SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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Hudson Valley Holding Corp.
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(Name of Registrant as Specified In Its Charter)
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HUDSON VALLEY HOLDING CORP.
21 SCARSDALE ROAD
YONKERS, NY 10707
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 12, 2003
We will hold the annual meeting of shareholders of Hudson Valley
Holding Corp., a New York corporation, at 21 Scarsdale Road, Yonkers, New York
on May 12, 2003 at 10:00 a.m., local time, for the following purposes:
1. To elect directors of the corporation to serve until the next
annual meeting of shareholders.
2. To act on such other matters as may be properly brought before
the meeting or any adjournments, postponements or continuations of the meeting.
The Board of Directors recommends that you vote FOR the election of all
of the nominees for director.
The Board of Directors has fixed the close of business on March 26,
2003, as the record date for the meeting. Only shareholders of record at the
close of business at this time are entitled to notice of, and to vote at, the
meeting or any adjournments, postponements or continuations of the meeting.
All shareholders are invited to attend the meeting. To ensure your
representation at the meeting, however, you are urged to mark, sign and return
the enclosed proxy in the accompanying envelope, whether or not you expect to
attend the meeting. In the event that you attend the meeting, you may vote in
person even if you have returned a proxy.
Your vote is important.
To vote your shares, please sign, date and complete the enclosed proxy
and mail it promptly in the enclosed return envelope.
April 11, 2003
By Order of the Board of Directors
James M. Coogan
Secretary to the Board of Directors
HUDSON VALLEY HOLDING CORP.
21 SCARSDALE ROAD
YONKERS, NEW YORK 10707
PROXY STATEMENT
This proxy statement is furnished to you in connection with the
solicitation of proxies by the Board of Directors to be used at the 2003 annual
meeting of shareholders of Hudson Valley Holding Corp. (the "Company"). Copies
of this proxy statement are being mailed on or about April 11, 2003 to persons
who were shareholders of record on March 26, 2003.
The Company is a New York corporation founded in 1982. The Company is a
registered bank holding company under the Bank Holding Company Act of 1956. The
Company provides financial services through its wholly-owned subsidiary, Hudson
Valley Bank (the "Bank"), a New York chartered commercial bank established in
1972. The Bank is an independent bank headquartered in Westchester County, New
York.
DATE, TIME AND PLACE OF MEETING
We will hold the 2003 annual meeting of shareholders on May 12, 2003,
at 10:00 a.m., local time, at 21 Scarsdale Road, Yonkers, New York, for the
purposes set forth in the accompanying Notice of Annual Meeting of Shareholders.
MATTERS TO BE CONSIDERED AT THE MEETING
At the meeting, we will ask our shareholders to consider and vote upon
the election of directors to serve until our next annual meeting.
The shareholders will also consider and vote upon such other matters as
may properly be brought before the meeting or any adjournment, postponement or
continuation thereof.
VOTE REQUIRED
A plurality of the votes cast by the shareholders present in person or
by proxy and entitled to vote is required to elect directors. With regard to the
election of directors, you may vote in favor of, or withhold your vote from,
each nominee. Votes that are withheld will be excluded entirely from the vote
and will have no effect. There is no cumulative voting with respect to the
election of directors.
Pursuant to applicable law, broker non-votes and abstentions will not
be counted in favor of any proposal presented at the meeting or the election of
any nominee for director. Abstentions and broker non-votes will also not count
against the proposal to elect directors.
VOTING OF PROXIES
Shares of our common stock represented by properly executed proxies
received in time for the meeting, unless previously revoked, will be voted at
the meeting as specified by the shareholders on the proxies. If a proxy is
returned without any voting instructions, the shares represented thereby will be
voted in favor of the election of directors, as recommended by the Board of
Directors.
REVOCABILITY OF PROXIES
If you give a proxy, you have the power to revoke it at any time before
it is voted. You can do so in one of three ways. First, you can send a written
notice to our Vice President, Shareholder Relations at the address given below
stating that you would like to revoke your proxy. Second, you can complete a new
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proxy card and send it to our Vice President, Shareholder Relations at the
address given below. Third, you can attend the meeting and vote in person. You
should send any written notice or new proxy card to:
Carmela Gibson
Vice President, Shareholder Relations
Hudson Valley Holding Corp.
21 Scarsdale Road
Yonkers, NY 10707
You may request a new proxy card by calling Carmela Gibson at (914)
961-6100.
RECORD DATE; SHAREHOLDERS ENTITLED TO VOTE; QUORUM
Only shareholders of record at the close of business on March 26, 2003,
will be entitled to receive notice of and vote at the meeting. As of the record
date 5,885,400 shares of common stock were issued and outstanding. Each share of
common stock is entitled to one vote on each matter which holders of common
stock are entitled to vote. A majority of the outstanding shares of common stock
entitled to vote must be represented in person or by proxy at the meeting in
order for a quorum to be present.
SOLICITATION OF PROXIES
The Board of Directors may solicit proxies, the form of which is
enclosed, for the meeting. The cost of any solicitation will be borne by the
Company. Our officers, directors or regular employees may communicate with
shareholders personally or by mail, telephone, telegram or otherwise for the
purpose of soliciting proxies. We and our authorized agents will request brokers
or other custodians, nominees and fiduciaries to forward proxy soliciting
material to the beneficial owners of shares held of record by these persons and
will reimburse their reasonable out-of-pocket expenses in forwarding the
material.
PROPOSALS OF SHAREHOLDERS
Shareholders of the Company who intend to present a proposal for action
at the 2004 Annual Meeting of Shareholders of the Company, must notify the
Company's management of such intention by notice, received at the Company's
principal executive offices not later than December 13, 2003 for such proposal
to be included in the Company's proxy statement relating to such meeting. The
proxies may use their discretionary power to vote against any shareholder
proposal presented at the 2003 annual meeting if the Company did not have notice
of the proposal by February 26, 2003.
