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 Rule 14a-11(c) or Rule 14a-12
Iroquois Bancorp, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Marianne R. O'Connor
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee as provided by Exchange Act Rule 0-
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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Notes:
IROQUOIS BANCORP, INC.
115 Genesee Street
Auburn, New York 13021
(315) 252-9521
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2000
TO THE SHAREHOLDERS OF IROQUOIS BANCORP, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Iroquois
Bancorp, Inc. (the "Company"), will be held at the Holiday Inn, 75 North Street,
Auburn, New York on Thursday, April 27, 2000 at 10:00 a.m., to consider and vote
upon the following matters:
1. The election of three (3) directors to serve for a term of three (3)
years and until their successors have been duly elected and
qualified.
2. The ratification of the appointment of KPMG LLP as independent
auditors for the fiscal year ending December 31, 2000.
3. The transaction of such other business as may properly come before
the Meeting or any adjournment thereof.
The close of business on March 23, 2000 has been fixed as the record date
for the determination of shareholders who will be entitled to notice of and to
vote at the Annual Meeting.
By Order of the Board of Directors
/s/ Kathleen A. Manley
---------------------------------------
Kathleen A. Manley, Corporate Secretary
March 27, 2000
THE BOARD OF DIRECTORS REQUESTS THAT YOU MARK, SIGN, AND RETURN PROMPTLY THE
ENCLOSED PROXY CARD IN THE POSTPAID ENVELOPE PROVIDED.
IROQUOIS BANCORP, INC.
115 Genesee Street
Auburn, New York 13021
(315) 252-9521
_______________________
PROXY STATEMENT
_______________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 27, 2000
_______________________________________
SOLICITATION AND VOTING OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Iroquois
Bancorp, Inc. (the "Company") for use in connection with the Annual Meeting of
Shareholders to be held April 27, 2000. The matters to be considered and acted
upon at such meeting are referred to in the preceding notice and are more fully
discussed below. Only if the enclosed proxy card is properly executed and
returned to the Company will the shares represented thereby be voted. If no
choices are specified on the returned card, the shares will be voted for each of
the persons nominated as director and in favor of management's proposals. The
proxy may be revoked by written notice to the Company prior to the meeting or by
written notice to the Secretary at the meeting at any time prior to being voted.
The first date on which this proxy statement and accompanying proxy are being
sent to shareholders is on or about March 27, 2000.
Proxies may be solicited by mail, personal interview, telephone, or
telegraph. Directors, officers, and employees of the Company may solicit proxies
by any such method without additional compensation. Costs of all proxy
solicitation will be paid by the Company, including reimbursement of brokerage
firms and other nominees for expenses of forwarding proxy solicitation material
to the beneficial owners for whom they held the shares.
The common stock of the Company is its only class of securities currently
outstanding and its only class of voting securities. Each share of common stock
entitles the holder thereof to one vote on all matters to come before the
meeting. The Board of Directors has fixed the close of business on March 23,
2000 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting. On March 23, 2000, there were 2,306,880 shares of
the Company's common stock outstanding. The presence, in person or by proxy, of
at least a majority of the total number of shares of common stock outstanding
and entitled to vote is necessary to constitute a quorum and in the event there
are not sufficient votes, the Annual Meeting may be adjourned.
Directors shall be elected by a plurality of the eligible votes cast and
the ratification of the appointment of independent auditors will be determined
by a majority of the eligible votes cast. Abstentions, in person or by proxy,
shall be counted toward a quorum, but abstentions under New York law are not
deemed to be votes cast and therefore abstentions have no effect on the outcome
of the vote, which requires either a plurality or majority of the eligible votes
cast, depending upon the proposal. Votes withheld in connection with the
election of one or more of the nominees for director will not be counted as
votes cast.
All of the items on the agenda for shareholder approval at this Annual
Meeting are deemed "discretionary" items upon which brokerage firms may vote in
their discretion on behalf of beneficial owners who have not furnished voting
instructions within ten days of the Annual Meeting. "Broker non-votes" occur for
"non-discretionary" items on which brokers may not vote if beneficial owners
have not given instruction by proxy. Broker non-votes, therefore, will not be a
factor with respect to any agenda item.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The table below indicates as of February 1, 2000 the only holders known to
the Company to be the beneficial owner of more than 5% of the total 2,306,880
outstanding shares of the Company's common stock.
Amount and Nature Percent of
of Outstanding
Name and Address Beneficial Ownership /1/ Stock
---------------- ------------------------ -----------
The Baird Family 230,606/2/ 9.52%
c/o Brian D. Baird
120 Delaware Avenue
Buffalo, New York 14202
Iroquois Bancorp, Inc. Employee 175,399/3/ 7.24%
Stock Ownership Plan
115 Genesee Street
Auburn, New York 13021
__________________
/1/ Except as otherwise noted, such beneficial owner has sole voting and
investment power with respect to the stock.
