SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
FIRST EMPIRE STATE CORPORATION
________________________________________________________________________________
(Name of Registrant as Specified in its Charter)
Not Applicable
________________________________________________________________________________
(Name of Person Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/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:
Not applicable.
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
Not applicable.
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not applicable.
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
Not applicable.
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/ / 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: Not applicable.
_________________________________________________
2) Form, Schedule or Registration Statement No. Not applicable.
____________________________
3) Filing party: Not applicable.
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4) Date filed: Not applicable.
_____________________________________________________________
FIRST EMPIRE STATE CORPORATION
One M&T Plaza Buffalo
New York 14240
1997
Notice of Annual Meeting of Stockholders
and
Proxy Statement
YOUR VOTE IS IMPORTANT
To ensure that your shares will be represented at the Annual Meeting of
Stockholders, please mark, sign, date and mail your proxy card to the Transfer
Agent, Boston Equiserve (The First National Bank of Boston), in the enclosed
postage-paid envelope. If your shares are held in the name of a broker, bank or
other holder of record, you will receive instructions from the holder of record
which you must follow in order for your shares to be voted.
ATTENDANCE AT THE ANNUAL MEETING OF STOCKHOLDERS
Please mark the appropriate box on the proxy card if you plan on attending
the Annual Meeting of Stockholders. Any stockholder present at the meeting may
withdraw his or her proxy and vote personally on each matter brought before the
meeting.
ELIMINATE DUPLICATE MAILINGS
First Empire State Corporation currently provides annual and quarterly
reports to stockholders who receive proxy statements. If you are a
stockholder of record and have more than one account in your name or the same
address as other stockholders of record, you may authorize First Empire State
Corporation to discontinue mailings of multiple annual and quarterly reports.
To discontinue duplicate mailings, mark the appropriate box on each proxy
card for each stockholder account that you do NOT wish to receive annual and
quarterly reports.
FIRST EMPIRE STATE CORPORATION
One M&T Plaza Buffalo, New York 14240
March 13, 1997
Dear Stockholder,
You are cordially invited to attend the 1997 annual meeting of
stockholders of First Empire State Corporation. Our annual meeting will be
held on the 10th floor of One M&T Plaza in Buffalo, New York on Tuesday,
April 15, 1997 at 11:00 a.m.
Stockholders will be asked to elect 17 directors. Information about the
nominees is set forth in the attached proxy statement.
Whether or not you presently plan to attend the meeting, please indicate
your vote on the enclosed proxy card, sign and date it, and then return it in
the enclosed postage-paid envelope. You may withdraw your proxy if you attend
the meeting and wish to vote in person.
I urge you to vote for the election of all 17 nominees.
ROBERT G. WILMERS
Chairman of the Board,
President and Chief Executive Officer
_______________________________________________________________________________
_______________________________________________________________________________
FIRST EMPIRE STATE CORPORATION
One M&T Plaza Buffalo, New York 14240
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TIME...................... 11:00 a.m., local time, on Tuesday, April 15, 1997.
PLACE..................... One M&T Plaza
10th Floor
Buffalo, New York 14240
ITEMS OF BUSINESS......... (1) To elect 17 directors for a term of one (1)
year and until their successors have been elected
and qualified.
(2) To transact such other business as may
properly come before the meeting and any
adjournments thereof.
RECORD DATE............... Holders of the Common Stock of record at 5:00 p.m.,
March 3, 1997 are entitled to vote at the meeting.
ANNUAL REPORT............. The 1996 First Empire State Corporation Annual
Report, which is not a part of the proxy soliciting
material, is enclosed.
PROXY VOTING.............. It is important that your shares be represented and
voted at the meeting. Please MARK, SIGN, DATE AND
RETURN PROMPTLY the enclosed proxy card in the
postage-paid envelope furnished for that purpose.
Any proxy may be revoked in the manner described
in the accompanying Proxy Statement at any time
prior to its exercise at the meeting.
RICHARD A. LAMMERT
Senior Vice President,
General Counsel and Secretary
March 13, 1997
_______________________________________________________________________________
_______________________________________________________________________________
TABLE OF CONTENTS
PAGE
____
PROXY STATEMENT............................................................. 1
VOTING RIGHTS............................................................... 1
PRINCIPAL BENEFICIAL OWNERS OF SHARES....................................... 2
ELECTION OF DIRECTORS....................................................... 4
NOMINEES FOR DIRECTOR....................................................... 5
STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS......................... 9
Section 16(a) Beneficial Ownership Reporting Compliance................ 10
PERFORMANCE GRAPH........................................................... 11
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS............................ 12
Compensation Committee Report on Executive Compensation................ 12
Compensation Committee Interlocks and Insider Participation............ 14
Executive Compensation................................................. 14
Stock Option Grants in 1996............................................ 16
Stock Options and Stock Appreciation Rights Exercised in 1996 and
Year-End Values...................................................... 17
Retirement Plan........................................................ 18
Supplemental Benefit Plans............................................. 19
Directors' Fees........................................................ 21
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS.......................... 22
BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND ATTENDANCE.................. 23
OTHER MATTERS............................................................... 23
INDEPENDENT PUBLIC ACCOUNTANTS.............................................. 24
SOLICITATION COSTS.......................................................... 24
STOCKHOLDER PROPOSALS....................................................... 24
FIRST EMPIRE STATE CORPORATION
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of First Empire State Corporation ("First Empire" or the
"Company") of proxies in the accompanying form for use at the 1997 Annual
Meeting of Stockholders or any adjournment or adjournments thereof.
The proxies designated on the form, or any one of them, may exercise all the
powers of said proxies and each shall have the power to appoint a substitute to
act in his place.
The Annual Meeting of Stockholders of First Empire will be held on the 10th
floor of One M&T Plaza in Buffalo, New York on Tuesday, April 15, 1997, at 11:00
a.m., local time.
First Empire's mailing address is One M&T Plaza, Buffalo, New York 14240 and
its telephone number is (716) 842-5445.
This Proxy Statement and the accompanying form of proxy are first being sent
to stockholders on or about March 13, 1997. A copy of the Company's Annual
Report for 1996, including financial statements, accompanies this Proxy
Statement, but is not part of the proxy solicitation materials.
VOTING RIGHTS
Stockholders of record at 5:00 p.m., Eastern Standard Time, on March 3, 1997
are entitled to vote at the Annual Meeting. At that time First Empire had
outstanding 6,690,722 shares of common stock, $5 par value ("Common Stock").
Each share of Common Stock is entitled to one vote. Shares may not be voted at
the meeting unless the owner is present or represented by proxy. Proxies will be
voted in accordance with the stockholder's direction, if any. A stockholder
giving a proxy may revoke it at any time before it is exercised by giving
written notice of such revocation or by delivering a later dated proxy or by the
vote of the stockholder in person at the Annual Meeting. Unless otherwise
directed, proxies will be voted in favor of the election as directors of the
persons named under the caption "NOMINEES FOR DIRECTOR."
1
The vote of a plurality of the shares of the Company's Common Stock present
or represented at the meeting is required for the election of directors,
assuming a quorum is present or represented at the meeting. The presence in
person or by proxy of the holders of a majority in voting power of the Common
Stock will constitute a quorum for the transaction of business at the meeting.
Broker non-votes will be counted as being present or represented at the meeting
for purposes of establishing a quorum, but will not have an effect on the
outcome of the vote for the election of directors.
PRINCIPAL BENEFICIAL OWNERS OF SHARES
The following table sets forth certain information with respect to all
persons or groups known by the Company to be the beneficial owners of more than
5% of its shares as of March 3, 1997.
