SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TOMPKINS TRUSTCO, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
NA
(2) Aggregate number of securities to which transaction applies: NA
(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): NA
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paid: NA
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: NA
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(3) Filing Party: NA
(4) Date Filed: NA
[COMPANY LOGO OMITTED]
April 11, 2003
NOTICE OF 2003 ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF TOMPKINS TRUSTCO, INC.
The annual meeting of stockholders (the "Meeting") of Tompkins Trustco,
Inc. ("Tompkins" or the "Company") will be held on Monday, May 12, 2003 at 5:30
p.m., at the Country Club of Ithaca, 189 Pleasant Grove Road, Ithaca, New York,
for the following purposes:
1. To elect four (4) directors for a term of three (3) years expiring in
the year 2006;
2. To consider and act upon a proposal to amend the Tompkins Trustco,
Inc. Stock Option Plan of 2001 to increase the number of shares of
Common Stock reserved for issuance thereunder from 350,000 shares of
Common Stock, having a $0.10 par value per share, to 850,000 shares of
Common Stock, having a $0.10 par value per share; and
3. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 28, 2003 as
the record date for determining stockholders entitled to notice of and to vote
at the Meeting. Only stockholders of record at the close of business on that
date are entitled to vote at the Meeting.
A stockholder's information meeting will be held at 11:00 a.m. on
Wednesday, May 14, 2003, for our stockholders in the Castile area at the Batavia
Party House, Batavia, New York.
A stockholder's information meeting will be held at 6:00 p.m. on Wednesday,
May 21, 2003, for our stockholders in the Mahopac area at the Mahopac Golf Club,
Mahopac, New York.
Enclosed with this notice are the attached proxy statement, a proxy card
and return envelope, instructions for voting by telephone or via the Internet,
the Annual Report on Form 10-K, and the Company's 2002 Corporate Report to
stockholders.
Your vote is important regardless of the number of shares you own. Whether
or not you plan to attend the Meeting, you are urged to read and carefully
consider the attached proxy statement. You may vote by telephone, via the
Internet, or mark, sign, date, and return the enclosed proxy card without delay
in the accompanying pre-addressed postage-paid envelope. Your proxy may be
revoked prior to its exercise by filing a written notice of revocation or a duly
executed proxy bearing a later date with the Corporate Secretary of Tompkins
prior to the Meeting, or by attending the Meeting and filing a written notice of
revocation with the Corporate Secretary at the Meeting prior to the vote and
voting in person.
By Order of the Board of Directors,
/s/ JAMES J. BYRNES /s/ JOSEPH H. PERRY
---------------------------------- ----------------------------------
James J. Byrnes Joseph H. Perry
Chairman & Chief Executive Officer Senior Vice President & Corporate
Secretary
P.O. BOX 460, ITHACA, NEW YORK 14851 (607) 273-3210
[This Page Intentionally Left Blank]
[COMPANY LOGO OMITTED]
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 12, 2003
This proxy statement is being mailed to stockholders on or about April 11,
2003 in connection with the solicitation by the Board of Directors of TOMPKINS
TRUSTCO, INC. ("Tompkins" or the "Company") of proxies to be used at the annual
meeting of stockholders (the "Meeting") of the Company to be held at 5:30 p.m.
on Monday, May 12, 2003 and any adjournment thereof.
VOTING
Only stockholders of record at the close of business on March 28, 2003 will
be entitled to vote. On March 28, 2003, there were 7,361,265 shares of common
stock of the Company, par value $0.10 per share (the "Common Stock"),
outstanding. Unless otherwise noted, all share numbers and share prices
reflected in this proxy statement have been adjusted for the effect of stock
splits. Each share of Common Stock is entitled to one vote on each matter to be
voted on at the Meeting.
Shares covered by any proxy that is properly executed and received prior to
the close of business on the day of the Meeting will be voted and, if the
stockholder who executes such proxy shall specify therein how such shares shall
be voted on such proposals, the shares will be voted as so specified. Executed
proxies with no instructions will be voted "FOR" each proposal for which no
instruction is given. It is not anticipated that any matters other than as set
forth in the Notice of Annual Meeting will be brought before the Meeting, but
the persons named in the accompanying proxy will vote the shares represented by
all properly executed proxies on any such matters that may come before the
Meeting in accordance with the judgment of the person or persons acting under
the proxy.
The presence of a stockholder at the Meeting will not automatically revoke
the stockholder's proxy. A stockholder may, however, revoke a proxy at any time
prior to its exercise by: (1) delivering to the Corporate Secretary a written
notice of revocation prior to the Meeting, (2) delivering to the Corporate
Secretary a duly executed proxy bearing a later date, or (3) attending the
Meeting and filing a written revocation with the Corporate Secretary at the
Meeting prior to the vote and voting in person.
The presence, in person or by proxy, of at least a majority of the total
number of shares of Common Stock outstanding and entitled to vote is necessary
to constitute a quorum for the conduct of business at the Meeting, and in the
event there are not sufficient votes on any matter, the Meeting may be
adjourned. Directors shall be elected by a plurality of the eligible votes cast
and such other business, whether or not set forth in this proxy statement, as
may properly come before the Meeting, will be determined by a majority of the
eligible votes cast. Abstentions, in person or by proxy, and broker non-votes
shall be counted toward a quorum, but abstentions and broker non-votes are not
deemed to be votes cast and therefore have no effect on the outcome of the vote,
which requires either a plurality or majority of the "votes cast," depending
upon the proposal. Votes withheld in connection with the election of one or more
of the nominees for Director will not be counted as votes cast. Accordingly,
votes withheld will have a negative impact on the outcome of the vote.
SOLICITATION OF PROXIES
The total cost of solicitation of proxies in connection with the Meeting
will be borne by the Company. In addition to solicitation by mail, directors,
officers and employees of the Company [references herein to the "Company"
include its subsidiaries, Tompkins Trust Company ("Trust Company"), The Bank of
Castile, Mahopac National Bank, and Tompkins Insurance Agencies, Inc. ("Tompkins
Insurance") as the context may require] may solicit proxies for the Meeting
personally or by telephone or electronic communication without additional
remuneration. The Company will also provide brokers and other record owners
holding shares in their names or in the names of nominees, in either case which
are beneficially owned by others, proxy material for transmittal to such
beneficial owners and will reimburse such record owners for their expenses in
doing so. Although the Company has not yet retained a proxy soliciting firm to
aid in the solicitation of proxies for the Meeting, it may do so at any time
prior to the Meeting or any adjournment thereof. In such event, the Company will
pay the fees and expenses of any such proxy solicitation firm.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information with
respect to the beneficial ownership of Common Stock of the Company as of March
28, 2003 by (i) the chief executive officer and each other executive officer
included in the Summary Compensation Table (ii) each director of the Company,
(iii) all executive officers and directors of the Company as a group, and (iv)
to the knowledge of the Company, all beneficial owners of five percent or more
of the Common Stock of the Company. Except as otherwise indicated, each of the
stockholders named below has sole voting and investment power with respect to
the outstanding shares of Common Stock beneficially owned:
Common Stock
Beneficially Owned
------------------
Percent of
Number of Outstanding
Names Shares Shares(1)
--------------------------------------------------------------------------------
Director and Executive Officers
John E. Alexander+ 12,347 (2) **
James J. Byrnes*+ 71,491 (3) **
Brenda L. Copeland* 57,754 (4) **
James W. Fulmer*+ 67,925 (5) **
Stephen E. Garner* 22,385 (6) **
Reeder D. Gates+ 83,537 (7) 1.12
William W. Griswold+ 4,439 (8) **
James R. Hardie+ 64,900 (9) **
Edward C. Hooks+ 4,955 (10) **
Bonnie H. Howell+ 4,321 (11) **
Hunter R. Rawlings, III+ 1,593 (12) **
Thomas R. Salm+ 2,732 (13) **
Michael H. Spain+ 94,093 (14) 1.26
William D. Spain, Jr.+ 94,240 (15) 1.26
Donald S. Stewart* 45,267 (16)
Craig Yunker+ 7,839 (17) **
All directors and executive
officers as a group (23 persons) 734,110 9.82
Investment Services Division of the Trust Company
in the fiduciary capacity indicated:
Executor, Trustee or Co-Trustee 1,363,917 (18) 18.24
Trustee for the Tompkins Trustco
Employee Stock Ownership Plan 535,250 (18) 7.16
Agent or Custodian 207,360 (18) 2.77
--------------------------
* Named Executive Officer
+ Director of the Company
** Less than 1 percent
2
(1) The number of shares of Common Stock deemed outstanding includes: (i)
7,361,265 shares of Common Stock outstanding as of March 28, 2003 and (ii)
89,000 shares of Common Stock subject to outstanding stock options which
are exercisable by the named individual or group in the next 60 days.
(2) Includes 1,122 shares owned by the spouse of Mr. Alexander and 1,137 shares
held in trust pursuant to the Company's 1996 Stock Retainer Plan for
Non-Employee Directors. Directors have no voting or investment power with
respect to such shares.
(3) Includes 16,623 shares held in the Company's Employee Stock Ownership Plan
and 22,500 shares issuable upon the exercise of exercisable stock options.
(4) Includes 9,399 shares held in the Company's Employee Stock Ownership Plan
and 540 shares owned by the spouse of Ms. Copeland. Ms. Copeland ceased to
be an employee of the Company effective January 21, 2003.
(5) Includes 8,787 shares held in the Company's Employee Stock Ownership Plan,
1,020 shares owned by the spouse of Mr. Fulmer and 490 shares held as
Custodian, under the Uniform Transfers to Minors Act, for his children, and
7,500 shares issuable upon the exercise of exercisable stock options.
(6) Includes 1,150 shares held in the Company's Employee Stock Ownership Plan
and 20,550 shares issuable upon the exercise of exercisable stock options.
(7) Includes 64,882 shares held in the R. D. Gates, Ltd. Employee Profit
Sharing Fund, 1,988 shares owned by the spouse of Mr. Gates and 1,059
shares held in trust pursuant to the Company's 1996 Stock Retainer Plan for
Non-Employee Directors. Directors have no voting or investment power with
respect to such shares.
(8) Includes 1,262 shares held in trust pursuant to the Company's 1996 Stock
Retainer Plan for Non-Employee Directors. Directors have no voting or
investment power with respect to such shares.
(9) Includes 188 shares held in the Company's Employee Stock Ownership Plan.
(10) Includes 198 shares held by his son and 1,056 shares held in trust pursuant
to the Company's 1996 Stock Retainer Plan for Non-Employee Directors.
Directors have no voting or investment power with respect to such shares.
(11) Includes 761 shares held in trust for Ms. Howell pursuant to the Company's
1996 Stock Retainer Plan for Non-Employee Directors. Directors have no
voting or investment power with respect to such shares.
(12) Includes 948 shares held in trust for Mr. Rawlings pursuant to the
Company's 1996 Stock Retainer Plan for Non-Employee Directors. Directors
have no voting or investment power with respect to such shares.
(13) Includes 581 shares owned by the spouse of Mr. Salm and 1,186 shares held
in trust pursuant to the Company's 1996 Stock Retainer Plan for
Non-Employee Directors. Directors have no voting or investment power with
respect to such shares.