FINANCIAL STATEMENTS
Copies of the Company's Annual Report on Form 10-K for the year ended
December 31, 2002 are being delivered to shareholders together with this proxy
statement. Representatives of Deloitte & Touche LLP, the Company's independent
auditors for the year ended December 31, 2002, are expected to attend the annual
meeting of shareholders, will have the opportunity to make a statement if they
so desire and will be available to respond to appropriate questions. The Audit
Committee of the Board of Directors has not yet determined whether to reappoint
Deloitte & Touche LLP to serve as the Company's auditors for the current year.
OTHER MATTERS
The Board of Directors knows of no matters that are expected to be
presented for consideration at the meeting that are not described herein.
However, if other matters properly come before the meeting, it is intended that
the persons named in the accompanying proxy will vote thereon in accordance with
their best judgment.
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ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed form of proxy
to nominate and to vote the shares represented by such proxy for the election of
all of the nominees listed below, unless such proxy specifies otherwise. The
Company has no reason to believe that any of the nominees will become
unavailable to serve as directors for any reason before this year's annual
meeting. However, in the event that any of them shall become unavailable, the
persons designated as proxies reserve the right to substitute another person of
their choice when voting at the annual meeting. Certain information regarding
each nominee is set forth in the table and text below. The number of shares, if
any, beneficially owned by each nominee is listed below under "Security
Ownership of Certain Beneficial Owners and Management," beginning on page 14.
NOMINEES FOR THE BOARD OF DIRECTORS
All directors of the Company serve for a term of one year, until the
next annual meeting of shareholders or until their respective successors have
been duly elected and qualified. All of the nominees are currently serving as
directors. The name and age of each nominee for election as director and his or
her present position with the Company are:
NAME AGE POSITION
---- --- --------
James J. Landy................ 48 President, Chief Executive Officer and Director
Stephen R. Brown.............. 47 Senior Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Director
William E. Griffin............ 70 Director and Chairman of the Board
James M. Coogan............... 60 Director and Secretary
Gregory F. Holcombe........... 41 Director
Angelo R. Martinelli.......... 75 Director
Ronald F. Poe................. 64 Director
John A. Pratt Jr.............. 72 Director
Cecile D. Singer.............. 73 Director
Craig S. Thompson............. 49 Director
JAMES J. LANDY has served as President and Chief Executive Officer
since January 2001. He served as Executive Vice President of the Bank from
December 1998 until December 2000 and as Manager of Strategic Relationships and
Sales from September 1999 until December 2000. He served as Manager of Special
Relationships from 1997 until 1999, as Senior Vice President and Manager of
Municipal and Community Relationships from 1996 to 1997, and as Regional Vice
President for Southern Westchester from 1988 to 1996. He has been a member of
the Board of Directors since 2000. He has been employed by the Bank since 1977.
STEPHEN R. BROWN has served as Senior Executive Vice President since
January 2001. He has served as the Chief Operating Officer and Chief Financial
Officer of the Company since 1997 and he served as Executive Vice President from
1997 until December 2000. Mr. Brown served as Senior Vice President and Chief
Financial Officer of the Company from 1996 to 1997 and as Vice President and
Controller from 1993 until 1996. He has been a member of the Board of Directors
since 2000.
WILLIAM E. GRIFFIN is an attorney and is a shareholder and President of
Griffin, Coogan & Veneruso, P.C., a law firm located in Bronxville, New York. He
has been a member of the Board of Directors since 1981 and Chairman of the Board
since 1990.
JAMES M. COOGAN is an attorney and is a shareholder and Vice President
of Griffin, Coogan & Veneruso P.C., a law firm located in Bronxville, New York.
He has been a member of the Board of Directors of the Company since 1994 and
Secretary since 1997.
GREGORY F. HOLCOMBE is Vice President of Supply Chain Management of
Precision Valve Corporation, a maker of aerosol spray valves based in Yonkers,
New York. Mr. Holcombe was previously
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Vice President of Component and Machinery Sales from 1997 to 1999 and Financial
Analyst Manager from 1995 to 1997 of Precision Valve Corporation. He has been a
member of the Board of Directors of the Company since 1999.
ANGELO R. MARTINELLI has been President of Gazette Press, Inc., a
printing company located in Yonkers, New York since 1948. He has been a director
of the Company since 1990.
RONALD F. POE has been President of Ronald F. Poe & Associates, a
private real estate investment firm in White Plains, New York, since February
1999; prior thereto, he was Senior Advisor of Legg Mason Dorman & Wilson, Inc.,
a real estate investment banking firm in White Plains from which he retired as
Chairman and Chief Executive Officer in August 1998. Mr. Poe has been a director
of the Company since 1997. He also serves as a member of the Board of Directors
of Freddie Mac and Charter One Financial, Inc.
JOHN A. PRATT JR. has served as a consultant to the Bank since 1996,
advising the Bank on new business development and business retention. Mr. Pratt
was previously the President and Chief Executive Officer of the Company,
retiring in 1995. He has served as a director of the Company since 1983.
CECILE D. SINGER has been a principal in Cecile D. Singer Consulting, a
consulting firm located in Yonkers, New York, specializing in government
relations since 1995. Ms. Singer has been a member of the Board of Directors
since 1994.
CRAIG S. THOMPSON has been the President and principal shareholder of
Thompson Pension Employee Plans, Inc. a company located in New York City and
specializing in pension administration and investment and insurance sales for
over 17 years. Mr. Thompson has been a member of the Company's Board of
Directors since 1988.
