SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Under Rule 14a-12
CODORUS VALLEY BANCORP, INC.
----------------------------
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[LETTERHEAD OF CODORUS VALLEY BANCORP, INC. OMITTED]
April 4, 2002
Dear Fellow Shareholders of Codorus Valley Bancorp, Inc.:
On behalf of the corporation's board of directors, I am pleased to invite you to
attend Codorus Valley Bancorp, Inc.'s Annual Meeting of Shareholders to be held
on Tuesday, May 21, 2002 at 9:00 a.m., Eastern Time. The location of the annual
meeting is the Codorus Valley Corporate Center, 105 Leader Heights Road, York,
Pennsylvania 17403. At the annual meeting, you will have the opportunity to ask
questions and to make comments. Enclosed with the proxy statement and notice of
meeting is your proxy and Codorus Valley Bancorp, Inc.'s 2001 Annual Report to
Shareholders.
The principal business of the meeting is to elect 3 Class C Directors to serve a
term of 3 years and to transact any other business that is properly presented at
the annual meeting. The notice of meeting and proxy statement accompanying this
letter describe the specific business to be acted upon in more detail.
I am delighted that you have invested in Codorus Valley Bancorp, Inc., and I
hope that, whether or not you plan to attend the annual meeting, you will vote
as soon as possible by completing, signing and returning the enclosed proxy in
the envelope provided. The prompt return of your proxy will save Codorus Valley
Bancorp, Inc. expenses involved in further communications. Your vote is
important. Voting by written proxy will ensure your representation at the annual
meeting if you do not attend in person.
I look forward to seeing you on May 21, 2002, at the corporation's annual
meeting.
Sincerely,
/s/ Larry J. Miller
Larry J. Miller, President
and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF CODORUS VALLEY BANCORP, INC.
TO BE HELD ON MAY 21, 2002
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that Codorus Valley Bancorp, Inc. will hold its Annual
Meeting of Shareholders on Tuesday, May 21, 2002, at 9:00 a.m., Eastern Time, at
the Codorus Valley Corporate Center, 105 Leader Heights Road, York,
Pennsylvania, 17403 to consider and vote upon the following proposals:
1. To elect the following individuals as Class C Directors, each to serve a 3
year term:
o D. Reed Anderson, Esq.;
o MacGregor S. Jones; and
o Larry J. Miller
2. To transact any other business properly presented at the annual meeting.
Shareholders of record as of March 14, 2002 are entitled to notice of the
meeting and may vote at the annual meeting, either in person or by proxy.
Management welcomes your attendance at the annual meeting. Whether or not you
expect to attend the annual meeting in person, you are requested to complete,
sign, date and promptly return the enclosed proxy in the accompanying
postage-paid envelope. The prompt return of your proxy will save the corporation
expenses involved in further communications. Even if you return a proxy, you may
vote in person if you give written notice to the Secretary of the corporation
and attend the annual meeting. Returning your proxy will ensure that your shares
will be voted in accordance with your wishes and that the presence of a quorum
will be assured.
The corporation's board of directors is distributing the proxy statement, form
of proxy and Codorus Valley Bancorp, Inc.'s 2001 Annual Report to Shareholders
on or about April 4, 2002.
By Order of the Board of Directors,
/s/ Harry R. Swift
Harry R. Swift, Esq.
Secretary
York, Pennsylvania
April 4, 2002
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED PROXY AND
MAIL IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
CODORUS VALLEY BANCORP, INC.
CODORUS VALLEY CORPORATE CENTER
105 LEADER HEIGHTS ROAD
YORK, PENNSYLVANIA 17403
NASDAQ TRADING SYMBOL: CVLY
PROXY STATEMENT
2002 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 2002
Mailed to Shareholders on or about April 4, 2002
TABLE OF CONTENTS
PROXY STATEMENT Page
GENERAL INFORMATION............................................................1
Date, Time and Place of the Annual Meeting................................1
Description of Codorus Valley Bancorp, Inc................................1
VOTING PROCEDURES..............................................................2
Solicitation and Voting of Proxies........................................2
Quorum and Vote Required For Approval.....................................3
Revocability of Proxy.....................................................4
Methods of Voting.........................................................4
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS......................................5
Governance................................................................5
Directors and Executive Officers of Codorus Valley Bancorp, Inc...........5
Executive Officers of PeoplesBank.........................................6
Committees and Meetings of the Corporation's and
the Bank's Boards of Directors...................................... 6
Committees of the Bank's Board of Directors...............................8
Compensation of the Boards of Directors...................................8
Independent Directors' Deferred Compensation Plan.........................9
Independent Directors' Stock Option Plan..................................9
AUDIT COMMITTEE REPORT.........................................................9
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION...........................11
Compensation Committee Report............................................11
Chief Executive Officer's Compensation...................................12
Executive Officers' Compensation.........................................13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION...................13
EXECUTIVE COMPENSATION........................................................13
Summary Compensation Table...............................................14
Qualified Stock Options..................................................15
Option/SAR Grants in Last Fiscal Year....................................15
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-end Option/SAR Values........................................15
Stock Incentive Plan.....................................................16
401(k) Plan..............................................................16
Employment Contract with Change of Control Provision.....................16
Change of Control Agreement..............................................17
Salary Continuation Agreements...........................................17
Supplemental Retirement Plans............................................18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................................18
ELECTION OF DIRECTORS.........................................................18
Qualification and Nomination of Directors................................18
Information as to Nominees and Directors.................................19
Board of Directors - Continuing as Directors.............................20
BENEFICIAL OWNERSHIP OF CODORUS VALLEY BANCORP, INC.'S STOCK
OWNED BY PRINCIPAL OWNERS AND MANAGEMENT ................................21
Principal Shareholders...................................................21
Share Ownership by the Directors, Officers and Nominees..................22
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.......................23
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING.................................24
PERFORMANCE GRAPH.............................................................25
PROPOSAL......................................................................26
Election of 3 Class C Directors..........................................26
ANNUAL REPORT.................................................................26
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING.........................26
ADDITIONAL INFORMATION........................................................26
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
CODORUS VALLEY BANCORP, INC.
TO BE HELD ON MAY 21, 2002
GENERAL INFORMATION
Date, Time and Place of the Annual Meeting
Codorus Valley Bancorp, Inc., a Pennsylvania business corporation and
registered bank holding company, is furnishing this proxy statement in
connection with the solicitation by the board of directors of proxies to be
voted at the corporation's annual meeting of shareholders. The annual meeting
will be held at the Codorus Valley Corporate Center, 105 Leader Heights Road,
York, Pennsylvania 17403 on Tuesday, May 21, 2002 at 9:00 a.m., Eastern Time.
The corporation's principal executive office is located at the Codorus
Valley Corporate Center, 105 Leader Heights Road, York, Pennsylvania 17403. The
corporation's telephone number is (717) 747-1519 or (800) 646-1970. All
inquiries regarding the annual meeting should be directed to Harry R. Swift,
Esq., Secretary and General Counsel of Codorus Valley Bancorp, Inc.
Description of Codorus Valley Bancorp, Inc.
Codorus Valley Bancorp, Inc. was incorporated in October 1986 under
Pennsylvania law; and, in March 1987, it became a one-bank holding company
pursuant to the Bank Holding Company Act of 1956. PeoplesBank, A Codorus Valley
Company and SYC Realty Company, Inc. are the corporation's wholly-owned
subsidiaries. PeoplesBank is a Pennsylvania chartered banking institution with
deposits insured by the FDIC. PeoplesBank wholly-owns SYC Settlement Services,
Inc. and SYC Insurance Services, Inc.
Included with this proxy statement is a copy of the corporation's annual
report to shareholders for the fiscal year ended December 31, 2001. You may
obtain a copy of the corporation's annual report for the 2000 fiscal year at no
cost by contacting the Treasurer, Codorus Valley Bancorp, Inc., Codorus Valley
Corporate Center, 105 Leader Heights Road, P.O. Box 2887, York, Pennsylvania
17405-2887, or by calling (717) 747-1519.
We have not authorized anyone to provide you with information about the
corporation; therefore, you should rely only on the information contained in
this document or on documents to which we refer. Although we believe we have
provided you with all the information helpful to you in your decision to vote,
events may occur at Codorus Valley Bancorp, Inc. subsequent to printing this
proxy statement that might affect your decision or the value of your stock.
1
VOTING PROCEDURES
Solicitation and Voting of Proxies
The board of directors solicits this proxy for use at the corporation's
2002 Annual Meeting of Shareholders. The corporation's directors, officers and
other employees may solicit proxies in person or by telephone, facsimile,
telegraph or mail, but only for use at the annual meeting. The corporation will
pay the cost of preparing, assembling, printing, mailing and soliciting proxies
and any additional material that the corporation sends to its shareholders.
Codorus Valley Bancorp, Inc. will make arrangements with brokerage firms and
other custodians, nominees, and fiduciaries to forward proxy solicitation
materials to the owners of stock held by these persons. The corporation will
reimburse these persons for their reasonable forwarding expenses.
Only shareholders of record as of the close of business on Thursday, March
14, 2002, (the voting record date), may vote at the annual meeting. The
corporation's records show that, as of the voting record date, 2,564,261 shares
of the corporation's common stock were outstanding. On all matters to come
before the annual meeting, shareholders may cast one vote for each share held.
Cumulative voting rights do not exist with respect to the election of directors.
See "Principal Shareholders" on pages 21 and 22 for a list of the persons known
by the corporation to be the beneficial owner of 5% or more of the corporation's
outstanding common stock as of the voting record date.
If you are also a participant in the Codorus Valley Bancorp, Inc. Dividend
Reinvestment and Stock Purchase Plan, the enclosed proxy will not serve as a
voting instruction card for your shares held in the plan. Instead, Wells Fargo
Bank Minnesota, N.A., the plan administrator, will provide plan participants
with a separate voting instruction card/proxy representing those shares held in
the Dividend Reinvestment and Stock Purchase Plan. The separate voting
instruction cards must be signed and returned to Wells Fargo or your shares held
in the plan will not be voted.
---
If your voting instruction card is signed but does not indicate your voting
preferences, the plan administrator will vote your shares FOR the 3 nominees for
Class C Director. Whole and fractional shares credited to your dividend
reinvestment account as of March 14, 2002, are included on your voting
instruction card.
By properly completing a proxy, the shareholder appoints Dallas L. Darr,
Mildred L. Lackey and George E. McCullough as proxy holders to vote his or her
shares as specified on the proxy. The proxy holders will vote any signed proxy
not specifying to the contrary as follows:
2
FOR the election of the following individuals as Class C Directors for a
term of 3 years expiring in 2005:
o D. Reed Anderson, Esq.;
o MacGregor S. Jones; and
o Larry J. Miller
Codorus Valley Bancorp, Inc.'s board of directors proposes to mail this
proxy statement to the corporation's shareholders on or about April 4, 2002.
Quorum and Vote Required For Approval
Codorus Valley Bancorp, Inc.'s Articles of Incorporation authorize the
corporation to issue up to 10,000,000 shares of common stock, par value $2.50
per share.
At the close of business on March 14, 2002, the corporation had 2,564,261
shares of common stock issued and outstanding. The corporation's common stock is
the only issued and outstanding class of stock.
In order to hold the annual meeting, a "quorum" of shareholders must be
present. Under Pennsylvania law and the corporation's Bylaws, the presence, in
person or by proxy, of the holders of a majority of the shares entitled to vote
(meaning a majority of the number of shares outstanding on the voting record
date) is required to constitute a quorum for the transaction of business at the
meeting. The proxy holders will count votes withheld and abstentions when
determining the presence of a quorum. However, the proxy holders will not count
broker non-votes when determining the presence of a quorum for the particular
matter as to which the broker withheld authority.
Assuming the presence of a quorum, the affirmative vote of a majority of
the number of shares that constitutes a quorum for the transaction of business
at the annual meeting is required to elect the director candidates. The proxy
holders will not cast votes for or against any director candidates where the
broker withheld authority. Cumulative voting rights do not exist for the
election of directors. Each share of common stock is entitled to cast only one
vote for each nominee. For example, if a shareholder owns 10 shares of common
stock, he or she may cast up to 10 votes for each of the 3 Class C Director
nominees.
3
Revocability of Proxy
Shareholders who sign proxies may revoke them at any time before they
are voted by:
o delivering written notice of the revocation or delivering a properly
executed later-dated proxy to Harry R. Swift, Esq., Secretary of
Codorus Valley Bancorp, Inc., at Codorus Valley Corporate Center, 105
Leader Heights Road, York, Pennsylvania, 17403 or by mailing the
notice or proxy to Harry R. Swift, Esq., Secretary, at Codorus Valley
Bancorp, Inc., P.O. Box 2887, York, Pennsylvania 17405-2887; or
o attending the meeting and voting in person after giving written notice
to the Secretary of Codorus Valley Bancorp, Inc.
You have the right to vote and, if desired, to revoke your proxy any time
before the annual meeting. Should you have any questions, please call Harry R.
Swift, Esq., Secretary, at (717) 747-1519 or (800) 646-1970.
Methods of Voting
Voting by Proxy
---------------
o Mark your selections.
o Date your proxy and sign your name exactly as it appears on your
proxy.
o Mail the proxy to Wells Fargo Bank Minnesota, N.A. in the enclosed
postage-paid envelope.
Voting in Person
----------------
o Attend the annual meeting and show proof of eligibility to vote.
o Obtain a ballot.
o Mark your selections.
o Date your ballot and sign your name exactly as it appears in the
corporation's transfer books.
4
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Governance
The board of directors oversees all of the corporation's business,
property, and affairs. The chairman and officers keep the members of the board
informed of the corporation's business through discussions at board meetings and
by providing them reports and other materials. The members also keep themselves
informed by attending board and committee meetings.
During 2001, the corporation's board of directors held 12 meetings and the
bank's board of directors held 26 meetings. Each director attended at least 75%
of the combined total number of meetings of the corporation's and the bank's
boards and the committees of which he or she was a member, except Director
Donald H. Warner, due to medical reasons.
Directors and Executive Officers of Codorus Valley Bancorp, Inc.
The following table sets forth (in alphabetical order) selected information
about the corporation's directors and executive officers. The officers are
elected by the board of directors and each holds office at the board's
discretion.
POSITION HELD AGE AS OF
NAME POSITION SINCE MARCH 14, 2002
---- -------- ----- --------------
D. Reed Anderson, Esq. Class C Director 1994 59
M. Carol Druck Class B Director 1988 53
MacGregor S. Jones Class C Director 1993 56
Rodney L. Krebs Class A Director 1988 61
Vice Chairman of the Board 2000
Larry J. Miller Class C Director 1986 50
President 1986
Chief Executive Officer 1986
Dallas L. Smith Class A Director 1986 56
Harry R. Swift, Esq. Secretary 1998 54
Vice President 1998
General Counsel 1997
George A. Trout, D.D.S. Class A Director 1986 67
Chairman of the Board 1994
Donald H. Warner Class B Director 1990 63
Vice President 1993
5
Jann Allen Weaver, CPA Treasurer 2000 52
Assistant Secretary 1991
Chief Financial Officer 1989
Executive Officers of PeoplesBank
The following table sets forth selected information about the bank's
executive officers, each of whom is elected by the bank's board of directors and
each of whom holds office at the board's discretion.
POSITION HELD AGE AS OF
NAME POSITION SINCE MARCH 14, 2002
---- -------- ----- --------------
Rodney L. Krebs Chairman of the Board 2000(1) 61
Larry J. Miller President 1981 50
Chief Executive Officer 1981
Harry R. Swift, Esq. General Counsel 1997 54
Executive Vice President 1998
Cashier 1999 1999
George A. Trout, D.D.S. Vice Chairman of the Board 1992(1) 67
Jann Allen Weaver, CPA Chief Financial Officer 1989 52
Senior Vice President 1994
Executive Vice President 2001
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(1) Mr. Krebs and Dr. Trout are not employees of the corporation or its
subsidiaries.
Committees and Meetings of the Corporation's and the Bank's Boards of Directors
The corporation's board of directors has, at present, no standing
committees, except the audit committee, which jointly serves the corporation and
the bank. The corporation does not maintain a compensation or a nominating
committee. A shareholder who intends to nominate a candidate for election to the
board of directors must provide written notice to the corporation's Secretary in
accordance with the informational requirements of Section 10.1 of the
corporation's bylaws. The shareholder's notice must be delivered or received at
the corporation's principal executive office not less than 90 days prior to the
anniversary date of the preceding shareholder meeting called for the election of
directors.
6
During 2001, the bank's board of directors maintained 6 standing
committees: executive, audit, risk management, trust and investment services,
asset-liability and marketing steering. The function and composition of each of
these committees is described below.
EXECUTIVE: This committee is authorized to meet at the call of an officer,
primarily to take action regarding the purchase and sale of
securities and to pass on loans presented for discount between
regularly scheduled board meetings. This committee met once in
2001. Rodney L. Krebs chairs this committee.
AUDIT: This committee held 4 meetings during 2001. The Audit Committee
oversees the accounting function of the corporation and the bank,
recommends to the board the engagement of independent auditors
for the year, reviews with management and the auditors the plan
and scope of the audit engagement, reviews the annual financial
statements of the bank and any recommended changes or
modifications to control procedures and accounting practices and
policies, and monitors with management and the auditors the
bank's system of internal controls and its accounting and
reporting practices. Dallas L. Smith chairs this committee.
RISK This committee was instituted during 2001 and met once. The
MANAGEMENT: committee addresses risks inherent in the corporation and its
affiliates relating to the following broadly identified risk
categories: credit, interest rate, liquidity, price, transaction,
compliance, strategic and reputation. Larry J. Miller chairs this
committee.
TRUST AND This committee provides general oversight and supervises the
INVESTMENT operation of the bank's trust and investment services division.
SERVICES: This committee met 12 times in 2001. D. Reed Anderson, Esq.,
chairs this committee.
ASSET- This committee reviews the bank's asset-liability and interest
LIABILITY: rate risk management. This committee met 7 times in 2001. Jann
Allen Weaver, CPA chairs this committee.
MARKETING This committee provides broad oversight and guidance to the
STEERING: bank's marketing activities. Its goals are to increase the bank's
identity in the marketplace, and increase market share and
profitability. This committee met 11 times in 2001. Cheryl L.
Keener chairs this committee.
7
Committees of the Bank's Board of Directors
MEETINGS HELD
COMMITTEE MEMBERS IN 2001
- --------- ------- -------
EXECUTIVE Rodney L. Krebs, chair, MacGregor S. Jones, Larry J. Miller, 1
Dallas L. Smith, George A. Trout, D.D.S. and Donald H. Warner
AUDIT Dallas L. Smith, chair, Rodney L. Krebs and Donald H. Warner 4
RISK Larry J. Miller, chair, George A. Trout, D.D.S., non-directors 1
MANAGEMENT Harry R. Swift, Esq., Diane E. Hill, CPA, Steven E. Miller, Linda
D. Senft, Jann Allen Weaver, CPA, and Scott T. Weaver
TRUST AND D. Reed Anderson, Esq., chair, M. Carol Druck, and MacGregor 12
INVESTMENT S. Jones
SERVICES
ASSET- Jann Allen Weaver, CPA, non-director chair, Larry J. Miller, and 7
LIABILITY non-directors Todd A. Tyson, Cheryl L. Keener, Kent A. Ketterman
Jane W. Loucks, CFA, and Elaine M. Miller
MARKETING Cheryl L. Keener, non-director chair, D. Reed Anderson, Esq., 11
STEERING MacGregor S. Jones, and non-directors James W. Coombes, David J.
Cover, Kent A. Ketterman, and Jann Allen Weaver, CPA
Compensation of the Boards of Directors
In 2001, members of the corporation's board of directors were not paid for
attendance at board meetings or committee meetings. The bank does not compensate
employee directors for attendance at board of directors meetings or committee
meetings.
In 2001, the bank's non-employee directors were compensated for their
services rendered as follows:
o a monthly retainer of $600; and
o directors' fees of $350 for each regular or special meeting attended;
and
o committee meeting fees paid at the rate of $100 per hour for
attendance.
8
The bank's chairman of the board received a monthly retainer of $700 in
2001. In addition, the bank paid life insurance premiums on behalf of the
non-employee bank directors, which amounted to $1,743 in 2001. In the aggregate,
the bank paid $119,713 to the board of directors in 2001.
Independent Directors' Deferred Compensation Plan
The corporation maintains a deferred compensation plan for non-employee, or
"independent" directors. Participants may elect to defer receipt of compensation
in order to gain certain tax benefits under Internal Revenue Code Section 451.
This plan is not funded by the corporation.
Independent Directors' Stock Option Plan
The corporation maintains the Codorus Valley Bancorp, Inc. 1998 Independent
Directors Stock Option Plan. The corporation's shareholders approved the plan at
the 1998 annual meeting and the board of directors originally reserved 100,000
shares, or 115,763 shares as of December 31, 2001, as adjusted for stock
dividends, for issuance under the plan. The purposes of the plan are to advance
the corporation's and the bank's development, growth and financial condition by
providing additional incentives to non-employee members of the corporation's
board of directors by encouraging them to acquire stock ownership in the
corporation and to secure, retain and motivate non-employee directors.
Directors who are not employees of the corporation or its subsidiaries are
eligible to receive awards under the plan. Pursuant to the terms of the plan,
each non-employee director who attended at least 75% of the total number of
board of directors and committee meetings during the previous fiscal year is
granted non-qualified stock options at each annual reorganization meeting of the
corporation. The first award under the plan was made at the 1998 organization
meeting. The purchase price of common stock subject to each stock option granted
is the fair market value at the time of grant. The recipient may exercise these
stock options for ten years from the grant date. As of December 31, 2001, the
corporation had granted 85,480 qualified stock options under this plan, as
adjusted for applicable stock dividends and/or stock splits. This aggregate
amount includes stock options that may have been cancelled and/or exercised
prior to December 31, 2001.
AUDIT COMMITTEE REPORT
On June 12, 2001, the boards of directors of Codorus Valley Bancorp, Inc.
and PeoplesBank, A Codorus Valley Company, the corporation's wholly owned
banking subsidiary, approved a resolution, based on the recommendations of the
audit committees of Codorus Valley and the bank, to engage Beard Miller Company
LLP as Codorus Valley's independent accountant. Beard Miller Company LLP
replaced Ernst & Young LLP (Ernst & Young), the prior independent accountant.
9
Ernst and Young's report on Codorus Valley's consolidated financial
statements for 2000 and 1999 contained no adverse opinion or disclaimer of
opinion or qualification as to uncertainty, audit scope or accounting
principles.
During the fiscal years 2000 and 1999 and interim periods, there were no
disagreements or reportable events relating to any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which Ernst & Young would have referred to in connection with their
report if the disagreement wasn't resolved to their satisfaction. Codorus Valley
acknowledges that disagreements required to be reported in response to the
preceding sentence include both those resolved to Ernst & Young's satisfaction
and those not resolved to Ernst & Young's satisfaction. Codorus Valley further
acknowledges that disagreements contemplated by this rule are those which
occurred at the decision-making level; i.e., between Codorus Valley personnel
responsible for the presentation of its financial statements and Ernst & Young
personnel responsible for rendering its report. There have been no reportable
events within the meaning of Item 304 of Regulation S-K.
On June 13, 2000, the board of directors adopted a written charter for the
Audit Committee, a copy of which is attached to last year's proxy statement. As
required by the charter, the Audit Committee, in fulfilling its oversight
responsibilities regarding the audit process:
o reviewed and discussed the fiscal year 2001 audited financial
statements with management;
o discussed with the independent auditors, Beard Miller Company LLP, the
matters required to be discussed by Statement on Accounting Standards
No. 61, 89 and 90 (Codification of Statements on Auditing Standards,
AU 380, as amended or supplemented); and
o reviewed the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees, as modified or
supplemented), and discussed with the independent auditors any
relationships that may impact their objectivity and independence.
Based upon the review and discussions referred to above, the Audit
Committee's review of management's representations, and the report of the
independent accountants to the Audit Committee, the Audit Committee recommended
to the board of directors that the audited financial statements for the year
ended December 31, 2001, be included in the corporation's Annual Report on Form
10-K and filed with the Securities and Exchange Commission.
Fees pertaining to services rendered to the corporation and the bank by
Beard Miller Company LLP, the independent accountants, during the year ended
December 31, 2001, were as follows:
10
Audit Fees $ 43,500
Financial Information Systems
Design and Implementation Fees 0
All Other Fees $ 4,700
The Audit Committee is comprised of 3 directors, all of whom are considered
"independent" as defined in Rule 4200(a)(15) of the National Association of
Securities Dealers listing standards.
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
The foregoing report has been furnished by the current members of the Audit
Committee.
MEMBERS OF THE AUDIT COMMITTEE
Dallas L. Smith, Chairman
Rodney L. Krebs
Donald H. Warner
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Report
The corporation's board of directors governs the corporation and its
subsidiaries. In fulfilling its fiduciary duties, the board of directors
endeavors to act in the best long-term interests of the corporation's
shareholders, customers, and the communities served by the corporation and its
subsidiaries. To accomplish the corporation's strategic goals and objectives,
the board of directors engages competent persons, who undertake to accomplish
these objectives with integrity and with cost-effectiveness. The board of
directors fulfills part of its strategic mission through the compensation of
these individuals. The bank, the corporation's wholly owned financial
subsidiary, provides compensation to the corporation's and the bank's directors
and employees.
The corporation seeks to offer competitive compensation opportunities for
all employees based on the individual's contribution and personal performance.
The entire board of directors (comprised of the individuals named below)
administers the compensation program. The board
11
seeks to establish a fair compensation policy to govern the executive officers
base salaries and incentive plans to attract and motivate competent, dedicated,
and ambitious managers, whose efforts will enhance the corporation's products
and services and will result in improved profitability, increased dividends to
the shareholders, and subsequent appreciation in the market value of the
corporation's shares.
The board reviews and annually approves the compensation of the
corporation's and the bank's top executives, including the chief executive
officer, executive vice presidents, senior vice presidents, and all other vice
presidents. As a guideline in determining base salaries, the board uses
information composed of a Pennsylvania bank peer group. This peer group of banks
with assets of $300 million to $500 million is different than the peer group
used for the performance graph. The peer group on the performance graph includes
bank holding companies and banks listed on NASDAQ, which may not be located in
Pennsylvania. The corporation uses Pennsylvania peer group banks because of
common industry issues and competition for the same executive talent group.
The board of directors does not deem Section 162(m) of the Internal Revenue
Code (the IRC) to be applicable to the corporation at this time. The board of
directors intends to monitor the future application of IRC Section 162(m) to the
compensation paid to its executive officers; and, in the event that this section
becomes applicable, the board of directors intends to amend the corporation's
and the bank's compensation policies to preserve the deductibility of the
compensation payable under the policies.
Chief Executive Officer's Compensation
The board of directors determined that the chief executive officer's 2001
compensation be set at $180,000, which was appropriate in light of the following
2001 Codorus Valley Bancorp, Inc. accomplishments: the addition of two full
service financial centers, a mortgage banking operation, a centralized call
center, and a variable annuity investment product. Additionally, the chief
executive officer was actively and effectively involved in numerous community
activities and served in leadership positions as chairman of the York County
Economic Development Corporation, vice-chairman of the William F. Goodling
Regional Advanced Skills Center, and vice president of the York-Adams Council of
the Boy Scouts of America. No direct correlation exists between the chief
executive officer's compensation, any change in the chief executive officer's
compensation, and any of the above criteria, nor does the board give any weight
to any of the above specific individual criteria. The board subjectively
determines the chief executive officer's compensation based on a review of all
relevant information.
Executive Officers' Compensation
The board of directors increased the 2001 compensation of the corporation's
and the bank's executive officers by approximately 4.75% over 2000 compensation.
The board determined these increases based on its subjective analysis of the
individual's contribution to the corporation's strategic goals and objectives.
In determining whether the strategic goals have been achieved, the board
considers numerous factors. Although the board measured the
12
performance and increases in compensation in light of these factors, no direct
correlation exists between any specific criteria and an employee's compensation,
nor does the board, in its analysis, attribute specific weight to any such
criteria. The board makes a subjective determination after review of all
relevant information, including the above.
In addition to base salary, the corporation's and the bank's executive
officers may participate in annual and long-term incentive plans, including the
bank's 401(k) plan and the corporation's stock incentive plan. (See page 16 for
more information.)
General labor market conditions, the individual's specific responsibilities
and the individual's contributions to the corporation's success influence total
compensation opportunities available to the corporation's and the bank's
employees. The board reviews individuals annually on their anniversary date of
hire and strives to offer compensation that is competitive with that offered by
employers of comparable size in our industry. Through these compensation
policies, the corporation strives to meet its strategic goals and objectives to
its constituencies and provide compensation that is fair and meaningful to its
executive officers.
This report is furnished by Codorus Valley Bancorp, Inc.'s board of
directors, which performs the functions of a compensation committee.
BOARD OF DIRECTORS
D. Reed Anderson, Esq. Rodney L. Krebs George A. Trout, D.D.S.
M. Carol Druck Larry J. Miller Donald H. Warner
MacGregor S. Jones Dallas L. Smith
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Larry J. Miller, President and Chief Executive Officer of the corporation
and the bank, participated in the discussion relating to the compensation of all
bank employees; but, he neither participates in conducting his own review nor
takes part in determining his own compensation.
EXECUTIVE COMPENSATION
The following table sets forth information with regard to the annual
compensation for service in all capacities to the corporation and to the bank
for the fiscal years ended December 31, 2001, 2000 and 1999 for those persons
who were, at December 31, 2001:
o the chief executive officer; and
o the other four most highly compensated executive officers of the
corporation and of the bank, to the extent that these persons' total
annual salary and bonus exceeded $100,000.
13
SUMMARY COMPENSATION TABLE
--------------------------
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Other Securities
Name Annual Restricted Underlying
and Compen- Stock Options/ LTIP All Other
Principal Salary Bonus sation Awards SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#)(1) ($) ($)(2)(3)(4)
-------- ---- --- --- --- --- ------ --- ---
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Larry J. Miller, 2001 169,165 0 0 0 8,000 0 18,205
President and 2000 170,338 0 0 0 0 0 39,841(5)
Chief Executive 1999 172,432 0 0 0 3,307 0 16,901
Officer of the
corporation and
the bank
Harry R. Swift, 2001 151,855 600 0 0 1,500 0 10,751
Esq., Secretary, 2000 148,215 200 0 0 0 0 9,328
General Counsel and 1999 146,251 500 0 0 1,653 0 8,964
Vice President of
the corporation,
General Counsel,
Executive Vice
President and
Cashier of the bank
- -------
(1) As adjusted for all stock dividends paid through December 31, 2001.
(2) Includes bank contributions to the 401(k) plan on behalf of Mr. Miller of
$5,250, $5,250 and $4,593 for 2001, 2000 and 1999, respectively.
(3) Includes life insurance premiums paid on behalf of Mr. Miller of $565, $530
and $478 for 2001, 2000 and 1999, respectively; and life insurance premiums
paid on behalf of Mr. Swift of $651, $578, and $505 for 2001, 2000 and
1999, respectively.
(4) Includes the payment of club dues for Mr. Miller in the amount of $1,140,
$1,140 and $1,080 for 2001, 2000 and 1999, respectively; as well as a
vehicle for Mr. Miller, valued at $11,250, $11,250 and $10,750 in 2001,
2000 and 1999, respectively. Also includes a vehicle for Mr. Swift valued
at $8,750, $8,750 and $8,459 in 2001, 2000 and 1999, respectively.
(5) This includes a non-recurring payment of $20,769 in 2000 for accrued
vacation due to a company-wide policy change.
14
Qualified Stock Options
The following table sets forth information relating to the corporation's
grants of qualified stock options to the executives named in the preceding table
during 2001, pursuant to the Codorus Valley Bancorp, Inc. 2000 Stock Incentive
Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
-------------------------------------
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
----------------- ---------------
% of Total Options/
Number of Securities SARs Granted to Exercise or
Underlying Options/ Employees in Base Price Expiration
Name SARs Granted (#) Fiscal Year ($/Sh) Date 5%($) 10%($)
---- ---------------- ----------- ------ ---- ----- ------
(a) (b) (c) (d) (e) (f) (g)
Larry J. Miller 8,000/0 47.1 14.625 12/11/11 73,581 186,468
Harry R. Swift, Esq. 1,500/0 8.8 14.625 12/11/11 13,796 34,963
The following table sets forth information relating to the exercise of and year
end value of qualified stock options granted pursuant to the Codorus Valley
Bancorp, Inc. 1996 and 2000 Stock Incentive Plans.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
----------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Value Options/SARs In-The-Money Options/SARs
Acquired on Realized at FY-End (#)(1) at FY-End ($)(1)(2)
Name Exercise (#) ($)(2) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ ------ ------------------------- -------------------------
(a) (b) (c) (d) (e)
Larry J. Miller 0 0 42,903/22,379 36,644/0
Harry R. Swift, Esq. 0 0 3,968/1,500 0/0
- -------------
(1) As adjusted for all stock dividends paid through December 31, 2001.
(2) The fair market value of the corporation's common stock on December 31,
2001 was $13.60 per share.
15
Stock Incentive Plan
On March 14, 2000, the board of directors adopted the Codorus Valley
Bancorp, Inc. 2000 Stock Incentive Plan and the plan was adopted by the
shareholders at the 2000 annual meeting. The corporation originally reserved
100,000 shares under the plan or 105,000 shares as of December 31, 2001, as
adjusted for stock dividends, for issuance under the plan. The plan provides for
awards of qualified stock options and non-qualified stock options to officers,
and is administered by a disinterested committee of the corporation's board of
directors. In 2000, there were no qualified stock options granted under the
plan.
401(k) Plan
The bank maintains and sponsors a defined contribution 401(k) savings and
investment plan. The 401(k) plan is administered by a committee which is
appointed by the board of directors. The 401(k) plan is subject to the Internal
Revenue Code of 1986 and to the regulations promulgated thereunder. Participants
are entitled to certain rights and protection under the Employee Retirement
Income Security Act of 1974.
Each bank employee who attains the age of 21, successfully completes any
probationary period(s) and, if part time, completes 1,000 hours of service per
year may participate in the 401(k) plan. An eligible employee may elect to
contribute certain portions of salary, wages, bonus (other than year-end bonus),
or other direct remuneration to the 401(k) plan. Generally, eligible employees
may not contribute more than 20% of their compensation. In 2001, 2000, and 1999,
the bank matched 50% of the first 6% of the employee's contributions. The bank's
contributions to the 401(k) plan for each participant vest in 3 years from plan
enrollment. The employee's contributions to the 401(k) plan vest immediately.
The bank incurred expenses of $77,000, $67,000 and $57,000, for financial
reporting purposes during 2001, 2000 and 1999, respectively, in connection with
the 401(k) plan.
Employment Contract with Change of Control Provision
In 1993, the corporation, the bank and Larry J. Miller, President and Chief
Executive Officer of the corporation and the bank, entered into an employment
agreement for a term of 3 years, which term renews automatically for an
additional 12 months at the end of each calendar year unless the corporation and
the bank provide written notice to Mr. Miller of non-renewal. The agreement
specifies Mr. Miller's positions and duties, compensation and benefits, and
indemnification and termination provisions. The agreement also contains a
non-competition provision and a confidentiality provision.
16
Under the terms of his employment agreement, Mr. Miller serves as the
President and Chief Executive Officer of the corporation and of the bank and as
a member of the boards of directors of the corporation and of the bank. Pursuant
to his employment agreement, Mr. Miller was entitled to an annual direct salary
of $180,000 in 2001. This salary may be increased in subsequent years as the
board of directors deems appropriate. In addition, the boards of directors of
the corporation and the bank have discretion to pay a periodic bonus to Mr.
Miller. Mr. Miller is not entitled to receive director's fees or other
compensation for serving on the corporation's or the bank's board of directors
or their committees. Mr. Miller is also entitled to receive the employee
benefits made available to bank employees and to use a vehicle provided by the
bank.
As amended in October 1997, the agreement with Mr. Miller provides that if
his employment is terminated by the corporation or the bank, due to death,
disability or "for cause", then he is entitled to the full annual direct salary
through the date of termination. If Mr. Miller's employment is terminated by the
corporation or the bank other than pursuant to death, disability or "for cause",
then he is entitled to his full annual direct salary from the date of
termination through the last day of the term of the agreement, or an amount
equal to his current annual direct salary, whichever is greater. If Mr. Miller
terminates his employment for "good reason", then he is entitled to an amount
equal to his direct annual salary. As amended in 1997, if Mr. Miller's
employment is terminated as a result of a change in control, then he is entitled
to receive a lump sum payment equal to 2.99 times his then current direct annual
salary and will continue his eligibility to participate in all employee benefit
plans and programs in which he was previously entitled to participate.
Change of Control Agreement
On October 1, 1997, the corporation, the bank and Harry R. Swift, Esq.,
Secretary, General Counsel and Vice President of the corporation and General
Counsel, Executive Vice President and Cashier of the bank, entered into a change
of control agreement that provides certain benefits to Mr. Swift in the event of
a change of control. The agreement becomes operative only upon a change in
control of the corporation or the bank or other specified event. The initial
term of the agreement is 39 months and each subsequent term consists of a 36
month period, which term automatically renews for an additional 12 months at the
end of each calendar year unless the corporation and the bank provide written
notice to Mr. Swift of non-renewal. The agreement specifies payments upon
termination as of the date of the change of control at not less than 2 times Mr.
Swift's then current annual direct salary.
Salary Continuation Agreements
On October 1, 1998, the bank entered into salary continuation agreements
with Larry J. Miller and Harry R. Swift, Esq., respectively. These agreements
provide for certain payments to these named executives following the executive's
normal retirement date and continuing for 239 and 179 months, respectively. The
agreements contain provisions for early retirement, disability
17
benefits, death benefits and payments on specified changes of control. The
agreements also contain non-competition provisions.
Supplemental Retirement Plans
In 1998, the bank provided group term life insurance replacement plans for
specific executive officers. These plans are the funding vehicle for payments to
the executives upon certain specified events. The specified events include a
change of control and the executive's normal retirement. In addition, the bank
provided a director approved group term life insurance replacement plan for the
benefit of the corporation's directors. This plan provides for payments to
accrue to the directors following termination of their service as a member of
the board of directors. These supplemental retirement plans replaced, in part,
other insurance coverages.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The corporation and the bank have not entered into any material
transactions, proposed or consummated, with any director or executive officer of
the corporation or the bank, or any associate of the foregoing persons, with the
exception of that disclosed below. The corporation and the bank have engaged in
and intend to continue to engage in banking and financial transactions in the
ordinary course of business with directors and officers of the corporation and
the bank and their associates on comparable terms with similar interest rates as
those prevailing from time to time for other bank customers.
Total loans outstanding from the bank at December 31, 2001, to the
corporation's and the bank's officers and directors as a group, members of their
immediate families and companies in which they had an ownership interest of 10%
or more amounted to $3,151,000, or approximately 12.9% of the bank's total
equity capital. The bank made these loans in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than the normal risk of collection or present other unfavorable
features. The largest aggregate amount of indebtedness outstanding at any time
during fiscal year 2001 to officers and directors of the corporation and the
bank as a group was $4,712,521. The aggregate amount of indebtedness outstanding
as of the latest practicable date, March 14, 2002, to the above described group
was $2,704,421.
ELECTION OF DIRECTORS
Qualification and Nomination of Directors
Section 10.2 of the corporation's bylaws authorizes the number of directors
to be not less than 5 nor more than 25. The bylaws provide for three classes of
directors with staggered 3 year terms of office. The board of directors may,
from time to time, fix the number of directors and their respective
classifications. All candidates for director must be at least 21 years of age.
No
18
director may continue to serve after he or she attains the age of 70 years. Each
director must hold solely, in his or her name, at least 100 shares of common
stock, which shares must be free of any liens or other encumbrances.
The board of directors nominated the 3 persons named below to serve as
Class C Directors until the 2005 annual meeting of shareholders or until their
earlier death, resignation, or removal from office. All of the nominees are
presently members of the board of directors and all have consented to serve
another term as a director if re-elected. If any of the nominees should be
unavailable to serve for any reason, pursuant to Section 11.1 of the
corporation's bylaws, a majority of the board of directors then in office may
fill the vacancy until the expiration of the term of the class of directors to
which he or she was appointed.
In accordance with Section 10.3 of the corporation's bylaws, the board of
directors is divided into 3 classes whose terms expire at successive annual
meetings. Therefore, the corporation maintains a classified board with staggered
3 year terms of office. Currently, Class A consists of 3 directors, Class B
consists of 2 directors, and Class C consists of 3 directors. Shareholders will
elect 3 Class C Directors at the annual meeting to serve for a 3 year term that
expires at the corporation's 2005 annual meeting.
The proxy holders intend to vote all proxies for the election of each of
the 3 nominees named below, unless you indicate that your vote should be
withheld from any or all of them. Each nominee elected as a director will
continue in office until his or her successor has been duly elected and
qualified, or until his or her death, resignation or retirement.
The board of directors proposes the following nominees for election as
Class C Directors at the annual meeting:
o D. Reed Anderson, Esq.;
o MacGregor S. Jones; and
o Larry J. Miller
The board of directors recommends that shareholders vote FOR the proposal
to elect the 3 nominees listed above as Class C Directors.
Information as to Nominees and Directors
Set forth below is the principal occupation and certain other information
regarding the nominees and other directors whose terms of office will continue
after the annual meeting. You will find information about their share ownership
on page 22 and 23.
19
Board of Directors - Continuing as Directors
CLASS C DIRECTORS
(TO SERVE UNTIL 2002)
AND NOMINEES FOR
CLASS C DIRECTORS
(TO SERVE UNTIL 2005, IF ELECTED)
D. Reed Anderson, Esq. Mr. Anderson, age 59, has served as a member
of the corporation's and the bank's board of
directors since 1994. Mr. Anderson is an
attorney-at-law with the firm of Stock and Leader,
LLP located in York, Pennsylvania.
MacGregor S. Jones Mr. Jones, age 56, has served as a member of the
corporation's and the bank's board of directors since
1993. He served as the corporation's Assistant
Secretary from January 1994 to April 1997. Mr. Jones
is a retired automobile dealer.
Larry J. Miller Mr. Miller, age 50, has served as the corporation's
President and Chief Executive Officer and a director
since 1986 and as the bank's President and Chief
Executive Officer and a director since 1981.
CURRENT CLASS A DIRECTORS
(to serve until 2003)
Rodney L. Krebs Mr. Krebs, age 61, has served as the corporation's
Vice Chairman and the bank's Chairman since 2000 and
has been a member of the corporation's and the bank's
board of directors since 1988. He also served as the
corporation's Treasurer from 1990 to 2000. Mr. Krebs
is the President of Springfield Contractors, Inc., a
heavy equipment/earth moving firm located near Glen
Rock, Pennsylvania.
Dallas L. Smith Mr. Smith, age 56, served as the corporation's
Secretary from January 1994 to May 1998. He has
served as a bank director since 1983 and as a
corporation director since 1986. He is the President
of Bruce V. Smith, Inc., a retail furniture
corporation located in Jacobus, Pennsylvania.
George A. Trout, D.D.S. Dr. Trout, age 67, has served as the corporation's
Chairman since January 1994. Dr. Trout has served as
the bank's Vice Chairman since 1992. He has been a
member of the bank's
20
board of directors since 1975 and of the corporation's
board since 1986. Dr. Trout is a retired dentist.
CURRENT CLASS B DIRECTORS
(to serve until 2004)
M. Carol Druck Ms. Druck, age 53, has been a member of the
corporation's and the bank's board of directors since
1988. She served as the corporation's Assistant
Secretary from April 1990 to April 1997 and as the
corporation's Assistant Treasurer from January 1994
to April 1997. Ms. Druck is the President of Druck
Realty, Inc. and is a realtor with Morgan-Collins
Realtors, Inc. located in York, Pennsylvania.
Donald H. Warner Mr. Warner, age 63, has been a member of the
corporation's and the bank's board of directors since
1990. He has been a Vice President of the corporation
since 1993. Mr. Warner is the President of Warner
Services, Inc., a moving and storage company located
in Red Lion, Pennsylvania.
BENEFICIAL OWNERSHIP OF
CODORUS VALLEY BANCORP, INC.'S STOCK OWNED BY
PRINCIPAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table sets forth, as of March 14, 2002, the name and address
of each person who owns of record or who is known by the board of directors to
be the beneficial owner of more than 5% of the corporation's outstanding common
stock, the number of shares beneficially owned by such person, and the
percentage of the corporation's outstanding common stock owned. The "beneficial
owner" of a security includes any person who directly or indirectly has or
shares: voting power, including the power to vote or to direct the voting of the
security; and/or investment power, including the power to dispose or direct the
disposition of the security.
21
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS
---------------- -------------------- -----
PeoplesBank, A Codorus Valley Company 260,962(1) 10.18%
Trust and Investment Services Division
Codorus Valley Corporate Center
105 Leader Heights Road
York, PA 17403
(1) 156,555 shares of common stock beneficially owned by the bank are held in
its fiduciary capacity. The bank has sole voting and dispositive power over
these shares of common stock. 104,407 shares of common stock beneficially
owned by the bank are shares for which the bank exercises shared
dispositive power. 156,555 shares of common stock beneficially owned by the
bank are shares for which the bank exercises sole voting power. 104,407
shares of common stock beneficially owned by the bank are shares for which
the bank exercises shared voting power and shared dispositive power. The
bank, in its fiduciary capacity, intends to cast all shares under its
control FOR the election of the nominees for Class C Director.
Share Ownership by the Directors, Officers and Nominees
The following table sets forth, as of March 14, 2002, and from information
received from the respective individuals, the amount and percentage of the
common stock beneficially owned by each director, each nominee and all officers,
directors, and nominees as a group. All shares are held individually unless
otherwise indicated. The percentage of outstanding stock owned is less than 1%,
unless otherwise indicated.
AMOUNT AND
NATURE OF
NAME OF INDIVIDUAL OR BENEFICIAL PERCENTAGE
IDENTITY OF GROUP OWNERSHIP(1)(2) OF CLASS
----------------- --------------- --------
D. Reed Anderson, Esq. 13,766(3) --
M. Carol Druck 15,137(4) --
MacGregor S. Jones 30,949(5) 1.21%
Rodney L. Krebs 24,266(6) --
Larry J. Miller 54,624(7) 2.13%
Dallas L. Smith 16,971(8) --
George A. Trout, D.D.S. 70,008(9) 2.73%
Donald H. Warner 12,007(10) --
Harry R. Swift, Esq. 3,968(11) --
Jann Allen Weaver, CPA 4,316(12) --
All Officers and Directors as a Group
(8 Directors, 6 Officers,
10 persons in total) 246,012(13) 9.59%
22
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in the
General Rules and Regulations of the Securities and Exchange Commission and
may include securities owned by or for the individual's spouse and minor
children and any other relative who has the same home, as well as
securities that the individual has or shares voting or investment power, or
has the right to acquire beneficial ownership within 60 days after March
14, 2002. Beneficial ownership may be disclaimed as to certain of the
securities. All numbers here have been rounded to the nearest whole number.
(2) Information furnished by the officers, directors and nominees.
(3) Includes 1,907 shares held in Mr. Anderson's 401(k) plan and non-qualified
stock options of 10,935.
(4) Includes 2,971 shares held jointly with her spouse, 506 shares held in
trust for her grandchildren and non-qualified stock options of 10,935.
(5) Includes 6,126 shares held in Mr. Jones' IRA, 10,836 shares held jointly
with his spouse, 2,307 shares held individually in his spouse's IRA and
non-qualified stock options of 10,935.
(6) Includes 3,596 shares held in Mr. Krebs' IRA, 7,485 shares held jointly
with his spouse and non-qualified stock options of 10,935.
(7) Includes 8,341 shares held jointly with his spouse, 258 shares held jointly
with his mother, 679 shares held jointly with his daughter, 679 shares held
jointly with his son, 781 shares held in Mr. Miller's IRA and non-qualified
stock options of 42,903.
(8) Includes 441 shares held individually in his spouse's IRA and non-qualified
stock options of 10,935.
(9) Includes 6,540 shares held in Dr. Trout's Defined Benefit Pension Plan,
52,097 shares held in trust for his children, 336 shares held jointly with
his spouse and non-qualified stock options of 10,935.
(10) Includes 486 shares held in Mr. Warner's IRA and non-qualified stock
options of 10,935.
(11) Includes non-qualified stock options of 3,968.
(12) Includes 348 shares held jointly with his spouse and non-qualified stock
options of 3,968.
(13) Includes 28,568 shares reported in Schedule 13-G, as amended, of the Trust
and Investment Services Division of PeoplesBank, A Codorus Valley Company
(17,487 shares are held for the benefit of MacGregor S. Jones and 11,081
shares are held for the benefit of Rodney L. Krebs.)
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, requires that the
corporation's officers and directors, and persons who own more than 10% of the
registered class of the corporation's equity securities, file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the corporation with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of Forms 3, 4 and 5 and amendments
thereto received by it, or written representations from certain reporting
persons that no Form 5 was required for that reporting person, the corporation
believes that during the period from January 1, 2001 through December 31, 2001,
its officers and directors were in compliance with all filing requirements
applicable to them, except for bank Senior Vice President Todd A. Tyson who
inadvertently filed a late Form 4 to report one transaction during 2001.
23
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Any shareholder who, in accordance with and subject to the provisions of
the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the corporation's proxy statement for its 2003 Annual
Meeting of Shareholders must deliver the proposal in writing to the Secretary of
Codorus Valley Bancorp, Inc. at its principal executive offices, Codorus Valley
Corporate Center, 105 Leader Heights Road, P. O. Box 2887, York, Pennsylvania
17405-2887, not later than Friday, December 6, 2002. If a shareholder proposal
is submitted to the corporation after December 6, 2002, it is considered
untimely; and, although the proposal may be considered at the annual meeting, it
may not be included in the corporation's 2003 proxy statement. Any proposals
should be addressed to the Secretary. Section 10.1 of the corporation's bylaws
requires a shareholder to deliver a notice of nomination for election to the
board of directors to the Secretary no later than 90 days in advance of the
anniversary date of the preceding shareholders meeting. See page 18 for more
information on nomination procedures and requirements.
[INTENTIONALLY LEFT BLANK]
24
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the corporation's common stock against
the cumulative total return of the S&P 500 Stock Index and the NASDAQ Bank Index
for the period of 5 fiscal years commencing January 1, 1997 and ending December
31, 2001. The graph shows that the cumulative investment return to shareholders,
based on the assumption that a $100 investment was made on December 31, 1996, in
each of the corporation's common stock, the S&P 500 Stock Index and the NASDAQ
Bank Index, and that all dividends were reinvested in such securities over the
past 5 years, the cumulative total return on such investment would be $116.39,
$146.10, $152.82, $148.87, and $138.29, respectively. The shareholder return
shown on the graph below is not necessarily indicative of future performance.
[GRAPHIC OMITTED]
In the printed version of the document, a line graph appears which depicts
the following plot points:
INDEX 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
Codorus Valley 100.00 166.39 146.10 152.82 148.87 138.29
Bancorp, Inc.
S&P 500 100.00 133.37 171.44 207.52 188.62 166.22
NASDAQ Bank Index 100.00 167.41 166.33 159.89 182.38 197.44
25
PROPOSAL
Election of 3 Class C Directors
The nominees for election are:
o D. Reed Anderson, Esq. (director since 1994);
o MacGregor S. Jones (director since 1993); and
o Larry J. Miller (director since 1986).