(14) Includes 63,090 shares held by W. D. Spain & Sons Limited Partnership of
which Mr. Spain is a 20 percent owner and General Partner and 138 shares
held in trust pursuant to the Company's 1996 Stock Retainer Plan for
Non-Employee Directors. Directors have no voting or investment power with
respect to such shares.
(15) Includes 63,090 shares held by W. D. Spain & Sons Limited Partnership of
which Mr. Spain is a 20 percent owner and General Partner and 218 shares
held in trust pursuant to the Company's 1996 Stock Retainer Plan for
Non-Employee Directors. Directors have no voting or investment power with
respect to such shares.
(16) Includes 9,592 shares held in the Company's Employee Stock Ownership Plan,
8,025 shares issuable upon the exercise of exercisable stock options and
10,516 shares owned by the spouse of Mr. Stewart.
(17) Includes 620 shares owned by Mr. Yunker's sons and 290 shares held in trust
pursuant to the Company's 1996 Stock Retainer Plan for Non-Employee
Directors. Directors have no voting or investment power with respect to
such shares.
(18) As of March 28, 2003, Tompkins Investment Services (a division of the Trust
Company) held 1,571,277 shares of Common Stock of the Company, representing
21.02 percent of the issued and outstanding shares of Common Stock. Of such
shares, 1,363,917 shares are held in a fiduciary capacity as Executor,
Trustee or Co-Trustee. Where the Trust Company is sole executor or trustee,
such shares will be voted only if the legal instrument provides for voting
the stock at the direction of the donor or a beneficiary and such direction
is in fact received. When acting in a co-fiduciary capacity, such shares
will be voted by the co-fiduciary or fiduciaries in the same manner as if
the co-fiduciary or fiduciaries were the sole fiduciary. Of the 1,571,277
shares mentioned above, 535,250 shares, or 7.16 percent of the outstanding
shares, are held by the Tompkins Trustco, Inc. Employee Stock Ownership
Plan, for which all shares have been allocated to participant accounts.
Individual plan participants vote these shares. In addition, 207,360 shares
are held as Agent or Custodian with the voting power retained by the owner.
Such shares represent 2.77 percent of the Common Stock outstanding.
3
PROPOSAL NO. 1
ELECTION OF DIRECTORS
One of the purposes of the Meeting is the election of four directors for a
term of three years expiring in the year 2006. The bylaws of the Company provide
that the stockholders elect directors to serve a three-year term to succeed
those directors in the class whose terms of office expire at the Meeting or for
a shorter period as the Board of Directors determines for the purposes of
equalizing the classes of directors.
The persons named in the proxy to represent stockholders at the Meeting
are: JOSEPH H. PERRY of Ithaca, N.Y. and LINDA M. CARLTON of Lansing, N.Y. They
will vote proxies as directed and in the absence of instructions, will vote the
shares represented by the proxies in favor of the election of nominees named
below. If any one or more of such nominees should become unavailable for
election by reason of death, or unexpected occurrence, they will vote the shares
for the election of such substitute nominees as the Board of Directors may
propose. In no event will the Board of Directors propose to elect a number of
directors in excess of the number of directors proposed in this proxy statement.
The following table sets forth each nominee and continuing director's name,
age, the year he or she first became a director and the year in which such term
will expire. Biographies of the nominees and the directors continuing in office
follow the table. Unless otherwise indicated, all Directors have been employed
in their current positions for at least five years.
Year First
Elected Term to
Name Age Director Expire
--------------------------------------------------------------------------------
Board Nominees For Terms To Expire In 2006
--------------------------------------------------------------------------------
James W. Fulmer 51 2000 2006
William W. Griswold 45 1996 2006
James R. Hardie 60 2001 2006
Thomas R. Salm 62 1981 2006
--------------------------------------------------------------------------------
Directors Continuing In Office
--------------------------------------------------------------------------------
James J. Byrnes 61 1989 2004
Reeder D. Gates 57 1985 2004
Bonnie H. Howell 55 1982 2004
Michael H. Spain 45 2000 2004
William D. Spain, Jr. 51 2000 2004
John E. Alexander 50 1993 2005
Edward C. Hooks 53 1990 2005
Hunter R. Rawlings, III 58 1996 2005
Craig Yunker 52 2000 2005
James W. Fulmer has served as President and a Director of the Company since
2000. He has served as a Director of The Bank of Castile since 1988 and as its
Chairman since 1992. Effective December 18, 2002, he assumed the additional
responsibilities of President and Chief Executive Officer of The Bank of
Castile. Mr. Fulmer has served as a Director of Mahopac National Bank since
1999, and as Chairman of Tompkins Insurance since January 1, 2001. He served as
the President and Chief Executive Officer of Letchworth Independent Bancshares
Corporation from 1991 until the merger with the Company in 1999. Mr. Fulmer also
served as the Chief Executive Officer of The Bank of Castile from 1996 through
April 2000. He serves on the boards of the Erie & Niagara Insurance Association,
the Cherry Valley Cooperative Insurance Company, and the Monroe Title Insurance
Association.
William W. Griswold has served as a Director of the Company and the Trust
Company since 1996. He is President, Chief Executive Officer, and a Director of
both the Ontario Telephone Company, Inc. and the Trumansburg Telephone Company
where he has been employed since 1979.
4
James R. Hardie was elected a Director of the Company effective February 1,
2001. He was President of Austin, Hardie, Wise Agency, Inc. from 1974 until
January 1, 2001, when he became President, Chief Executive Officer and a
Director of Tompkins Insurance, a wholly-owned subsidiary of the Company.
Effective January 1, 2003, Mr. Hardie's role as Chief Executive Officer was
assumed by David S. Boyce. Mr. Hardie became Vice Chair of the Board of Tompkins
Insurance, effective August 1, 2002.
Thomas R. Salm has served as a Director of the Trust Company since 1981 and of
the Company since 1995. Mr. Salm was Vice President for Business Affairs at
Ithaca College until his retirement on August 31, 2002.
James J. Byrnes has been the President and Chief Executive Officer and a
Director of the Trust Company since 1989. Mr. Byrnes has also served as the
Chairman of the Board of Directors since 1992. He was elected to serve in the
same capacities for the Company in 1995. On January 25, 2000, Mr. Byrnes' role
as President of the Company was assumed by James W. Fulmer. Mr. Byrnes also
serves as a Director of Mahopac National Bank and Tompkins Insurance. Effective
January 1, 2003, Mr. Byrnes' role as President and Chief Executive Officer of
the Trust Company was assumed by Stephen E. Garner.
Reeder D. Gates has served as a Director of the Trust Company since 1985 and of
the Company since 1995. Mr. Gates is President of R. D. Gates, Ltd., a company
engaged in community pharmacies.
Bonnie H. Howell has served as a Director of the Trust Company since 1982 and as
Vice Chair of the Board of Directors since 1992. She was elected to serve in the
same capacities for the Company in 1995. Ms. Howell was President and Chief
Executive Officer of Cayuga Medical Center at Ithaca until her retirement on
December 31, 2002. She also serves as a Director of the Medical Liability Mutual
Insurance Company.
Michael H. Spain has served as a Director of Mahopac National Bank since 1992
and of the Company since 2000. He is President and Owner of the Spain Agency, an
insurance agency located in Mahopac, New York.
William D. Spain, Jr. has served as a Director of the Company since 2000. He has
served as a Director of Mahopac National Bank since 1991 and as Chairman of
Mahopac National Bank since 2000. He has been the Managing Partner of Spain &
Spain, PC, a law firm in Mahopac, New York, since 1983.
John E. Alexander has served as a Director of the Trust Company since 1993 and
of the Company since 1995. He is President of The CBORD Group, Inc., a computer
software company.
Edward C. Hooks has served as a Director of the Trust Company since 1990 and of
the Company since 1995. He is an attorney and a partner of Harris Beach LLP, the
firm that is General Counsel to the Company.
Hunter R. Rawlings, III has served as a Director of the Company and the Trust
Company since 1996. He is the 10th President of Cornell University. Dr. Rawlings
was previously President of the University of Iowa.
Craig Yunker has served as a Director of The Bank of Castile since 1991 and of
the Company since 2000. He is the Managing Member of CY Farms, LLC.
5
BOARD OF DIRECTORS
The Board of Directors of Tompkins held four regular meetings during the
year ended December 31, 2002. Each director attended 75 percent or more of the
aggregate number of meetings of the Board of Directors of Tompkins and meetings
of the committees of which such director was a member.
Directors who are not otherwise employed by the Company are paid $650 for
each meeting of the Board of Directors that is attended and $275 for each
committee meeting attended (collectively, the "Meeting Fees"). Directors who are
not otherwise employed by the Company and chair a committee of the Board of
Directors also receive an annual stipend of $1,000 (the "stipend"). Meeting Fees
are paid quarterly, and annual stipends are paid at year end. Pursuant to the
1996 Stock Retainer Plan for Non-Employee Directors, as amended (the "Retainer
Plan"), which was approved by the Company's stockholders on April 24, 1996, the
non-employee directors of the Company are issued shares of Common Stock in the
Company, in lieu of cash, as payment of their Meeting Fees and, as applicable,
their stipend. Each Director participating in the Retainer Plan may elect to
defer receipt of the stock retainer. Aggregate fees paid by the Company to the
nine non-employee Directors in 2002 for Meeting Fees and stipends were $32,800.
For the year ended December 31, 2002, 1,148 shares of Common Stock were issued
to non-employee directors, or placed in a trust account with respect to deferred
shares, for services on the Tompkins board.
Director Howell does not receive the fees described above, but instead
receives an annual retainer for her services as Vice Chair of the Board of
Directors of Tompkins. The annual retainer paid to her in 2002 was $22,500. A
portion of this retainer was paid in the form of 69 shares of Common Stock,
which were deferred and placed in a trust account pursuant to the Retainer Plan.
Directors who are salaried employees of the Company are not compensated for
their service on the Tompkins board or any board committee.
COMMITTEES OF THE BOARD OF DIRECTORS
As of December 31, 2002, Tompkins had a standing
Executive/Compensation/Personnel Committee, Audit/Examining Committee,
Nominating Committee, and Pension Administration Committee.
The Executive/Compensation/Personnel Committee held three meetings during
2002, and its members at the close of business on December 31, 2002 were: Bonnie
H. Howell, Chair; Reeder D. Gates; William W. Griswold, Thomas R. Salm, Craig
Yunker, and as an alternate, Edward C. Hooks. For a description of this
committee, see "Report of the Executive/Compensation/Personnel Committee of the
Board of Directors" in this proxy statement.
The Audit/Examining Committee held four meetings during 2002, and its
members at the close of business on December 31, 2002 were: William W. Griswold,
Chair, John E. Alexander, Thomas R. Salm, and as an alternate, Bonnie H. Howell.
For a description of this committee, see "Report of the Audit/Examining
Committee of the Board of Directors" in this proxy statement.
The Nominating Committee held one meeting during 2002, and its members at
the close of business on December 31, 2002, were: John E. Alexander, Chair, and
Bonnie H. Howell. The Nominating Committee recommended to the Board of Directors
nominees for election as directors. The committee will consider recommendations
from stockholders if submitted in a timely manner and will apply the same
criteria to all persons being considered.
The Pension Administration Committee held three meetings during 2002, and
its members at the close of business on December 31, 2002, were: James J.
