DIMECO, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Jerome D. Theobald
and Susan Wright and each and any of them, proxies of the undersigned, with
full power of substitution, to vote all of the shares of Dimeco, Inc. (the
"Company") that the undersigned may be entitled to vote at the Annual Meeting
of Shareholders of the Company to be held at the Operations Center of The
Dime Bank, 120 Sunrise Avenue, Honesdale, Pennsylvania 18431, on Thursday,
April 22, 1999, at 2:00 p.m.,Eastern Standard Time, and at any adjournment or
postponement of the meeting as follows:
1. ELECTION OF CLASS A DIRECTORS
Joseph J. Murray, Thomas A. Peifer and Robert E. Genirs
[ ] For all nominees listed [ ] WITHHOLD AUTHORITY
above (except as provided to vote for all nominees
to the contrary below) listed above
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
-------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES LISTED ABOVE.
2. Ratification of the selection of S. R. Snodgrass, A.C., Certified
Public Accountants, as the auditors of the Company for the year ending
December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
3. In their discretion, the proxies 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, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE AND FOR PROPOSAL 2.
Dated , 1999
----------------------
-------------------------------
-------------------------------
Signature(s)
Number of Shares Held of
Record on March 15, 1999:
-------------------
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER AND RETURNED
PROMPTLY TO THE COMPANY 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 MUST SIGN.
DIMECO, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF DIMECO, INC.:
Dimeco, Inc. (the "Company") hereby gives notice that the Annual
Meeting of Shareholders will be held at 2:00 p.m., Eastern Standard time, on
Thursday, April 22, 1999, at the Operations Center of The Dime Bank, 120
Sunrise Avenue, Honesdale, Pennsylvania 18431, for the following purposes:
1. To elect three Class A directors to serve for a three-year
term and until their successors are properly elected and qualified;
2. To ratify the selection of S. R. Snodgrass, A.C., Certified
Public Accountants, of Wexford, Pennsylvania, as the independent auditors of
the Company for the fiscal year ending December 31, 1999; and
3. To transact such other business as may properly come before
the Annual Meeting and any adjournment or postponement of the meeting.
Only those shareholders of record at the close of business, at 5:00
p.m., on Monday, March 15, 1999, may vote at the Annual Meeting.
A copy of the Company's Annual Report for the fiscal year ended
December 31, 1998, is being mailed with this notice.
You are urged to mark, sign, date and promptly return your proxy in
the enclosed, postage-prepaid envelope. By so doing, you will assure that
your shares will be voted in accordance with your wishes, whether or not you
personally attend the meeting. The return of your proxy will also help to
assure the presence of a quorum at the meeting. Finally, the prompt return of
your signed proxy, regardless of the number of shares you hold, will aid the
Company in reducing the expense of additional proxy solicitation. The giving
of such proxy does not affect your right to vote in person if you attend the
meeting and give written notice to the Secretary of the Company.
By Order of the Board of Directors
Joseph J. Murray
President & Chief Executive Officer
April 1, 1999
PROXY STATEMENT FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD APRIL 22, 1999
GENERAL
Introduction, Date, Place and Time of Meeting
Dimeco, Inc. (the "Company"), 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 Annual Meeting of Shareholders of the Company and any
adjournment or postponement of the meeting. The Annual Meeting will be held
at the Operations Center of The Dime Bank, 120 Sunrise Avenue, Honesdale,
Pennsylvania 18431, on Thursday, April 22, 1999, at 2:00 p.m., Eastern
Standard time.
The main office of the Company is located at The Dime Bank, 820
Church Street, Honesdale, Pennsylvania 18431. The Dime Bank is the wholly-
owned subsidiary of the Company and its sole subsidiary. The telephone number
for the Company is (570) 253-1970. All inquiries should be directed to Joseph
J. Murray, President and Chief Executive Officer.
The Company is first sending this Proxy Statement and the enclosed form of
proxy to shareholders of the Company on or about April 1, 1999.
Solicitation
By properly filling out, signing and returning the accompanying form
of proxy in the enclosed postage-prepaid envelope, a shareholder is appointing
the proxy holders to vote his or her shares in accordance with the
shareholder's directions on the proxy. Unless a proxy specifies to the
contrary, the proxy holders will vote the shares held by the shareholder
giving the proxy as follows:
- - FOR the election of the three nominees for Class A Director named below;
and
- - FOR the ratification of the selection of S. R. Snodgrass, A.C., Certified
Public Accountants of Wexford, Pennsylvania, as the independent auditors
for the Company for the year ending December 31, 1999.