EXECUTIVE OFFICERS
Certain information with respect to executive officers of the Company
and of the Bank is set forth below. All executive officers are elected by the
Board of Directors and serve until their successors are duly elected by the
Board of Directors. Messrs. Landy, Brown and Griffin serve as executive officers
of both the Company and the Bank, while the other individuals named below are
executive officers of the Bank only. Biographical information concerning
executive officers who are also members of the Board of Directors is given above
under the caption "Nominees for the Board of Directors."
NAME AGE POSITION
---- --- --------
James J. Landy ............... 48 President, Chief Executive Officer and Director
Stephen R. Brown.............. 47 Senior Executive Vice President, Chief Operating Officer, Chief
Financial Officer and Director
Joseph L. Bellini, III........ 62 Executive Vice President of the Bank
Michael P. Maloney............ 41 Executive Vice President of the Bank
Mary B. Minieri............... 44 Executive Vice President of the Bank
Vincent T. Palaia............. 56 Executive Vice President and Chief Lending Officer of the Bank
Frank J. Skuthan.............. 49 Executive Vice President of the Bank
William E. Griffin............ 70 Director and Chairman of the Board
JOSEPH L. BELLINI, III has served as Executive Vice President of the
Bank since 1997. He became responsible for Top 100 VIP Relationships in 2000.
From 1997 until 1999, Mr. Bellini was responsible for the Bank's Sales Group and
Segment Leader for General Business. From 1996 until 1997, Mr. Bellini served as
Senior Vice President of the Bank and Team Leader for Small Businesses. Prior to
joining the Bank, Mr. Bellini was Vice President of Chase Manhattan Bank,
serving the small business market in Westchester and Bronx counties in New York
until 1996.
MICHAEL P. MALONEY has served as Executive Vice President, Strategic
Relationships and Sales of the Bank since January 2001. From May 2000 to
December 2000, he served as Senior Vice President of the Bank. From January 1999
until May 2000, Mr. Maloney served as Vice President and Relationship Manager
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of the Bank. From August 1998 until January 1999, Mr. Maloney was an associate
with the law firm of Gainsburg & Hirsch in New York City. From August 1995 to
May 1998, Mr. Maloney attended law school. Mr. Maloney was previously employed
by the Bank from February 1993 to August 1998 as a Credit Analyst and
Relationship Manager.
MARY B. MINIERI has served as Executive Vice President, Branch
Administrator of the Bank since March 2002. She served as Senior Vice President,
Branch Administrator of the Bank from October 1997 to February 2002. She served
as Vice President, Branch Administrator of the Bank from November 1994 until
October 1997. She has been employed by the Bank since 1989.
VINCENT T. PALAIA has served as Executive Vice President and Chief
Lending Officer of the Bank since 1997. From 1995 until 1997, Mr. Palaia served
as Senior Vice President and Chief Lending Officer of the Bank, responsible for
real estate and general business lending.
FRANK J. SKUTHAN has served as Executive Vice President and Marketing
Director of the Bank since August 2000. Prior to joining the Bank, he was: a
Vice President and Senior Consultant at ANALYTIC, a subsidiary of True North
Communications, from April to August 2000; the marketing director of the
national tax practice at Ernst & Young LLP in New York from October 1996 to
April 2000; and Senior Vice President of Marketing and Strategic Planning at
NatWest Bank USA (now Fleet Bank) from June 1995 until June 1996.
THE BOARD OF DIRECTORS OF THE COMPANY, THE BANK AND ITS COMMITTEES
The Company's Board of Directors convened 13 times in 2002. The
Company's Board does not have any separate committees. Policy decisions for the
Bank and its subsidiaries are often made by standing committees of the Board of
Directors of the Bank. Each of the members of the Board of Directors of the
Company is also a member of the Board of Directors of the Bank. No director,
except Mr. Thompson, attended fewer than 75 percent of the meetings of the Board
and the Committees of the Boards on which he or she has served.
The Board of Directors of the Bank has several standing committees,
including the Executive Committee, the Audit Committee and the Compensation and
Organization Committee. The Executive Committee is comprised of 8 directors who
are not Company or Bank employees and 2 directors who are employees. The Audit
Committee is comprised of directors who are not Company or Bank employees. The
Compensation and Organization Committee is comprised of 5 directors who are not
Company or Bank employees and 2 directors who are employees.
The Executive Committee is charged with responsibility for and
authority regarding all financial matters of the Bank and its subsidiaries,
including an annual review and approval of all policies related to the financial
management of the Bank and the approval of the annual budget for the Bank and
the Bank's subsidiaries. The Committee convened 12 times in 2002. Ms. Singer and
Messrs. Thompson, Coogan, Griffin, Holcombe, Martinelli, Poe and Pratt served as
non employee directors of this Committee, along with Messrs. Landy and Brown,
the Company's 2 employee directors.
The Compensation and Organization Committee is charged with: conducting
performance reviews of all executive officers and certain other officers of the
Bank and its subsidiaries; reviewing and approving all officer promotions;
reviewing salary ranges by grade, staffing levels, vacancies, recruiting
programs, benefit plans, pension plans and related investment performance;
approving stock option plans and all grants of stock options; and reviewing the
life insurance policies on executive officers. The Compensation Committee also
reviews and approves personnel policies and engages consultants as required. The
Committee convened 5 times in 2002. Ms. Singer and Messrs. Griffin, Martinelli,
Poe and Thompson, served as non employee directors of this Committee, along with
Messrs. Landy and Brown, the Company's 2 employee directors.
The Audit Committee is charged with the responsibility for overseeing
the Company's internal control structure, and for the overall accuracy of the
financial statements. The Committee also has the
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responsibility for and authority regarding the annual audit of the financial
statements of the Company, the Bank, and its subsidiaries, for recommending to
the Board of Directors the selection and termination of the independent
Certified Public Accountant, for the ongoing examination of the operations of
the Company, the Bank, and its subsidiaries, and for the issuance of ethics
policies and monitoring compliance therewith. The Committee convened 4 times in
2002. During 2002, the Audit Committee members were Ms. Singer, Messrs. Pratt,
Coogan and Thompson. Although the Company's shares are not listed on the New
York Stock Exchange, the Company believes that the members of the Audit
Committee would meet the standards of independence required for companies listed
on the New York Stock Exchange.