Byrnes, Chair, Hunter R. Rawlings, III and Thomas R. Salm. The Pension
Administration Committee administers the Tompkins Trustco, Inc. Retirement Plan
and the Tompkins Trustco, Inc. Deferred Compensation Plan for Selected Officers.
6
EXECUTIVE COMPENSATION
The following Report of the Executive Compensation/Personnel Committee and the
performance graph included elsewhere in this proxy statement do not constitute
solicitation material and should not be deemed filed or incorporated by
reference into any other Company filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent the Company specifically incorporates this Report or the performance
graphs by reference therein.
Report of the Executive/Compensation/Personnel Committee of the Board of
Directors
The Executive/Compensation/Personnel Committee (the "Compensation
Committee") for 2002 was composed of five outside directors plus an alternate.
Among its duties, the Compensation Committee is responsible for monitoring the
compensation of the Company's executive officers. A goal of the Compensation
Committee is to maintain executive compensation that is fair and reasonable,
given the size, nature and performance goals of the Company. The Compensation
Committee also strives to see that compensation and benefits are competitive in
order to attract and retain qualified management. The financial services
industry is increasingly competitive and the Board believes that strong
management is essential for continuing the Company's record of strong financial
performance.
The Compensation Committee regularly surveys compensation practices, base
salary and total compensation, including incentives, in the banking industry. In
2002, the Compensation Committee utilized the Ben S. Cole Financial Inc. and the
IBANYS compensation surveys which provide comparable information regarding the
three compensation components used by the Company to motivate executive
performance, namely annual base salary, incentive bonuses and equity-based
incentive compensation. Based upon these surveys, the Compensation Committee
believes the Company's compensation practices are appropriate, given the
Company's strong operating results.
The chief executive officer and each executive officer (the "Named
Executive Officers") included in the Summary Compensation Table has an annual
base salary at a level the Compensation Committee believes is comparable to
companies in the commercial banking industry with similar marketplace geography
and demographics. In addition to base salary, each of the Named Executive
Officers participated in an executive bonus plan in 2002. Corporate performance
is measured by the Company's strategic and financial performance in the fiscal
year, with particular emphasis on earnings per share growth and return on
shareholders' equity for the year. Although the Compensation Committee considers
year-to-year changes in stock price in its evaluation of corporate performance,
the Committee does not emphasize this criteria because they do not believe that
short-term fluctuations in stock price necessarily reflect the underlying
strength or future prospects of the Company. Individual performance is measured
by the strategic and financial performance of the particular officer's
operational responsibility in comparison to targeted performance criteria. As
reported in the Summary Compensation Table, the salary, bonus, and other
compensation of the Named Executive Officers reflect the Company's strong
results.
While the Compensation Committee recognizes that the Company can exert very
little influence on short-term fluctuations in stock price, the Compensation
Committee does believe that long-term stock price appreciation reflects
achievement of strategic goals and objectives. Accordingly, the Company seeks to
create long-term performance incentives for its key employees by aligning their
economic interests with the interests of stockholders through the equity-based
component of its compensation program. Stock options are granted periodically to
key employees at a price equal to the fair market value on the date of the
grant. Awards are based on the performance of those employees and their
anticipated contributions to the achievement of strategic goals and objectives.
In addition to stock options, employees of the Company, including the Named
Executive Officers, may be awarded Common Stock through the profit sharing
component of the Tompkins Trustco Inc. Employee Stock Ownership Plan.
Members of the Compensation Committee
Bonnie H. Howell, Chair Reeder D. Gates William W. Griswold
Thomas R. Salm Craig Yunker Edward C. Hooks, Alternate
7
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee as of the date of this
proxy statement is or has been an officer or employee of the Company. Director
Griswold is the vice president and a director of Finger Lakes Technologies
Group, Inc., a wholly-owned subsidiary of Ontario Telephone Company, Inc. and
Trumansburg Telephone Company, Inc. Mr. Griswold serves as President, Chief
Executive Officer and as a Director Ontario Telephone Company, Inc. and
Trumansburg Telephone Company, Inc. The Company has purchased telecommunication,
network, and computer equipment and services from Finger Lakes Technologies
Group, Inc. and telephone service from the Trumansburg Telephone Company, Inc.
In 2002, the Company paid Finger Lakes Technologies Group, Inc. an amount equal
to $186,821 and the Trumansburg Telephone Company, Inc. an amount equal to
$11,745.
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation paid
by the Company for each of the fiscal years ended December 31, 2002, 2001 and
2000 to (i) the Company's Chief Executive Officer, (ii) the three other most
highly compensated individuals (based on total salary and bonus for the last
completed fiscal year) who were serving as executive officers at the end of the
fiscal year ended December 31, 2002, and whose compensation exceeded $100,000,
and (iii) an individual who would constitute one of the most highly compensated
executive officers (other than the Chief Executive Officer) but for the fact
that she was not serving as an executive officer at the end of the last
completed fiscal year.
Long-Term
Annual Compensation Compensation
Name and ---------------------------------------------------------------------------------
Principal Other Annual All Other
Position Year Salary(1) Bonus(2) Compensation(3) Options(#) Compensation(4)
---------------------------------------------------------------------------------------------------------------
JAMES J. BYRNES 2002 $375,000 $150,000 $424,660 -0- $ 39,875
Chairman of the Board, 2001 346,500 150,000 456,026 10,000 34,520
President & Chief 2000 330,000 140,000 7,404 -0- 42,900
Executive Officer
JAMES W. FULMER 2002 $199,000 $ 65,000 $ 5,224 -0- $ 19,779
President of the Company 2001 189,000 60,000 6,507 -0- 28,345
& Chairman of the Board 2000 174,000 57,000 3,792 30,000 16,320
of The Bank of Castile
STEPHEN E. GARNER 2002 $197,000 $ 60,000 $ 92,600 10,000 $ 23,725
President & CEO 2001 187,000 104,000 2,794 5,000 20,800
Mahopac National Bank 2000 177,000 91,250 1,780 -0- 5,276
BRENDA L. COPELAND(5) 2002 $170,000 -0- -0- -0- $406,130
President & CEO of 2001 162,000 45,000 2,425 -0- 18,800
The Bank of Castile 2000 152,000 40,000 1,671 25,000 8,672
DONALD S. STEWART 2002 $143,000 $ 43,000 $ 13,878 6,000 $ 15,675
Executive Vice President & 2001 137,000 38,000 14,139 -0- 16,492
Senior Trust Officer 2000 131,000 36,000 10,556 6,000 17,030
(1) Includes Directors fees for Mr. Fulmer's service on the boards of The
Bank of Castile and Mahopac National Bank, for Ms. Copeland's service
on the board of The Bank of Castile and for Mr. Garner's service on the
board of Mahopac National Bank.
(2) These amounts represent cash awards for performance bonuses, as well as
any such bonuses deferred under the Tompkins Trust Company Deferred
Compensation Plan for Selected Officers.
(3) Includes amounts for cost of applicable life insurance, club dues and
use of company vehicle or reimbursement for use of personal vehicle, as
well as any value realized as a result of stock options exercised
during the year. For Mr. Garner, this amount includes moving allowances
paid in 2002.
(4) Includes amounts paid pursuant to the Profit Sharing Plan including
amounts matched on salary deferral pursuant to the Company's Investment
and Stock Ownership Plan. For Ms. Copeland, includes monies accrued as
a part of a Retirement Package effective January 21, 2003.
(5) Ms. Copeland was President and Chief Executive Officer of The Bank of
Castile until December 18, 2002.
8
BENEFIT PLANS
Employment Arrangements
The Company has an agreement with James J. Byrnes, Chairman and Chief
Executive Officer, which provides for severance payments equal to approximately
three times his annualized tax-includable compensation under certain
circumstances. This agreement would be operable should certain events take place
which seek to effect a "change of control" (as defined in the agreement) of the
Company. Payments would be due to Mr. Byrnes in the event of his termination (as
defined in the agreement) within two years of a change of control.
In connection with the merger of Letchworth Independent Bancshares
Corporation ("LIBC") with and into Tompkins, the Company assumed all of LIBC's
obligations under its employment agreements with James W. Fulmer and Brenda L.
Copeland, respectively. During 2002, Mr. Fulmer served as the President of
Tompkins and the Chairman of the Board of Directors of The Bank of Castile.
Pursuant to the terms of the agreement, as amended, each year the term of Mr.
Fulmer's employment agreement is automatically extended for an additional year
so that the term of the employment agreement is always three (3) years. In the
event that the Company terminates the employment agreement without "cause," as
that term is defined in the agreement, the Company is required to pay Mr.
Fulmer, as severance pay, his annual compensation plus all fringe benefits for a
period of three (3) years from the date of such termination.
Effective January 21, 2003, Brenda L. Copeland retired from The Bank of
Castile. In connection therewith, the Company accrued monies in 2002 for her
retirement package. The total is included under All Other Compensation in the
Summary Compensation Table.
Stephen E. Garner has an employment agreement with the Company. Each year,
the term of Mr. Garner's employment agreement is automatically extended for an
additional year so that the term of the employment agreement is always three (3)
years. In the event that the Company terminates the employment agreement without
"cause," as that term is defined in the agreement, the Company is required to
pay Mr. Garner, as severance pay, his annual compensation for a period of
eighteen (18) months from the date of such termination. In addition, in the
event that the Company terminates the employment agreement without "cause" as a
result of a "Significant Event," as that term is defined in the agreement, the
Company is required to pay Mr. Garner, as severance pay, his annual compensation
for the remainder of the then current three (3) year term of the employment
agreement.
Life Insurance
Life insurance benefits are provided to certain officers of the Company.
The Company has entered into life insurance contracts for the respective
executives. These insurance contracts are carried at cash surrender value on the
consolidated statements of condition. Increases in the cash surrender value of
the insurance are reflected as noninterest income, and the related mortality
expense is recognized as other employee benefits expense in the consolidated
statements of income.
9
Stock Option Plan
General. During 2002, the Company maintained a stock option plan as a
vehicle to encourage the continued employment of key employees of the Company
and its subsidiaries, and to align their interests with those of the Company's
stockholders by facilitating their purchase of a stock interest in Tompkins.
Management believes that an incentive stock option plan is in the best interests
of the Company and its stockholders since it will enhance the Company's ability
to continue to attract and retain qualified directors, officers and other key
employees.
Options Granted During 2002. During 2002, the Company issued options to
acquire 162,000 shares of its Common Stock at a purchase price of $42.90 per
share. The following table sets forth certain information concerning stock
options granted during the fiscal year ended December 31, 2002, to the Named
Executive Officers. In accordance with the rules of the Securities and Exchange
Commission, the following table also sets forth the potential realizable value
over the term of the options (the period from the grant date to the expiration
date) based on assumed rates of stock appreciation of 5% and 10%, compounded
annually. These amounts do not represent the Company's estimate of future stock
prices. Actual realizable values, if any, of stock options will depend on the
future performance of the Common Stock. No stock appreciation rights were
granted to the Named Executive Officers during the fiscal year. In fact, the
Company has never granted any stock appreciation rights.
--------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation For Option Term(2)
-----------------
--------------------------------------------------------------------------------------------------------------------
Number of % of Total Exercise
Securities Options Price 5% 10%
Underlying Granted in Per Expiration
Option Granted Fiscal Share Date ($) ($)
Name Year(1) ($/SH)
--------------------------------------------------------------------------------------------------------------------
Donald S. Stewart 6,000 3.70 42.90 9/30/2012 161,877 410,229
--------------------------------------------------------------------------------------------------------------------
Stephen E. Garner 10,000 6.17 42.90 9/30/2012 269,796 683,716
--------------------------------------------------------------------------------------------------------------------
(1) Based on an aggregate of 162,000 options granted in the fiscal year
ended December 31, 2002 to employees of the Company, including the
Named Executive Officers.
(2) The potential realizable value is calculated based on the term of the
option at its time of grant and illustrates value that might be
realized upon exercise of the options immediately prior to the
expiration of their terms, assuming the specified annual compounded
rates of appreciation of the market price per share from the date of
grant to the end of the option term. Actual gains, if any, on stock
option exercise are dependent upon a number of factors, including the
future performance of the Common Stock and the timing of option
exercises, as well as the optionee's continued employment through the
vesting period. There can be no assurances that the amounts reflected
in this table will be achieved.
10
Outstanding Options of Named Executive Officers. The following table shows
the aggregate number of options outstanding as of December 31, 2002 for each of
Named Executive Officers, and for all executive officers of the Company as a
group.
Number of Options Average Price Per
Name Outstanding Option Outstanding (1)
--------------------------------------------------------------------------------
James J. Byrnes 32,500 $24.950
James W. Fulmer 30,000 $26.625
Stephen E. Garner 35,550 $29.310
Brenda L. Copeland 25,000 $26.625
Donald S. Stewart 18,525 $28.06
All executive officers
as a Group 211,350 $30.49 (2)
--------------------------------------------------------------------------------
(1) This price represents the weighted average of the fair market value, as
that term is defined in the option plan, of the Common Stock of the
Company on the date that the options were granted.
(2) This price represents a weighted average of the exercise price of all
of the options currently outstanding to all executive officers of the
Company.
Options Exercised and Value for 2002. During 2002, 53,578 options were
exercised under the option plan, including the exercise by Mr. Byrnes of 18,000
options and the exercise by Mr. Stewart of 340 options. Subsequent to her
retirement, Ms. Copeland exercised 5,904 options in February 2003.
The following table shows the number of options exercised and the value of
"in-the-money" options exercised by each of the Named Executive Officers during
2002, as well as the breakdown between options granted to each individual that
were exercisable and unexercisable as of December 31, 2002, and the potential
value of "in-the-money" options, both exercisable and unexercisable, as of
December 31, 2002. "In-the-money" options are those options where the fair
market value of the Company's Common Stock as of the close of the fiscal year
was in excess of the Named Executive Officer's price established on the grant
date. This value is only realized by the executive when the option is exercised
and will fluctuate with changes in the price for the Company's Common Stock
after the close of the fiscal year.
Value of
Number of Unexercised
Unexercised In-the-Money
Options Options
at Year-End (#) at Year-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable (1)
--------------------------------------------------------------------------------------------
James J. Byrnes 18,000 $416,183 22,500/10,000 $558,749/$ 63,500
James W. Fulmer 0 0 7,500/22,500 $131,062/$393,187
Stephen Garner 0 0 20,550/15,000 $491,844/$ 43,750
Brenda Copeland 0 0 6,250/18,750 $109,219/$327,656
Donald S. Stewart 340 $ 7,417 8,397/10,500 $193,218/$ 85,838
(1) The average price for the Company's Common Stock on the American Stock
Exchange on December 31, 2002, the last trading day of the year, was
$44.10 per share.
No assurances can be given relating to the dilutive effect that the stock
option plans, or options granted thereunder, may have on the outstanding Common
Stock.
11
Deferred Profit-Sharing Plan
During 2002, the Company had an Investment and Stock Ownership Plan (the
"ISOP") that covered substantially all employees of the Company. The ISOP has an
employee funded 401(k) component. Pursuant to the plan, the Company will match
100% of an employee's contribution up to 3% of the employee's base pay, and
match 50% of an employee's additional contribution to the ISOP up to 2% of the
employee's base pay. In addition, the ISOP has an employer-funded profit-sharing
component. Profit sharing contributions are determined by the Board of Directors
and were limited to a maximum amount as stipulated in the ISOP. This plan allows
employees to elect to defer a portion of their profit sharing component (which
deferral is not eligible for matching by the Company), or to receive cash.
Amounts contributed for the accounts of the Named Executive Officers are
included in the Summary Compensation Table.
During 2002, the Company also had the Tompkins Trustco, Inc. Employee Stock
Ownership Plan (the "ESOP") that covered substantially all employees of the
Company. The purpose of the ESOP is to provide a discretionary profit sharing
contribution to the plan in order to facilitate stock ownership by employees.
Contributions are determined by the Board of Directors and are limited to a
maximum amount as stipulated in the ESOP. Amounts accrued for the accounts of
the Named Executive Officers are included in the Summary Compensation Table.
Retirement Plan
During 2002, the Company had a non-contributory pension equity plan, the
Tompkins Trustco, Inc. Retirement Plan, that covered substantially all employees
of the Company. The assets of the pension plan are held in a separate trust and
administered by the Pension Administration Committee appointed by the Board of
Directors.
The Plan provides a retirement benefit based on "Points" defined in the
Plan as a combination of age plus years of service, multiplied by "Average Final
Earnings," as that term is defined in the Plan. Certain employees of the
Company, including Mr. Byrnes and Mr. Stewart, are covered by the Plan's
"grandfathering" provisions. Specifically, Messrs. Byrnes and Stewart are
currently deemed to have 14 and 31 years of service, respectively, under the
Plan.
Under the plan normal retirement age is 65 with reduced benefit payments
for early retirement following age 55 to age 65.
TOMPKINS TRUSTCO, INC. RETIREMENT PLAN TABLE (1)
Years of Service
------------------------------------------------------------------------------
Average Final
Earnings 15 20 25 30 35
------------------------------------------------------------------------------
$ 50,000.00 $ 6,142 $ 8,161 $10,544 $12,609 $15,207
$ 75,000.00 $10,145 $13,464 $17,368 $20,747 $24,985
$100,000.00 $14,148 $18,766 $24,193 $28,884 $34,763
$125,000.00 $18,152 $24,068 $31,018 $37,021 $44,541
$150,000.00 $22,155 $29,371 $37,843 $45,159 $54,319
------------------------------------------------------------------------------
$170,000.00 $26,158 $34,673 $44,668 $53,296 $64,097
------------------------------------------------------------------------------
(1) A "grandfathering" multiplier based on age and service as of January 1,
2001 will increase the benefits of certain Trust Company employees covered under
the previous Tompkins County Trust Company Retirement Plan, including Mr. Byrnes
and Mr. Stewart.
12
Supplemental Employee Retirement Plans
The Tompkins Trust Company has a Supplemental Employee Retirement Plan
(SERP) covering James J. Byrnes. The SERP provides for a retirement benefit to
Mr. Byrnes at age 65 equal to 50 percent of average earnings (as defined in the
SERP) over the highest five consecutive years. Benefits under the SERP are
reduced by payments due under the Tompkins Trustco, Inc. Retirement Plan and
Social Security. Reduced benefits are payable in the event of retirement prior
to age 65.
Stephen E. Garner and certain other officers of Mahopac National Bank each
have a SERP that provides for a retirement benefit at age 65 equal to 75 percent
of final salary as defined in the SERP. Benefits under the SERPs are offset by
payments due under the Tompkins Trustco, Inc. Retirement Plan and Social
Security. Reduced benefits are payable in the event of retirement prior to age
65.
The Bank of Castile has entered into certain executive supplemental income
agreements that provide for specified deferred compensation benefits payable to
certain highly compensated officers, including Mr. Fulmer and Ms. Copeland.
Under these agreements, retirement benefits of up to 75 percent of the average
salary during the officer's final five years of employment are due and payable
to the participants. Retirement benefits under these agreements are reduced by
payments due under the Tompkins Trustco, Inc. Retirement Plan and Social
Security.
Deferred Compensation Plan for Selected Officers
The Company maintains a nonqualified deferred compensation plan for a
select group of employees. The plan allows participating employees to defer
receipt of all or a portion of bonuses and profit sharing payments otherwise
payable to them until a future date. The Deferred Compensation Plan Committee
directs the investment of these monies.
Post-Retirement Life Insurance and Medical Insurance
The Company offers post-retirement life insurance coverage to certain
employees who have worked for the Company for ten years and who retire on or
after age 55. Tompkins Trust Company offers post-retirement medical coverage to
certain employees who have worked for the Trust Company for ten years and who
retire on or after age 55. Medical coverage is contributory with contributions
reviewed annually. The Trust Company assumes the majority of the cost for these
benefits, while retirees share some of the cost through co-insurance and
deductibles.
13
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Except for the late filing disclosures set forth below, to the Company's
knowledge, based solely on a review of the copies of such reports furnished to
the Company and written representations that no other reports were required,
during the fiscal year ended December 31, 2002, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were satisfied.
Timing requirements for the filing of Form 4 were accelerated effective
August 29, 2002. Late Form 4 filings were made during 2002 for the following
officers: Donald S. Stewart, Executive Vice President, filed a Form 4 on October
30, 2002 regarding the sale of 2,125 shares of common stock from the ESOP on May
9, 2002 and the grant of incentive stock options on September 30, 2002; Richard
S. Dolge, Senior Vice President, filed a Form 4 on October 30, 2002 regarding
the grant of incentive stock options on September 30, 2002; Senior Vice
Presidents Robert B. Bantle, Francis M. Fetsko, Joyce P. Maglione, Joseph H.
Perry and Lawrence A. Updike each filed a Form 4 on November 4, 2002 regarding
the grant of incentive stock options on September 30, 2002.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and officers of the Company, members of their immediate
families and companies or firms with which they are associated, were customers
of, or had other transactions with, the Company in the ordinary course of
business during 2002. All loans and commitments to loan were made 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 normal risk of collectibility or present other unfavorable
features. As of December 31, 2002, the balance of all such loans included in
total loans was $1,705,000. None of the loans outstanding to directors or
officers of the Company, or members of their immediate families or companies or
firms with which they are associated, were nonperforming at December 31, 2002.
Edward C. Hooks, a Director of the Company and of the Trust Company, is a
partner in the law firm of Harris Beach LLP, the firm that provides legal
services to the Company.
James R. Hardie, a Director of the Company and Vice Chair of Tompkins
Insurance, is a partner in a partnership that leases space to Tompkins Insurance
in Attica, New York. The total amount paid to the partnership in 2002 was
$36,000.
William W. Griswold, a Director of the Company and of the Trust Company, is
vice president and a director of Finger Lakes Technologies Group, Inc. a
wholly-owned subsidiary of Ontario Telephone Company, Inc. and Trumansburg
Telephone Company, Inc. Mr. Griswold serves as president, chief executive
officer, and director of Ontario Telephone Company, Inc. and Trumansburg
Telephone Company, Inc. The Company has purchased telecommunication, network,
and computer equipment and services from Finger Lakes Technologies Group, Inc.
and telephone service from the Trumansburg Telephone Company, Inc. In 2002, the
Company paid Finger Lakes Technologies Group, Inc. an amount equal to $186,821
and the Trumansburg Telephone Company, Inc. an amount equal to $11,745.
Michael H. Spain, a Director of the Company and Mahopac National Bank, is
president and owner of the Spain Agency, an insurance agency that placed the
Company's current workers compensation and statutory disability insurance
coverages.