The execution and return of the enclosed proxy will not affect a
shareholder's right to attend the Annual Meeting and vote in person, after
giving written notice to the Secretary of the Company of his or her intent to
vote in person.
The Company will pay for preparing, assembling, mailing and
soliciting proxies. In addition to the use of the mails, certain directors,
officers and employees of the Company intend to solicit proxies personally, by
telephone and by facsimile. The Company will arrange with brokerage houses
and other custodians, nominees and fiduciaries to forward proxy solicitation
material to the beneficial owners of stock held of record by these persons.
Upon request, the Company will reimburse such custodians for their reasonable
forwarding expenses.
Right of Revocation
A shareholder who executes and returns a proxy may revoke the proxy
at any time before it is voted only by:
- - Giving written notice of the revocation to Mr. Gerald Weniger, Secretary,
Dimeco, Inc., 820 Church Street, Honesdale, Pennsylvania, 18431, telephone:
(570)253-1970;
- - Executing a later-dated proxy and giving written notice of this fact to the
Secretary of the Company; or
- - Giving written notice to the Secretary of the Company that the shareholder
intends to vote in person at the Annual Meeting.
Voting Securities and Record Date
At the close of business on March 15, 1999, the Company had
outstanding 732,168 shares of common stock, $.50 par value per share.
Only holders of common stock on the Company's records as of the
close of business on March 15, 1999, may vote at the Annual Meeting. On all
matters to come before the Annual Meeting, each share of common stock entitles
its holder to one vote.
Quorum
Pennsylvania law requires the presence of a quorum prior to the
transaction of business at the Annual Meeting. Section 3.1 of the By-laws of
the Company provide that the presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes which all shareholders are
entitled to cast shall constitute a quorum for the transaction of business at
the meeting. Votes withheld and abstentions will be counted in determining
the presence of a quorum for the particular matter. Broker non-votes will not
be counted in determining the presence of a quorum for the particular matter,
as to votes which the broker withheld authority. Those shareholders present,
in person or by proxy, may adjourn the meeting to another time and place if a
quorum is lacking.
Vote Required for Approval
Assuming the presence of a quorum, the three nominees for director
receiving the highest number of votes cast by shareholders entitled to vote
for the election of directors shall be elected. Votes withheld from a nominee
and broker non-votes will not be cast for the nominee.
Assuming the presence of a quorum, the affirmative vote of a
majority of the votes cast by all shareholders, in person or by proxy, who are
entitled to vote at the Annual Meeting will be sufficient to approve the
selection of S.R. Snodgrass, A.C., Certified Public Accountants, as the
auditors of the Company for the year ending December 31,1999. Abstentions and
broker non-votes, which do not count either for or against a proposal, have
the practical effect of reducing the number of affirmative votes required to
achieve a majority for the matter by reducing the total number of shares voted
from which the required majority is calculated.
2
PRINCIPAL BENEFICIAL OWNERS OF THE COMPANY'S STOCK
Principal Owners
As of March 15, 1999 there was no person who owned of record or who
is known by the Board of Directors to be the beneficial owner of more than
five percent (5%) of the Company's outstanding common stock.
Beneficial Ownership by Officers, Directors and Nominees
The following table indicates the amount and percentage of the
common stock of the Company beneficially owned by each director, each nominee
and all officers and directors of the Company as a group as of March 15, 1999.
All shares reported have been rounded to the nearest whole share and are
individually owned by the reporting person unless otherwise indicated.
Name of Individual Amount and Nature of Percent of Outstanding Common
or Identity of Group Beneficial Ownership(1)(2) Stock Beneficially Owned
- -------------------- -------------------------- ------------------------
Robert E. Genirs(4) 1,000 -----
Barbara Jeanne Genzlinger(5) 151 -----
John S. Kiesendahl(5)(9) 10,932 1.49%
Joseph J. Murray(4)(10) 1,427 -----
Thomas A. Peifer(4)(7) 7,041 -----
William E. Schwarz(6) 5,550 -----
Henry M. Skier(6)(8) 29,600 4.04%
John F. Spall(5)(7) 11,115 1.52%
Gerald J. Weniger(6) 3,789 -----
All Officers and Directors as a
Group (11 persons in total) 72,346 9.88%
- -------------------------------
(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 ("SEC") 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 to which the individual has or
shares voting or investment power or has the right to acquire beneficial
ownership within 60 days after March 15, 1999. Beneficial ownership may
be disclaimed as to certain of the securities.