/2/ Such shares are beneficially owned either directly or as trustees or
custodians for other family members or as trustees of the Cameron Baird
Foundation. The respective beneficial owners have sole investment and
voting power with respect to their shares.
/3/ Such shares are held in trust for the participants in the plan who are the
beneficial owners and who direct the voting of their allocated shares in
the trust. All unallocated shares in the trust are voted by the independent
trustee.
As of February 1, 2000, no director except Brian Baird and no executive
officer of the Company or any subsidiary beneficially owned more than 5% of the
Company's outstanding common stock. All directors and executive officers as a
group (12 persons) beneficially owned 615,711 shares of the Company's common
stock, including exercisable options, representing approximately 25.42% of the
2,306,880 outstanding shares of common stock plus 115,000 outstanding
exercisable options. Those ownership interests are set forth in the following
table.
2
Amount and Nature of Percent Common
Name Positions Held Beneficial Ownership/1/ Stock Outstanding
---- -------------- ----------------------- -----------------
Joseph P. Ganey Chairman of the Board 62,161/2/ 2.57%
Richard D. Callahan President and CEO, Vice-Chairman 78,729/3/ 3.25
of the Board
Brian D. Baird Director 230,606/4/ 9.52
Robert B. Bantle Senior Vice President 327 *
John Bisgrove, Jr. Director 9,709 *
Peter J. Emerson Director 51,949/5/ 2.15
Arthur A. Karpinski Director 24,740 1.02
Henry D. Morehouse Director 9,405/6/ *
Marianne R. O'Connor Treasurer and CFO 35,553/7/ 1.47
Edward D. Peterson Director 9,735 *
W. Anthony Shay, Jr. Vice President 14,566/8/ *
Lewis E. Springer, II Director 68,481 2.83
All directors and executive
officers as a group (persons) 615,711/9/ 25.42
* less than 1%
______________________
/1/ Except as otherwise noted, each beneficial owner listed has sole voting and
investment power with respect to the stock.
/2/ Includes 6,455 shares held jointly with spouse.
/3/ Includes 1.756 shares held jointly with spouse, 4,228 shares held by
spouse, and exercisable options to purchase 69,400 shares of common stock.
/4/ Such shares are beneficially owned either directly or as trustees or
custodians for other family members or as trustees of the Cameron Baird
Foundation. The respective beneficial owners have sole investment and
voting power with respect to their shares.
/5/ Includes 36,000 shares held by the F.L. Emerson Foundation, Inc., of which
he is a director and as to which he disclaims beneficial ownership.
/6/ Includes 2,665 shares held jointly with spouse.
/7/ Includes 1.854 shares held jointly with spouse, 223 shares held as
custodian for minor children, and exercisable options to purchase 16,300
shares of common stock.
/8/ Includes 3,242 shares owned jointly with spouse and exercisable options to
purchase 8,900 shares of common stock.
/9/ Includes 19,750 shares held in the ESOP that have not been awarded or
allocated and are therefore voted by the ESOP independent trustee and
exercisable options to purchase 94,600 shares of common stock.
3
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
In accordance with the rules of the Securities and Exchange Commission
under Section 16(a) of the Securities Exchange Act of 1934, as awarded,
directors, executive officers, and beneficial owners of 10% or more of the
Company's stock must file certain reports of stock ownership and changes of
stock ownership. To the Company's knowledge, based solely on a review of the
copies of reports furnished to the Company and written representations,
including written representations of its directors and officers that no other
reports were required, during the fiscal year ended December 31, 1999, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with by those parties.
ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of nine (9)
directors, divided into a total of three classes, with terms expiring in 2000,
2001 and 2002. Upon the expiration of the terms of office for the directors in
the class of 2001, the Company expects to reduce the number of directors in that
class to three (3) and to increase the number of directors in the class of 2002
to three (3) at the same time, leaving the total number of directors at nine. At
the Annual Meeting, three (3) directors will be elected for a term of office
expiring in 2003 and until the election and qualification of their successors.
It is intended that, if no contrary specification is made, the persons
named on the proxy card will vote for the nominees named below. The Board
believes that all of the nominees will be available and able to serve as
directors, but if for any reason any of these persons should not be available or
able to serve, the proxies may exercise discretionary authority to vote for a
substitute or substitutes. All nominees for election in 2000 have been
previously elected by the shareholders of the Company.
There is set forth below certain information about the nominees for
election to the Board of Directors, as well as about those present directors
whose term of office will continue after the meeting. The names of the directors
and nominees below represent a full Board of Directors. Except for Brian D.
Baird, Henry D. Morehouse and Edward D. Peterson, all present directors and
nominees are also serving as directors of the Company's subsidiary, Cayuga Bank
(formerly Cayuga Savings Bank). Mr. Morehouse and Mr. Peterson also serve on the
Board of Directors of the Company's other subsidiary, The Homestead Savings (FA)
("Homestead Savings"). Cayuga Bank and Homestead Savings are currently the only
subsidiaries of the Company (also referred to as "member banks").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL THE NOMINEES FOR ELECTION AS
DIRECTORS.
Nominees for Election of Directors for Terms of Office Expiring in 2000:
- ------------------------------------------------------------------------
BRIAN D. BAIRD, age 49, became a director on July 1, 1990, through an expansion
of the Board, and was thereafter elected by the shareholders at the Company's
next Annual Meeting. He is an attorney with the law firm of Kavinoky and Cook in
Buffalo, New York, where he has practiced law since 1983.
JOHN BISGROVE, JR., age 60, a director of Cayuga Bank since 1978, is the owner
and President of Sunrise Farms with business activity in cattle breeding, horses
and related interests.
RICHARD D. CALLAHAN, age 57, became a director of Iroquois and Cayuga Bank in
1994 after his appointment as Chief Executive Officer and President of both the
Company and Cayuga Savings and was recently appointed Vice Chairman of the
Board. Prior to joining Iroquois, he was Regional Executive Vice
4
President, Regional President, and Senior Executive Vice President of Operations
and Marketing, in that order, for Marine Midland Bank from 1983 to 1993, after
18 years of prior banking experience.
Present Directors Whose Terms of Office Expire in 2001:
- -------------------------------------------------------
PETER J. EMERSON, age 59, a director of Cayuga Bank since 1971, is a Director of
the F.L. Emerson Foundation, Inc., a charitable foundation, where he also served
as President until June, 1997.
JOSEPH P. GANEY, age 76, a director of Cayuga Bank since 1974, was named
Chairman of the Board of Cayuga Savings Bank in 1985, and remains as Chairman of
the Board of the Company as well. Having served as Chief Executive Officer since
1976, he retired at the end of 1988. Before joining Cayuga Savings Bank as
Executive Vice President in 1971, Mr. Ganey had 29 years of banking experience.
EDWARD D. PETERSON, age 65, a director of Homestead Savings since 1978, became a
director of Iroquois in 1996, having been elected by the board in 1996 to fill
the vacancy arising from the retirement of Russel C. Fielding. Mr. Peterson is
retired from General Electric Corporation, where he served for 34 years in a
number of positions, including Manager of Employee and Community Relations for
Aerospace Electronic Systems and the Aerospace Operations Departments.
LEWIS E. SPRINGER II, age 61, a director of Cayuga Bank since January, 1987, was
formerly the President and owner of Creative Electric, Inc. of Auburn, New York
and Andersen Laboratories, Inc. of Bloomfield, Connecticut, both of which merged
into Sawgrass Electronics. The companies manufacture electronic components for
guidance systems and other applications.
Present Directors Whose Terms of Office Expire in 2002:
- -------------------------------------------------------
ARTHUR A. KARPINSKI, age 71, a director of Cayuga Bank since 1969, is now
retired from the practice of periodontics.
HENRY D. MOREHOUSE, age 70, a director of Homestead Savings since 1968, is the
owner of Morehouse Appliances, a retail appliance business, where he has been
employed since 1942.
There are no family relationships between any director, executive officer,
or any person nominated or chosen by the Board to become a director or executive
officer.
Board of Directors Meetings and Committees
The Board of Directors held 4 regular quarterly meetings and 6 special
meetings during 1999. All of the directors attended at least 75% of the
aggregate of the total number of Board meetings and meetings of committees of
the Board on which they served except Mr. Bisgrove and Mr. Karpinski, whose
absences were excused for good cause. The Board of Directors currently has three
standing committees: Executive, Audit, and Nominating/Personnel. The Chairman of
the Board is a member ex-officio, with vote, of all committees. The principal
responsibilities of the standing committees, the number of meetings held during
1999, and the present committee members are set forth below.
Executive Committee: The Executive Committee is authorized to exercise the
powers of the Board of Directors to take action between regular meetings of the
Board. This Committee met 1 time during 1999. The Committee presently consists
of 5 appointed members with Mr. Bisgrove as chairperson, Messrs. Baird,
Callahan, Emerson, Morehouse and Peterson as appointed members and Mr. Ganey ex-
officio.
5
Audit Committee: The Audit Committee examines and reviews the accounting,
reporting, and financial practices of the Company. The Committee also receives
reports of the Company's independent auditors, and reviews and approves all non-
audit services performed by the independent auditors. During 1999, the Committee
met 3 times. This Committee presently consists of 4 appointed members, with Mr.
Morehouse as chairperson, Messrs. Karpinski, Peterson and Springer as appointed
members, and Mr. Ganey ex-officio.
Nominating/Personnel Committee: The Nominating/Personnel Committee reviews
the qualifications of candidates for the Board and recommends a slate of
nominees for election at the annual meeting of shareholders, as well as
considers nominees recommended by shareholders on the same basis as other
persons considered provided such names are submitted in sufficient time for the
Committee to review the potential candidate's qualifications. The Committee is
also responsible for Company policy regarding general management and human
resource matters, including compensation. During 1999, this Committee met 5
times. The Committee presently consists of 7 appointed members, with Mr.
Springer as chairperson, Messrs. Baird, Bisgrove, Callahan, Emerson, Karpinski
and Peterson as appointed members, and Mr. Ganey ex-officio. With the exception
of Mr. Callahan, the Nominating/Personnel Committee members serve as the Board's
compensation committee and have been designated the Stock Option Committee to
administer the Company's 1996 Stock Option Plan.
Director Compensation
The Company compensates its non-employee directors $1,600 per year in cash
for service on the Board of the Company. Directors who reside beyond a 50 mile
radius of the Company's principal office also receive reimbursement for travel
expenses, and all directors receive a fee of $150 for each committee meeting
attended, with the chairperson presiding at each committee meeting receiving
$175. During 1999, the Company compensated directors who attended the special
board meetings a fee of $350 for each such special meeting. Directors who serve
on the boards of member bank subsidiaries also receive compensation for such
service from the subsidiary in accordance with policy set by its board of
directors.
The Company maintains a Stock Incentive Program to provide financial
incentives for directors to increase stock ownership and strengthen their
commitment to the Company's success. The Program is also consistent with the
Company's policy that requires a minimum level of stock ownership by directors.
Under the Program, each director who purchases shares of common stock of the
Company may be reimbursed up to $5,000 of the cost of the shares purchased
during any year.
Insurance
As authorized by law and its Bylaws, the Company maintains insurance for
itself and subsidiaries to indemnify directors and officers. It has obtained
insurance from Executive Risk Indemnity, Inc, of Simsbury, Connecticut insuring
the Company and its subsidiaries against any obligation incurred as a result of
indemnification of their directors and officers and insuring such persons for
liabilities for which they may not be indemnified. This insurance policy has a
three-year term expiring November 1, 2000, with coverage of $5,000,000 aggregate
annual limitation. As of this date, no sums have been paid under this policy.
The current annual premium is $28,440.
6
EXECUTIVE COMPENSATION
Summary Compensation Table
The table on the following page shows, for the three years ended December
31, 1999, the cash compensation paid to the Company's chief executive officer
and the three other most highly compensated executive officers of the Company.
As explained in the Report on Executive Compensation below, this compensation is
paid by the subsidiary for which each individual also serves in an executive
capacity.
Annual Compensation Long Term Compensation
------------------------------ -----------------------------------
Awards Payouts
------------- -------------
Other
Annual Restricted All Other
Compen- Stock Options LTIP Compen-
Name and Salary Bonus sation Awards SARs Payouts sation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- ------ ----- ------- ------- ------- ------- ---------
Richard D. Callahan, 1999 240,000 104,544 5,000 -- 10,800 -- 12,228/1/
CEO 1998 223,700 83,284 5,000 -- 9,500 -- 15,751
1997 211,000 80,412 5,000 -- 10,700 -- 15,942
Richard J. Notebaert, Jr., 1999 134,000 -- -- -- 3,700 -- 19,125/2/
Vice President 1998 127,000 23,241 -- -- 3,500 -- 19,684
1997 121,000 32,501 5,000 -- 3,200 -- 19,387
Marianne R. O'Connor, 1999 108,300 35,733 2,286 -- 3,000 -- 12,868/3/
CFO 1997 105,000 28,718 5,000 -- 3,000 -- 13,811
1997 100,800 31,006 5,000 -- 2,800 -- 12,334
W. Anthony Shay, Jr., 1999 96,700 23,343 5,000 -- 1,700 -- 10,777/4/
Vice President 1997 90,400 18,387 5,000 -- 1,700 -- 10,727
1997 85,300 19,380 5,000 -- 1,300 -- 9,113
______________________
/1/ This amount reflects 3 components:
(a) $6,185 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary based formula for all employees.
(b) $1,662 for the employer matching contributions on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $4,381 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/2/ This amount reflects 3 components:
(a) $10,185 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $4,559 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $4,381 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/3/ This amount reflects 3 components:
(a) $5,286 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $3,694 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $3,888 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
/4/ This amount reflects 3 components:
(a) $4,189 for the employer contribution to the Company's money purchase
(defined contribution) pension plan in which all eligible employees
participate and for which contributions are determined by the same
salary-based formula for all employees.
(b) $3,300 for the employer matching contribution on behalf of this
employee for participation in the Company's 401(k) Savings Plan.
(c) $3,288 for the employer contribution on behalf of this employee to the
Company's Employee Stock Ownership Plan.
7
Option/SAR Grants Table
During 1999, the Company granted options pursuant to the Company's 1996
Stock Option Plan. The Table below shows the relevant information pertaining to
the grant of options during 1999 to executive officers named in the Summary
Compensation Table.
Option/SAR Grants in Last Fiscal Year
-------------------------------------
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Term
----------------- ---------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
Options/ SARs
SARs Granted to Exercise or
Granted Employees in Base Price Expiration 5% 10%
Name (#) Fiscal Year ($/Sh) Date ($) ($)
- -------- -------- ------------ ----------- ---------- -- --
Richard D. Callahan, 10,800 43.4% 21.90 1/19/06 105,405 237,018
CEO
Richard J. Notebaert, Jr., 3,700 14.9% 21.90 1/19/06 36,111 81,201
Vice President
Marianne R. O'Connor, 3,000 12.0% 21.90 1/19/06 29,279 65,838
CFO
W. Anthony Shay, Jr., 1,700 6.8% 21.90 1/19/06 16,592 37,308
Vice President
8
Aggregated Option/SAR Exercises and Values
The Table below shows for all officers named in the Summary Compensation
Table above the total number of options exercised during 1999 and unexercised
options held as of December 31, 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year
---------------------------------------------------
and FY-End Option/SAR Values
----------------------------
(a) (b) (c) (d) (e)
Value
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares Acquired FY-End (#) FY-End ($)
on Exercise Value Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
---- --------------- -------------- --------------- ---------------
Richard D. Callahan, 0 0 59,900 141,060
CEO exercisable exercisable
20,300 0
unexercisable unexercisable
Richard J. Notebaert, Jr., 0 0 8,100 0
Vice President exercisable exercisable
7,200 0
unexercisable unexercisable
Marianne R. O'Connor, 0 0 13,300 12,865
CFO exercisable exercisable
6,000 0
unexercisable unexercisable
W. Anthony Shay, Jr., 0 0 7,200 7,470
Vice President exercisable exercisable
3,400 0
unexercisable unexercisable
Employment Contracts
The Company is a party to employment agreements with certain named
executive officers shown in the table in the section above entitled Summary
Compensation Table and certain officers who do not appear in the table. These
employment agreements are effective for a term of one year, subject to renewal
by the Company. Compensation under these agreements remains a primary obligation
of the subsidiary for whom the named executive also serves in an executive
capacity. The Company may in the future agree to become the primary obligor if
the officer's duties for the Company are expanded sufficiently to warrant a
change in the primary compensation obligation.
Mr. Callahan has an employment agreement with both the Company, as
President and Chief Executive Officer, and with Cayuga Bank, for which he also
serves as President and Chief Executive Officer. Mr. Callahan's employment
agreement with the Company and Cayuga Bank fixed annual base compensation for
2000 in the amount of $252,000. Mr. Notebaert has an employment agreement with
Homestead Savings for which he serves as President and Chief Executive Officer.
Mr. Notebaert's agreement provides for 2000 annual compensation in the amount of
$142,000.
9
These employment agreements with Messrs. Callahan and Notebaert contain a
severance provision that allows for a cash payment in the amount of two (2)
times the executive's annual base salary plus target annual incentive for the
year in which termination occurs and the two years immediately preceding the
year of termination, divided by three. The severance provision applies only to
termination by the Company or its subsidiary without cause.
The employment agreements with Messrs. Callahan and Notebaert also contain
a provision regarding a change of control of the Company. Under these
agreements "change of control" occurs if (i) any "person", including a "group"
as determined in accordance with the Section 13(d) of the Securities Exchange
Act of 1934 (the "Exchange Act"), is or becomes the beneficial owner, directly
or indirectly, of securities of Iroquois representing 20% or more of the
combined voting power of the then outstanding securities of Iroquois; (ii) as a
result of, or in connection with, any tender offer or exchange offer, merger or
other business combination (a "Transaction"), the persons who were directors of
Iroquois before the Transaction shall cease to constitute a majority of the
board of directors of Iroquois or any successor of Iroquois, (iii) Iroquois is
merged or consolidated with another corporation and as a result of the merger or
consolidation less than 80% of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the aggregate by the
former shareholders of Iroquois, other than (A) affiliates within the meaning of
the Exchange Act, or (B) any party to the merger or consolidation; (iv) a tender
offer or exchange offer is made and consummated for the ownership of securities
of Iroquois representing 20% or more of the combined voting power of Iroquois'
then outstanding voting securities; or (v) Iroquois transfers substantially all
of its assets to another corporation which is not controlled by Iroquois. If
employment is terminated for any reason within 24 months following a change of
control, the executive will receive a lump-sum cash payment of 2.99 times base
salary and the average annual incentive.
Ms. O'Connor's employment agreement with the Company and Cayuga Bank, where
she also serves as Treasurer and Chief Financial Officer, provides for 2000
annual compensation in the amount of $111,600. Mr. Shay's employment agreement
with the Company and Cayuga Bank, where he also serves as Vice President of
Operations, provides for 2000 annual compensation in the amount of $101,500.
The Company and Cayuga Bank also entered into an employment agreement with
Robert B. Bantle when he commenced employment as Senior Vice President of the
Company and Cayuga Bank in June of 1999. The employment agreement provides for
2000 annual compensation in the amount of $130,000. The employment agreements
with Ms. O'Connor, Mr. Shay, Mr. Bantle and other officers (except as described
above) contain a severance provision that allows for a cash payment in the
amount of the officer's annual base salary plus target annual incentive for the
year in which termination occurs and the two years immediately preceding the
year of termination, divided by three. The severance provision applies only to
termination by the Company or its subsidiary without cause. These employment
agreements also contain a provision regarding a change of control of the Company
(as defined above). If the officer's employment is (i) terminated involuntarily
for any reason other than death, disability, or just cause or constructively
terminated for good reason during the 24-month period following a change of
control, or, (ii) terminated voluntarily by the executive during the 30-day
period beginning on the first anniversary of the change of control, the officer
will receive a lump-sum cash payment of 2.99 times base salary and the average
annual incentive.
Compensation Committee Interlocks and Insider Participation
Joseph P. Ganey, Chairman of the Board of Directors of the Company and a
member of its Compensation Committee, served as Acting President and Chief
Executive Officer from the time that office became vacant in November, 1993
through May, 1994, when Richard D. Callahan was appointed. Mr. Ganey also served
as President and Chief Executive Officer of Cayuga Savings Bank, as predecessor
to the Company from 1976 through 1988, when he retired from active employment.
10
Report on Executive Compensation
OVERALL COMPENSATION POLICY
The Company's executive compensation strategy was developed to place
greater emphasis on the incentive and equity components of compensation and to
minimize the base salary aspect of compensation. This policy, which was
introduced in 1996, continues to serve the Company's objectives because it
recognizes that the chief executive officer ( CEO) and other executive officers
should, as all employees, have both appropriate financial rewards and incentives
to encourage long term commitment and high quality performance. The policy also
helps in attracting highly qualified individuals to become executive officers at
the Company and enables continued development and improvement of Company-wide
compensation procedures and programs to assure reasonable consistency among the
various entities within the Iroquois family. The policy relies primarily on an
executive compensation strategy designed to further the Company's specific
business objectives without sacrificing consideration of current market data
relating to compensation levels for executives at comparable companies. The
four key elements of Iroquois executive compensation are:
. Base salary levels that are targeted below the relevant comparable
market to emphasize the pay for performance strategy and to preserve
effective management of fixed costs.
. A strong annual incentive compensation component that (a) is designed
to reward only above-market target performance levels to account for
adverse impact of economic factors on community banks, (b) emphasizes
rewards for performance that exceeds the higher level quantitative
targets of financial and operational results to assure a sufficiently
challenging incentive program, and (c) minimizes awards for executive
performance which only meets plan targets.
. Equity compensation to align executives' interests with shareholder
values.
. Benefits tied to market for comparable positions in comparable
companies in the same industry group.
When these four elements are integrated into the Company's compensation
programs, the result is an effective strategy that has the following
characteristics:
. Balanced reinforcement of management performance to meet both short
term and long term Company objectives.
. Total executive compensation within industry ranges for comparably
sized companies to ensure compensation remains competitive in the
relevant market yet recognizes the particular needs and conditions of
the Company.
The Company continues to believe that its approach to total compensation
for executives, by emphasizing the incentive compensation component, will
attract, retain, and motivate executives and will promote results for
shareholders. The following sections summarize the analysis and recommendations
of the Company's Compensation Committee for executive compensation during 1999.
BASE SALARY
Executive Officers Compensation. The determination of base salary for
executive officers relies on three components: market information, performance
and relevant experience. In accordance with the
11
Company's compensation strategy, information from the Company's independent
consultant on the ranges of salaries for executive officers at companies of
similar size in the same industry group were reduced by 10% to establish a below
market base salary range for executive officers. Each individual executive
officer was then evaluated based upon performance and experience and base salary
compensation was awarded within the established range. Base salaries for
executive officers were established in this manner by the chief executive
officer or the appropriate member bank Board. The Committee then reviewed the
analysis and base salary recommendations and determined it would continue to
differentiate executives from the nonexecutive levels of management, for which
the reduction below market is only 5% to place even greater emphasis on
incentive compensation for that group.
CEO Compensation. Mr. Callahan's base salary was determined directly by
the Committee based upon the market information and performance criteria method
that was applied to all executive officers as described above. A base salary
range was derived from specific market information on chief executive officer
salaries at companies comparable within the financial services industry and with
similar asset size to Iroquois. Mr. Callahan's base salary was then fixed
within that range, taking into consideration his performance during the previous
year.
ANNUAL INCENTIVE COMPENSATION
Executive Officers Compensation. Annual incentive compensation during 1999
was used to reward executives upon achievement of key operating and financial
results. The Company's 1999 incentive awards were made to certain executives
who were eligible based upon the achievement of both their subsidiary bank and
individual performance goals, where the weight allocated between the performance
achieved for those two elements varied, with greater weight attached to overall
bank performance for higher levels of responsibility. Overall bank performance
was determined according to net income. Under the Annual Management Incentive
Plan, the executives were awarded for performance within a range of 14.42% to
43.55% of base salary based on the level of achievement of the established
performance goals. Targeted incentive award percentages under the Annual
Management Incentive Plan were established based on market information provided
by the Company's independent consultant for companies of similar size and in the
same industry group. During 1999, Homestead Savings entered into long-range
investment decisions regarding the realignment of its branch network that
resulted in below target performance. Accordingly, executive officers of
Homestead Savings were not entitled to awards for 1999.
The Company continues to believe that incentive compensation plays a
critical role in the Company's effort to reinforce the pay for performance goal.
CEO Compensation. Annual incentive compensation was awarded to Mr.
Callahan during 1999 under the Company's Annual Management Incentive Plan
described above based upon his individual performance and the performance of
Cayuga Bank, for which he also serves as Chief Executive Officer. The Committee
determined that no additional incentive compensation was necessary for holding
company responsibilities independent of the subsidiary, which comprises the
Company's primary asset and operations. This determination is consistent with
the Company's compensation philosophy that compensation be paid and primary
performance be measured at the operating subsidiary level until the size and
complexity of the holding company indicates a change is appropriate.
12
EQUITY BASED INCENTIVE COMPENSATION
Equity based compensation was once again utilized in 1999 to provide
balance to the short term pay for performance strategy. Awards for 1999 were
granted in the form of stock options under the Company's 1996 Stock Option Plan.
Options were awarded to top management as determined by the Stock Option
Committee in accordance with the terms of the 1996 Stock Option Plan. The option
award allocations made in 1999 were based on each executive's level within the
Company as well as the return on equity (ROE) of the Company attained for 1998.
The factor used as the multiple was derived from market level long-term
incentive opportunities within similar sized financial institutions. Options
granted in 1999 vest after two years and expire if not exercised within their
term of seven years.
The Company believes this component of compensation is essential to
reinforce the Company's long-term goal of increasing shareholder value, and has
been successful because equity interests align executives' interests more
closely with those of the shareholders.
The Company recognizes the importance of a compensation policy, and has
begun an extensive review of executive compensation that is expected to entail
substantial changes in 2000.
Iroquois Bancorp, Inc.
Compensation Committee
Lewis E. Springer, II, Chairperson
Brian D. Baird
John J. Bisgrove, Jr.
Peter J. Emerson
Joseph P. Ganey
Arthur A. Karpinski
Edward D. Peterson
13
Performance Graph
The following graph compares the yearly percentage change in the Company's
cumulative total shareholder return on its common stock to (a) the cumulative
return of the Nasdaq Stock Market (US Companies) index, (b) the cumulative
return of the Nasdaq Bank Stocks index and (c) the cumulative return of the Bank
Index provided by SNL Securities L.C. The inclusion of the SNL Bank Index was
used because it is more indicative of performance of banks of a similar size
nationally and management believes this index offers a more useful comparison
than either the Nasdaq Bank Stocks or a small peer group selected regionally.
The graph and tabular explanation of the graph assume that $100 was invested on
December 31, 1994 in each of Iroquois common stock, the Nasdaq Stock Market (US
Companies) Index, the Nasdaq Stock Market and the Bank Stocks Index, and that
all dividends were reinvested. The data was furnished by the Center for Research
in Security Prices (CRSP).
Graphical Representation of the following data:
- --------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------
Iroquois Bancorp,
Inc. $100.00 161.61 215.91 332.35 275.75 198.11
- --------------------------------------------------------------------------------
Nasdaq Stock
Market (National Market -
US Companies) 100.00 141.33 173.89 213.07 300.25 542.43
- --------------------------------------------------------------------------------
Nasdaq Bank
Stocks 100.00 149.00 196.73 329.39 327.11 314.42
- --------------------------------------------------------------------------------
SNL $500M-$1B 100.00 132.76 165.97 269.80 265.28 245.56
Bank Index
The stock prices on the Performance Graph are not necessarily indicative of
future stock price performance. Each of the Report of the Compensation
Committee of the Board of Directors and the Performance Graph shall not be
deemed incorporated by reference by any general statement incorporating The
Executive Compensation section of this Proxy Statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates these specific items by
reference, and shall not otherwise be deemed filed under such acts.
14
CERTAIN TRANSACTIONS
From time to time, Cayuga Bank and Homestead Savings make loans to their
directors and officers and those of the Company, as well as to other companies
and businesses with which directors of the Company and its subsidiaries may be
affiliated. Included are loans that may be secured by a mortgage on the
officer's or director's primary residence. All loans to directors and executive
officers and to any affiliated business are specifically approved in writing by
the lending institution's Board of Directors, and are made on substantially the
same terms, including interest rates and collateral, as those for comparable
transactions with other persons prevailing at the time, and do not involve more
than the normal risk of collectability or present other unfavorable features.
________________________________
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
2000, subject to ratification of such appointment by the shareholders of the
Company. KPMG LLP, and its predecessors, have served as auditors of Cayuga Bank
and the Company for more than 25 years. Representatives of KPMG LLP will be
present at the Annual Meeting of Shareholders and will have the opportunity to
make a statement, if they so desire, and will be available to respond to
appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2000.
________________________________
15
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
All proposals of shareholders intended to be presented at the 2001 Annual
Meeting of Shareholders must be received by the Company at the address on the
cover of this proxy statement no later than December 1, 2000 in order to be
included in the proxy statement and form of proxy for the 2000 Annual Meeting.
All such proposals shall be subject to the requirements of the Securities and
Exchange Commission adopted under the Securities Act of 1934, as amended. With
respect to proposals not required to be included in the proxy statement under
the rules of the Securities and Exchange Commission, management will be
permitted to exercise discretionary voting power for all proxies and to vote
against the proposal unless notice of such proposal is received by the Company
at the address on the cover of this proxy statement no later than February 14,
2001.
OTHER MATTERS
As of this date, the Board of Directors does not know of any business to be
brought before the Annual Meeting other than as specified above. If any other
matters properly come before the Meeting, however, it is the intention of the
persons named in the enclosed proxy to vote such proxy in accordance with their
judgment on such matters.
A copy of the Annual Report to Shareholders of the Company containing
consolidated financial statements prepared in conformity with generally accepted
accounting principles for the year ended December 31, 1999 accompany this proxy
statement being mailed to shareholders and is incorporated by reference, and
made a part of this proxy statement. Additional copies of the Annual Report to
Shareholders may be obtained without charge from the Secretary of the Company,
115 Genesee Street, Auburn, New York 13021.
By Order of the Board of Directors
/s/ Kathleen A. Manley
Kathleen A. Manley, Corporate Secretary
Auburn, New York
March 27, 2000
The Company will furnish, without charge, to any record holder or
beneficial owner of its common stock at any time after March 30, 2000 a copy of
the Company's Annual Report to the Securities and Exchange Commission on Form
10-K. Written requests should be directed to Iroquois Bancorp, Inc., to the
attention of Kathleen A. Manley, 115 Genesee Street, Auburn, New York 13021.
16
APPENDIX TO PROXY STATEMENT
REVOCABLE
PROXY IROQUOIS BANCORP, INC.
COMMON STOCK
ANNUAL MEETING OF SHAREHOLDERS APRIL 27, 2000
The undersigned holder of common stock of Iroquois Bancorp, Inc.
hereby appoints Marianne R. O'Connor and Robert B. Bantle and each of them
his/her attorneys, agents and proxies to represent the undersigned and to vote
and act upon the shares of common stock standing in the name of the undersigned
which he/she would be entitled to vote if personally present, as specified
below, at the Annual Meeting of Shareholders to be held on Thursday, April 27,
2000 at 10:00 a.m. or at any adjournment thereof, with full power of
substitution and revocation.
BALLOT
1. ELECTION OF DIRECTORS FOR THREE YEAR TERMS EXPIRING IN 2003
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
Class of 2000: Brian D. Baird, John Bisgrove, Jr., Richard D. Callahan.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below).
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS INDEPENDENT AUDITORS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Signature on reverse side required)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE
OTHER SIDE OF THIS CARD. IF NO DIRECTION IS MADE, IT WILL BE VOTED FOR PROPOSALS
1 AND 2.
Date: ___________________________________
Signed __________________________________
(Name of shareholder should be signed exactly as
it appears to the left) Please mark, sign, date
and return this proxy card promptly in the
enclosed postpaid envelope. This will save your
Company the cost of a follow-up solicitation.