William D. Spain, Jr., a Director of the Company and a Director and
Chairman of Mahopac National Bank, is Managing Partner of Spain & Spain, PC, a
firm that provides legal services to Mahopac National Bank.
14
STOCK PERFORMANCE GRAPH
The following graph sets forth comparative information regarding the
Company's cumulative return on its Common Stock over the five-year period ended
December 31, 2002. Total shareholder return is measured by dividing cumulative
dividends (assuming dividend reinvestment) plus the change in share price during
the measurement period by the share price at the beginning of the measurement
period. The Company's cumulative shareholder return for the five-year period
based upon an initial investment of $100 is compared to the cumulative return of
the NASDAQ Stock Market (U.S. Companies) and the SNL Securities L.P. Bank Index,
assuming the reinvestment of dividends. The stock prices on the performance
graph are not necessarily indicative of future stock price performance.
[GRAPHIC CHART OMITTED]
------------------------------------------------------------------------------------------------
Period Ending
------------------------------------------------------------------------------------------------
Index 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
------------------------------------------------------------------------------------------------
Tompkins Trustco, Inc. 100.00 124.27 107.02 108.23 160.74 180.82
------------------------------------------------------------------------------------------------
NASDAQ - Total US* 100.00 140.99 261.48 157.42 124.89 86.33
------------------------------------------------------------------------------------------------
SNL Bank Index 100.00 108.17 104.84 123.81 125.06 114.67
------------------------------------------------------------------------------------------------
15
PROPOSAL NO. 2
AMENDMENT OF TOMPKINS TRUSTCO, INC. 2001 STOCK OPTION PLAN
On March 24, 2003, the Board of Directors of the Company adopted, subject
to stockholder approval, an amendment to the Tompkins Trustco, Inc. 2001 Stock
Option Plan (the "2001 Plan"). Specifically, the Board of Directors recommends
that the number of shares of Common Stock reserved for issuance thereunder be
increased by 500,000 shares. As a result, the maximum number of shares of Common
Stock that could be issued by the exercise of options granted under the 2001
Plan, as amended, would be 850,000 shares. All other terms of the 2001 Plan
shall remain the same. The 2001 Plan, as approved on May 15, 2001 by a majority
of stockholders, is set forth on Exhibit A to this proxy statement. For purposes
of the discussion that follows, the "2001 Plan" shall mean the original Plan, as
amended by the proposal above.
The purpose of the 2001 Plan is to promote the interests of the Company and
its stockholders by helping the Company attract and retain the best available
personnel, and to furnish additional incentive to officers and key employees of
Tompkins or any of the Company's subsidiaries, by encouraging such officers and
key employees to acquire a proprietary interest in the Company or to increase
the same.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
RESERVATION OF 500,000 ADDITIONAL SHARES OF COMMON STOCK FOR
ISSUANCE UNDER THE 2001 PLAN, INCREASING TO 850,000 AS THE
MAXIMUM NUMBER OF SHARES WHICH MAY BE ISSUED UPON EXERCISE OF
OPTIONS GRANTED UNDER THE 2001 PLAN.
The affirmative vote of stockholders holding at least a majority of Common
Stock voting in person or by proxy at the Meeting is necessary for approval.
Unless otherwise specified, proxies solicited by the Board of Directors will be
voted "FOR" the adoption of the amendment to the 2001 Plan.
Summary of the 2001 Plan
Administration. The Compensation Committee will be responsible for
administering the 2001 Plan. The Compensation Committee has full authority,
subject to the terms of the 2001 Plan, to make all determinations under the 2001
Plan. The Company will indemnify each member of the Board of Directors and the
Compensation Committee for actions taken under the 2001 Plan.
Incentive and Non-Statutory Stock Options. The Compensation Committee may
grant Incentive Stock Options (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended) (the "Code") under the 2001 Plan and options which do
not qualify as Incentive Stock Options ("Non-Statutory Stock Options").
Eligibility. The persons eligible to receive options under the 2001 Plan
shall be such officers and key employees and consultants of the Company and its
subsidiaries, as the Compensation Committee shall select from time to time.
Directors who are not otherwise officers or employees of the Company, and other
"Consultants," as defined in the 2001 Plan, are eligible to receive
Non-Statutory Stock Options under the 2001 Plan.
Stock Subject to 2001 Plan. The number of shares of Common Stock of the
Company which may be subject to options granted under the 2001 Plan is currently
350,000 shares. Assuming that Proposal No. 2 is approved by the stockholders,
the number of shares of Common Stock of the Company which may subject to options
granted under the 2001 Plan will be 850,000 shares. Shares subject to options
which are no longer exercisable will be available for issuance pursuant to other
options.
Exercise Price. The 2001 Plan provides that the exercise price under each
option shall be no less than 100% of the fair market value (as defined in the
2001 Plan) of the Common Stock on the day the option is granted. The exercise
price of an option is to be paid in cash, or by the delivery of a certified
check or a bank check payable to the order of the Company. Alternatively, an
optionee may pay for such shares, in whole or in part, by the delivery of shares
of Common Stock of the Company already owned by such optionee in exchange for
such new shares, provided that the value of such shares so exchanged shall be
determined by the value of such shares on the date of exercise.
16
Non-Transferability. Options granted under the 2001 Plan generally may be
exercised during the optionee's lifetime only by the optionee, and shall not be
assignable or transferable by the optionee, whether voluntarily or by operation
of law or otherwise, except by Will or the laws of descent and distribution.
Exercise. The duration of each option will be ten (10) years from the date
of grant. Each option, or any installment thereof, may be exercised in whole or
in part, by giving written notice to the Company at its principal office,
specifying the number of shares to be purchased and accompanied by the payment
of the exercise price. In no event will an option be exercisable later than ten
years from the date of grant of the option.
Effect of Termination of Services. Optionees shall have the right to
exercise the vested portion of any options granted under the 2001 Plan only
while the optionee maintains a relationship as an employee or Consultant as the
case may be, of the Company or any of its subsidiaries and has been an employee
or Consultant, as the case may be, of one or more of such corporations
continuously since the grant of the option, except as otherwise expressly
provided in the 2001 Plan. An optionee will be eligible to participate under the
2001 Plan and will be treated as a continuing employee during the period when
the optionee is on military duty, sick leave or other bona fide leave of absence
if the period of such leave does not exceed ninety (90) days, or, if longer, so
long as a statute or contract guarantees the optionee's right to re-employment
with the Company or its subsidiary. If an optionee's employment or consulting
relationship is terminated because of the optionee's death, options held by the
optionee may be exercised by the person designated in the optionee's Will or by
the optionee's proper legal representative for a period of twelve (12) months
after the date of the optionee's death. If an optionee is an employee or
consultant of the Company or a subsidiary of the Company and the termination is
due to the optionee's permanent and total disability, options held by the
optionee may be exercised for a period of twelve (12) months following the date
of such termination. If an optionee's employment with the Company or any of its
subsidiaries is terminated without cause, any such unexercised options or
portion thereof may be exercised, in whole or in part, by the optionee for a
period of thirty (30) days after the effective date of such termination. In the
event of an optionee's termination of employment for cause, any option or
options held by him or her under the 2001 Plan, to the extent not exercised
before the effective date of such termination, shall immediately terminate. In
the case of optionee's death or permanent and total disability, the options may
be exercised only to the extent exercisable on the date of death or permanent
disability. Notwithstanding any provision to the contrary, in no event is an
option exercisable after the termination date specified in the option grant.
Stock Dividends and Stock Splits. The number, kind and price of the shares
subject to each outstanding option will be proportionately and appropriately
adjusted in the event of any stock dividend, stock split, recapitalization,
reclassification, or other similar change in the Company's outstanding
securities. The number of shares of Common Stock of the Company reserved for
issuance pursuant to options granted under the 2001 Plan will be adjusted by the
Board of Directors for any such changes.
Reorganization. Pursuant to the terms and conditions of the 2001 Stock
Option Plan, all options granted thereunder shall have full and immediate
vesting in the event that (i) the Company shall dispose of all or substantially
all of its assets as an entity and thereafter dissolve, or (ii) consolidate with
or merge into another corporation or permit one or more corporations to
consolidate with or merge into it, and pursuant to any such merger or
consolidation (1) the Company shall not be the resulting or surviving
corporation and (2) neither the Company nor the stockholders of the Company
entitled to vote for the election of directors as of the date immediately
preceding the effective date of said consolidation or merger, shall receive more
than fifty percent (50%) of the resulting entity's voting capital stock. In the
event of any merger or consolidation involving the Company pursuant to which the
Company shall be the resulting or surviving corporation, any options granted
under the 2001 Plan shall not be subject to full and immediate vesting.
Term of 2001 Plan. The 2001 Plan will terminate on January 22, 2011, ten
(10) years from the date the 2001 Plan was adopted by the Board of Directors,
or, if earlier, upon the purchase of all Common Stock subject to the 2001 Plan
pursuant to the exercise of options granted thereunder. Any options outstanding
after the termination of the 2001 Plan will remain in effect in accordance with
their terms. The Board of Directors may terminate or amend the 2001 Plan, except
that the Board may not, without stockholder approval, increase the number of
shares of Common Stock as to which options may be granted or change the class of
employees eligible to receive options under the 2001 Plan.
17
Income Tax Consequences
The following discussion summarizes certain federal income tax consequences
of participation in the 2001 Plan and is based on the law as in effect on the
date of this proxy statement.
To a Participant. The grant of an option does not, by itself, result in any
taxable income to an optionee. Taxable income also does not result merely
because an option becomes exercisable. However, an optionee may have taxable
income upon exercise of an option and may have further tax consequences upon
disposition of any Common Stock purchased with the Option.
Optionees who exercise Non-Statutory Stock realize "ordinary income" on the
date of exercise equal to the difference (the "option spread") between the value
of the Common Stock purchased and the exercise price. If the optionee is an
employee of the Company, this income, like other wages, is subject to tax
withholding.
Any subsequent sale of Common Stock purchased under a Non-Statutory Stock
may result in a capital gain or loss. Generally, gain on a sale of Common Stock
held for more than 12 months is treated as "long term" gain subject to a maximum
federal income tax rate of 20%. An optionee who sells the Common Stock at a loss
is generally entitled to claim a capital loss, although the tax rules do not
allow losses on so-called "wash sales" and sales to certain related parties (for
example, a family member). The amount of gain or loss recognized on any sale
will depend on the optionee's tax basis in the Common Stock. If the optionee
paid the option exercise price entirely in cash, his or her tax basis is the
amount of cash paid plus any ordinary income realized upon exercise. If the
optionee paid part or all of the exercise price by surrendering previously
acquired shares of Common Stock, his or her tax basis (and capital gains holding
period) in the surrendered shares carries over dollar-for-dollar to an
equivalent number of shares purchased under the option. Any additional shares
purchased under the option have a tax basis equal to any cash paid upon exercise
plus all the ordinary income realized upon exercise of the entire option.
Different rules apply to options that qualify as Incentive Stock Options or
ISOs. An optionee does not have ordinary income upon exercise of an ISO.