Notwithstanding anything to the contrary set forth in any of our
filings under the Securities Act of 1933, or the Securities Exchange Act of
1934, that might incorporate this filing by reference, the Audit Committee
Report, other information furnished pursuant to Item 7(d)(3) of Schedule 14A
under the Securities Exchange Act, the Compensation Committee Report and the
Stockholder Return Performance Graph shall not be incorporated by reference into
any such filings.
AUDIT COMMITTEE REPORT
In accordance with its written charter adopted by the Board of
Directors, the Audit Committee (the "Committee"), which consists entirely of
outside directors, assists the Board of Directors in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company.
In discharging its oversight responsibility as to the audit process,
the Committee obtained from the independent auditors a formal written statement
describing all relationships between the auditors and the Company that might
bear on the auditors' independence consistent with the Independence Standards
Board Standard No. 1, "Independence Discussions with Audit Committees." The
Committee discussed with the auditors any relationships that may impact their
objectivity and independence, including fees for non-audit services, and
satisfied itself as to the auditor's independence. The Committee also discussed
with management, the internal auditors and the independent auditors the quality
and adequacy of the Company's internal controls and the internal audit
function's organization, responsibilities, budget and staffing. The Committee
reviewed with the independent auditors and the internal auditors their audit
plan and audit scope.
The Committee discussed and reviewed with the independent auditors all
communications required by generally accepted auditing standards, including
those described in Statement on Auditing Standards No. 61, as amended,
"Communications with Audit Committees" and, with and without management present,
discussed and reviewed the independent auditors' examination of the financial
statements. The Committee also discussed the results of the internal audit
examinations.
The Committee reviewed the audited financial statements of the Company
as of and for the year ended December 31, 2002, with management and the
independent auditors. Management has the responsibility for the preparation of
the Company's financial statements and the independent auditors have
responsibility for the examination of those statements.
Based on the above-mentioned review and discussions with the
independent auditors, the Committee recommended to the Board of Directors that
the Company's audited financial statements be included in its Annual Report on
Form 10-K for the year ended December 31, 2002, for filing with the Securities
and Exchange Commission. The Committee has not yet determined whether to
reappoint Deloitte & Touche LLP as the Company's independent auditors for the
year ending December 31, 2003. In making its determination, the Committee will
consider price, quality of service and the potential benefits of rotating
accounting firms.
John A. Pratt Jr, Chairman
James M. Coogan
Cecile D. Singer
Craig S. Thompson
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PRINCIPAL ACCOUNTING FIRM FEES
Set forth below is a summary of the fees paid for the year ended
December 31, 2002 to the Company's principal accounting firm, Deloitte & Touche
LLP.
Audit Fees $ 260,000
Consulting fees relating to financial information
systems design and implementation $ 0
All other fees $ 58,830(a)
(a) Represents fees for tax consulting
COMPENSATION COMMITTEE REPORT
The executive compensation program is administered by the Compensation
and Organization Committee of the Board of Directors. The Committee is comprised
of 5 outside directors and 2 employee directors. The employee directors'
compensation is approved by the outside directors, who are not employed by the
Company or the Bank.
Compensation for executive officers consists of direct salary,
incentive bonuses paid under the Bank's Incentive Compensation Plan, and stock
options awarded under the Company's Stock Option Plan. The payment or awarding
of compensation is approved by the Committee. Following approval by the
Committee, the full Board of Directors approves the salary package for all
executive officers and reviews the proposed payment of incentive compensation
and granting of stock options.
The Committee adheres to the practice that compensation for executive
officers be directly and materially linked to Bank performance, individual
performance, and to what is paid to individuals in similar positions within the
industry. Following this practice, (1) salaries are related to overall Bank
performance; (2) incentive compensation, an objective means of rewarding
individual performance, is paid pursuant to the Incentive Compensation Plan
based on achievement by the individual of objective goals and the Bank's
performance with respect to profitability and financial strength; and (3) base
salary and incentive compensation for executive officers are compared to the
amounts of such compensation paid to individuals with reasonably similar
responsibilities employed by banks that are similar in size and scope to the
Company. In addition, from time to time, the Company retains outside consultants
to determine the appropriateness of executive officer compensation.
Regarding Messrs. Landy and Brown's compensation, the Committee has
considered, in addition to the factors described above, the profitability and
growth of the Company during their tenure as Chief Executive Officer and Chief
Operating and Financial Officer, respectively.
Cecile D. Singer, Chairperson
Stephen R. Brown
William E. Griffin
James J. Landy
Angelo R. Martinelli
Ronald F. Poe
Craig S. Thompson
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2002, Ms. Singer and Messrs. Griffin, Martinelli, Poe and
Thompson, all of whom are non-employee directors, and Messrs. Landy and Brown as
employee directors, served as members of the Compensation and Organization
Committee. Messrs. Griffin, Martinelli and Thompson are shareholders
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and officers of firms that have performed services for the Company. Mr. Thompson
has sold shares of the Company's common stock owned by him to the Company, and
the Bank has made loans to Ms. Singer, Messrs. Griffin, Martinelli, Poe,
Thompson, Landy and Brown. See "Certain Relationships and Related Transactions,"
which begins on page 12. Members of the Committee do not participate in
deliberations concerning their own compensation. No executive officer of the
Company has served as a director or a member of a compensation committee of
another company of which any member of the Committee is an executive officer.
STOCKHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the Company's total stockholder return for
the years 2000 (the Company's first year as a Registrant with the Securities and
Exchange Commission), 2001 and 2002 based on prices as reported on the
over-the-counter bulletin board with (1) the Russell 2000 and (2) the SNL $1
billion to $5 billion Bank Index.
[PERFORMANCE GRAPH]
PERIOD ENDED
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TOTAL RETURN INDEX FOR: 12/31/99 6/30/00 12/31/00 6/30/01 12/31/01 6/30/02 12/31/02
- ----------------------- -------- ------- -------- ------- -------- ------- --------
Hudson Valley Holding Corp. 100.0 120.18 127.57 139.35 162.55 177.64 200.32
Russell 2000 100.0 103.04 96.98 103.73 99.39 93.92 79.03
SNL $1B-$5B Bank Index 100.0 90.19 113.48 137.61 137.88 167.44 159.16
The graph assumes $100 is invested on December 31, 1999 and dividends are
reinvested. Returns are market-capitalization weighted.
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EXECUTIVE COMPENSATION
The following table provides information as to the compensation of the
Company's Chief Executive Officer and the persons who, at the end of 2002, were
the other four most highly compensated executive officers of the Company or the
Bank (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
-----------------
ANNUAL COMPENSATION AWARDS/SECURITIES
------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1) COMPENSATION($)
--------------------------- ---- --------- -------- ------------- ---------------
James J. Landy.......................... 2002 250,000 150,000 11,000 14,083(2)
President and Chief Executive 2001 225,000 135,000 10,890 12,050
Officer 2000 167,308 50,000 7,867 11,668
Stephen R. Brown........................ 2002 240,000 135,000 10,670 14,288(2)
Senior Executive Vice President 2001 215,000 120,000 10,285 12,536
Chief Operating Officer and 2000 184,231 80,000 8,983 12,332
Chief Financial Officer
Vincent T. Palaia....................... 2002 190,000 65,000 3,630 13,729(2)
Executive Vice President, 2001 176,500 52,000 7,018 11,872
Chief Lending Officer of the Bank 2000 165,000 45,000 7,667 11,878
Michael P. Maloney...................... 2002 165,000 80,000 5,115 13,323(2)
Executive Vice President 2001 140,000 60,000 5,082 11,246
Strategic Relationships and Sales of 2000 89,430 22,000 2,040 6,929
the Bank
Frank J. Skuthan ...................... 2002 167,135 55,000 3,245 13,793(2)
Executive Vice President 2001 152,255 47,500 1,210 5,081
Marketing Director of the Bank 2000 54,808 12,000 4,658 433
(1) The number of shares underlying options was adjusted to reflect a 10%
stock dividend in December 2002, December 2001 and December 2000.
(2) Includes, for 2002: for Mr. Landy, $ 2,677 in group term life insurance
premiums, $10,000 in employer contributions to the Company's
Profit-sharing Plan and $1,406 in employer matching contributions to
the Company's Section 401(k) plan; for Mr. Brown, $ 2,578 in group term
life insurance premiums, $10,000 in employer contributions to the
Company's Profit-sharing Plan and $1,710 in employer matching
contributions to the Company's Section 401(k) plan; for Mr. Palaia,
$1,770 in group term life insurance premiums, $10,000 in employer
contributions to the Company's Profit-sharing Plan and $ 1,959 in
employer matching contributions to the Company's Section 401(k) plan;
for Mr. Maloney, $1,836 in group term life insurance premiums, $10,000
in employer contributions to the Company's Profit-sharing Plan and
$1,487 in employer matching contributions to the Company's Section
401(k) plan; for Mr. Skuthan, $1,935 in group term life insurance
premiums, $10,000 in employer contributions to the Company's
Profit-sharing Plan and $1,858 in employer matching contributions to
the Company's Section 401(k) plan.
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OPTION/STOCK APPRECIATION RIGHTS GRANTS IN LAST FISCAL YEAR
The following table provides information as to options granted to the
Named Executive Officers during 2002.
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS/SARs EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS/SARs EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1),(2) FISCAL YEAR ($/SH)(2) DATE 5% ($) 10% ($)
---- ----------------- ---------------- --------- ---------- -------- --------
James J. Landy............ 11,000 13.3% $32.27 1/1/12 $223,300 $565,800
Stephen R. Brown.......... 10,670 12.9% $32.27 1/1/12 $216,601 $548,826
Vincent T. Palaia......... 3,630 4.4% $32.27 1/1/12 $ 73,689 $186,714
Michael P. Maloney........ 5,115 6.2% $32.27 1/1/12 $103,835 $280,071
Frank J. Skuthan.......... 3,245 3.9% $32.27 1/1/12 $ 65,874 $166,911
(1) All options were granted on January 1, 2002 and were fully vested on
grant, except for Mr. Skuthan whose options vest over a five-year
period.
(2) The number of shares underlying options and the exercise price was
adjusted to reflect a 10% stock dividend in December, 2002.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
The following table provides information as to options exercised by the
Named Executive Officers during 2002. In addition, this table includes the
number of shares covered by both exercisable and unexercisable stock options as
of December 31, 2002. Also reported are the values of "in the money" options,
which represent the positive spread between the exercise price of outstanding
stock options and the year-end price.
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS/SARs AT IN-THE-MONEY
FISCAL YEAR- OPTIONS/SARSs AT
END(#) FISCAL YEAR-END($)(1)
--------------- -------------------
SHARES ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ------------------ ---------- --------------- -------------------
James J. Landy ............ 2,997 76,294 44,111/0 $ 617,350/0
Stephen R. Brown............ 18,843 453,976 33,305/0 $ 298,258/0
Vincent T. Palaia........... 10,278 261,669 31,309/0 $ 499,153/0
Michael P. Maloney.......... 0 0 13,591/330 $116,364/$2,895
Frank J. Skuthan............ 0 0 2,586/6,525 $49,314/$17,013
(1) Based on a value per share of common stock of $36.50 at December 31,
2002, based on the then most recent sale price of the common stock.