TITLE OF NAME AND ADDRESS NUMBER PERCENT
CLASS OF BENEFICIAL OWNER OF SHARES OF CLASS
- -------- ------------------- --------- --------
Common Stock A group ("Group I")
comprised of:
Robert G. Wilmers 685,782 10.09%
One M&T Plaza
Buffalo, NY 14240
West Ferry Foundation 11,000 less than 1%
One M&T Plaza
Buffalo, NY 14240
Rem Foundation 451,320 6.75%
Allgemeines Treuun-
ternehmen,
Postfach 34 722,
FL 9490
Vaduz, Liechtenstein
Hofin Anstalt 344,400 5.15%
P.O. Box 83
Vaduz, Liechtenstein
Argali [BVI] Limited 30,200 less than 1%
P.O. Box 71
Craigmuir Chambers
Road Town
Tortola, British
Virgin Islands --------- ---------
Total for Group I 1,511,702(1) 22.23%
2
TITLE OF NAME AND ADDRESS NUMBER PERCENT
CLASS OF BENEFICIAL OWNER OF SHARES OF CLASS
- -------- ------------------- --------- --------
Common Stock A group ("Group II")
comprised of:
Brent D. Baird 361,388(2) 5.40%
and others
1350 One M&T Plaza
Buffalo, NY 14203
Common Stock National Indemnity 506,930(3) 7.58%
Company
3024 Harney Street
Omaha, NE 68131
Common Stock Oppenheimer Group, Inc. 390,850(4) 5.84%
Oppenheimer Tower
World Financial Center
New York, NY 10281
- ------------------------
(1) The members of Group I have jointly filed with the Securities and Exchange
Commission ("SEC") a Schedule 13D, as amended, indicating that they
constitute a "group" as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Each member of
Group I has indicated in such amended Schedule 13D or otherwise advised the
Company that such member has sole voting and dispositive power with respect
to the shares indicated opposite such member's name in the table. Mr.
Wilmers is the trustee of the West Ferry Foundation, a charitable trust
formed by him, and, as trustee, he holds sole voting and dispositive power
over the shares which it owns. As to Mr. Wilmers, the shares indicated in
the table include the shares owned by the West Ferry Foundation and 109,000
shares subject to options granted under the First Empire State Corporation
1983 Stock Option Plan ("Stock Option Plan") which are currently exercisable
or are exercisable within 60 days after March 3, 1997 and which were deemed
to be outstanding for purposes of calculating the percentage of outstanding
shares beneficially owned by Mr. Wilmers and Group I. See also the footnotes
applicable to Mr. Wilmers in the table set forth under the caption "STOCK
OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS." Hofin Anstalt is a
corporation controlled by Jorge G. Pereira, a director and vice chairman of
the Board of Directors of the Company. The shares indicated for Hofin
Anstalt include shares held by its wholly owned subsidiaries.
(2) Brent D. Baird, a director of the Company, and twelve of his associates have
jointly filed with the SEC a Schedule 13D, as amended, disclaiming that they
constitute a "group" as such term is used in Section 13(d)(3) of the
Exchange Act and reporting that they are the beneficial owners, in the
aggregate, of in excess of 5% of the outstanding Common Stock. Mr. Baird has
sole voting and
3
dispositive power with respect to 1,184 shares that he owns
individually. An additional 200,000 shares are owned by entities of which
Mr. Baird is a director or trustee, and as to which shares he may be deemed
to share voting or dispositive power. In addition, he has remainder
interests in trusts that own an aggregate of 40,104 shares. The remaining
120,100 shares, as to which Mr. Baird disclaims beneficial ownership, are
owned by members of Mr. Baird's family, either individually or as trustee,
or by a charitable foundation, all the trustees of which are members of Mr.
Baird's family.
(3) Warren E. Buffett, Berkshire Hathaway Inc. and National Indemnity Company
have jointly filed with the SEC a Schedule 13G reporting that they were the
beneficial owners of 100% of the Company's Series 9% Convertible Preferred
Stock ("9% Preferred Stock") as of the date of that filing. National
Indemnity Company, a subsidiary of Berkshire Hathaway Inc., converted all of
the shares of the 9% Preferred Stock into 506,930 shares of Common Stock on
March 29, 1996, and has advised the Company that the reporting persons have
shared voting and dispositive powers with respect to the shares of the
Common Stock held by them.
(4) Oppenheimer Group, Inc. ("Oppenheimer Group") has filed with the SEC a
Schedule 13G, as amended, reporting that it is the beneficial owner of in
excess of 5% of the outstanding Common Stock and that it has shared voting
and dispositive power with respect to 390,850 shares. Oppenheimer Group, a
holding company which owns a variety of companies engaged in the securities
business, filed the amended Schedule 13G on behalf of Oppenheimer & Co.,
L.P., its parent corporation, and on behalf of certain of its subsidiaries
and investment advisory clients or discretionary accounts of such
subsidiaries.
ELECTION OF DIRECTORS
Shares represented by properly executed proxies will be voted, unless such
authority is withheld, for the election as directors of First Empire of the
following seventeen (17) persons, to hold office until the 1998 Annual Meeting
of Stockholders and until their successors have been elected and qualified. Each
of the nominees listed below was elected at the 1996 Annual Meeting of
Stockholders. If any nominee for any reason should become unavailable for
election or if a vacancy should occur before the election (which events are not
expected), it is intended that the shares represented by the proxies will be
voted for such other person as the Company's management shall designate.
The principal occupation of each of the nominees for the last five years was
substantially the same as is listed below. The information with respect to the
nominees is as of March 3, 1997 and includes their affiliations with First
Empire's subsidiary banks, Manufacturers and Traders Trust Company ("M&T
Bank"), The East New York Savings Bank ("East New York") and M&T Bank, National
Association ("M&T Bank, N.A."), and with First Empire's other subsidiaries.
4
NOMINEES FOR DIRECTOR
BRENT D. BAIRD IS 58, IS A MEMBER OF THE EXECUTIVE AND COMPENSATION
COMMITTEES AND HAS BEEN A DIRECTOR SINCE 1983.
Mr. Baird is a private investor. Prior to 1992, he was a limited partner of
Trubee, Collins & Co., Inc., a member firm of the New York Stock Exchange, Inc.
Mr. Baird is a director of M&T Bank and a member of its Executive, Trust and
Investment, Nomination, and Community Reinvestment Act Committees. He is a
director of East New York and M&T Financial Corporation. Mr. Baird is chairman
of the board of directors of First Carolina Investors, Inc. and president of
Citizens Growth Properties, both of which are engaged in the real estate
business. He is also president and a director of Merchants Group, Inc. and a
director of Oglebay Norton Company, Todd Shipyards Corporation and Exolon-ESK
Company.
JOHN H. BENISCH IS 61 AND HAS BEEN A DIRECTOR SINCE 1988.
Mr. Benisch is a founder and limited principal of Colliers ABR, Inc., a real
estate firm based in New York City which is engaged in leasing, management and
consulting services. Colliers ABR, Inc. is also an owner/member of Colliers
International Property Consultants, which has regional offices throughout the
United States and internationally. He is a director of East New York and a
member of its Community Reinvestment Act Committee. Mr. Benisch is a member of
The Real Estate Board of New York, Inc. He is also an honorary trustee of St.
Mary's Hospital for Children, Bayside, New York, and is a member of The
Salvation Army of Greater New York Advisory Board.
C. ANGELA BONTEMPO IS 56, IS A MEMBER OF THE AUDIT COMMITTEE AND HAS BEEN A
DIRECTOR SINCE 1991.
Ms. Bontempo is senior vice president and executive director of the Roswell
Park Cancer Institute. She served as the administrator of health services at
Covenant House in New York City from July 1993 to January 1994, and from January
1987 to October 1992 was president and chief executive officer of the Sisters of
Charity Hospital, Buffalo, New York. Ms. Bontempo is a director of M&T Bank and
a member of its Examining Committee. She is also a member of the American
College of Health Care Executives, the advisory board of Ciminelli Development
Company, Inc., and the Dean's Advisory Council of the School of Management of
the State University of New York at Buffalo.