However, exercise of an ISO increases alternative minimum taxable income
("AMTI") by an amount equal to the option spread. This increase may give rise to
an alternative minimum tax ("AMT") liability. Whether exercise of an ISO gives
rise to an AMT liability will depend on a number of factors, including the size
of the option spread relative to the optionee's overall income. The rules for
determining AMT liability require the optionee to compute AMTI in excess of
certain exemption amounts, make certain adjustments, and then apply the AMT tax
rate (maximum 20%). If the resulting tax amount is greater than the tax computed
under the ordinary method, the optionee owes the AMT. An optionee who is
required to pay the AMT by reason of exercising an ISO may be able to credit a
portion of the AMT against regular tax liability in subsequent years.
Shares purchased under an ISO are subject to special tax holding rules. If
the optionee holds on to ISO shares for at least two years from the date the
option was granted and at least one year after exercise, any subsequent sale of
the shares will produce long-term capital gain or loss. However, a disposition
of ISO shares within either of these special holding periods (a so-called
"disqualifying disposition") will generally result in the optionee having (i)
ordinary income, subject to specific calculations, in the year of the
disposition and (ii) additional gain on the disposition.
Optionee's tax basis in ISO shares (used in measuring any capital gain or
loss upon a sale or exchange) will depend on a number of factors. In general,
the rules for determining tax basis are the same as those described above for
Non-Statutory Stock Options. However, since an optionee does not have taxable
ordinary income upon exercising an ISO, his or her aggregate tax basis in ISO
shares (except for AMT calculation purposes) is generally limited to the amount
of cash paid plus the tax basis in any shares surrendered as part of the
purchase price. On the other hand, the optionee's tax basis in ISO shares that
are disposed of in a "disqualifying disposition" is increased by the amount of
any ordinary income realized by reason of that disposition.
The rules described above for ISOs assume that the optionee exercises the
ISO while an employee of the Company or within three months following
termination of his or her employment (one year, if termination occurred by
reason of total and permanent disability). If the optionee exercises an ISO
after the expiration of these periods, the option will be treated for tax
purposes as a Non-Statutory Stock Option. ISOs are also treated as Non-Statutory
Stock Options for tax purposes to the extent that, in the aggregate, they first
become exercisable in any calendar year for shares of Common Stock having a fair
market value (determined at time of grant) in excess of $100,000.
18
To the Company. In general, the Company will be entitled to a deduction in
connection with awards under the Plan only at such time, and in such amount, as
optionees realize ordinary income in connection with the awards. Thus, in the
case of an ISO, assuming there is no disqualifying disposition, the Company will
not be entitled to a deduction because the optionee will not realize ordinary
income. Where a transfer of Common Stock results in ordinary income subject to
withholding, the Code requires satisfaction of the applicable withholding
requirements as a condition to the Company's claiming its deduction.
The Code limits to $1 million the deduction a public corporation may claim
for remuneration paid to certain of its top officers, with a number of
exceptions. Qualifying performance-based compensation is exempt from this
deduction limitation. It is intended that stock options awarded under the 2001
Plan may qualify for this performance-based exemption except as the Board of
Directors may otherwise determine.
Equity Compensation Plans
The following table summarizes information, as of December 31, 2002,
relating to equity compensation plans of the Company pursuant to which grants of
options, restricted stock, restricted stock units or other rights to acquire
shares may be granted from time to time.
EQUITY COMPENSATION PLAN INFORMATION
-----------------------------------------------------------------------------------------------------------
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity compensation
exercise of exercise price of plans (excluding
outstanding options, outstanding options, securities reflected in
warrants and rights warrants and rights column (a))
Plan Category (a) (b)(2) (c)
-----------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders (1) 477,120 32.10 132,000
-----------------------------------------------------------------------------------------------------------
Equity compensation plans not
approved by security holders 0 0 0
-----------------------------------------------------------------------------------------------------------
Total 477,120 32.10 132,000
-----------------------------------------------------------------------------------------------------------
(1) These plans are the Tompkins Trustco, Inc. 2001 Stock Option Plan, the
Tompkins County Trustco, Inc 1998 Stock Option Plan, and the Tompkins
County Trust Company 1992 Stock Option Plan.
(2) This price represents the weighted average exercise price of all
outstanding options.
19
REPORT OF THE AUDIT/EXAMINING COMMITTEE
The following Report of the Audit/Examining Committee does not constitute
solicitation material and shall not be deemed filed or incorporated by reference
into any other Company filing under the Securities Act of 1933, as amended, or
the Securities Exchange Act of 1934,as amended, except to the extent that the
Company specifically incorporates this Report by reference therein.
The Audit/Examining Committee is appointed by the Board of Directors to
assist the Board in fulfilling its oversight responsibilities. The
Audit/Examining Committee is composed of at least three non-employee Directors,
all of whom are deemed independent directors under Section 121(A) of the listing
standards of the American Stock Exchange (the "AMEX Standards").
The Audit /Examining Committee operates under a written charter approved by
the Board of Directors. The Audit/Examining Committee's primary duties and
responsibilities are to monitor the integrity of the Company's financial
reporting process and systems of internal controls regarding finance,
accounting, and legal compliance; monitor the independence and performance of
the Company's independent auditors and internal auditing department; and provide
an avenue of communication among the independent auditors, management, the
internal auditing department, and the Board of Directors. The Audit/Examining
Committee also determines the compensation of the external auditor.
The Audit/Examining Committee met four times during 2002 and reports to the
Board on a quarterly basis. The Audit/Examining Committee schedules its meetings
with a view to ensuring that it devotes appropriate attention to all of its
tasks. The Audit/Examining Committee's meetings include, whenever appropriate,
executive sessions with the Company's independent auditors and with the
Company's internal auditors, in each case without the presence of the Company's
management.
The Audit/Examining Committee has the authority to conduct any
investigation appropriate to fulfilling its responsibilities. It has direct
access to the independent auditors and any employee or officer of the Company.
The Audit/Examining Committee has the ability to retain, at the Company's
expense and at compensation it deems appropriate, special legal, accounting, or
other consultants or experts it deems necessary in the performance of its
duties.
Management is responsible for the Company's internal controls and financial
reporting process. The Company's independent accountants, KPMG LLP ("KPMG"), are
responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with auditing standards generally accepted in
the United States of America and to issue a report thereon.
In connection with these responsibilities, the Audit/Examining Committee
met with management and with KPMG to review and discuss the Company's December
31, 2002 consolidated financial statements. The Audit/Examining Committee also
discussed with KPMG the matters required by Statement on Auditing Standards No.
61 (Communication with Audit Committees), and received written disclosures from
KPMG required by Independence Standards Board No. 1 (Independence Discussions
with Audit Committees).
Based upon the Audit/Examining Committee's discussions with management,
internal audit, and KPMG and its review of the information described in the
preceding paragraph, the Audit/Examining Committee recommended that the Board of
Directors approve the inclusion of the Company's audited consolidated financial
statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, for filing with the Securities and Exchange Commission.
Members of the Audit/Examining Committee
William W. Griswold, Chair John E. Alexander
Thomas R. Salm Bonnie H. Howell, Alternate
20
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered
by KPMG for the audit of the Company's annual financial statements for the years
ended December 31, 2002 and 2001, and fees billed for other services rendered by
KPMG during 2002 and 2001.
2002 2001
---- ----
Audit Fees: $185,400 $190,300
Audit-related Fees:
FHLB collateral maintenance audit at The Bank of Castile 4,500 0
Tax Fees:
Tax return preparation and quarterly estimates 64,260 55,350
Other tax services (1) 25,570 49,195
All Other Fees:
Assistance in strategic planning 0 63,575
(1) Includes tax planning assistance and tax related research
All non-audit services were reviewed with the Audit/Examining Committee, which
concluded that the provision of such services by KPMG was compatible with the
maintenance of that firm's independence and the conduct of its auditing
functions.
INDEPENDENT AUDITORS
On recommendation of its Audit/Examining Committee, the Board of Directors
has retained KPMG to continue as independent auditors and to audit the
consolidated financial statements of the Company for the year ending December
31, 2003. A representative of KPMG is expected to attend the Annual Meeting and
will have an opportunity to make statements and respond to appropriate questions
from stockholders.
21
STOCKHOLDER PROPOSALS
If any stockholder desires to have a proposal formally considered at the
next annual meeting of stockholders and included in the proxy statement and
proxy for that meeting, the Corporate Secretary must receive the proposal in
writing no later than December 12, 2003.
The persons named in the proxies distributed by the Company may use their
discretion in voting proxies with respect to stockholder proposals not included
in the proxy statement for the 2004 Annual Meeting unless the Company receives
notice of such proposals prior to February 23, 2004.
FORM 10-K
A copy of the Company's Annual Report on Form 10-K filed with the SEC is
available without charge at our website www.tompkinstrustco.com or by writing
to: Tompkins Trustco, Inc., ATTN: Francis M. Fetsko, Senior Vice President &
Chief Financial Officer, P.O. Box 460, Ithaca, New York 14851. In addition, the
Annual Report (with exhibits) is available at the SEC's Internet site
(http://www.sec.gov).
OTHER MATTERS
The management knows of no business to be presented for consideration at
the Meeting other than that stated in the Notice of Annual Meeting. If any
additional matters should be presented, it is intended that the enclosed proxy
will be voted in accordance with the judgment of the person or persons acting
under the proxy.
Your vote is important regardless of the number of shares you own. Whether
or not you plan to attend the Meeting, you are urged to vote your proxy
promptly. You may vote by telephone, via the Internet, or mark, sign, date, and
return the enclosed proxy card without delay in the accompanying pre-addressed
postage-paid envelope. Your proxy may be revoked prior to its exercise by filing
with the Corporate Secretary of Tompkins Trustco, Inc. prior to the Meeting a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Meeting, filing a written notice of revocation with the
Corporate Secretary at the Meeting prior to the vote and voting in person.
Dated: April 11, 2003 By Order of the Board of Directors
/s/ JOSEPH H. PERRY
-------------------------------------------
Joseph H. Perry
Senior Vice President & Corporate Secretary
22
EXHIBIT A
TOMPKINS TRUSTCO, INC. 2001 STOCK OPTION PLAN
1. Purpose. THE TOMPKINS TRUSTCO, INC. 2001 STOCK OPTION PLAN
(hereinafter referred to as the "Plan") is designed to attract the best
available personnel for positions of substantial responsibility and to furnish
additional incentive to officers and key employees of TOMPKINS TRUSTCO, INC.
(hereinafter referred to as the "Company"), or any of the Company's wholly-owned
or substantially owned subsidiaries, upon whose efforts the successful conduct
of the business of the Company largely depends, by encouraging such officers and
key employees to acquire a proprietary interest in the Company or to increase
the same. This purpose will be effected through the granting of options to
purchase the Common Stock of the Company which will be either "Incentive Stock
Options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended to date (hereinafter referred to as the "Code") or Non-Statutory
Stock Options (which shall not qualify under Section 422 of the Code) on the
terms provided herein. Hereinafter the term "option" shall be deemed to refer to
either Incentive Stock Options or Non-Statutory Stock Options as the context
requires, unless specific reference is made to Incentive Stock Options.
2. Eligibility. The persons eligible to receive options under this
Plan shall be such officers and key employees and "Consultants" of the Company
and its subsidiaries as the Board of Directors of the Company shall select from
time to time; provided, however, that all options must be approved by the
Executive, Compensation/Personnel Committee designated by the Board of Directors
(the "Compensation Committee"). The Compensation Committee shall be composed
solely of two (2) or more "Non-Employee Directors," as that term is defined in
Rule 16b-3(b)(3)(i) promulgated under Section 16 of the Securities Exchange Act
of 1934, as amended. All references in this Plan to employees of the Company
shall include the officers and key employees of any parent or subsidiary of the
Company, as those terms are defined in Section 424 of the Internal Revenue Code.
For the purposes of this Plan, "Consultant" shall mean any person or entity,
including an officer or director of the Company or a subsidiary of the Company
who provides services (other than as an employee) to the Company or a subsidiary
of the Company, and shall include a member of the Board of Directors of the
Company who is not an employee of the Company or a subsidiary of the Company at
the time the option is granted. Key employees shall be entitled to receive
Incentive Stock Options and/or Non-Statutory Stock Options hereunder.
Consultants shall be entitled to receive Non-Statutory Stock Options hereunder.
3. Stock Subject to Options. Subject to the provisions of Section 11
hereof, options may be granted under this Plan for up to 350,000 shares of
Common Stock, par value $.10 per share, of the Company (hereinafter referred to
as "Shares"), which Shares may, in the discretion of the Board of Directors of
the Company, consist either in whole or in part of authorized but unissued
shares of Common Stock or shares of Common Stock held in the treasury of the
Company. Any Shares subject to an option that expires or terminates unexercised
as to such Shares for any reason whatsoever, shall continue to be available for
options under this Plan.
4. Effective Date. The effective date of this Plan shall be January
23, 2001, the date that the Plan was adopted by the Board of Directors of the
Company; provided, however, that the effectiveness of the Plan shall be subject
to and contingent upon the approval by the stockholders of the Company within
twelve (12) months of the date that this Plan is so adopted by the Board of
Directors.
5. Terms and Conditions of Options. Each option granted by the
Compensation Committee on behalf of the Board of Directors pursuant to this Plan
shall be evidenced by a certain stock option agreement (the "Agreement")
containing provisions consistent with this Plan. The Agreement shall specify
whether the options granted are Incentive Stock Options, designed to qualify
under the provisions of Section 422 of the Code, or Non-Statutory Stock Options,
which are not designed to qualify under Section 422 of the Code. The Agreement,
whether for Incentive Stock Options, Non-Statutory Stock Options, or both, shall
incorporate in substance the following terms and conditions:
(a) Price. Each option shall state the number of Shares
subject to the option as well as the option price of each such Share,
which shall be an amount not less than the "Fair Market Value" of a
share of Common Stock of the Company as of the date the option is
granted. For the purposes of the Plan, the "Fair Market Value" of each
share of Common Stock of the Company shall be, if shares of Common
Stock of the Company are listed or admitted to trading on any stock
exchange, an amount equal to the closing price of the Common Stock of
the Company on such exchange, on the date immediately preceding the
date of such grant. If the Common Stock of the Company is not, at the
time an option is granted, listed or admitted to trading on a stock
exchange, the "Fair Market Value" shall be the average between the
lowest reported "bid" price and the highest reported "ask" price of
shares of Common Stock of the Company on the date immediately preceding
the date of such grant in the over-the-counter market, as such prices
23
are reported in a publication of general circulation selected by the
Compensation Committee. If for any reason the Common Stock of the
Company is no longer being traded at the time of the grant of the
option, the "Fair Market Value" of each share of Common Stock of the
Company shall be determined by the Compensation Committee; provided,
however, that the "Fair Market Value" shall in no event be less than
the book value of the Common Stock of the Company as of the date said
option is granted, excluding goodwill. In the event an option, which is
designed to qualify as an Incentive Stock Option, is granted to any
person who would after the grant of such option be deemed to
beneficially own stock possessing more than ten percent (10 percent) of
the total combined voting power of all classes of capital stock of the
Company within the meaning of Section 422(b)(6) of the Code
(hereinafter referred to as a "Ten Percent Shareholder"), the option
price per share shall be an amount equal to not less than one hundred
ten percent (110 percent) of the "Fair Market Value" of a share of
Common Stock of the Company as of the date the option is granted.
(b) Term. The term of each option shall be determined by the
Compensation Committee, but in no event shall an option be exercisable
either in whole or in part after the expiration of ten (10) years from
the date on which it is granted, or in the case of a Ten Percent
Shareholder where the option is designed to qualify as an Incentive
Stock Option, in no event shall such an option be exercisable either in
whole or in part after the expiration of five (5) years from the date
on which it is granted. The Board of Directors and an optionee may at
any time by mutual agreement terminate any option granted to such
optionee under this Plan.
(c) Vesting Schedule. Each Agreement may include, in the
discretion of the Compensation Committee, a vesting period following
the grant of any option during which all or any part of such option
remains forfeitable and cannot be exercised. All Agreements shall
provide for full and immediate vesting in the event that (i) the
Company shall dispose of all or substantially all of its assets as an
entity and thereafter dissolve, or (ii) consolidate with or merge into
another corporation or permit one or more corporations to consolidate
with or merge into it and pursuant to any such merger or consolidation
(1) the Company shall not be the resulting or surviving corporation and
(2) neither the Company nor the shareholders of the Company entitled to
vote for the election of directors as of the date immediately preceding
the effective date of said consolidation or merger, shall receive more
than fifty percent (50 percent) of the resulting entity's voting
capital stock. In the event of any merger or consolidation involving
the Company and pursuant to which (1) the Company shall be the
resulting or surviving corporation, or (2) either Company shall not be
the resulting or surviving corporation and (2) neither the Company nor
the shareholders of the Company entitled to vote for the election of
directors as of the date immediately preceding the effective date of
said consolidation or merger, shall receive more than fifty percent of
the resulting entity's voting capital stock, then any options granted
under this Plan shall remain subject to the vesting schedule set forth
in the Agreement regarding such grant and shall not be subject to full
and immediate vesting. Additional specific provisions regarding vesting
in the event of an optionee's death or disability are set forth at
Sections 9 and 10 of this Plan, respectively.
(d) Exercise. Notwithstanding any provision to the contrary
set forth herein, any option exercised subsequent to the date in which
optionee's relationship with the Company or any of its subsidiaries is
terminated (whether such relationship is as an employee or Consultant),
shall only be exercisable to the extent that said option vested as of
said termination date. Each option, or any installment thereof, shall
be exercised whether in whole or in part, by giving written notice to
the Company at its principal office, specifying the number of Shares to
be purchased and the purchase price to be paid, and accompanied by the
payment of the purchase price. Any optionee may pay for the Shares
subject to the option with cash, a certified check or a bank check
payable to the order of the Company. Alternatively, the optionee may
pay for the Shares, in whole or in part, by the delivery of shares of
Common Stock of the Company already owned by him or her for a period in
excess of six (6) months, which shares will be accepted in exchange for
the Shares at their value on the date of exercise. Certificates
representing the shares purchased by the optionee shall be issued as
soon as practicable after the optionee has complied with the provisions
hereof.
6. Annual Limitation for Incentive Stock Options. The aggregate Fair
Market Value of the Shares (determined under Section 5 as of the time the option
is granted) with respect to which Incentive Stock Options are first exercisable
by an optionee during any calendar year (under all stock option plans of the
Company or any of its subsidiaries) shall not exceed One Hundred Thousand
Dollars ($100,000).
7. Non-Assignment. During the lifetime of the optionee, options issued
hereunder shall be exercisable only by the optionee and shall not be assignable
or transferable by the optionee, whether voluntarily or by operation of law or
otherwise, and no other person shall acquire any rights therein.
24
8. Termination of Employment.
(a) Optionees shall have the right to exercise the vested
portion of any options granted under this Plan only while the optionee
maintains a relationship as an employee or Consultant, as the case may
be, of the Company or any of its subsidiaries and has been an employee
or Consultant of one or more such corporations continuously since the
grant of the option, except as otherwise expressly provided herein. For
purposes of this Section, a relationship qualifying an optionee to
participate under this Plan will be treated as continuing during the
period when the optionee is on military duty, sick leave or other bona
fide leave of absence if the period of such leave does not exceed
ninety (90) days, or, if longer, so long as a statute or contract
guarantees the optionee's right to re-employment with the Company or
the applicable subsidiary. When the period of leave exceeds ninety (90)
days and the optionee's right to re-employment is not guaranteed either
by statute or by contract, the relationship will be deemed to have
terminated on the ninety-first (91st) day of such leave.
(b) In the event of an optionee's termination of employment
without "cause," other than by reason of death or permanent and total
disability, or the retirement by optionee as a result of "Normal
Retirement" (as defined for purposes of the Company's retirement plan
as in effect as of the date that this Plan was adopted by the Board of
Directors of the Company), the optionee shall have the right to
exercise the vested portion of his or her unexercised options as of
said termination date, or any portion thereof, at any time within
thirty (30) days of said termination date; provided, however, that in
any event, the option cannot be exercised after the expiration of the
term of the option. In the event of an optionee's termination of
employment for "cause", any option or options held by him or her under
this Plan, to the extent not exercised before the effective date of
such termination, shall forthwith terminate. For purposes of this Plan,
the term "cause" shall mean the optionee's dishonesty, malfeasance,
misfeasance or the commission of a criminal offense. The conclusion of
the Compensation Committee in determining whether "cause" for
termination exists shall be final and conclusive. In the event that the
optionee retires from the Company or any of its subsidiaries as a
result of a Normal Retirement, the optionee shall have the right to
exercise the vested portion of his or her unexercised options as of
said retirement date, or any portion thereof, at any time within ninety
(90) days of said Normal Retirement Date (as defined for purposes of
the Company's retirement plan as in effect as of the date that the Plan
was adopted by the Board of Directors of the Company); provided,
however, that in any event, the option cannot be exercised after the
expiration of the term of the option. Options not exercised within the
applicable period specified above shall terminate.
9. Death of Optionee. In the event that an optionee's employment (in
the case of an employee), or provision of services as a consultant (in the case
of a Consultant), terminates by reason of said optionee's death prior to the
complete exercise of the vested portion of the options granted to the optionee
under this Plan, any such unexercised option or portion thereof may be exercised
in whole or in part within one (1) year after the date of the optionee's death
and then only: (i) by the optionee's estate or by or on behalf of such person or
persons to whom the optionee's rights pass under the optionee's Will or the laws
of descent and distribution; and (ii) prior to the expiration of the term of the
option.
10. Disability. In the event that an optionee's employment (in the case
of an employee) or provision of services as a consultant (in the case of a
Consultant) with the Company or any of its subsidiaries terminates by reason of
said optionee's permanent and total disability (within the meaning of Section
22(e)(3) of the Code) prior to the complete exercise of the vested portion of
the options granted to the optionee under this Plan, the optionee shall have the
right to exercise the vested portion of his or her unexercised options as of the
termination date, or any portion thereof, within one (1) year after the date
that optionee's employment or consulting relationship with the Company
terminates as a result of said permanent and total disability; provided,
however, that in no event shall any such options be exercisable after the
expiration of the term of the option.
25
11. Adjustments to Number of Shares. The aggregate number and kind of
Shares available for options under this Plan, the number and kind of Shares
subject to any outstanding option and the option price of each outstanding
option, shall be proportionately adjusted by the Board of Directors for any
increase, decrease or change in the total outstanding common shares of the
Company resulting from a stock dividend, recapitalization or similar transaction
(but not by reason of the issuance or purchase of common voting stock by the
Company in consideration for money, services or property).