(2) Information furnished by the directors and the Company.
(3) Less than one percent (1%) unless otherwise indicated.
(4) A Class A Director whose term expires in 1999 and a nominee for Class A
Director whose term expires in 2002.
(5) A Class B Director whose term expires in 2000.
(6) A Class C Director whose term expires in 2001.
(7) All shares are held jointly with his spouse.
(8) Includes 29,347 shares held individually by Mr. Skier and 253 shares
held by Mr. Skier as custodian for his two children.
(9) Includes 1,588 shares held individually by Mr. Kiesendahl, 2,383 shares
held by his stepson who resides with Mr. Kiesendahl and 6,961 shares
held by Woodloch Pines, Inc., of which Mr. Kiesendahl is the President.
(10) Includes 1,415 shares held jointly by Mr. Murray with his spouse and 12
shares held by his son who resides with Mr. Murray.
3
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities (in this
case the Company's common stock), to file reports of ownership and changes in
ownership with the Securities and Exchange Commission, (the "SEC"). SEC
regulation require officers, directors and greater than ten-percent
shareholders to furnish the Company with copies of all Section 16(a) forms
that they file.
Based solely on its review of the copies of such forms received by
it, or on written representations from certain reporting persons that no Forms
5 were required for those persons, the Company believes that during the period
January 1, 1998 through December 31, 1998 all filing requirements applicable
to its officers, directors and greater than ten-percent shareholders were
complied with, except as follows: Mr. Henry M. Skier, a director of the
Company, did not file a Form 4 in a timely manner. On July 26, 1996, Mr.
Skier purchased 660 additional shares of the Company's common stock for his
retirement account. The Form 4 was filed on February 8, 1999, in conjunction
with the filing of Mr. Skier's Form 5.
ELECTION OF DIRECTORS
The Company has a classified Board of Directors with staggered
three-year terms of office. In a classified board, the directors are
generally divided into separate classes of equal number with the terms of the
separate classes expiring in successive years. The Company's Board is divided
into three classes. Thus, at the 1999 Annual Meeting of Shareholders,
successors to the current Class A directors whose terms expire in 1999 shall
be elected to hold office for a term of three years.
In addition, there is no cumulative voting for the election of
directors. Accordingly, each share of common stock entitles its holder to
cast only one vote for each nominee. For example, if a shareholder owns 100
shares of common stock, he or she may cast up to 100 votes for each of the
nominees for director in the class to be elected. Only the affirmative vote
of at least a majority of the shares of common stock represented at the Annual
Meeting can elect a nominee to the office of director.
The Board of Directors of the Company has nominated the current
Class A directors to serve as Class A directors for the next three-year term
of office. The nominees for re-election this year are as follows:
- Joseph J. Murray, director of the Company since 1992;
- Thomas A. Peifer, director of the Company since 1992; and
- Robert E. Genirs, director of the Company since 1998.
Each nominee has consented to serve a three year term of office and until his
successor is elected and qualified.
Unless otherwise instructed, the proxy holders will vote the Proxies
received by them for the election of the three nominees for Class A director
named above. If any nominee should become unavailable for any reason, the
proxy holders will vote the proxies in favor of a substitute nominee as the
Board of Directors of the Company shall determine. The Board of Directors has
no reason to believe the nominees named will be unable to serve if elected. A
majority of directors of the Company may fill any vacancy occurring on the
Board of Directors of the Company for any reason until the expiration of the
term of vacancy. Also, pursuant to Section 10.2 of the Company's By-Laws, the
Board of Directors may from time to time fix the number of directors and their
classifications, except that the total number of directors may not be less
than three.
4
INFORMATION AS TO NOMINEES AND DIRECTORS
The following table contains certain information with respect to the
current Class A directors who are also the nominees for Class A director and
the current Class B and Class C directors. The terms of office for class A, B
and C directors expire in 1999, 2000 and 2001, respectively.
Principal Occupation
for Past Five Years
Age as of and Position Held with Director Since
Name March 15, 1999 Company and Bank Company/Bank
- ---- -------------- ---------------- ------------
Nominees For Class A Directors Whose Term Will Expire
In 2002 And Current Class A Directors Whose Term Expires In 1999
- ----------------------------------------------------------------
Joseph J. Murray 59 President and Chief Executive 1992/1991
Officer of the Company and
the Bank
Thomas A. Peifer 56 Superintendent of the 1992/1987
Wallenpaupack Area
School District
Robert E. Genirs(1) 63 Retired 1998; prior 1998/ -
Chief Administrative Officer -
Lehman Brothers
Class B Directors Whose Term Expires In 2000
- --------------------------------------------
John S. Kiesendahl 52 President - Woodloch 1992/1985
Pines, Inc. (resort)
Barbara J. Genzlinger(1) 47 Owner - Settlers Inn 1998/ -
(bed & breakfast)
John F. Spall(1) 52 Attorney-at-law 1999/ -
Class C Directors Whose Term Expires In 2001
- --------------------------------------------
William E. Schwarz 56 Chairman of the Board of 1992/1971
the Company and the Bank
President - Edw. J. Schwarz, Inc
(automobile dealership)
Henry M. Skier 58 President and Treasurer - 1992/1982
A. M. Skier Agency, Inc.
(independent insurance agency)
Gerald J. Weinger 68 Secretary of the Company 1992/1986
Assistant Secretary of the Bank
Retired - 1998; prior
President - Weniger Electronics,
Inc. (retail electronic
appliances and equipment)
(1) New directors appointed to fill vacancies in the Board which were
created by increasing the number of Class A and Class B directors to
three each and by the vacancy created by the death of Mr. David Boyd in
1997.
5
The members of the Board of Directors of the Company also serve as
members of the Board of Directors of the Bank. During 1998, the Board of
Directors of the Company held seven meetings. Directors received no
additional remuneration for attendance at meetings of the Board of
Directors of the Company. The Board of Directors of the Bank held 28 meetings.
Each of the Directors, with the exception of Mr. Skier, attended at
least 75% of the total number of meetings of the Company's Board of Directors.
Each of the directors, with the exception of Mr. Genirs, attended at least 75%
of the total number of meetings of the Bank's Board of Directors.
At present, the Board of Directors of the Company has no standing
committees. Neither the Company nor the Bank has a nominating committee. A
shareholder who desires to nominate an individual for director should submit a
proposal in writing to the Secretary of the Company in accordance with Section
10.1 of the Company's By-laws not less than 60 days prior to the date of any
meeting of shareholders called for the election of directors and must provide
the specific information listed in Section 10.1 of the By-Laws.
INFORMATION AS TO COMPENSATION OF EXECUTIVES AND DIRECTORS
Executive Compensation
The following table sets forth the total compensation for services
in all capacities paid by the Company and the Bank during 1998, 1997, and 1996
to the Company's and the Bank's President and Chief Executive Officer. No
other officer of the Company or the Bank had total annual salary and bonus
that exceeded $100,000 during 1998, 1997 or 1996.
SUMMARY COMPENSATION TABLE (1)
Annual Compensation
------------------------------------------------
Other Annual| All Other
Name and Fiscal Compensation|Compensation
Principal Position Year Salary($) Bonus($) ($) | ($)
- ------------------------------------------------------------------------------
|
Joseph J. Murray, 1998 130,179 8,650 6,210(2) | 48,993(3)
President and Chief 1997 132,592 8,000 7,351(2) | 37,781(4)
Executive Officer of 1996 100,511 10,047 6,398(2) | 34,877(5)
the Company and Bank |
==============================================================================
(1) From January 1, 1996 through December 31, 1998, the Company did not pay
any long-term compensation in the form of stock options, stock
appreciation rights, restricted stock or any other long-term
compensation, nor did it make any long-term incentive plan payments.
Accordingly, no such information is presented in the Summary
Compensation Table.
(2) Incremental costs for an automobile made available to Mr. Murray.
(3) Includes $40,377 vested benefit in salary continuation plan, a $7,688
contribution to Mr. Murray's 401(k) profit sharing plan and $928
representing various medical, disability and life insurance
premiums.
(4) Includes $26,405 vested benefit in salary continuation plan, a $9,324
contribution to Mr. Murray's 401(k) profit-sharing plan and $2,052
representing various medical, disability and life insurance premiums
(5) Includes $24,260 vested benefit in a salary continuation plan, a $7,962
contribution to Mr. Murray's 401(k) profit-sharing plan and $2,655
representing various medical, disability and life insurance premiums.