Each has consented to serve a 3 year term. (See page 18 for more
information.)
If any director is unable to stand for re-election, the board may designate
a substitute. The proxy holders will vote in favor of a substitute nominee. The
board of directors has no reason to believe the 3 nominees for Class C Director
will be unable to serve if elected.
Cumulative voting rights do not exist with respect to the election of
directors. The affirmative vote of a majority of the number of shares that
constitutes a quorum for the transaction of business at the annual meeting is
necessary to elect the director candidates.
The Board of Directors recommends that shareholders vote FOR the election
of the 3 nominees as Class C Directors.
ANNUAL REPORT
A copy of the corporation's annual report to shareholders for its fiscal
year ended December 31, 2001 is enclosed with this proxy statement. A
representative of Beard Miller Company LLP, the independent auditors who
examined the financial statements in the annual report, will attend the meeting.
The representative will have the opportunity to make a statement, if he desires
to do so, and will be available to respond to any appropriate shareholder
questions concerning the annual report.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The board of directors knows of no business other than that referred to in
the accompanying Notice of Annual Meeting of Shareholders that may be presented
at the annual meeting. However, if any other matter should be properly presented
for consideration and voting at the annual meeting or any adjournments of the
meeting, the proxy holders will vote the proxies in what they determine to be
the corporation's best interests.
26
ADDITIONAL INFORMATION
Upon written request of any shareholder, a copy of the corporation's annual
report on Form 10-K for its fiscal year ended December 31, 2001, including the
financial statements, schedules and exhibits, required to be filed with the
Securities and Exchange Commission pursuant to Rule 13a-1 under the Securities
Exchange Act of 1934, may be obtained, without charge by writing to the:
Treasurer, Codorus Valley Bancorp, Inc., Codorus Valley Corporate Center, 105
Leader Heights Road, P.O. Box 2887, York, Pennsylvania 17405-2887 or via the
Internet at www.peoplesbanknet.com, select Codorus Valley Bancorp, Inc., then
select the Securities and Exchange Commission link, or visit the SEC's website
at www.sec.gov.
27
CODORUS VALLEY BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 21, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Dallas L. Darr, Mildred L.
Lackey and George E. McCullough and each or any of them, proxies of the
undersigned, with full power of substitution to vote all of the shares of
Codorus Valley Bancorp, Inc. that the undersigned may be entitled to vote at the
corporation's Annual Meeting of Shareholders to be held on Tuesday, May 21,
2002, at 9:00 a.m., Eastern Time, at the Codorus Valley Corporate Center, 105
Leader Heights Road, York, Pennsylvania 17403, and at any adjournment or
postponement of the meeting as follows:
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER(S) AND RETURNED PROMPTLY TO
WELLS FARGO BANK MINNESOTA, N.A. IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE.
IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER
SHOULD SIGN.
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. ELECTION OF 3 CLASS C DIRECTORS TO SERVE FOR A 3 YEAR TERM.
01 D. REED ANDERSON, ESQ. 02 MACGREGOR S. JONES 03 LARRY J. MILLER
[ ] Vote FOR all nominees [ ] Vote WITHHELD from
(except as marked) all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED TO THE RIGHT.)
- --------------------------------------------------------------------------------
2. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any adjournment
or postponement of the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED ABOVE.
Dated: ______________________, 2002
Address Change? Mark Box [ ]
Indicate changes below:
_________________________________
Shareholder Signature
_________________________________
Co-holder Signature if any
Signature(s) in Box
When signing as attorney, executor, administrator, trustee or guardian, please
give full title. If more than one trustee, each owner should sign.
[LETTERHEAD OF CODORUS VALLEY BANCORP, INC.]
April 4, 2002
Dear Dividend Reinvestment and Stock Purchase Plan Participant:
As a participant in Codorus Valley Bancorp, Inc.'s Dividend Reinvestment and
Stock Purchase Plan, you are entitled to instruct the plan's administrator,
Wells Fargo Bank Minnesota, N.A., to vote the plan shares held on your behalf at
Codorus Valley Bancorp, Inc.'s 2002 Annual Meeting of Shareholders. To instruct
the plan administrator as to how you would like these shares voted at the annual
meeting, please complete the enclosed Voting Instruction Card/Proxy and return
it to Wells Fargo. At the annual meeting, if a participant executed and returned
a Voting Instruction Card/Proxy, the plan administrator will vote the
participant's whole and fractional interests credited to his or her account, to
the extent permitted by law or the company's bylaws.
The board of directors encloses a copy of Codorus Valley Bancorp, Inc.'s Notice
of Annual Meeting and proxy statement in connection with the 2002 Annual Meeting
of Shareholders and a copy of Codorus Valley Bancorp, Inc.'s 2001 Annual Report
to Shareholders. Also enclosed is your Voting Instruction Card/Proxy which you
should complete and promptly return to the plan administrator in the enclosed
envelope.
If you have any questions, please contact Wells Fargo Shareowner Services at
(800) 468-9716 or the undersigned at (717) 747-1519 or (800) 646-1970.
Sincerely,
/s/ Larry J. Miller
Larry J. Miller, President
and Chief Executive Officer
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
VOTING INSTRUCTION CARD/PROXY
CODORUS VALLEY BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 21, 2002
---------------------------------
The undersigned hereby constitutes and appoints Wells Fargo Bank Minnesota,
N. A. proxy of the undersigned, with full power of substitution, to vote all of
the shares of Codorus Valley Bancorp, Inc. that the Codorus Valley Bancorp, Inc.
Dividend Reinvestment and Stock Purchase Plan holds on behalf of the undersigned
and may be entitled to vote at Codorus Valley Bancorp, Inc.'s Annual Meeting of
Shareholders to be held at the Codorus Valley Corporate Center, 105 Leader
Heights Road, York, Pennsylvania 17403, on Tuesday, May 21, 2002 at 9:00 a.m.,
Eastern Time, and at any adjournment or postponement of the meeting as follows:
THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SHARES OF COMMON STOCK HELD IN YOUR
PLAN ACCOUNT BUT NOT REGISTERED IN YOUR NAME. THESE SHARES OF COMMON STOCK CAN
BE VOTED ONLY BY THE PLAN ADMINISTRATOR AS THE RECORD HOLDER OF THE SHARES.
PLEASE DATE, SIGN AND PROMPTLY RETURN YOUR VOTING INSTRUCTION CARD/PROXY TO
WELLS FARGO BANK MINNESOTA, N.A. IN THE RETURN ENVELOPE PROVIDED.
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1. ELECTION OF 3 CLASS C DIRECTORS TO SERVE FOR A 3 YEAR TERM.
01 D. REED ANDERSON, ESQ. 02 MACGREGOR S. JONES 03 LARRY J. MILLER
[ ] Vote FOR all nominees [ ] Vote WITHHELD from
listed above (except as marked) all nominees
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED TO THE RIGHT.)
- --------------------------------------------------------------------------------
2. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any adjournment
or postponement of the meeting.
THIS VOTING INSTRUCTION CARD/PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED PLAN PARTICIPANT. IF NO DIRECTION IS MADE,
THIS VOTING INSTRUCTION CARD/PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE.
Dated: ______________________, 2002 _________________________________
Shareholder Signature
Address Change? Mark Box [ ]
Indicate changes below:
_________________________________
Co-holder Signature if any
Signature(s) in Box
When signing as attorney, executor, administrator, trustee or guardian, please
give full title. If more than one trustee, each owner should sign.