12. Rights as a Shareholder. The optionee shall have no rights as a
stockholder of the Company with respect to the Shares purchased by him or her
pursuant to the exercise of an option until the date of the issuance to him or
her of a certificate of stock representing such Shares. No adjustment shall be
made for dividends or for distributions of any other kind with respect to Shares
for which the record date is prior to the date of the issuance to the optionee
of a certificate for the Shares.
13. Investment Purpose. Each written notice by which an optionee
exercises an option shall contain representations on behalf of the optionee that
he or she acknowledges that the Company is selling or distributing Shares to him
or her under a claim of exemption from registration under the Securities Act of
1933, as amended (hereinafter referred to as the "Act"), as a transaction not
involving any public offering; that he or she represents and warrants that he or
she is acquiring such Shares with a view to investment and not with a view to
distribution or resale; and that he or she agrees not to make any sale or other
distribution or disposition of such Shares unless (i) a registration statement
with respect to such Shares shall be effective under the Act, together with
proof satisfactory to the Company that there has been compliance with applicable
state law, or (ii) the Company shall have received an opinion of counsel
satisfactory to it that no violation of the Act or applicable state law will be
involved in such transfer. The Company shall include on any certificate for
Shares issued under this Plan such legend restricting the transfer thereof as it
may deem appropriate to comply with any requirement established by law or by the
rules of any stock exchange.
14. Term of Plan. This Plan originally was adopted by the Board of
Directors on January 23, 2001, and approved by the stockholders of the Company
at the Annual Meeting of Stockholders on May 15, 2001, and shall remain in
effect until all Shares subject to issuance hereunder have been purchased
pursuant to the exercise of the options granted under this Plan or until all
such options have lapsed or terminated unexercised; provided, however, that all
options and rights under this Plan must be granted on or before January 22,
2011, which date is ten (10) years from the date that this Plan was adopted by
the Board of Directors of the Company.
15. Amendment and Termination of Plan. The Board of Directors of the
Company, without further approval of the stockholders of the Company, may at any
time suspend or terminate this Plan or may amend it from time to time in any
manner; provided, however, that no amendment shall be effective without prior
approval of the stockholders of the Company which would (i) except as provided
in Section 11 hereof, increase the maximum number of Shares which may be issued
under this Plan, (ii) change the eligibility requirements for individuals
entitled to receive options under this Plan, (iii) extend the period for
granting options, (iv) change the manner of determining the option price, or (v)
materially increase the benefits accruing to employees under this Plan. No
amendment, modification or termination of this Plan shall in any manner
adversely affect any outstanding option under this Plan without the consent of
the optionee holding such affected options.
16. Termination of Prior Stock Option Plans. Upon adoption of this Plan
by the stockholders of the Company, all other stock option plans in effect on
behalf of the Company or any of its subsidiaries shall terminate; provided,
however, such plans shall remain in effect to the extent there remain
unexercised options issued in accordance with the terms and conditions of such
plan or plans.
17. Administration. This Plan shall be administered by the Compensation
Committee of the Board of Directors and decisions of the Compensation Committee
concerning the interpretation and construction of any provisions hereof or any
option granted pursuant hereto shall be final. The Company shall effect the
grant of options under this Plan in accordance with the decisions of the
Compensation Committee, which may, from time to time, adopt rules and
regulations for carrying out this Plan. For purposes of this Plan, an option
shall be deemed to be granted when the written Agreement for the same is signed
on behalf of the Company by its duly authorized officer or representative.
Subject to the express provisions of this Plan, the Compensation Committee shall
have the authority, in its discretion and without limitation, to determine: the
Optionees to receive options, the times when such individuals shall receive such
options, the number of Shares to be subject to each option, the term of each
option, the date when each option or portion thereof shall become exercisable,
the term of each installment, the option price of each Share subject to option,
and such other terms or conditions of any option that are not inconsistent with
the terms and conditions of this Plan or, in the case of an Incentive Stock
26
Option, not inconsistent with the qualification of such option under Section 422
of the Code; to accelerate the date of exercise of any option or installment
thereof; and to make all other recommendations advisable for administering this
Plan.
18. Reservation of Shares. The Company shall be under no obligation to
reserve Shares to fill options. The grant of options to employees hereunder
shall not be construed to constitute the establishment of a trust of such Shares
and no particular Shares shall be identified as optioned and reserved for
employees hereunder. The Company shall be deemed to have complied with the terms
of this Plan if, at the time of issuance and delivery pursuant to the exercise
of an option, it has a sufficient number of Shares authorized and unissued or in
its treasury which may then be appropriated and issued for the purposes
contemplated herein, irrespective of the date when such Shares were authorized.
19. Application of Proceeds. The proceeds of a sale of Shares by the
Company under this Plan will constitute general funds of the Company and may be
used by the Company for any purpose.
20. No Rights Conferred. The adoption and maintenance of this Plan
shall not be deemed to constitute a contract between the Company or any of its
subsidiaries and any officer or employee or to be a consideration for, or an
inducement to or condition of, the employment of any person. Nothing herein
contained shall be deemed to: (i) give to any officer or employee the right to
be retained in the employ of the Company or any of its subsidiaries, (ii)
interfere with the right of the Company or any of its subsidiaries to discharge
any officer or employee at any time, (iii) give to the Company or any of its
subsidiaries the right to require any officer or employee to remain in its
employ, or (iv) interfere with any officer's or employee's right to terminate
his or her employment with the Company or any of its subsidiaries at any time.
21. Tax Withholding. The Company, which employs an officer or employee
granted an option under this Plan, shall have the right to deduct or otherwise
effect a withholding of any amount required by federal or state laws to be
withheld with respect to the grant, exercise, or surrender of any option, or the
sale of Shares acquired upon the exercise of an option, in order for the Company
(or one of its subsidiaries, as the case may be) to obtain a tax deduction
otherwise available as a consequence of such grant, exercise, surrender or sale,
as the case may be. Under appropriate circumstances, such right shall include
the right to receive payment from the optionee of the required withholding
amount. In addition, if, following the exercise of an option granted hereunder,
an optionee sells Shares purchased on exercise of an Incentive Stock Option
within two (2) years from the date of the granting of such Incentive Stock
Option or within one (1) year after the transfer of such Shares to the optionee,
the optionee shall notify the Company at the time of such sale.
22. Indemnification. To the extent permitted by law, each person who is
or shall have been a member of the Board of Directors of the Company or the
Compensation Committee shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
this Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of judgment in any such action, suit, or proceeding against him or
her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Certificate of Incorporation or Bylaws, as a
matter of law, or otherwise, or any power that the Company or any subsidiary
thereof may have to indemnify them or hold them harmless.
23. Governing Law. This Plan shall be governed by and construed in
accordance with the laws of the State of New York.
27
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28
[COMPANY LOGO OMITTED]
P.O. Box 460, Ithaca, New York 14851
(607) 273-3210
www.tompkinstrustco.com
ANNUAL MEETING OF SHAREHOLDERS OF
TOMPKINS TRUSTCO, INC.
May 12, 2003
PROXY VOTING INSTRUCTIONS
Dear Tompkins Trustco Stockholder:
For our Annual Meeting, we offer you the convenience of telephone or Internet voting. Your telephone or Internet vote authorizes
the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
-------------------------------------
MAIL - Date, sign and mail your proxy card in the
envelope provided as soon as possible. COMPANY NUMBER
- OR - -------------------------------------
TELEPHONE - Call toll-free 1-800-PROXIES ACCOUNT NUMBER
(1-800-776-9437) from any touch-tone telephone
and follow the instructions. Have your control -------------------------------------
number and proxy card available when you call.
CONTROL NUMBER
- OR -
-------------------------------------
INTERNET - Access "www.voteproxy.com" and
follow the on-screen instructions. Have your control
number available when you access the web page.
Please detach and mail in the envelope provided IF you are not voting via telephone or the Internet.
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
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FOR AGAINST ABSTAIN
1. Election of four (4) Directors for a term of three years 2. To approve the proposal to amend the [ ] [ ] [ ]
expiring in the year 2006. Tompkins Trustco, Inc. Stock Option
NOMINEES: Plan of 2001 to increase the number of shares of common stock
[ ] FOR ALL NOMINEES [ ] James W. Fulmer (3 yrs.) reserved for issuance thereunder from 350,000 shares of Common
[ ] William W. Griswold (3 yrs.) Stock, having a $0.10 par value per share, to 850,000 shares of
[ ] WITHHOLD AUTHORITY [ ] James R. Hardie (3 yrs.) Common Stock, having a $0.10 par value per share.
FOR ALL NOMINEES [ ] Thomas R. Salm (3 yrs.)
3. In their discretion, the proxies are authorized to vote upon such
[ ] FOR ALL EXCEPT other business as may properly come before the meeting or any
(See instructions below) adjournment thereof. [Management at present knows of no other
business to be presented at the meeting.]
TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE
HEREOF.
INSTRUCTION: To withhold authority to vote for any individual
----------- nominee(s), mark "FOR ALL EXCEPT" and fill in the
circle next to each nominee you wish to withhold,
as shown here: [ ]
---------------------------------------------------------------
JOHN SMITH
1234 MAIN STREET
APT. 203
NEW YORK, NY 10038
---------------------------------------------------------------
To change the address on your account, please check the [ ]
box at right and indicate your new address in the address
space above. Please note that changes to the registered
name(s) on the account may not be submitted via this method.
---------------------------------------------------------------
Signature of Shareholder ____________________ Date: __________ Signature of Shareholder ____________________ Date: __________
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized person.
TOMPKINS TRUSTCO, INC.
Annual Meeting of Stockholders
Tuesday, May 12, 2003
YOUR VOTING CARD IS ATTACHED BELOW.
You may vote by telephone, via the Internet or by conventional mail.
Please read the other side of this card carefully for instructions.
However you decide to vote, your representation at the
Annual Meeting of Stockholders is important to Tompkins Trustco, Inc.
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
TOMPKINS TRUSTCO, INC.
FOR THE ANNUAL MEETING ON MONDAY, MAY 12, 2003
The undersigned stockholder of TOMPKINS TRUSTCO, INC. (the "Company")
hereby constitutes and appoints Joseph H. Perry and Linda M. Carlton, or either
of them, as proxy of the undersigned, with full power of substitution and
revocation, to vote all shares of Common Stock of the Company standing in his or
her name on the books of the Company at the Annual Meeting of Stockholders to be
held at 5:30 p.m. at the Country Club of Ithaca, 189 Pleasant Grove Road,
Ithaca, NY, on May 12, 2003, or at any adjournment thereof, with all the powers
which the undersigned would possess if personally present, as designated on the
reverse side.
The undersigned hereby instructs the said proxies (i) to vote in accordance
with the instructions indicated on the reverse side, but if no instruction is
given on the reverse side, to vote "FOR" the approval of Proposals 1 and 2, and
(ii) to vote in their discretion with respect to such other matters (including
matters incident to the conduct of the meeting), as may properly come before the
meeting.
The undersigned hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement dated April 11, 2003, relating to the Annual Meeting of
Stockholders to be held May 12, 2003. (Signature on the reverse side is
required.)
(Continued and to be signed on the reverse side)
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COMMENTS:
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