ONBANCorp, Inc.
101 South Salina Street
Syracuse, New York 13202
Attention: Treasurer of the Corporation
(b) If to an Option holder, to the Option holder's address as shown in the
Corporation's personnel records.
7.9 EFFECTIVE DATE. The effective date of this Plan shall be August 6, 1987.
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[LOGO] REVOCABLE PROXY
ANNUAL MEETING OF SHAREHOLDERS-APRIL 22, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William M. Le Beau and Brian S. Higgins, and
each of them, as proxies of the undersigned, with full power of substitution, to
vote all shares of stock of the undersigned in ONBANCorp, Inc. with like effect
as if the undersigned were personally present and voting at the Annual Meeting
of Shareholders of ONBANCorp, Inc. to be held on April 22, 1997, and at any
adjournments or postponements thereof.
The shares represented by this proxy will be voted as directed by the
shareholder. Unless otherwise directed, such shares will be voted "FOR"
proposals 1, 2 and 3.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
1. ELECTION OF DIRECTORS (Terms
of Office Expire in 2000)
/ / For all nominees listed below (except as indicated to the contrary)
/ / WITHHOLD AUTHORITY to vote for all nominees
Nominees: Robert J. Bennett, William J. Donlon, Henry G. Lavarnway, Jr.,
T. David Stapleton, Jr., and William J. Umphred, Sr.
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
his or her name on the line below.
Name(s): ____________________________________________________________________
2. PROPOSAL TO AMEND ONBANCorp, INC.'S RESTATED 1987 STOCK OPTION AND
APPRECIATION RIGHTS PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPOINT KPMG PEAT MARWICK LLP as independent auditors for the
fiscal year ending December 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any adjournments
or postponements thereof.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Date: ___________________________________
Signature: ______________________________
Signature: ______________________________
(Please date and sign exactly as name
appears on this card and return in the
enclosed envelope. If acting as executor,
administrator, trustee, guardian, or
otherwise, please so indicate when
signing. If the signer is a corporation, a
duly authorized officer should sign the
full corporate name. If shares are held
jointly, each shareholder named should
sign.)