RETIREMENT PLANS
Executive officers participate in the Company's Employee Savings Plan
and the Company's Profit-sharing Plan. These defined contribution plans are
available to employees generally and are qualified, respectively, under Section
401(k) and 401(a) of the Internal Revenue Code of 1986.
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Messrs. Landy and Palaia participate in the Company's 1995 Supplemental
Retirement Plan, while Mr. Brown participates in the Company's 1997 Supplemental
Retirement Plan. These plans are not qualified for tax purposes and are
available only to executive officers. Benefits under these plans are unfunded.
Pursuant to the 1995 Supplemental Retirement Plan, participating executive
officers are entitled to receive supplemental retirement benefits for a period
of 15 years payable on a monthly basis. Supplemental benefits equal 75% of the
executive officer's highest base salary in any of the last 3 years of
employment, less any retirement plan benefits provided to him by the Bank.
Pursuant to the 1997 Supplemental Retirement Plan, a participating executive
officer who retires is entitled to receive supplemental retirement benefits for
a period of 15 years payable on a monthly basis. Supplemental benefits equal 60%
of the average of the highest five years' annual base compensation paid to the
executive during his last 10 years of employment, reduced by (1) the value of
his qualified plan account as of the date of retirement; (2) the value of his
401(k) matching benefit as of the date of retirement; (3) 50% of his primary
social security benefit; and (4) the value of any other retirement type benefits
provided to him by the Company and its subsidiaries.
The estimated annual benefits payable upon retirement at normal
retirement age to each of the participating Named Executive Officers under the
supplemental retirement plans are: $330,000 for Mr. Landy; $252,000 for Mr.
Brown and $189,000 for Mr. Palaia. The Company has purchased life insurance to
support its obligations under the supplemental retirement plans.
DIRECTOR COMPENSATION
Each member of the Board of Directors who is not employed by the
Company or its subsidiaries is entitled to a director's fee based on the number
of years of service with the Board, the number of meetings attended and other
factors. The directors' fees paid in 2002 for service on the Board of Directors
of the Company and its subsidiaries were as follows: $67,000 for Mr. Griffin,
$42,000 for Mr. Coogan, $42,000 for Mr. Holcombe, $52,000 for Mr. Martinelli,
$44,000 for Mr. Poe, $44,000 for Mr. Pratt, $44,000 for Ms. Singer and $54,000
for Mr. Thompson.
The Company permits directors to defer all or any portion of the
directors' fees owed to them. The directors may elect to receive up to 50% of
their fees in common stock of the Company.
Directors who are not full-time employees of the Company or its
subsidiaries participate in the Directors' Retirement Plan. This plan is
designed to benefit all outside directors who serve 5 or more years as a
director. Benefits are paid upon a director's retirement or resignation and are
equal to a percentage of the aggregate annual fees paid to the director during
the 12 months prior to the commencement of the benefit as determined by a
vesting schedule based on the number of years served as a director. Benefits are
payable for a period of up to 8 years after resignation or retirement, depending
on the number of years of service as a director. Benefits under the plan are not
funded. The following vesting schedule determines the annual benefit to
directors:
PERCENTAGE OF DIRECTOR'S FEES
-----------------------------
NUMBER OF YEARS AS A DIRECTOR PAYABLE AT RETIREMENT AGE
- ----------------------------- -----------------------------
Less than 5 years 0%
5 years but less than 6 5%
6 years but less than 7 10%
7 years but less than 8 20%
8 years but less than 9 30%
9 years but less than 10 40%
10 years but less than 11 50%
11 years but less than 12 60%
12 years but less than 13 70%
13 years but less than 14 80%
14 years but less than 15 90%
15 years or more 100%
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Estimated annual benefits to each of the non-employee directors at
normal retirement age under the Directors' Retirement Plan are: $81,000 to Mr.
Griffin, $68,200 to Mr. Coogan, $164,400 to Mr. Holcombe, $35,000 to Mr.
Martinelli, $53,800 to Mr. Poe, $24,000 to Mr. Pratt, $23,000 to Ms. Singer and
$163,300 to Mr. Thompson.
Mr. Pratt serves as a consultant to the Bank on matters relating to new
business and business retention. The consulting contract calls for Mr. Pratt to
make between 30 and 40 calls per month to the Bank's high income producing
customers or to customers who have the potential to attain this status. For
consulting services rendered in 2002, Mr. Pratt received a consulting fee of
$60,000.
Directors of the Company are eligible to receive options under the
Company's 2002 Stock Option Plan. In 2002, the following directors were granted
non-statutory options to purchase the following number of shares (adjusted to
reflect a 10% stock dividend in December, 2002) of the Company's common stock
under this plan:
Griffin 9,350 Poe 4,840
Coogan 5,720 Pratt 5,940
Holcombe 5,940 Singer 5,720
Martinelli 6,820 Thompson 5,940
Each option was fully vested upon receipt and will expire on January 1,
2012, the tenth anniversary of the date of grant.
REQUIRED REPORTING OF TRANSACTIONS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons beneficially owning more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission, and to
furnish to the Company copies of such reports. Based solely on the review of
copies of the forms received, the Company believes that, during the last fiscal
year, all filing requirements under Section 16(a) applicable to its officers,
directors and 10% stockholders were timely, except an inadvertent late filing of
one Form 4 for John P. Abplanalp and one Form 4 for Gregory F. and Marie A.
Holcombe both relating to a distribution in December 2002 of shares from a trust
of which Mr. Abplanalp and Mrs. Holcombe are trustees. Additionally, there was
an inadvertent late filing by Craig S. Thompson with respect to the sale of
shares to the Company in March 2002. Form 4s reporting these transactions were
promptly filed after each oversight was discovered.