ROBERT T. BRADY IS 56 AND HAS BEEN A DIRECTOR SINCE 1994.
Mr. Brady is president, chief executive officer and chairman of the board of
directors of Moog, Inc., a manufacturer of control systems and components for
aircraft, satellites and automated machinery. He is a director of M&T Bank. Mr.
Brady is a director of Seneca Foods Corporation, Acme Electric Corporation,
National Fuel Gas Company and Astronics Corporation. He is also a director of
the Greater Buffalo Partnership and serves as a trustee of the University at
Buffalo Foundation, Inc.
5
PATRICK J. CALLAN IS 60 AND HAS BEEN A DIRECTOR SINCE 1988.
Mr. Callan is a principal of The RREEF Funds, pension fund real estate
investment advisors and managers. He is a partner of RREEF America Partners and
a trustee of BRT Realty Trust. Mr. Callan is a director of East New York and a
member of its Mortgage Investment Committee. He is also a member of The New York
University Real Estate Institute Advisory Board, the MIT Center for Real Estate
Advisory Board, the Association for Foreign Investors in U.S. Real Estate and
The Real Estate Board of New York, Inc.
RICHARD E. GARMAN IS 66, IS A MEMBER OF THE EXECUTIVE COMMITTEE AND HAS BEEN
A DIRECTOR SINCE 1987.
Mr. Garman is president and chief executive officer of A.B.C. Paving Co.,
Inc., a general construction contractor, and Buffalo Crushed Stone, Inc., an
operator of quarries and asphalt production facilities, both of which are
located in Buffalo, New York. He is a director of M&T Bank and a member of its
Executive and Trust and Investment Committees. Mr. Garman is a director of
Merchants Group, Inc., Associated General Contractors--New York State, the
Greater Buffalo Partnership and Millard Fillmore Hospitals. He is also chairman
of the Greater Niagara Frontier Council of the Boy Scouts of America.
JAMES V. GLYNN IS 62, IS A MEMBER OF THE AUDIT COMMITTEE AND HAS BEEN A
DIRECTOR SINCE 1994.
Mr. Glynn is president and owner of Maid of the Mist Corporation, a provider
of scenic boat tours of Niagara Falls. He is a director of M&T Bank and a member
of its Examining Committee. Mr. Glynn is a trustee of Niagara University and
serves as chairman of its Financial Committee. He also is a member of the
Niagara University Council and a director of Artpark & Company and the Greater
Buffalo Partnership.
ROY M. GOODMAN IS 66 AND HAS BEEN A DIRECTOR SINCE 1984.
Senator Goodman is a New York State senator serving his fifteenth term in
the Legislature representing the East Side of Manhattan. He is the deputy
majority leader for policy of the New York State Senate, chairman of the Senate
Committee on Investigations, Taxation, and Government Operations, and chairman
of the Senate Special Committee on the Arts and Cultural Affairs. Senator
Goodman serves as a member of the National Council on the Arts for the National
Endowment for the Arts, a position to which he was appointed in 1989 by then
President Bush.
PATRICK W.E. HODGSON IS 56, IS A MEMBER OF THE AUDIT COMMITTEE AND HAS BEEN
A DIRECTOR SINCE 1987.
Mr. Hodgson is president of Cinnamon Investments Limited, a private
investment company with real estate and securities holdings. Since February
1993, he has served as chairman of the board and chief
6
executive officer of Todd Shipyards Corporation. From June 1994 through August
1996, Mr. Hodgson served as chairman of the board of Scotts Hospitality Inc.
He is a director and a member of the Examining Committee of M&T Bank, and a
director of M&T Capital Corporation. Mr. Hodgson is a director of Todd Shipyards
Corporation, First Carolina Investors, Inc., Scotts Restaurants Inc. and
Exolon-ESK Company. He is also chairman of the board of T-W Truck Equippers
Inc., Buffalo, New York, and a director of Kissing Bridge Corp., Glenwood, New
York, and Niagara Blower Co., Buffalo, New York.
SAMUEL T. HUBBARD, JR. IS 47 AND HAS BEEN A DIRECTOR SINCE 1994.
Mr. Hubbard is president, chief executive officer and a director of The
Alling & Cory Company, a distributor of paper products. He is a director of M&T
Bank. Mr. Hubbard is a director of Rochester Gas & Electric Corp., the Genesee
Corporation, McCurdy & Company, Inc. and The Sodus Cold Storage Co., Inc. He is
also a trustee of the Rochester Institute of Technology, a director of the
United Way of Greater Rochester, and a member of the advisory committee of
Rochester's Child Advisory.
LAMBROS J. LAMBROS IS 61, IS A MEMBER OF THE AUDIT COMMITTEE AND HAS BEEN A
DIRECTOR SINCE 1984.
Mr. Lambros is managing director of J.W. Childs Associates, L.P., a private
investment company, a position he has held since October 1995. A private
investor from 1994 until October 1995, he was chairman, president, chief
executive officer and a director of Norfolk Holdings Inc., an independent oil
and gas exploration and production company, from 1986 through 1993. Prior to
1986, Mr. Lambros had been executive vice president and a director of Amerada
Hess Corporation, an integrated oil and gas producer, refiner and marketer,
where he was responsible for that company's financial and administrative
activities.
WILFRED J. LARSON IS 69, IS THE CHAIRMAN OF THE AUDIT COMMITTEE AND HAS BEEN
A DIRECTOR SINCE 1987.
Mr. Larson retired in 1991 as president and chief executive officer of
Westwood-Squibb Pharmaceuticals Inc., a subsidiary of the Bristol-Myers Squibb
Company. Prior to his retirement, he also served as a vice president of
Bristol-Myers Squibb Company. Mr. Larson is a director of M&T Bank, the chairman
of its Examining Committee and a member of its Community Reinvestment Act
Committee.
JORGE G. PEREIRA IS 63 AND HAS BEEN A DIRECTOR SINCE 1982. HE IS VICE
CHAIRMAN OF THE BOARD OF FIRST EMPIRE AND IS THE CHAIRMAN OF ITS COMPENSATION
COMMITTEE.
Mr. Pereira is a private investor. He is vice chairman of the board and a
director of M&T Bank, and serves as chairman of its Nomination Committee. Mr.
Pereira is also owner of Hofin Anstalt, a private investment company.
7
RAYMOND D. STEVENS, JR. IS 70, IS A MEMBER OF THE EXECUTIVE AND COMPENSATION
COMMITTEES AND HAS BEEN A DIRECTOR SINCE 1970.
Mr. Stevens served as chairman of the board and a director of Pratt &
Lambert United, Inc. until the consummation of its merger with The
Sherwin-Williams Company on January 10, 1996. The merger concluded his 44-year
affiliation with Pratt & Lambert United, Inc. and its predecessor companies. Mr.
Stevens is a director of M&T Bank and a member of its Executive, Trust and
Investment, and Nomination Committees. He is director of Episcopal-General
Homecare, Inc. and an honorary trustee of the Buffalo General Hospital. Mr.
Stevens is also a former chairman of the National Paint & Coatings Association.
HERBERT L. WASHINGTON IS 46 AND HAS BEEN A DIRECTOR SINCE 1996.
Mr. Washington is president of H.L.W. Fast Track, Inc., the owner and
operator of six McDonald's Restaurants in the greater Rochester, New York area,
and Syracuse Minority Television, Inc. He is a director of M&T Bank. Mr.
Washington is a trustee of the Rochester Institute of Technology and a member of
the board of governors of Strong Memorial Hospital.
JOHN L. WEHLE, JR. IS 50 AND HAS BEEN A DIRECTOR SINCE 1994.
Mr. Wehle is chairman of the board, chief executive officer and president of
the Genesee Corporation, and chairman of the board and chief executive officer
of The Genesee Brewing Company, Inc. He is a director of M&T Bank. Mr. Wehle is
chairman of the executive committee and treasurer of the Genesee Country Museum,
vice chairman of the board of governors of Strong Memorial Hospital, a trustee
of The Greater Rochester Chamber of Commerce, and a director of the Greater
Rochester Visitors Association, Inc., the United Neighborhood Center of Greater
Rochester Foundation, Inc., the Industrial Management Council, and the Trooper
Foundation, State of New York, Inc.
ROBERT G. WILMERS IS 62 AND HAS BEEN A DIRECTOR SINCE 1982. HE IS THE
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF FIRST EMPIRE,
AND IS THE CHAIRMAN OF ITS EXECUTIVE COMMITTEE.
Mr. Wilmers is chairman of the board, chief executive officer and a director
of M&T Bank, chairman of its Executive Committee and a member of its Trust and
Investment Committee; a director and member of the Executive Committee of East
New York; chairman of the board and a director of M&T Bank, N.A.; and a director
of M&T Financial Corporation. He held the additional position of president of
M&T Bank from March 1984 through June 1996. Mr. Wilmers is a director of the
Greater Buffalo Partnership, the Federal Reserve Bank of New York and The
Business Council of New York State, Inc., and a member of the Visiting Committee
of the John F. Kennedy School of Government at Harvard University. He is also a
director of the Albright-Knox/Buffalo Fine Arts Academy.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF ALL 17 NOMINEES.
8
STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
Direct and indirect ownership of Common Stock by each of the directors and
the executive officers who are named in the Summary Compensation Table (the
"Named Executive Officers"), and by the directors and executive officers as a
group is set forth in the table below as of March 3, 1997, together with the
percentage of total shares outstanding represented by such ownership. (For
purposes of this table, beneficial ownership has been determined in accordance
with the provisions of Rule 13d-3 under the Exchange Act, under which, in
general, a person is deemed to be the beneficial owner of a security if he or
she has or shares the power to vote or to direct the voting of the security or
the power to dispose or to direct the disposition of the security, or if he or
she has the right to acquire the beneficial ownership of the security within 60
days.)
PERCENT
NAME OF BENEFICIAL OWNER NUMBER OF SHARE OF CLASS
- ------------------------ --------------- --------
Brent D. Baird 47,288 (1) (10)
John H. Benisch 3,864 (2) (10)
C. Angela Bontempo 60 (3) (10)
Robert T. Brady 200 (10)
Patrick J. Calla 6,172 (2) (10)
James A. Carrigg 897 (10)
Barber B. Conable, Jr. 500 (10)
Richard E. Garman 25,500 (10)
James V. Glynn 1,025 (10)
Roy M. Goodman -- --
Patrick W.E. Hodgso 5,700 (4) (10)
Samuel T. Hubbard, Jr. 200 (5) (10)
Lambros J. Lambro 6,000 (10)
Wilfred J. Larson 5,616 (10)
Jorge G. Pereira 344,400 (6) 5.15%
Raymond D. Stevens, Jr. 4,756 (7) (10)
Herbert L. Washingto 200 (10)
John L. Wehle, Jr. 200 (10)
Robert G. Wilmers 685,782 (2)(6)(8)(9) 10.09%
Robert E. Sadler, Jr. 56,978 (2)(8) (10)
William C. Rappolt 31,782 (8) (10)
Atwood Collins, III. 29,900 (2) (10)
James L. Hoffman 27,545 (2) (10)
All directors and executive
officers as a group 1,348,570 (2)(8) 19.52%
(29 persons)
- ------------------------
(1) See footnote (2) to the table set forth under the caption "PRINCIPAL
BENEFICIAL OWNERS OF SHARES."
9
(2) Includes the following shares of Common Stock subject to options granted
under the Stock Option Plan which are currently exercisable or are
exercisable within 60 days after March 3, 1997: Mr. Benisch--64 shares; Mr.
Callan--572 shares; Mr. Wilmers -109,000 shares; Mr. Sadler--32,201 shares;
Mr. Collins -29,900 shares; Mr. Hoffman--11,300 shares; all directors and
executive officers as a group--216,459 shares.
(3) Includes 15 shares held by a trust for which the director is a trustee and
in which the director has a pecuniary interest and investment power.
(4) Includes 600 shares of Common Stock held by a close relative for which
beneficial ownership is disclaimed. Also includes 4,500 shares of Common
Stock owned by a corporation controlled by Mr. Hodgson.
(5) The indicated shares are held by a trust for which the director is a trustee
and in which the director has a pecuniary interest and investment power.
(6) See footnote (1) to the table set forth under the caption "PRINCIPAL
BENEFICIAL OWNERS OF SHARES."
(7) Includes 1,116 shares of Common Stock held as trustee for another and for
which beneficial ownership is disclaimed.
(8) Includes the following shares of Common Stock through participation in the
First Empire State Corporation Retirement Savings Plan and Trust
("Retirement Savings Plan"): Mr. Wilmers--3,297 shares; Mr. Sadler--1,727
shares; Mr. Rappolt--2,557 shares; all directors and executive officers as a
group--10,041 shares.
(9) Includes 3,590 shares of Common Stock held by a close relative or the estate
of a close relative for which beneficial ownership is disclaimed.
(10) Less than 1%.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, the Company's directors and
officers and persons who are the beneficial owners of more than 10% of the
Common Stock are required to report their ownership of the Common Stock, options
and stock appreciation rights (other than certain cash-only rights) and any
changes in that ownership to the SEC and the American Stock Exchange. Specific
due dates for these reports have been established, and the Company is required
to report in this proxy statement any failure to file by these dates during
1996. The Company believes that all of these filing requirements were satisfied
by its directors and officers and by the beneficial owners of more than 10% of
the Common Stock. In making this statement, the Company has relied on copies of
the reporting forms received by it or on the written representations from
certain reporting persons that no Forms 5 (Annual Statement of Changes in
Beneficial Ownership) were required to be filed under the applicable rules of
the SEC.
10
PERFORMANCE GRAPH
The graph which has been omitted from this filing contains a comparison of
the cumulative stockholder return on the Common Stock against the cumulative
total returns of the KBW 50 Index, compiled by Keefe, Bruyette & Woods, Inc.,
and the S&P 500 Index, compiled by Standard & Poor's Corporation, for the
five-year period beginning on December 31, 1991 and ending on December 31, 1996.
The KBW 50 Index is comprised of fifty American banking companies, including all
money-center and most major regional banks. The data points depicted on such
graph are contained in the tabular presentation immediately following the space
intentionally left blank below.
[THIS SPACE INTENTIONALLY LEFT BLANK]
Stockholder Value at Year End*
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
First Empire $ 100 $ 137 $ 145 $ 142 $ 231 $ 308
KBW 50 Index $ 100 $ 127 $ 134 $ 128 $ 204 $ 289
S&P 500 Index $ 100 $ 108 $ 118 $ 120 $ 165 $ 203
- ------------------------
* Assumes a $100 investment on December 31, 1991 and reinvestment of all
dividends.
11
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
A key objective of First Empire is to attract, develop and maintain strong
executive officers who are capable of maximizing the Company's performance for
the benefit of its stockholders. In furtherance of this objective, the
Compensation Committee has adopted a compensation strategy for its executive
officers which utilizes reasonable salaries, while placing heavy emphasis on the
use of variable incentives such as awards of cash bonuses and grants of stock
options in order to reward longer-term contributions to the Company's success.
First Empire periodically compares its compensation levels, practices and
financial performance to a select group of commercial banking institutions of
similar size, geographic market and business makeup to First Empire. The
Compensation Committee considered twenty-one commercial banking companies which
it believed were reasonably comparable to the Company's asset size and
performance and which were generally located in the northeast or midwest (the
"comparative group of banks"). Seventeen of the twenty-one commercial banking
companies forming the comparative group of banks considered by the Compensation
Committee were included in the KBW 50 Index compiled by Keefe, Bruyette & Woods,
Inc.
Base salaries of First Empire's executive officers are determined by
competitive, market-based pay practices, performance evaluations and expected
future contributions. In line with its strategy of emphasizing variable pay, the
Compensation Committee generally targets the salaries of First Empire's
executive officers at or below the median of the comparative group of banks,
while also considering the unique responsibilities and performance of each
executive officer. Overall, the Compensation Committee targets the total cash
compensation of First Empire's executive officers above the median of the
comparative group of banks.
First Empire's executive officers participate in an annual incentive
compensation plan ("Annual Incentive Plan"). The Annual Incentive Plan
provides for discretionary grants of cash awards to executive officers out of
a fund established annually by the Compensation Committee. In establishing
this fund, the Compensation Committee considers First Empire's profitability,
as well as the number of participants in the Annual Incentive Plan, and may
establish a minimum threshold of net operating earnings after taxes below
which no fund will be created. At the end of the year, the Compensation
Committee may increase the size of the established fund in its discretion by
no more than 50% to take into account its subjective assessment of
management's contribution to First Empire's profitability. First Empire's net
operating earnings after taxes for 1996 exceeded the minimum threshold of
profitability which had been previously established by the Compensation
Committee, thereby initiating the payment of cash bonuses to its executive
officers under the Annual Incentive Plan, but the Compensation Committee did
not exercise its discretion to increase the aggregate size of the fund above
the predetermined level.
The aggregate amount of the Annual Incentive Plan pool and 1996's awards
to First Empire's executive officers thereunder were reviewed and approved by
the Compensation Committee. The Compensation Committee considered, but did
not formally weight, a number of quantitative and qualitative
12
performance factors to evaluate the 1996 performance of executive officers
and other employees under the Annual Incentive Plan. The performance factors
considered were: growth and composition of earnings; achieving business
plans; asset quality; market share; and responsiveness to the economic
environment. In determining its discretionary evaluation of the Chief
Executive Officer's performance, the Compensation Committee considered, but
did not formally weight, the following performance factors: the Company's
earnings growth; its asset quality relative to the banking industry as a
whole; and market share in key markets and service niches. Another factor
which the Compensation Committee considered in determining the Chief
Executive Officer's 1996 incentive award was its philosophy of providing the
Chief Executive Officer with greater long-term opportunities in the form of
stock options and placing a lesser emphasis on base salary and annual cash
incentives.
Consistent with its objective of attracting, developing and maintaining
strong executive management, First Empire provides potentially significant
long-term incentive opportunities to its executive officers through
discretionary grants of stock options under the Stock Option Plan, thereby
emphasizing the potential creation of long-term stockholder value and more
closely aligning the interests of First Empire's executive officers with those
of its stockholders. Stock options are considered effective long-term incentives
by the Compensation Committee because an executive can profit only if the value
of the Common Stock increases. In making these grants, the Compensation
Committee considers its subjective assessment of the Company's past financial
performance and future prospects, an executive officer's current level of
ownership of the Common Stock, the period during which an executive officer has
been in a key position with the Company, individual performance and competitive
practices within the comparative group of banks.
In 1996, the Compensation Committee considered, but did not formally weight,
the following factors in connection with the number of options granted to each
executive officer: the competitive practices within the comparative group of
banks; the individual executive officer's position and potential within First
Empire; and the level of past awards of stock options or stock appreciation
rights made to each executive officer. In the determination of the Chief
Executive Officer's 1996 stock option award, the Compensation Committee also
considered its philosophy of providing him with greater long-term opportunities
in the form of stock options and placing a lesser emphasis on base salary and
annual cash incentives.
The 1996 performance factors considered by the Compensation Committee in its
salary determinations and its annual incentive and stock option awards made to
the Company's executive officers exceeded predetermined objectives or, where no
predetermined level had been set, were deemed to be above industry averages or
otherwise exceeded the Compensation Committee's expectations. The Compensation
Committee believes that the total compensation provided to the Company's
executive officers is competitive and reflects the Company's performance. Also,
the Compensation Committee believes that the Company's compensation programs
have helped to focus First Empire's executive officers on increasing the
Company's performance and stockholder value.
13
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"), generally denies a deduction to any publicly-held
corporation for compensation paid to its chief executive officer and its four
other highest-paid executive officers to the extent that any such
individual's compensation exceeds $1 million, subject to certain exceptions,
including one for "performance-based compensation." The Compensation
Committee believes that none of the Company's executive officers received
compensation in 1996 which was nondeductible under Section 162(m) of the
Internal Revenue Code.
This report was prepared by the Compensation Committee of the Board of
Directors:
Jorge G. Pereira, Chairman
Brent D. Baird
Raymond D. Stevens, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Pereira, Baird and Stevens served as members of the Compensation
Committee throughout 1996, and are currently serving as such.
Mr. Pereira is vice chairman of First Empire and M&T Bank, titular posts
without day-to-day managerial responsibilities which he has held since April 18,
1984. Mr. Baird served as chairman of the board of M&T Capital Corporation, the
venture capital subsidiary of M&T Bank, from August 4, 1983 to April 20, 1987.
Neither Mr. Pereira nor Mr. Baird has received additional compensation for
serving in such capacities.
Members of the Compensation Committee and their associates are, as they have
been in the past, customers of, and have had transactions with, the bank
subsidiaries of the Company; and additional transactions may be expected to take
place in the future between such persons and subsidiaries. Any loans from the
Company's subsidiary banks to such persons and their associates outstanding at
any time since the beginning of 1996 were made in the ordinary course of
business of the banks 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.
EXECUTIVE COMPENSATION
The following table contains information concerning the compensation
received by the Company's Chief Executive Officer and the four other most highly
compensated executive officers of the Company in the three fiscal years ended
December 31, 1996.
14
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPEN-
SATION
AWARDS
----------
SECURITIES ALL
ANNUAL COMPENSATION UNDERLYING OTHER
--------------------------------- OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SARS SATION
- ----------------------------------------------------------- --------- ---------- ---------- ----------- ---------
($) ($) (#) ($)(*)
Robert G. Wilmers
Chairman of the Board, President and Chief Executive 1996 $ 400,000 $ 350,000 10,000 $ 12,718
Officer of First Empire; Chairman of the Board and 1995 400,000 300,000 20,000 12,726
Chief Executive Officer of M&T Bank 1994 400,000 235,000 20,000 12,546
Robert E. Sadler, Jr.
President of M&T Bank; 1996 300,000 375,000 8,000 11,130
Executive Vice 1995 277,700 350,000 8,000 24,304
President of First Empire 1994 250,000 300,000 7,500 10,875
William C. Rappolt
Executive Vice President 1996 200,000 225,000 5,000 14,471
and Treasurer of First Empire 1995 200,000 225,000 4,000 12,806
and M&T Bank 1994 200,000 185,000 5,000 12,306
Atwood Collins, III
President and Chief Executive Officer 1996 200,000 215,000 5,000 9,173
of East New York; Executive Vice President 1995 200,000 210,000 4,000 9,174
of First Empire and M&T Bank 1994 200,000 190,000 3,000 9,174
James L. Hoffman 1996 200,000 205,000 5,000 10,916
President of Hudson Valley Division of M&T Bank; 1995 200,000 200,000 5,000 10,917
Executive Vice President of First Empire and M&T Bank 1994 190,000 175,000 3,000 10,016
- ------------------------
(*) Includes a $6,750 contribution for each of Messrs. Wilmers, Sadler,
Rappolt, Collins and Hoffman by the Company to the Retirement Savings Plan,
a qualified defined contribution plan providing for salary reduction
contributions by participants and matching contributions by the Company.
Includes the following 1996 credits by the Company under the Supplemental
Savings Plan (as hereinafter defined under the caption "Supplemental Benefit
Plans") for the benefit of
15
the Named Executive Officers: Messrs. Wilmers and Sadler--$3,862;
Messrs. Rappolt, Collins and Hoffman--$2,250. Includes the
following insurance premiums paid by the Company in 1996 in respect
of term life insurance for the benefit of the Named Executive
Officers: Mr. Wilmers--$2,106; Mr. Sadler--$518; Mr.
Rappolt--$5,471; Mr. Collins--$173; and Mr. Hoffman--$1,916.
STOCK OPTION GRANTS IN 1996
The following table contains information with respect to the grants of stock
options under the Stock Option Plan during the fiscal year ended December 31,
1996 to the Named Executive Officers who are covered by the Summary Compensation
Table. No stock appreciation rights were granted under the Stock Option Plan in
1996 other than limited stock appreciation rights granted in tandem with stock
options.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------------------------------------------------------
NUMBER PERCENT
OF OF TOTAL
SECUR- OPTIONS/
ITIES SARS
UNDER- GRANTED TO
LYING EMPLOYEES
OPTIONS IN EXERCISE EXPIR- GRANT DATE
/SARS FISCAL OR ATION PRESENT
NAME GRANTED YEAR BASE PRICE DATE VALUE
- -------------------------------------------------------- ----------- --------------- ----------- --------- -----------
(#)(1) (4) ($/SHARE) ($)(5)
(2)(3)
Robert G. Wilmers. 10,000 5.8% $ 211.00 1/16/06 $ 497,500
Robert E. Sadler, Jr. 8,000 4.7 211.00 1/16/06 398,000
William C. Rappolt 5,000 2.9 211.00 1/16/06 248,750
Atwood Collins, III. 5,000 2.9 211.00 1/16/06 248,750
James L. Hoffman 5,000 2.9 211.00 1/16/06 248,750
- ------------------------
(1) Title of securities subject to grant: Common Stock.
(2) All grants to the Named Executive Officers include grants of an equal number
of related (or "tandem") limited stock appreciation rights. Limited stock
appreciation rights may be exercised only in the event of a tender or
exchange offer ("Offer") for the Common Stock (a) which, if successful,
would cause the offeror to become the beneficial owner of 20% or more of the
outstanding Common Stock, and (b) that the Compensation Committee determines
would result in a change in control of the Company, if consummated. Upon
exercise, a limited stock appreciation right granted in tandem with a
nonstatutory stock option entitles the holder to receive
16
cash in an amount equal to the excess of (a) the highest price paid
pursuant to the Offer during the 90 days prior to exercise, or (b) the
highest market value of a share of Common Stock during the 90 days
prior to exercise, whichever is greater, over the market value of a
share of Common Stock on the date of grant. A limited stock
appreciation right granted in tandem with an incentive stock option
entitles the holder to receive cash in an amount equal to the
appreciation in the market value of a share of Common Stock since the
date of grant.
(3) The stock options are exercisable in installments that provide vesting of
10% of the optioned stock after the first anniversary of the grant, an
additional 20% after the second anniversary, 30% more after the third
anniversary, and the remaining 40% after the fourth anniversary.
(4) Excludes shares of Common Stock subject to options granted under the Stock
Option Plan to directors who are not employees of the Company. See
"Directors' Fees."
(5) The Company used a binomial option pricing model to determine the grant date
present value of stock options granted in 1996 upon the belief that such
model is the most reasonable method of estimating the value of stock options
granted under the Stock Option Plan. The estimated value per option is
$49.75, which was calculated through the use of the following assumptions:
an option term, based on historical data since the inception of the Stock
Option Plan, of 6.5 years, representing the estimated period between the
grant dates of options under the Stock Option Plan and their exercise dates;
an interest rate that represents the yield on a zero-coupon U.S. Treasury
security with a maturity date corresponding to that of the adjusted option
term; volatility calculated using weekly stock prices for the three-year
(156-week) period prior to the grant date; and an estimated dividend yield
of 1.28%, the approximate annualized cash dividend rate paid with respect to
a share of the Common Stock on December 31, 1995. The Company also deducted
10% to reflect an estimate of the probability of forfeiture prior to
vesting, based on historical data since the inception of the Stock Option
Plan. The actual value an executive may realize will depend upon the excess
of the price of the Common Stock over the exercise price on the date the
option is exercised. Accordingly, there is no assurance that the value
ultimately realized by an executive officer, if any, will approximate the
value estimated by the model.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS EXERCISED IN 1996 AND YEAR-END
VALUES
The following table reflects the number of stock options and stock
appreciation rights exercised by the Named Executive Officers in 1996, the total
gain realized upon exercise, the number of stock options and stock appreciation
rights held at the end of the year, and the realizable gain of the stock options
and stock appreciation rights that are "in-the-money." In-the-money stock
options and stock appreciation rights are stock options or stock appreciation
rights with exercise prices that are below the year-end stock price because the
stock value increased since the date of the grant.
17
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
----------------------
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END (2)
ACQUIRED VALUE ---------------------- ------------------------
ON REAL- EXER- UN- UN-
EXER- IZED CIS- EXERCIS- EXERCIS- EXERCIS-
NAME CISE (1) ABLE ABLE ABLE ABLE
- ---------------------------------------------------- ----------- ---------- --------- ----------- ------------ ----------
(#) ($) (#) (#) ($) ($)
Robert G. Wilmers -- -- 95,000 50,000 20,200,875 6,746,000
Robert E. Sadler, Jr. -- -- 32,551 23,450 6,512,710 2,923,600
William C. Rappolt 11,650 1,830,675 -- 14,100 -- 1,745,800
Atwood Collins, III. -- -- 34,200 11,700 7,471,625 1,383,775
James L. Hoffman 2,800 498,400 12,900 12,600 2,752,275 1,516,975
- ------------------------
(1) Based upon the difference between the closing price of the Common Stock on
the American Stock Exchange on the date or dates of exercise and the
exercise price or prices for the stock options or stock appreciation rights.
(2) Based upon the closing price of the Common Stock on the American Stock
Exchange on December 31, 1996 of $288.00 per share.
RETIREMENT PLAN
The following table sets forth the annual retirement benefits under
the regular benefit formula of the First Empire State Corporation
Retirement Plan ("Retirement Plan") payable upon retirement to persons
within specified levels of remuneration and years of service
classifications assuming attainment of age 65 during 1997.
18
PENSION PLAN TABLE (1) (2)
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 10 15 20 25 30
- ------------- --------- --------- --------- --------- ---------
$150,000 24,035 36,052 48,070 60,087 72,104
250,000 41,035 61,552 82,070 102,587 123,104
350,000 58,035 87,052 116,070 145,087 174,104
450,000 75,035 112,552 150,070 187,587 225,104
550,000 92,035 138,052 184,070 230,087 276,104
- ------------------------
(1) The table assumes a straight-life annuity form of payment. The retirement
benefits provided under the regular benefit formula of the Retirement Plan,
as depicted in the table, are not subject to any deduction for Social
Security or other offset amounts.
(2) The amounts in the table have not been restricted to those within the
maximum annual retirement benefit which is currently permissible under the
Internal Revenue Code. That limit (the "IRS Benefit Limit") is $125,000 for
1997. Also, in calculating a participant's benefit, annual compensation in
excess of a limit set annually by the Secretary of the Treasury may not be
considered. That limit (the "IRS Compensation Limit") is $160,000 for 1997.
The compensation covered by the Retirement Plan benefits summarized in the
above table approximates an employee's base annual salary. The covered
compensation for each of the Named Executive Officers in the Summary
Compensation Table would approximate the highest average of the amounts shown in
the "Salary" column of that table which are paid during any five consecutive
calendar year period in the ten calendar years preceding retirement, subject to
the applicable IRS Compensation Limits. For 1996, covered compensation taken
into account under the Retirement Plan for each of the Named Executive Officers
in the Summary Compensation Table was as follows: Mr. Wilmers -$400,533; Mr.
Sadler--$293,185; Mr. Rappolt--$194,832; Mr. Collins--$198,631; and Mr.
Hoffman--$200,031. For purposes of the Retirement Plan, such executive officers
had the following years of service at year end 1996: Mr. Wilmers--14 years; Mr.
Sadler--13 years; Mr. Rappolt--12 years; Mr. Collins--8 years; and Mr.
Hoffman--37 years.
SUPPLEMENTAL BENEFIT PLANS
In addition to retirement benefits under the Retirement Plan, M&T Bank has
agreed, on an unfunded basis, to pay supplemental retirement benefits to Messrs.
Sadler and Collins in amounts equal to the difference between 55% of each
individual's average annual compensation, as defined in the Retirement Plan, but
without regard to the IRS Benefit and Compensation Limits, and the amount, if
any, payable to each individual from such plan. M&T Bank has also agreed, on an
unfunded basis, to pay supplemental retirement benefits to Mr. Rappolt in an
amount equal to the difference between his benefit
19
under the Retirement Plan and a benefit amount calculated under the
Retirement Plan formula as if he had been hired by M&T Bank on January
1, 1977. The supplemental retirement benefits to be paid to each of
them are not dependent upon their respective entitlement to retirement
benefits under the Retirement Plan. In the case of Messrs. Sadler and
Collins, the supplemental benefits are reduced by payments which they
will receive from the retirement plans of their previous employers.
Based on current actuarial assumptions associated with their
participation in the Retirement Plan, the following amounts would be
payable to them annually as supplemental retirement benefits commencing
at age 65: Mr. Sadler--$94,456; Mr. Rappolt--$11,449; and Mr. Collins
- --$24,645. Actuarially reduced amounts would be payable to any of them
who elected early retirement.
Effective January 1, 1994, the Company adopted the First Empire State
Corporation Supplemental Pension Plan (the "Supplemental Pension Plan"). The
purpose of the Supplemental Pension Plan is to provide for the payment of
supplemental retirement benefits based on a maximum compensation level of
$235,840 to select management and highly compensated employees of certain First
Empire affiliates whose benefits payable under the Retirement Plan are limited
by the IRS Compensation Limit. The supplemental benefits are dependent upon a
participant's entitlement to benefits under the Retirement Plan. A participant's
supplemental benefit is equal to the excess of (a) the payment he would have
received under the Retirement Plan were the IRS Compensation Limit $235,840 over
(b) the payment actually received under the Retirement Plan. Each of the Named
Executive Officers is eligible to participate in the Supplemental Pension Plan
and, in accordance with the terms of the Supplemental Pension Plan, M&T Bank has
agreed, on an unfunded basis, to pay retirement benefits under the Supplemental
Pension Plan to each of them. With respect to Messrs. Sadler, Rappolt and
Collins, the supplemental benefits under the Supplemental Pension Plan are
reduced by the supplemental retirement benefits which M&T Bank has agreed to pay
to them in accordance with the preceding paragraph. Based on current actuarial
assumptions associated with participation in the Retirement Plan, Messrs.
Wilmers, Rappolt and Hoffman would receive the following amounts payable to them
annually if they retired at age 65: Mr. Wilmers--$7,783; Mr. Rappolt--$3,068;
and Mr. Hoffman - $2,965. An actuarially reduced amount would be payable if the
participant elected early retirement. Based on current actuarial assumptions
associated with their participation in the Retirement Plan, Messrs. Sadler and
Collins would receive no benefits under the Supplemental Pension Plan.
Also effective January 1, 1994, the Company adopted the First Empire State
Corporation Supplemental Retirement Savings Plan (the "Supplemental Savings
Plan"). The purpose of the Supplemental Savings Plan is to provide for the
payment of supplemental benefits to select management and highly compensated
employees of certain First Empire affiliates, contributions on whose behalf
under the Retirement Savings Plan are limited by the IRS Compensation Limit. To
participate in the Supplemental Savings Plan, the executive must make salary
reduction contributions to the Retirement Savings Plan of at least six percent
of compensation (up to the IRS Compensation Limit) and must have compensation in
excess of the IRS Compensation Limit. In such a case, the Company will credit to
the participant's account under the Supplemental Savings Plan an amount equal to
the excess of (a) the matching contribution that would have been made on his
behalf by the Company under the Retirement Savings Plan had compensation under
that plan been capped at $235,840 rather than at the IRS
20
Compensation Limit, over (b) the matching contribution actually made on
his behalf by the Company under the Retirement Savings Plan. The
Supplemental Savings Plan also permits a participant to elect to defer
and have credited to his account under the Supplemental Savings Plan an
amount of compensation in excess of the IRS Compensation Limit, but not
in excess of $235,840, equal to the percentage of compensation the
participant has elected to defer under the Retirement Savings Plan. A
participant's account in the Supplemental Savings Plan is credited with
investment income or loss as if the funds had been invested in the
investment funds offered under the Retirement Savings Plan, as elected
by the participant. The amount of a participant's account under the
Supplemental Savings Plan will be paid at such time as the participant
elects irrevocably upon becoming a participant under the Supplemental
Savings Plan. Each of the Named Executive Officers is eligible to
participate in Supplemental Savings Plan and, in accordance with the
terms of the Supplemental Savings Plan, M&T Bank has agreed, on an
unfunded basis, to pay benefits under the Supplemental Savings Plan to
them. See the footnote to the Summary Compensation Table for a listing
of the credits made by the Company in 1996 under the Supplemental
Savings Plan on behalf of each of the Named Executive Officers.
DIRECTORS' FEES
FIRST EMPIRE. Directors of First Empire who are not also salaried
officers of the Company or its subsidiaries receive an annual retainer
of $10,000 plus $750 for each meeting of the Board of Directors
attended. Such directors who are members of a committee of the Board of
Directors of First Empire receive $500 for each committee meeting
attended. If a director's domicile is more than 100 miles from the
location of a board or committee meeting, such director receives an
additional $375 for attending the board meeting and an additional $250
for attending the committee meeting. The Board of Directors has
established a limitation on total compensation for services as a
director of First Empire and its subsidiaries of $40,000 per year. All
directors of First Empire are entitled to reimbursement for travel
expenses incidental to their attendance at meetings.
In connection with its acquisition of East New York, the Company agreed to
grant to persons who became directors and advisory directors of First Empire and
its subsidiaries upon First Empire's acquisition of East New York and certain
other officers of East New York, on an annual basis, nonstatutory stock options
to purchase shares of the Common Stock having an aggregate fair market value on
the date of grant, in the case of an officer, equal to his or her then basic
annual compensation and, in the case of a non-officer director, equal to the
aggregate amount of his or her then annual retainer and his or her board and
committee meeting fees in the last full calendar year preceding the date of
grant. During 1996, Messrs. Benisch and Callan each were granted options
covering 189 shares, each with an exercise price of $211.00 per share.
M&T BANK. Directors of First Empire who also serve as directors of M&T Bank
or its subsidiaries, if not salaried officers of the Company or its
subsidiaries, receive attendance fees for each board or committee meeting
attended. Such attendance fees are identical to the schedule of fees paid to
directors of First Empire for board and committee meetings attended. All such
directors of M&T Bank and its subsidiaries are entitled to reimbursement for
travel expenses incidental to their attendance at
21
meetings. An unfunded plan for the deferral of board and committee fees
is available to the directors of M&T Bank whereby a specific amount or
percentage of such fees may be deferred until the later of January 1st
following the date the director leaves the Board of Directors or the
date the director reaches age 65. Quarterly compounded interest is
credited to the deferred fees at a rate equal to that paid on M&T
Bank's regular savings accounts.
EAST NEW YORK. Each of the former trustees of East New York who became a
director of East New York and who is not a salaried officer of the Company or
its subsidiaries, receives an annual retainer of $18,000, a fee of $750 for each
East New York board meeting attended and a fee of $500 for each East New York
committee meeting attended. If a director must travel more than 100 miles to
attend a board or committee meeting, such director receives an additional $375
for attending the board meeting and an additional $250 for attending the
committee meeting. Other directors of East New York who also serve as directors
of First Empire, if not salaried officers of the Company or its subsidiaries,
are entitled to the same schedule of attendance fees but receive an annual
retainer of $10,000 and, if applicable, a fee of $750 for attending each meeting
of the Mortgage Investment Committee of East New York's board. If any such
director must travel more than 100 miles to attend a Mortgage Investment
Committee meeting, the director receives an additional $375 for attending the
meeting. Subject to its fiduciary duties, the Company has agreed to cause each
of the former trustees of East New York who became a director of East New York
following the conversion of East New York from mutual to stock form and its
acquisition by the Company on December 24, 1987 to be elected to serve as a
director of East New York until the earlier of the director's 75th birthday or
resignation. If East New York is merged into another bank subsidiary of the
Company prior thereto, subject to its fiduciary duties, the Company has agreed
to cause each such East New York director to become an advisory director of such
bank subsidiary until the earlier of such director's 75th birthday or
resignation and to cause the bank subsidiary to hold the requisite number of
meetings and to appoint such advisory director to the requisite number of
committees so that the advisory director would receive compensation equivalent
to the compensation received as a director of East New York. Application has
been made to appropriate regulatory authorities to merge East New York into M&T
Bank during 1997.
TRANSACTIONS WITH DIRECTORS AND EXECUTIVE OFFICERS
Directors and executive officers of the Company and their associates are, as
they have been in the past, customers of, and have had transactions with, the
bank subsidiaries of the Company; and additional transactions may be expected to
take place in the future between such persons and subsidiaries. Any loans from
the Company's subsidiary banks to such persons and their associates outstanding
at any time since the beginning of 1996 were made in the ordinary course of
business of the banks 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.
22
BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND ATTENDANCE
The Board of Directors held four meetings during 1996. Each of the directors
attended at least 75% of the total number of meetings of the Board of Directors
and of the committees on which the director served, except for Senator Goodman
and Messrs. Pereira and Washington.
The Executive Committee of the Board of Directors is empowered to act in the
board's stead when the Board of Directors is not in session, during which time
the Executive Committee possesses all of the board's powers in the management of
the business and affairs of the Company except as otherwise limited by law. The
Executive Committee held three meetings during 1996. Messrs. Wilmers (Chairman),
Baird, Garman and Stevens comprise the current membership of the Executive
Committee.
The Audit Committee met five times during 1996 with representatives of the
Company's independent accountants. In addition to recommending the selection of
the independent accountants each year, the Audit Committee reviews the
activities of the subsidiary banks' examining committees, the audit plan and
scope of work of the independent accountants, the results of the annual audit
and the limited reviews of quarterly financial information, the recommendations
of the independent accountants with respect to internal controls and accounting
procedures, and any other matters it deems appropriate. Messrs. Larson
(Chairman), Glynn, Hodgson and Lambros and Ms. Bontempo are the current members
of the Audit Committee.
The Compensation Committee is responsible for administering the Stock Option
Plan, including the making of grants thereunder, for administering the Annual
Incentive Plan and, in addition, for making such determinations and
recommendations as the Compensation Committee deems necessary or appropriate
regarding the remuneration and benefits of employees of the Company and its
subsidiaries. The Compensation Committee met twice during 1996. Messrs. Pereira
(Chairman), Baird and Stevens currently serve as the members of the Compensation
Committee.
First Empire does not have a standing committee of its Board of Directors on
nominations, or any other committee performing similar functions.
OTHER MATTERS
The Board of Directors of First Empire is not aware that any matters not
referred to in the form of proxy will be presented for action at the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares represented thereby in
accordance with their best judgment.
23
INDEPENDENT PUBLIC ACCOUNTANTS
On the recommendation of the Audit Committee of the Board of Directors, the
firm of Price Waterhouse, certified public accountants, has been selected as
First Empire's principal independent public accountants for the year 1997, a
capacity in which it has served since 1984. Representatives of Price Waterhouse
are expected to be present at the Annual Meeting. The representatives may, if
they wish, make a statement and, it is expected, will be available to respond to
appropriate questions.
SOLICITATION COSTS
The cost of soliciting proxies in the accompanying form will be borne by
First Empire. The solicitation is being made by mail, and may also be made by
telephone or in person using the services of a number of regular employees of
First Empire and its subsidiary banks at nominal cost. Banks, brokerage firms
and other custodians, nominees and fiduciaries will be reimbursed by the Company
for expenses incurred in sending proxy material to beneficial owners of the
Common Stock.
STOCKHOLDER PROPOSALS
A stockholder wishing to submit a proposal for consideration at the 1998
Annual Meeting of Stockholders should do so not later than November 14, 1997.
By Order of the Board of Directors.
RICHARD A. LAMMERT
Secretary
March 13, 1997
24
P FIRST EMPIRE STATE CORPORATION
R
O ANNUAL MEETING OF STOCKHOLDERS-APRIL 15, 1997 AT 11:00 A.M.
X
Y THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ANTHONY J. COSTELLO, MICHAEL A.
ERVOLINA, JR. AND DONALD L. MEYER as Proxies and authorizes said Proxies, or
any one of them, to represent and to vote all of the shares of common stock of
First Empire State Corporation which the undersigned may be entitled to vote at
the Annual Meeting of Stockholders to be held on April 15, 1997 and any
adjournments thereof (i) as designated on the item set forth on the reverse
side and (ii) at the discretion of said Proxies, or any one of them,on such
other matters as may properly come before the meeting.
(MARK, SIGN AND DATE ON REVERSE SIDE)
___________
SEE REVERSE
SIDE
___________
/X/ Please mark vote as in this example
ELECTION OF DIRECTORS
Nominees: Brent D. Baird, John H. Benisch, C. Angela Bontempo, Robert T.
Brady, Patrick J. Callan, Richard E. Garman, James V. Glynn, Roy M. Goodman,
Patrick W.E. Hodgson, Samuel T. Hubbard, Jr., Lambros J. Lambros, Wilfred J.
Larson, Jorge G. Pereira, Raymond D. Stevens, Jr., Herbert L. Washington,
John L. Wehle, Jr. and Robert G. Wilmers
________________________________________
/ / FOR / / WITHHELD IF PROPERLY EXECUTED, THIS PROXY WILL BE
ALL FROM ALL VOTED AS SPECIFIED OR, IF NOT SPECIFIED,
NOMINEES NOMINEES WILL BE VOTED FOR ALL NOMINEES. A VOTE
---
FOR ALL NOMINEES IS RECOMMENDED.
---
________________________________________
For, except vote withheld from the
following nominee(s):
/ / ___________________________________
Mark here for Mark here if Mark here to
address change / / you plan / / discontinue / /
and note to attend duplicate annual
change the meeting and quarterly
at left reports
Please mark, date and sign below exactly as name appears hereon
and return this proxy in the envelope provided. Persons signing
as executors, administrators, trustees, etc. should so indicate.
If a joint account, all should sign.
Signature:_____________________ Date:_____ Signature:________________ Date:_____