6
Salary Continuation Plan for Executive Officers
Joseph J. Murray has served as the Company's and the Bank's
President and Chief Executive Officer since 1993 and Executive Vice President
and Chief Executive Officer of the Bank since 1986. Maureen H. Beilman has
served as the Company's and the Bank's Treasurer since 1993, the Bank's
Secretary since 1997, the Company's Assistant Secretary since 1997 and as
Controller of the Bank since 1988 and as of 1999 as the Chief Financial
Officer of the Company and the Bank. Gary C. Beilman has served as Vice
President of the Company since 1993 and as Vice President of the Bank since
1989 and as of 1999 as the Senior Vice President of the Company and the Bank.
As a result of these officers' active involvement and experience in the
affairs of the Bank, the Bank has depended upon, and continues to depend upon,
their continued employment. The Bank does not maintain employment contracts
or key man insurance, other than in connection with the salary continuation
plans below, with respect to Messrs. Murray and Beilman and Ms. Beilman.
However, in 1995, the Bank entered into agreements to establish a non-
qualified salary continuation plan (the "Salary Continuation Plan") for these
officers. If an officer continues to serve as an officer of the Bank until he
or she attains age 65, the Bank agrees to pay that officer 120 guaranteed
consecutive monthly payments commencing on the first day of the month
following the officer's 65th birthday. If the officer attains 65 years of
age, but dies before receiving all of the guaranteed monthly payments or dies
before age 65 while serving as an officer, then the Bank will make the
remaining payments to that officer's designated beneficiary or to the
representative of his or her estate. The Bank has obtained life insurance
(designating the Bank as beneficiary) on the life of each participating
officer in an amount which is intended to cover the Bank's obligations under
the Salary Continuation Plan, based upon certain actuarial assumptions. In
1998, the Bank accrued $44,877 as an expense for the Salary Continuation Plan.
Income realized from increases in the cash surrender values of the life
insurance policies in 1998 was $55,579.
Report of the Board of Directors on Executive Compensation
The Board of Directors of Dimeco, Inc. is responsible for the
governance of the Company and its subsidiary, The Dime Bank. In fulfilling
its fiduciary duties, the Board of Directors acts in the best interests of the
Company's shareholders, customers and the communities served by the Company
and the Bank. To accomplish the strategic goals and objectives of the
Company, the Board of Directors engages competent persons who undertake to
accomplish these objectives with integrity in a cost-effective manner. The
compensation of these individuals is part of the Board of Directors'
fulfillment of its duties to accomplish the Company's strategic mission. The
Bank provides compensation to the employees of the Company and the Bank.
The fundamental philosophy of the Company's and the Bank's
compensation program is to offer competitive compensation opportunities for
all employees based on the individual's contribution and personal performance.
The Board of Directors in its entirety acts as the Compensation Committee.
The objectives of the Board of Directors in administering this duty are to
establish a fair compensation policy to govern executive officers' base
salaries and to develop incentive plans to attract and motivate competent,
dedicated and ambitious managers whose efforts will enhance the products and
services of the Company, the results of which will be improved profitability,
increased dividends to our shareholders and subsequent appreciation in market
value of our shares.
The Board of Directors annually reviews and approves the
compensation of the Company's and Bank's top executive officers. The top
executives whose compensation is determined by the Board include the president
and chief executive officer, the chief financial officer and treasurer, the
senior vice president and all other vice presidents. As a guideline for
review in determining base salaries, the Board uses compensation information
from the L.R. Webber Associates, Inc. Survey Report, which includes peer group
banks in Pennsylvania with assets of $100,000,000 to $199,999,000.
7
President and Chief Executive Officer Compensation
The Board of Directors, with the exception of Mr. Murray, determines
the annual salary and bonus for the President and CEO. They have determined
that the CEO's 1998 compensation of $130,179 is appropriate in light of the
following Company performance accomplishments over the past five years: (1) a
ninety-seven percent (97%) increase in net income; (2) an eleven percent (11%)
increase in return on equity; and (3) a fifty-nine percent (59%) increase in
assets. In addition, the Company, through its Bank subsidiary, has introduced
a number of new products over this time frame and expanded the operations of
the Company. There is, however, no direct correlation between the CEO's
compensation, the CEO's increase in compensation and any of the above
criteria, nor is there any weight given by the Board to any of the above
specific individual criteria. Such increase in the CEO's compensation is
based on the Board's subjective determination after review of all information,
including the above, that it deems relevant.
Executive Officers
The Board of Directors establishes the compensation of the Company's
and the Bank's executive officers. The members determined compensation
increases based on its subjective analysis of each individual's contribution
to the Company's strategic goals and objectives. In determining whether
strategic goals have been achieved, the Board of Directors considers among
numerous factors, the following; the Company's performance as measured by
earnings, revenues, return on assets, return on equity, market share, total
assets and non-performing loans. Although performance and increases in
compensation were measured in light of these factors, there is no direct
correlation between any such criteria in the Board of Director's analysis.
The determination by the Board is subjective after review of all information,
including the above, it deems relevant.
Total compensation opportunities available to the employees of the
Bank are influenced by general labor market conditions, the specific
responsibilities of the individual and the individual's contributions to the
Company's success. Individuals are reviewed annually on a calendar year
basis. The Bank strives to offer compensation that is competitive with that
offered by employers of comparable size in our industry. Through these
compensation policies, the Company strives to meet its strategic goals and
objectives to its constituencies and provide compensation that is fair and
meaningful to its employees.
Submitted By The Board of Directors Acting
as the Executive Compensation Committee:
Joseph J. Murray John S. Kiesendahl
William E. Schwarz Thomas A. Peifer
Gerald J. Weniger Henry M. Skier
Robert E. Genirs Barbara J. Genzlinger
8
Board of Directors Interlocks and Insider Participation in Compensation
Decisions
Joseph J. Murray, President and Chief Executive Officer of the
Company and the Bank is a member of the Board of Directors. Mr. Murray makes
recommendations to the Board of Directors regarding compensation for all
employees. The recommendations are submitted to the entire Board of
Directors to be voted upon to establish compensation policies. Mr. Murray
does not participate in the discussions and decision relating to his base
salary and cash bonus.
Directors' Compensation
Each outside director of the Bank, with the exception of Mr. Genirs
and Ms. Genzlinger, received $11,000 for his services as a director in 1998.
Mr. Genirs and Ms. Genzlinger, who each received $7,597, were appointed to
serve on the Board of Directors in April 1998 and their compensation was
prorated accordingly. In 1998, the directors of the Bank received $70,194,
in the aggregate, for attendance at Board meetings. Directors received no
remuneration for attendance at meetings of the Board of Directors of the
Company. Mr. Murray is a salaried employee of the Bank and therefore receives
no additional income for his duties as a member of the Board of Directors.
Director Deferred Compensation Plans
The Bank has entered into agreements with two directors to
establish non-qualified deferred compensation plans, the Director Deferred
Compensation Plans. Although Messrs. Skier and Kiesendahl are the only
directors who have entered into these agreements as of this date, the Bank has
offered these plans to all directors and may enter into substantially similar
plans with its remaining directors. Mr. Skier is deferring substantially all
of his directors' fees described above. These fees are paid to a split dollar
insurance plan, which neither the Company nor the Bank pay any additional
amounts. The plan is equal to a sum of money measured by the collateral
assignment portion of the insurance plan between the director and the Bank
accruing during the term of his appointment in connection with the director's
agreement with the Bank. If the directors's appointment is terminated due to
his death or disability while still named as a director of the Bank, the Bank
shall make the payment at the termination of service, if disabled, or to his
beneficiary, if deceased.
The plan for Mr. Kiesendahl is recorded by the Bank in a deferred
compensation account for his benefit. He is entitled to receive all amounts
credited to the account as of the date of termination of service. If
termination is due to his death, his beneficiary will be entitled to receive
all amounts credited to the account as of the date of his death, either in
installments or as a lump sum, at the Bank's discretion. Mr. Kiesendahl chose
not to defer any portion of his director's fees during 1998.
9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the opinion of the management of Dimeco, Inc and The Dime Bank,
there have been no material transactions since January 1, 1998, nor are any
such transactions currently proposed, to which the Company or the Bank was or
is to be a party and in which any director or executive officer of the
Company, or any beneficial owner of more than 5% of the common stock of the
Company or his associate, had or will have a material interest. The Company
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
executive officers of the Company and their associates on comparable terms
and with similar interest rates and collateral as those prevailing from time
to time for other non-affiliated customers of the Company and the Bank. Total
loans outstanding from the Company and the Bank, at December 31, 1998, to the
Company's officers and directors as a group and members of their immediate
families and companies in which they had an ownership interest of 10% or more
was $3,263,850 or 20.2% of the Bank's total equity capital accounts. The
largest amount of indebtedness outstanding at any time during fiscal year 1998
to the above identified group was $3,564,423, which was 23.2% of the Bank's
total equity capital accounts. Such loans do not involve more than the normal
risk of collectibility nor do they present other unfavorable features.
EXECUTIVE OFFICERS OF THE COMPANY
The following table presents selected information about the
executive officers of the Company, each of whom is selected annually by the
Board of Directors and each of whom holds office at the discretion of the
Board of Directors. All reported shares have been rounded to the nearest
whole share.
Bank Number of Age as of
Held Employee Company Shares March 15,
Name Office/Position with Company Since Since Beneficially Owned (6) 1999
- ---- ---------------------------- ----- -------- --------------------- ---------
William E. Schwarz Chairman 1993 (1) 5,550 (3) 56
Joseph J. Murray President and CEO 1993 1986(2) 1,427 (3) 59
Gerald J. Weniger Secretary 1993 (1) 3,789 (3) 68
Maureen H. Beilman CFO,Treasurer and 1993 1988(2) 863 (4) 43
Asst.Secretary
Gary C. Beilman Sr.Vice President 1994 1989(2) 878 (5) 44
- -----------------------------------------------
(1) Messrs. Schwarz and Weniger have never been employees of the Bank.
Refer to "Information as to Nominees and Directors" above.
(2) Messrs. Murray and Beilman and Ms. Beilman are full-time employees of
the Bank. Mr. Beilman is Ms. Beilman's brother-in-law.
(3) Details regarding the beneficial ownership of this individual may be
found in footnotes to "Beneficial Ownership of Officers and Directors
and Nominees" above.
(4) Includes 749 shares held jointly with spouse and 114 shares held by Mrs.
Beilman as custodian for her two children.
(5) All shares held jointly with his spouse.
(6) 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 ("SEC") 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 to which the individual has or
shares voting or investment power or has the right to acquire beneficial
ownership within 60 days after March 15, 1999. Beneficial ownership may
be disclaimed as to certain of the securities.
10
EXECUTIVE OFFICERS OF THE BANK
The following table sets forth selected information about the
principal officers of the Bank, each of whom is selected by the Board of
Directors of the Bank and each of whom holds office at the discretion of the
Board of Directors of the Bank. All shares reported have been rounded to the
nearest share.
Bank Number of Age as of
Held Employee Company Shares March 15,
Name Office/Position with Bank Since Since Beneficially Owned(3) 1999
- ---- ------------------------- ----- -------- --------------------- ---------
William E. Schwarz Chairman 1986 (1) 5,550 (3) 56
Joseph J. Murray President and CEO 1993 1986 1,427 (3) 59
Gerald J. Weniger Assistant Secretary 1991 (1) 3,789 (3) 68
Gary C. Beilman(2) Sr. Vice President 1989 1999 878 (4) 44
Maureen H. Beilman(2) Chief Financial Officer, 1988 1999 863 (5) 43
Secretary and Treasurer
L. Jill George Vice President 1999 1983 304 (4) 37
Jeffrey H. Ketcham Vice President 1998 1998 - 56
- ----------------------------------------------------
(1) Messrs. Schwarz and Weniger have never been employees of the Bank. Refer
to "Information as to Nominees and Directors" above.
(2) Mr. Beilman is Ms. Beilman's brother-in-law.
(3) Details regarding the beneficial ownership of this individual may be
found in footnotes to "Beneficial Ownership of Officers and Directors
and Nominees" above.
(4) All shares held jointly with his/her spouse.
(5) Includes 749 shares held jointly with spouse and 114 shares held by Mrs.
Beilman as custodian for her two children.
(6) 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 ("SEC") 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 to which the individual has or
shares voting or investment power or has the right to acquire beneficial
ownership within 60 days after March 15, 1999. Beneficial ownership may
be disclaimed as to certain of the securities.
11
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Unless instructed to the contrary, the proxy holders will cast all
votes represented by proxies for the ratification of the selection of S. R.
Snodgrass, A.C., Certified Public Accountants, of Wexford, Pennsylvania
("Snodgrass"), as the Company's independent public accountants for its fiscal
year ending December 31, 1999. The Company has been advised by Snodgrass that
none of its members has any financial interest in the Company. Ratification
of Snodgrass will require an affirmative vote of a majority of the votes cast
by all shareholders in person or in proxy, entitled to vote at the Annual
Meeting. Snodgrass served as the Company's independent public accountants for
the Company's 1998 fiscal year.
In addition to performing customary audit services, Snodgrass
assisted the Company with the preparation of its federal and state tax
returns, provided consulting services and provided assistance in connection
with regulatory matters, charging the Company for such services at its
customary hourly billing rates. The Company's and the Bank's Board of
Directors approved these non-audit services, after due consideration of the
effect of the performance of such services on the independence of the
accountants and after the conclusion by the Company's and the Bank's Board of
Directors that there was no effect on the independence of the accountants.
The Bank's Board of Directors also hired Snodgrass to perform internal audit
services for 1998 and has hired Snodgrass to perform the same services in
1999. The Board of Directors has reviewed the issue of the effect of such
internal audit services on the independence of Snodgrass in the performance of
its external audit services. They believe that this arrangement will not
compromise the independence of Snodgrass in their role as external auditor.
In the event that the shareholders do not ratify the selection of
Snodgrass as the Company's independent public accountants for the 1999 fiscal
year, the Board of Directors may choose another accounting firm to provide
independent public accountant audit services for the 1999 fiscal year. The
Board of Directors recommends that the shareholders vote FOR the ratification
of the selection of Snodgrass as the auditors for the Company for the year
ending December 31, 1999. As stated below, under "Annual Report", a
representative of Snodgrass will attend the Annual Meeting and be available to
respond to questions.
It is understood that even if the selection of Snodgrass is
ratified, the Board of Directors, at its discretion, may direct the
appointment of a new independent auditing firm at any time during the year if
the Board of Directors determines that such a change would be in the best
interest of the Company and its shareholders.
LEGAL PROCEEDINGS
General
In the opinion of the management of the Company, there are no
proceedings pending to which the Company or the Bank is a party or to which
its property is subject, which, if determined adversely to the Company and/or
the Bank, would have a material effect on the Company's and the Bank's
undivided profits or financial condition. There are no proceedings pending
other than ordinary routine litigation incident to the business of the Company
and the Bank. In addition, to management's knowledge, no government
authorities have initiated, threatened to initiate, or contemplated any
material proceedings against the Company or the Bank.
12
ANNUAL REPORT
A copy of the Company's Annual Report for its fiscal year ended
December 31, 1998, is being mailed with this Proxy Statement. A
representative of Snodgrass, the accounting firm which examined the financial
statements in the Annual Report, will attend the Annual Meeting. This
representative of Snodgrass will have the opportunity to make a statement, if
he or she desires to do so, and will be available to respond to any
appropriate questions presented by shareholders at the Annual Meeting.
Additional copies of the Annual Report may be obtained by contacting Maureen
H. Beilman, Treasurer, Dimeco, Inc. 820 Church Street, Honesdale, Pennsylvania
18431, telephone (570) 253-1970.
SHAREHOLDER PROPOSALS
Any shareholder, who in accordance with and subject to the
provisions of the proxy rules of the SEC, wishes to submit a proposal for
inclusion in the Company's Proxy Statement for its 2000 Annual Meeting of
Shareholders must deliver such proposal in writing to the Secretary of Dimeco,
Inc. at the principal executive offices of the Company at The Dime Bank, 820
Church Street, Honesdale, Pennsylvania 18431, not later than Thursday,
December 2, 1999. In addition, if the Company does not receive notice of
shareholder proposals by February 16, 2000, the proxy holders may vote on
these proposals at their discretion.
OTHER MATTERS
The Board of Directors does not know of any matters to be presented
for consideration other than the matters described in the Notice of Annual
Meeting of Shareholders, but if any matters are properly presented, the
persons named in the accompanying proxy intend to vote on such matters in
accordance with their best judgment.
ADDITIONAL INFORMATION
Any shareholder may obtain a copy of the Company's report on Form
10-KSB for its fiscal year ended December 31, 1998, including the financial
statements and the schedules thereto, required to be filed with the SEC,
without charge, by submitting a written request to Maureen H. Beilman,
Treasurer, Dimeco, Inc., 820 Church Street, Honesdale, Pennsylvania 18431,
telephone: (570) 253-1970.
In addition, any shareholder may obtain a copy of the Annual
Disclosure Statement of The Dime Bank, without charge, from Maureen H.
Beilman, Treasurer.
13