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
LOANS TO OFFICERS AND DIRECTORS
The Bank makes loans to the Company's executive officers and directors,
and businesses with which they are associated, in the ordinary course of
business. Such loans are made on the same terms and conditions, including
interest rate and collateral, as those prevailing at the same time for
comparable transactions with unrelated persons. None of the loans involve more
than the normal risk of collectibility or present other unfavorable features.
The aggregate amount outstanding for all such loans was $8,462,732 in 2002,
$9,115,586 in 2001 and $7,685,928 in 2000.
STOCK RESTRICTION AGREEMENTS
The Company has required all employees and directors who acquire shares
of common stock from the Company to enter into Stock Restriction Agreements that
give the Company a right of first refusal on any shares of common stock that the
shareholder wishes to transfer. Gifts to family members are not subject to
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the Company's right of first refusal, but the donee must enter into a Stock
Restriction Agreement with the Company. Pursuant to the Stock Restriction
Agreements, the Company may, but is not required to, purchase all of the shares
offered upon the same terms and conditions as that offered by the prospective
purchaser. The table below sets forth the aggregate number of shares and
aggregate purchase price for shares purchased by the Company from executive
officers, directors and beneficial owners of 5 percent or more of the common
stock (considered together with members of their immediate family) pursuant to
Stock Purchase Agreements in 2002, 2001 and 2000. The table excludes sales to
the Company aggregating less than $60,000 per annum per executive officer,
director or beneficial owner.
STOCK PURCHASES BY THE COMPANY
----------------------------------------------------------------------
2002 2001 2000
---------------------- ---------------------- ----------------------
(SHARES/DOLLAR AMOUNT) (SHARES/DOLLAR AMOUNT) (SHARES/DOLLAR AMOUNT)
Griffin............................... 0 0 3,930/$133,218
Palaia................................ 2,647/$103,233 0 0
Pratt................................. 2,203/$85,410 2,000/$74,000 0
Thompson.............................. 7,110/$300,730 8,413/$320,710 5,509/$203,737
LOANS TO FIVE-PERCENT BENEFICIAL OWNERS
The Bank makes loans to the beneficial owners of 5 percent or more of
the Company's common stock and the immediate family members of such persons in
the ordinary course of business. Such loans are made on the same terms and
conditions, including interest rate and collateral, as those prevailing at the
same time for comparable transactions with unrelated persons. None of the loans
involve more than the normal risk of collectibility or present other unfavorable
features. The dollar amount per individual borrower for 2002, 2001 and 2000 is
listed below:
BORROWER 2002 2001 2000
- -------- ------------ ------------ -----------
BMW Machinery Co., Inc.......................... $ 7,085,821 $ 7,331,460 $ 6,111,833
J. Abplanalp.................................... 797,963 971,554 737,086
M. Holcombe..................................... 1,000,627 1,164,282 594,928
W. Griffin...................................... 766,253 900,505 902,354
G. Holcombe..................................... 1,071,065 1,234,720 468,928
CERTAIN OTHER RELATED PARTY TRANSACTIONS
Messrs. Griffin and Coogan are shareholders of the law firm of Griffin,
Coogan & Veneruso, P.C., which serves as the Company's general counsel. Griffin,
Coogan & Veneruso, P.C. received fees approximating $928,000 in 2002, $792,000
in 2001 and $678,000 in 2000 for legal services performed on behalf of the
Company and its subsidiaries, including fees for representing the Bank at loan
closings which were paid directly by the borrower.
Mr. Thompson is the President and principal shareholder of Thompson
Pension Employee Plans, Inc., which has written life insurance policies
supporting the Company's obligations under the supplemental retirement plans for
executive officers. The total annual premiums approximated $497,000 in 2002,
$416,000 in 2001 and $501,000 in 2000. Thompson Pension Employee Plans, Inc.
also provides consulting services in exchange for a $6,000 fee.
Mr. Martinelli is the President and principal shareholder of the
Gazette Press, Inc., which received fees approximating $155,000 in 2002,
$122,000 in 2001 and $95,000 in 2000 in exchange for printing services provided
to the Company and its subsidiaries.
-13-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the "beneficial ownership" (as that term
is defined in the rules of the Securities and Exchange Commission) of the common
stock as of March 1, 2003, by (a) each Named Executive Officer and member of the
Board of Directors, and (b) each other person known to be a beneficial owner of
more than five percent of the common stock and (c) all executive officers and
members of the Board of Directors as a group. Persons who hold options that are
exercisable within 60 days of March 1, 2003 are deemed to own, beneficially, the
shares of common stock that may be acquired on the exercise of such options.
Such shares are deemed outstanding for purposes of computing the number of
shares owned by the person holding the option, but not for any other purpose.
NUMBER OF SHARES PERCENT OF OUTSTANDING
---------------- -----------------------
NAME OF COMMON STOCK SHARES OF COMMON STOCK
---- ---------------- -----------------------
BMW Machinery Co., Inc.(1)........................ 356,569(1) 6.1%
John P. Abplanalp(2).............................. 1,042,193(2) 17.7
Marie A. Holcombe(3).............................. 1,066,248(3) 18.1
James J. Landy ................................... 99,025(4) 1.7
Stephen R. Brown.................................. 63,944(5) 1.1
Vincent T. Palaia................................. 72,756(6) 1.2
Michael P. Maloney................................ 17,488(7) *
Frank J. Skuthan.................................. 5,789(8) *
William E. Griffin(9)............................. 806,249(9) 13.7
James M. Coogan................................... 170,949(10) 2.9
Gregory F. Holcombe(11)........................... 1,066,248(11) 18.1
Angelo R. Martinelli ............................. 121,570(12) 2.1
Ronald F. Poe..................................... 34,550(13) *
John A. Pratt Jr.................................. 102,781(14) 1.7
Cecile D. Singer.................................. 49,887(15) *
Craig S. Thompson................................. 208,218(16) 3.5
All directors and executive officers as a group
(15 persons)................................... 2,263,084(17) 36.8%
* Less than 1% of the outstanding shares of common stock.
(1) The address for BMW Machinery Co., Inc. is P.O. Box 309, Yonkers, New
York 10702.
(2) The address for John P. Abplanalp is 700 Nepperhan Avenue, Yonkers, New
York 10702. Includes 356,569 shares owned by BMW Machinery Co., Inc.
(of which Mr. Abplanalp is a principal shareholder); 571,210 shares
held by the R.H. Abplanalp Grantor Retained Annuity Trusts of which
John P. Abplanalp, Marie A. Holcombe and William E. Griffin are
co-trustees, and 76,457 shares held in trusts for the benefit of the
children of John P. Abplanalp or the children of Gregory F. and Marie
A. Holcombe (for which John P. Abplanalp serves as trustee) and 1,823
shares in trusts for the children of John P. Abplanalp.
(3) The address for Marie A. Holcombe is 700 Nepperhan Avenue, Yonkers, New
York 10702. Mrs. Holcombe is the wife of Gregory F. Holcombe. Includes
356,569 shares owned by BMW Machinery Co., Inc. (of which Mrs. Holcombe
is a principal shareholder); 571,210 shares held by the R.H. Abplanalp
Grantor Retained Annuity Trusts of which John P. Abplanalp, Marie A.
Holcombe and William E. Griffin are co-trustees, and 76,457 shares held
in trusts for the benefit of the children of Marie A. Holcombe or the
children of John P. Abplanalp (for which Marie A. Holcombe serves as
trustee), plus 707 shares held in a trust for the benefit of her
children and 910 shares in a trust for her daughters. The table also
includes 11,940 shares which may be acquired by Mrs. Holcombe's
husband, Gregory F. Holcombe, upon the exercise of options.
(4) Includes 54,111 shares which may be acquired upon the exercise of
options.
(5) Includes 43,005 shares which may be acquired upon the exercise of
options.
-14-
(6) Includes 34,609 shares which may be acquired upon the exercise of
options.
(7) Includes 16,996 shares which may be acquired upon the exercise of
options.
(8) Includes 5,789 shares which may be acquired upon the exercise of
options.
(9) The address for William E. Griffin is Griffin, Coogan & Veneruso, P.C.,
51 Pondfield Road, Bronxville, NY 10708. Includes 571,210 shares held
by the R.H. Abplanalp Grantor Retained Annuity Trusts of which John P.
Abplanalp, Marie A. Holcombe and William E. Griffin are co-trustees.
The table also includes 15,000 shares which may be acquired upon the
exercise of options.
(10) Includes 5,200 shares which may be acquired upon the exercise of
options and 53,513 shares held by the William E. Griffin Irrevocable
Trust of which Mr. Coogan is trustee.
(11) The address for Gregory F. Holcombe is 700 Nepperhan Avenue, Yonkers,
New York 10702. Mr. Holcombe is the husband of Marie A. Holcombe.
Includes 356,569 shares owned by BMW Machinery Co., Inc.; 571,210
shares held by the R.H. Abplanalp Grantor Retained Annuity Trusts of
which John P. Abplanalp, Marie A. Holcombe and William E. Griffin are
co-trustees, and 76,457 shares held in trusts for the benefit of the
children of Marie A. Holcombe or the children of John P. Abplanalp (for
which Marie A. Holcombe serves as trustee), plus 707 shares held in a
trust for the benefit of his children and 910 shares in a trust for his
daughters. Beneficial ownership of all these shares may be attributed
to Mr. Holcombe through his wife. The table also includes 11,940 shares
that may be acquired by Mr. Holcombe upon the exercise of options.
(12) Includes 6,500 shares which may be acquired upon the exercise of
options.
(13) Includes 4,000 shares which may be acquired upon the exercise of
options.
(14) Includes 36,853 shares which may be acquired upon the exercise of
options.
(15) Includes 4,400 shares which may be acquired upon the exercise of
options.
(16) Includes 16,466 shares which may be acquired upon the exercise of
options.
(17) Includes 268,690 shares which may be acquired upon the exercise of
options.
-15-
HUDSON VALLEY HOLDING CORP.
This proxy is being solicited on behalf of the Board of Directors
The undersigned shareholder hereby appoints Angelo R. Martinelli, Cecile D.
Singer and Craig S. Thompson or any one of them with full power to act alone as
proxy, with full power of substitution and revocation, to vote on behalf of the
undersigned all shares of common stock of Hudson Valley Holding Corp. which the
undersigned is entitled to vote at the annual meeting of shareholders to be held
on May 12, 2003, or any adjournments thereof.
ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary as
described below) [ ___ ]
James J. Landy, Stephen R. Brown, William E. Griffin, James M. Coogan,
Gregory F. Holcombe, Angelo R. Martinelli, Ronald F. Poe, John A. Pratt
Jr., Cecile D. Singer, Craig S. Thompson
WITHHOLD AUTHORITY to vote for all of the nominees listed above [ ___ ]
(INSTRUCTION: to withhold authority to vote for any individual nominee
only, cross out the nominee's name above.)
In the proxy's sole discretion, the proxy is authorized to vote upon such
other business as may properly come before the meeting or any adjournment(s)
thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED TO ELECT ALL
NOMINEES NAMED IN THIS PROXY TO THE BOARD OF DIRECTORS
Dated: ___________, 2003
_________________________________
Signature
_________________________________
Additional Signature (if held jointly)
(Please sign exactly as ownership appears on this proxy. Where stock is
held by joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by an authorized officer. If a
partnership, please sign in partnership name by an authorized person.)
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE