March 31, 2006
Dear Shareholder:
We cordially invite you to attend the Annual Meeting of Shareholders of
Pathfinder Bancorp, Inc. (the "Company"). The Annual Meeting will be held at the
Econolodge, 70 East First Street, Oswego, New York at 10:00 a.m., Eastern Time,
on April 26, 2006.
The enclosed Notice of Annual Meeting and Proxy Statement describe the formal
business to be transacted. During the Annual Meeting we will also report on the
operations of the Company. Directors and officers of the Company, as well as a
representative of our independent registered public accounting firm
("Auditors"), will be present to respond to questions that shareholders may
properly present.
The Annual Meeting is being held so that shareholders may consider the election
of directors and the ratification of the appointment of Beard Miller Company
LLP as the Company's Auditors for 2006.
For the reasons set forth in the Proxy Statement, the Board of Directors
unanimously recommends a vote "FOR" the election of directors and the
ratification of the appointment of Beard Miller Company LLP as the Company's
Auditors.
On behalf of the Board of Directors, we urge you to sign, date and return the
enclosed proxy card as soon as possible, even if you currently plan to attend
the Annual Meeting. This will not prevent you from voting in person, but will
assure that your vote is counted if you are unable to attend the meeting. Your
vote is important, regardless of the number of shares that you own.
Sincerely,
\s\Thomas W. Schneider
-----------------------------------------
Thomas W. Schneider
President and Chief Executive Officer
PATHFINDER BANCORP, INC.
214 WEST FIRST STREET
OSWEGO, NEW YORK 13126
(315) 343-0057
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 26, 2006
Notice is hereby given that the Annual Meeting of Pathfinder Bancorp, Inc.,
(the "Company") will be held at the Econolodge, 70 East First Street, Oswego,
New York on April 26, 2006 at 10:00 a.m., Eastern Time.
A Proxy Card and a Proxy Statement for the Annual Meeting are enclosed.
The Annual Meeting is for the purpose of considering and acting upon:
1) The election of four Directors to the Board of Directors;
2) The ratification of the appointment of Beard Miller Company
LLP as the Company's Auditors for the year ending December 31,
2006 and
such other matters as may properly come before the Annual Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on the foregoing proposals at the Annual Meeting on
the date specified above, or on any date or dates to which the Annual Meeting
may be adjourned. Shareholders of record at the close of business on March 15,
2006 are the shareholders entitled to vote at the Annual Meeting, and any
adjournments thereof.
EACH SHAREHOLDER, WHETHER HE OR SHE PLANS TO ATTEND THE ANNUAL MEETING, IS
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. ANY PROXY GIVEN BY THE SHAREHOLDER MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED. A PROXY MAY BE REVOKED BY FILING
WITH THE SECRETARY OF THE COMPANY A WRITTEN REVOCATION OR A DULY EXECUTED PROXY
BEARING A LATER DATE. ANY SHAREHOLDER PRESENT AT THE ANNUAL MEETING MAY REVOKE
HIS OR HER PROXY AND VOTE PERSONALLY ON EACH MATTER BROUGHT BEFORE THE ANNUAL
MEETING. HOWEVER, IF YOU ARE A SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORD HOLDER IN
ORDER TO VOTE PERSONALLY AT THE ANNUAL MEETING.
By Order of the Board of Directors
/s/Edward A. Mervine
--------------------
Edward A. Mervine
Secretary
March 31, 2006
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IMPORTANT: A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
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PROXY STATEMENT
PATHFINDER BANCORP, INC.
214 WEST FIRST STREET
OSWEGO, NEW YORK 13126
(315) 343-0057
ANNUAL MEETING OF SHAREHOLDERS
APRIL 26, 2006
This proxy statement is furnished in connection with the solicitation of proxies
on behalf of the board of directors of Pathfinder Bancorp, Inc. (the "Company")
to be used at the annual meeting of shareholders of the Company (the "annual
meeting"), which will be held at the Econolodge, 70 East First Street, Oswego,
New York on April 26, 2006, at 10:00 a.m., eastern time, and all adjournments of
the annual meeting. The accompanying notice of annual meeting of shareholders
and this proxy statement are first being mailed to shareholders on or about
March 31, 2006.
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REVOCATION OF PROXIES
--------------------------------------------------------------------------------
Shareholders who sign the proxies we are soliciting will retain the right
to revoke them in the manner described below. Unless so revoked, the shares
represented by such proxies will be voted at the Annual Meeting and all
adjournments thereof. Proxies solicited on behalf of the Board of Directors of
the Company will be voted in accordance with the directions given thereon.
Where no instructions are indicated, validly executed proxies will be voted
"for" the proposals set forth in this proxy statement. If any other matters are
properly brought before the annual meeting, the persons named in the
accompanying proxy will vote the shares as directed by a majority of the
board of directors in attendance at the annual meeting on such matters, if
any, that may properly come before the annual meeting or any adjournments
thereof.
Proxies may be revoked by sending written notice of revocation to the
Secretary of the Company, at the address shown above, by delivering to the
Company a duly executed proxy bearing a later date, or by attending the Annual
Meeting and voting in person. The presence at the Annual Meeting of any
shareholder who had returned a proxy will not revoke the proxy unless the
shareholder delivers his or her ballot in person at the Annual Meeting or
delivers a written revocation to the Secretary of the Company prior to the
voting of the proxy. If you are a shareholder whose shares are not registered
in your name, you will need appropriate documentation from your record holder to
vote in person at the Annual Meeting.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
--------------------------------------------------------------------------------
Holders of record of the Company's common stock, par value $0.01 per share
(the "Common Stock") as of the close of business on March 15, 2006 (the "Record
Date") are entitled to one vote for each share they own. As of the Record Date,
the Company had 2,950,419 shares of Common Stock issued and 2,463,132 shares of
Common Stock outstanding of which 1,583,239 were held by Pathfinder Bancorp,
M.H.C. (the "Mutual Holding Company"), and 879,893 of which were held by
shareholders other than the Mutual Holding Company ("Minority Shareholders").
The presence in person or by proxy of a majority of the outstanding shares of
Common Stock entitled to vote is necessary to constitute a quorum at the Annual
Meeting. If a shareholder holds shares in street name (i.e. the shares are held
in a stock brokerage account or by a bank, trust, or other institution) and does
not provide voting instructions to the holder of the account, such shares will
be considered "Broker non-votes." Broker non-votes and proxies marked
abstain will be counted for purposes of determining that a quorum is
present. As to the election of Directors, shareholders may cast their votes
"For" or "Withheld". As to the ratification of our Auditors, shareholders may
cast their votes "For", "Against" or "Abstain". Directors are elected by a
plurality of votes cast, without regard to either broker non-votes, or proxies
as to which the authority to vote for the nominees being proposed is withheld.
The affirmative vote of holders of a majority of the total votes cast at the
Annual Meeting in person or by proxy, without regard to broker non-votes or
proxies as to which shareholders abstain, is required for ratification of Beard
Miller Company LLP as the Company's Auditors. Because the Mutual Holding
Company owns a majority of the outstanding shares, should it vote "For" the
proposals, passage of the proposals would be assured.
Persons and groups who beneficially own in excess of five percent of the
Common Stock are required to file certain reports with the Securities and
Exchange Commission (the "SEC") regarding such ownership. The following table
sets forth, as of the Record Date, the shares of Common Stock beneficially owned
by Directors individually, by executive officers individually, by executive
officers and Directors as a group and by each person who was the beneficial
owner of more than five percent of the Company's outstanding shares of Common
Stock.
Amount of Shares
Owned and Nature Percentage of Shares
Name and Address of Of Beneficial of Common Stock
Beneficial Owners (1) Ownership (2) Outstanding
--------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS (2):
Chris C. Gagas 78,158 3.19%
Thomas W. Schneider 6,705 (4) .26
Chris R. Burritt 4,800 (5) .20
George P. Joyce 1,775 .07
Bruce E. Manwaring 14,215 .58
L. William Nelson, Jr. 27,250 (6) 1.11
Janette Resnick 3,050 (7) .12
Corte J. Spencer 14,500 .59
Steven W. Thomas 7,825 .32
Lloyd "Buddy" Stemple 100 .00
James A. Dowd 7,010 .28
Melissa A. Miller 3,695 .14
Edward A. Mervine 1,015 .04
John F. Devlin 608 .02
Rhonda L. Hutchins 2,182 .08
All Directors and Executive Officers
as a Group (15 persons) (3) 172,888 7.02
PRINCIPAL SHAREHOLDERS:
Pathfinder Bancorp, M.H.C. (3) 1,583,239 64.28
214 West First Street
Oswego, New York 13126
Pathfinder Bancorp, M.H.C. and all 1,756,127 71.30
Directors and Executive Officers
--------------------------------------------------------------------------------
1) The mailing address for each person listed is 214 West First
Street, Oswego, New York 13126.
2) A person is deemed to be the beneficial owner, for purposes of
this table, of any shares of Common Stock if he has shared voting or
investment power with respect to such security, or has a right to
acquire beneficial ownership at any time within 60 days from the
Record Date. As used herein, "voting power" is the power to vote or
direct the voting of shares and "investment power" is the power to
dispose or direct the disposition of shares. This table includes all
shares held directly as well as by spouses and minor children, in
trust and other indirect ownership, over which shares the named
individuals effectively exercise sole or shared voting and investment
power. Unless otherwise indicated, the named individual has sole
voting and investment power.
3) All of the Company's directors are also directors of the Mutual
Holding Company. Three of the Company's executive officers are also
executive officers of the Mutual Holding Company.
4) Mr. Schneider has sole voting and investment power over 6,405
shares and shared voting and investment power over 300 shares.
5) Mr. Burritt has sole voting and investment power over 4,650
shares and shared voting and investment power over 150 shares.
6) Mr. Nelson has sole voting and investment power over 8,770 shares
and shared voting and investment power over 18,480 shares.
7) Ms. Resnick has sole voting power over 2,600 shares and shared
voting and investment power over 450 shares.
--------------------------------------------------------------------------------
CONDUCT OF MEETING
-------------------------------------------------------------------------------
In accordance with the Bylaws, and by action of the Board of Directors, the
Chairman will preside over the Annual Meeting of Shareholders. The Chairman has
broad authority to ensure the orderly conduct of the meeting. This includes
discretion to recognize shareholders or proxies who wish to speak, and determine
the extent of discussion on each item of business. Rules governing the conduct
of the meeting have been established and will be available at the meeting along
with the Agenda. The Chairman may also rely on applicable law regarding
disruption or disorderly conduct to ensure that the meeting is conducted in a
manner that is fair to all shareholders.
--------------------------------------------------------------------------------
PROPOSAL 1 - ELECTION OF DIRECTORS
--------------------------------------------------------------------------------
The Company's Board of Directors is currently composed of ten members. The
Company's bylaws provide that approximately one-third of the Directors are to be
elected annually. Directors of the Company are generally elected to serve for a
three-year period and until their respective successors shall have been elected
and qualify. Four Directors will be elected at the Annual Meeting, each to
serve for a three-year period and until their respective successors shall have
been elected and qualify. The Board of Directors has nominated to serve as
Directors Bruce E. Manwaring, L. William Nelson, Jr., George P. Joyce, and
Lloyd "Buddy" Stemple.
The table below sets forth certain information regarding the composition of
the Company's Board of Directors, including the terms of office of Board
members. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to one or more
nominees) will be voted at the Annual Meeting for the election of the nominees
identified below. If the nominee is unable to serve, the shares represented by
all such proxies will be voted for the election of such substitute as the Board
of Directors may recommend. At this time, the Board of Directors knows of no
reason why any of the nominees would be unable to serve if elected. Except as
indicated herein, there are no arrangements or understandings between any
nominee and any other person pursuant to which such nominee was selected.
CURRENT
DIRECTOR TERM TO
NAME (1) AGE POSITION HELD SINCE(2) EXPIRE
--------------------------------------------------------------------------------
NOMINEES
Bruce E. Manwaring 64 Director 1984 2006
L. William Nelson, Jr. 61 Director 1986 2006
George P. Joyce 54 Director 2000 2006
Lloyd "Buddy" Stemple 45 Director 2005 2006(3)
DIRECTORS CONTINUING IN OFFICE
Steven W. Thomas 43 Director 2000 2007
Corte J. Spencer 62 Director 1984 2007
Janette Resnick 63 Chairman of the Board 1996 2007
Chris C. Gagas 74 Director 1966 2008
Thomas W. Schneider 44 President, CEO 2001 2008
Chris R. Burritt 52 Director 1986 2008
--------------------------------------------------------------------------------
(1) The mailing address for each person listed is 214 West First
Street, Oswego, New York 13126. Each of the persons listed is also a
Director of Pathfinder Bancorp, M.H.C., which owns the majority of the
Company's issued and outstanding shares of Common Stock. Information
regarding the Common Stock beneficially owned by each director is set
forth under "Voting Securities and Principal Holders Thereof".
(2) Dates prior to 1995 reflect initial appointment to the Board of
Trustees of the mutual predecessor to Pathfinder Bank.
(3) Lloyd "Buddy" Stemple was appointed to the Board on July 26,
2005, to complete the term of retiring Board member Raymond Jung.
The principal occupation during the past five years of each Director and
Executive Officer is set forth below. All Directors and Executive Officers have
held their present positions for five years unless otherwise stated.
JANETTE RESNICK, Chair of the Board is retired. Prior to her retirement in
2003, she was the Executive Director of Oswego County Opportunities, a private,
not for profit human services agency located in Oswego and Fulton, New York.
CHRIS C. GAGAS is retired. Until his retirement on January 14, 2000, Mr.
Gagas was also President and Chief Executive Officer of the Company and its
principal subsidiary, Pathfinder Bank ("the Bank"). Mr. Gagas had served as an
officer of the Company since 1986.
CHRIS R. BURRITT is the president and general manager of R.M. Burritt
Motors, Inc./Chris Cross, Inc., an automobile dealership located in Oswego, New
York.
BRUCE E. MANWARING is the Chamberlain for the City of Oswego. Prior to his
appointment in 1999, Mr. Manwaring was the owner of Oswego Printing Co. located
in Oswego, New York.
WILLIAM NELSON, JR. is the owner and manager of Nelson Funeral Home located
in Oswego, New York.
STEVEN W. THOMAS is a licensed real estate broker and a developer. Until
recently, Mr. Thomas owned and operated five Dunkin Donuts franchises and two
hotels in Oswego County. Mr. Thomas additionally is involved in numerous
commercial development projects in Oswego County and operates a marina in Fair
Haven, New York, known as the Boathouse. Mr. Thomas is also a member of Surelock
Industries, LLC, a local wood floor manufacturer.
GEORGE P. JOYCE is the owner and operator of Laser Transit, Ltd., Lacona,
New York, a Central New York logistics services provider.
CORTE J. SPENCER is the Chief Executive Officer and Administrator of Oswego
Hospital and the managing director of Oswego Health, Inc. located in Oswego, New
York.
LLOYD "BUDDY" STEMPLE is the Vice-President and General Manager of Novelis
Specialty Products Group, Inc. which has manufacturing locations in Oswego, New
York, Kingston, Ontario Canada and sales offices in Cleveland, Ohio and Detroit,
Michigan.
EXECUTIVE OFFICERS OF THE COMPANY WHO ARE DIRECTORS
THOMAS W. SCHNEIDER is the President and Chief Executive Officer of the
Company and the Bank. Prior to his appointment as President in 2000, Mr.
Schneider was the Executive Vice President and Chief Financial Officer of the
Company and the Bank.
INDEPENDENCE OF DIRECTORS
The Company's common stock is listed on the Nasdaq Small Cap Market. The
Board of Directors of the Company has considered the Nasdaq listing requirements
for "Independence" of Directors, and although the Company may be exempt as a
"controlled" company pursuant to Nasdaq rules, it has determined, nonetheless,
that all of its Directors with the exception of Mr. Schneider are "Independent".
Our independent directors will hold executive sessions no less than twice a
year. Shareholders who wish to communicate with the Chairman or with the
independent directors as a group may do so by writing to the Secretary of the
Corporation at Pathfinder Bank, 214 West First Street, Oswego, New York 13126.
The Secretary will forward said communication to the independent directors or
Chairman as requested by the shareholder.
EXECUTIVE OFFICERS OF THE COMPANY WHO ARE NOT DIRECTORS
JAMES A. DOWD, CPA, age 38, is a Vice President and Chief Financial
Officer of the Company and the Bank. Mr. Dowd is responsible for the
accounting and finance departments.
MELISSA A. MILLER, age 48, is a Vice President and Chief Operating Officer
of the Company and the Bank. Ms. Miller is responsible for deposit operations,
compliance, and information services.
EDWARD A. MERVINE, ESQ., age 49, is Vice President, General Counsel and
Secretary for the Company and the Bank. Prior to joining the Company in 2002,
Mr. Mervine was a partner in the law firm of Bond Schoeneck & King, LLP.
JOHN F DEVLIN, age 41, is Vice President and Senior Commercial Lender for
the Company and the Bank. Prior to joining the Company in 2002, Mr. Devlin
served as Assistant Vice President and Commercial Loan Officer for Alliance
Bank, NA.
RHONDA L. HUTCHINS, age 47, is Vice President, Retail Lending, for the
Company and the Bank. Prior to joining the Company in 1997, Ms. Hutchins worked
in loan originations for Homestead Financial, Syracuse, New York.
OWNERSHIP REPORTS BY OFFICERS AND DIRECTORS
The Common Stock of the Company is registered with the SEC pursuant to
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"). The
officers and directors of the Company and beneficial owners of greater than 10%
of the Company's Common Stock ("10% beneficial owners") are required to file
reports on Forms 3, 4 and 5 with the SEC disclosing beneficial ownership and
changes in beneficial ownership of the Common Stock. SEC rules require
disclosure in the Company's Proxy Statement or Annual Report on Form 10-K of the
failure of an officer, director or 10% beneficial owner of the Company's Common
Stock to file a Form 3, 4, or 5 on a timely basis. All of the Company's
officers and directors filed these reports in a timely fashion, with the
following exception. A Form 4 was not filed timely on one trade occurring on
June 3, 2005 (Director Chris C. Gagas). The lack of timely filing was a result
of an oversight by the parties involved. The late filing on this transaction
was made on June 22, 2005. A Form 3, announcing the January 1, 2006 promotion
of Rhonda Hutchins to Vice President - Retail Lending, an executive officer
position, was not filed until February 22, 2006.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Board of Directors is conducted through meetings and
activities of the Board and its committees. During the year ended December 31,
2005, the Board of Directors held twelve regular and five special meetings.
During the year ended December 31, 2005, no director attended fewer than 75%
percent of the total meetings of the Board of Directors and committees on
which such director served.
The Compensation Committee meets periodically to review the performance of
officers and employees and to determine compensation programs and
adjustments. The entire Board of Directors ratifies the recommendations of the
Compensation Committee. In the year ending December 31, 2005, the
Compensation Committee consisted of Directors Gagas, Manwaring, Resnick,
Spencer and Nelson. All of these Directors are "independent" pursuant to Nasdaq
listing requirements. The Compensation Committee met three times during the year
ended December 31, 2005.
The Nominating/Governance Committee meets several times a year to address
issues concerning corporate governance, succession planning, and to nominate
directors to fulfill the terms of the upcoming year. In the year ended December
31, 2005, the Nominating/Governance Committee was comprised of directors Thomas,
Manwaring, Joyce, Resnick and Spencer, all of whom are "independent" pursuant to
the Nasdaq listing requirements. The Nominating/Governance Committee has a
charter in the form of governance guidelines which is available at the Company's
website at WWW.PATHFINDERBANK.COM.
Among other things, the functions of the Nominating/Governance Committee
include the following:
- to lead the search for individuals qualified to become
members of the Board and to select director nominees to be
presented for shareholder approval;
- to review and monitor compliance with the requirements for
board independence; and
- to review the committee structure and make recommendations
to the Board regarding committee membership.
The Nominating/Governance Committee identifies nominees by first evaluating
the current members of the Board of Directors willing to continue in service.
Current members of the Board with skills and experience that are relevant to the
Company's business and who are willing to continue in service are first
considered for re-nomination, balancing the value of continuity of service by
existing members of the Board with that of obtaining a new perspective. If any
member of Board does not wish to continue in service, or if the Committee or the
Board decides not to re-nominate a member for re-election, or if the size of the
Board is increased, the Committee would solicit suggestions for director
candidates from all Board members. In addition, the Committee is authorized by
its charter to engage a third party to assist in the identification of director
nominees. The Nominating/Governance Committee would seek to identify a candidate
who, at a minimum, satisfies the following criteria:
- has personal and professional ethics and integrity and whose
values are compatible with the Company's;
- has had experiences and achievements that have given him or
her the ability to exercise and develop good business judgment;
- is willing to devote the necessary time to the work of the
Board and its committees, which includes being available for
Board and committee meetings;
- is familiar with the communities in which the company
operates and/or is actively engaged in community activities;
- is involved in other activities or interests that do not
create a conflict with his or her responsibilities to the Company
and its shareholders; and
- has the capacity and desire to represent the balanced, best
interest of the shareholders of the Company as a group, and not
primarily a special interest group or constituency.
The Nominating/Governance Committee will also take into account whether a
candidate satisfies the criteria for "independence" under the Nasdaq corporate
governance listing standards and, if a nominee is sought for service on the
Audit Committee, the financial and accounting expertise of a candidate,
including whether an individual qualifies as an Audit Committee Financial
Expert.
The Nominating/Governance Committee will consider candidates for the Board
of Directors recommended by shareholders. In order to make a recommendation to
the Board of Directors, a shareholder must own no less than 500 shares of the
corporation. Shareholders who are so qualified may send their recommendations to
the Secretary of the Company for forwarding to the Nominating/Governance
Committee. In light of the due diligence required to evaluate recommendations,
said recommendations for the Nominating/Governance candidate for the 2007 annual
meeting must be made by June 30, 2006.
Shareholders can submit the names of candidates to be considered by writing
to our Corporate Secretary, at 214 West First Street, Oswego, New York 13126.
The submission must include the following information:
- the name and address of the shareholder as it appears on the
Company's books, and number of shares of the Company's common stock
that are owned beneficially by such shareholder (if the shareholder is
not a holder of record, appropriate evidence of the shareholder's
ownership will be required).
- the name, address and contact information for the candidate, and
the number of shares of common stock of the Company that are owned by
the candidate (if the candidate is not a holder of record, appropriate
evidence of the shareholder's ownership should be provided).
- a statement of the candidate's business and educational experience.
- such other information regarding the candidate as would be
required to be included in the proxy statement pursuant to SEC
Regulation 14A.
- a statement detailing any relationship between the candidate and the
Company.
- a statement detailing any relationship between the candidate and
any customer, supplier or competitor of the Company.
- detailed information about any relationship or understanding
between the proposing shareholder and the candidate and
- a statement that the candidate is willing to be considered and
willing to serve as a director if nominated and elected.
The Nominating/Governance Committee will consider shareholder
recommendations made in accordance with the above similarly to any other nominee
proposed by any other source. The Company has not paid a fee to any third party
to identify or evaluate any potential nominees. Moreover, the Nominating/
Governance Committee has not received within the last year a recommended nominee
from a shareholder who beneficially owned more than five percent (5%) of the
company's common stock for at least one (1) year, or from a group of
shareholders owning more than five (5%) percent of the common stock.
The Audit Committee consists of directors Manwaring, Nelson, Spencer and
Joyce. The Audit Committee meets on a periodic basis with the internal auditor
to review audit programs and the results of audits of specific areas, on
regulatory compliance issues, as well as to review information to further their
financial literacy skills. The Audit Committee meets with the Auditors to review
quarterly and annual filings, the results of the annual audit and other related
matters. The Chairman of the Audit Committee may meet with the Auditors on
quarterly filing issues in lieu of the entire committee. Each member of the
Audit Committee is "independent" as defined in the listing standards of Nasdaq
and SEC Rule 10A-3. The Company's Board of Directors has adopted a written
charter for the Audit Committee which is available on the Company's website at
WWW.PATHFINDERBANK.COM.
The Audit Committee maintains an understanding of the Company's key areas
of financial risk and assesses the steps management takes to minimize and manage
such risks; selects and evaluates the qualifications and performance of the
Auditors, ensures that the internal and external auditors maintain no
relationship with management and/or the Company that would impede their ability
to provide independent judgment; oversees the adequacy of the systems of
internal control; reviews the nature and extent of any significant changes in
accounting principles; and oversees that management has established and
maintained processes reasonably calculated to ensure the Company's compliance
with all applicable law, regulations, corporate policies and other matters
contained in the Company's Code of Ethics which is available on the Company's
website at WWW.PATHFINDERBANK.COM. The Audit Committee has established
procedures for the confidential, anonymous submission by employees of concerns
regarding accounting or auditing matters.
The Board of Directors of Pathfinder Bancorp, Inc. has determined that
Bruce E. Manwaring, chairman of the Audit Committee in 2004, 2005, and 2006
qualifies as a financial expert serving on the committee. Mr. Manwaring meets
the criteria established by the Securities and Exchange Commission as follows:
- Mr. Manwaring maintains an understanding of generally accepted
accounting principles and financial statements and has the ability to
assess the application of such principles in connection with
accounting for estimates, accruals and reserves.
- Mr. Manwaring has garnered comparable experience preparing and
analyzing financial statements in his current position as the
Chamberlain of the City of Oswego, which he has held since his
appointment in 1999.
- Mr. Manwaring has earned a Bachelor of Science degree majoring in
accounting from the State University of New York, College at Oswego
and has successfully passed the Uniform Certified Pubic Accountancy
Examination.
- Through his work experience and education, Mr. Manwaring has
developed a thorough understanding of internal controls and financial
reporting procedures, as well as a detailed understanding of audit
committee functions.
The Board of Directors has also determined that Mr. Manwaring and all of
the Audit Committee members meet the definition of independent as prescribed by
the Nasdaq listing requirements, and are all financially literate.
AUDIT AND AUDIT RELATED FEES
Beard Miller Company LLP billed the Company a total of $76,653 for the
audit of the Company's 2005 annual financial statements and for the review of
the related Forms 10-Q. During the fiscal year ended December 31, 2004, Beard
Miller Company LLP billed the company a total of $69,283 for the audit of the
Company's 2004 annual financial statements and its review of the related Forms
10-Q.
The Audit Committee considered whether the provision of non-audit services
was compatible with maintaining the independence of its Auditors. The Audit
Committee concluded that performing such services in 2005 did not affect the
auditors' independence in performing their function as Auditors of the Company.
POLICY ON AUDIT COMMITTEE PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES OF
INDEPENDENT AUDITOR
The Audit Committee's policy is to pre-approve all audit and non-audit
services provided by the Auditors. These services may include audit services,
audit-related services, tax services and other services. Pre-approval is
generally provided for up to one year and any pre-approval is detailed as to
particular service or category of services and is generally subject to a
specific budget. The Audit Committee has delegated pre-approval authority to its
Chairman when expedition of services is necessary. The Auditors and management
are required to periodically report to the full Audit Committee regarding the
extent of services provided by the Auditors in accordance with this
pre-approval, and the fees for the services performed to date.
ALL OTHER FEES
Aggregate fees billed for other services rendered by Beard Miller Company
LLP for the Company during the years ended December 31, 2005 and 2004 were as
follows:
2005 2004
--------------------------------------------------------------------------------
Recurring and non-recurring tax services
Beard Miller Company LLP $11,450 $22,600
All other fees
Beard Miller Company LLP $ 0 $ 0
Recurring and non-recurring tax services include assistance in connection
with the New York State Franchise tax examination.
AUDIT COMMITTEE REPORT
In accordance with rules established by the SEC, the Audit Committee has
prepared the following report for inclusion in this proxy statement: As part of
its ongoing activities, the Audit Committee has:
- Reviewed and discussed with management the Company's audited
consolidated financial statements for the year ended December 31,
2005;
- Discussed with the Auditors the matters required to be discussed
by Statement on Auditing Standards No. 61, Communications with Audit
Committees, as amended;
- Received the written disclosures and the letter from the Auditors
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, and has discussed with the Auditors
their independence; and
- Considered the compatibility of non-audit services described
above with maintaining auditor independence.
Based on the review and discussions referred to above, the Audit Committee
recommended to the Board of Directors that the audited consolidated financial
statements be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 2005. The Audit Committee appointed Beard Miller Company LLP
as Auditors for 2006, which the shareholders will be asked to ratify at the
Annual Meeting.
This report has been provided by the Audit Committee:
Messrs, Joyce, Spencer, Manwaring, and Nelson.
PERFORMANCE GRAPH
Set forth hereunder is a performance graph comparing (a) the total return
on the Common Stock for the period beginning on December 31, 2000 through
December 31, 2005, (b) the cumulative total return on stocks included in the
Nasdaq Composite Index over such period, and (c) the yearly cumulative total
return on stocks included in the SNL Thrift Index over such period. The
cumulative total return on the Common Stock was computed assuming the
reinvestment of cash dividends during the fiscal year.
There can be no assurance that the Common Stock's performance will continue
in the future with the same or similar trend depicted in the graph. The Company
will not make or endorse any predictions as to future stock performance.
GRAPHIC OMMITTED
PERIOD ENDING
--------------------------------------------------------------------------------
INDEX 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05
--------------------------------------------------------------------------------
Pathfinder Bancorp, Inc. 100.00 219.80 249.59 321.21 298.62 237.78
NASDAQ Composite 100.00 79.18 54.44 82.09 89.59 91.54
SNL Thrift Index 100.00 106.88 127.50 180.50 202.12 208.21
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The full Board of Directors of the Company determines the salaries to be
paid each year to the executive officers of the Company.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Under SEC rules, the Company is required to disclose certain data and
information regarding compensation and benefits of its Chief Executive Officer
and other executive officers. The disclosure includes the use of tables and a
report explaining the rationale for and considerations that led to fundamental
executive compensation decisions affecting these individuals. In fulfilling this
requirement, the Board of Directors of the Company has prepared the following
report for inclusion in this proxy statement.
The Compensation Committee of the Board of Directors (the "Committee") is
comprised of Directors Chris Burritt, Chris Gagas, William Nelson, Janette
Resnick and Corte Spencer, all of whom are "independent" pursuant to Nasdaq
listing rules. The Committee annually reviews the performance of the Chief
Executive Officer and other executive officers and recommends to the Board of
Directors changes to base compensation as well as the amount of any bonus to be
awarded. In determining whether the base salary of an officer should be
increased, the Committee and the Board of Directors take into account individual
performance, performance of the Company and information regarding compensation
paid to executives of peer group institutions made to executives performing
similar duties for financial institutions in the Bank's market area.
While the Committee and the Board of Directors do not use strict numerical
formulas to determine changes in compensation for the Chief Executive Officer
and Vice Presidents, and while they weigh a variety of different factors in
their deliberations, they have emphasized and will continue to emphasize
earnings, profitability, earnings contribution to capital, capital strength,
asset quality, and return on tangible equity as factors in setting the
compensation of the Chief Executive Officer and senior officers. Non-
quantitative factors considered by the Committee and the Board of Directors in
2005 included general management oversight of the Company, the quality of
communication with the Board of Directors, and the productivity of employees.
Finally, the Committee and the Board of Directors considered the standing of the
Company with customers and the community, as evidenced by customer and community
complaints and compliments. While the Committee and the Board of Directors
considered each of the quantitative and non-quantitative factors described
above, such factors were not assigned a specific weight in evaluating the
performance of the Chief Executive Officer and Vice Presidents.
The Board of Directors approved salary increases totaling $20,500 for the
Company and Bank's six executive officers including Mr. Schneider. Mr. Schneider
does not participate in the Board of Director's consideration of his
compensation. There was no increase in Mr. Schneider's base salary during 2005.
This has been provided by the Board of Directors: Chris C. Gagas, Thomas W.
Schneider, Chris R. Burritt, George P. Joyce, Bruce E. Manwaring, L. William
Nelson, Jr., Janette Resnick, Corte J. Spencer, Lloyd "Buddy" Stemple and
Stephen W. Thomas.
DIRECTORS' COMPENSATION
Each non-employee director, with the exception of the Board Chairman and
the Audit Committee Chairman, receives an annual retainer of $9,500, a meeting
fee of $500 for each Board meeting attended and $300 for each committee meeting
attended. The Board Chairman receives an additional retainer of $10,000. The
Audit Committee Chairman receives an additional retainer of $5,000 and the
chairman of all other committees receives an additional $100 for each committee
meeting in which they serve in the capacity of committee chairman. Employee
directors do not receive monthly meeting fees. The Company paid a total of
$156,150 in director fees during the year ending December 31, 2005.
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31, 2005, 2004
and 2003, certain information as to the total remuneration paid by the Company
to Mr. Schneider, the Company's Chief Executive Officer, and to Mr. Mervine,
the Company's Vice-President, General Counsel and Secretary. No other executive
officers received compensation exceeding $100,000 for the year ended December
31, 2005.
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------
Annual Compensation Long-Term Compensation Awards
--------------------------------------------------------------------------------------------------------------
Fiscal
Years Other Restricted
Ended Annual Stock Options/ All Other
Name and December Salary Bonus Compensation Award(s) SARS Compensation
Principal Position (1) 31 ($) (2) ($) ($) (3) ($) (4) (#) (5) Payouts ($) (3)
--------------------------------------------------------------------------------------------------------------
Thomas W. Schneider 2005 $185,000 $ 2,128 - - - - $25,464
President and Chief 2004 $185,000 $10,000 - - - - $19,049
Executive Officer 2003 $180,000 $20,000 - - - - $17,553
Edward Mervine 2005 $122,000 $ 1,282 - - - - $ 4,315
Vice President, 2004 $117,250 $ 6,000 - - - - $ 5,200
General Counsel 2003 $114,000 $ 7,500 - - - - $ 4,800
(1) No other executive officer received salary and bonuses that in
the aggregate exceeded $100,000.
(2) Includes compensation deferred at the election of the named
individual under the Company's cafeteria plan.
(3) Includes the following amounts for Mr. Schneider for 2005:
$16,688 contribution in connection with the executive supplemental
retirement agreement and an $8,776 contribution to the Company's
401(k) plan. Includes a contribution of $4,315 to the Company's 401(k)
plan on behalf of Mr. Mervine.
(4) Amount represents compensation associated with the vested portion
of stock awards granted under the Management Recognition and Retention
Plan.
(5) Amount represents the vested portion of option shares granted
under the Stock Option Plan.
BENEFITS
MEDICAL AND LIFE INSURANCE AND EDUCATIONAL ASSISTANCE. The Company provides
full-time employees with medical and life and accidental death and dismemberment
insurance. In addition, the Company maintains a "cafeteria plan" for employees,
which permits qualifying employees to allocate a portion of their compensation,
on a pre-tax basis, for the payment of medical, dental and dependent care
expenses as well as the payment of certain insurance premiums. The Company also
offers educational assistance to full-time employees who have worked for the
Company for at least one year and who desire to take courses at any accredited
school of learning. The Company also provides long-term disability income
insurance for all employees equal to the lesser of $6,000 per month or 60% of
the employee's basic monthly earnings.
DEFINED BENEFIT PLAN. The Company maintains a tax-qualified noncontributory
defined benefit plan ("Retirement Plan"). All salaried employees age 21 or older
who have worked for the Company for at least one year and have been credited
with 1,000 or more hours of employment with the Company during the year are
eligible to accrue benefits under the Retirement Plan. The Company contributes
annually to the Retirement Plan an amount necessary to satisfy the actuarially
determined minimum funding requirements in accordance with the Employee
Retirement Income Security Act of 1974 ("ERISA").
At the normal retirement age of 65 the plan is designed to provide a life
annuity. The retirement benefit provided is equal to 1.5% of a participant's
average monthly compensation for periods after May 1, 2004, and 2.0% of the
participant's average monthly compensation for credited service prior to May 1,
2004 based on the average of the three consecutive years during the last 10
years of employment which provides the highest monthly average compensation
multiplied by the participant's years of credited service (not to exceed 30
years) to the normal retirement date. Retirement benefits also are payable upon
retirement due to early and late retirement. Benefits also are paid from the
Retirement Plan upon a Participant's disability or death. A reduced benefit is
payable upon early retirement at or after age 60, or the completion of 30 years
of service with the Company. Upon termination of employment other than as
specified above, a participant who was employed by the Company for a minimum of
five years is eligible to receive his or her accrued benefit reduced or early
retirement or a deferred retirement benefit commencing on such participant's
normal retirement date. Benefits are payable in various annuity forms. At
December 31, 2005 the market value of the Retirement Plan trust fund was
approximately $4,070,000. For the plan year ended September 30, 2005, the
Company made a contribution of $670,000 to the Retirement Plan.
The following table indicates the annual retirement benefit that would be
payable under the Retirement Plan upon retirement at age 65 in plan year 2005,
expressed in the form of a single life annuity for the final average salary and
benefit service classification specified below.
YEARS OF BENEFIT SERVICE AT RETIREMENT
--------------------------------------------------------------------------------
FINAL
AVERAGE COMPENSATION 15 20 25 30
--------------------------------------------------------------------------------
$ 25,000 $ 7,292 $ 9,792 $ 12,292 $ 14,792
$ 50,000 $14,583 $19,583 $ 24,583 $ 29,583
$ 75,000 $21,875 $29,375 $ 36,875 $ 44,375
$100,000 $29,167 $39,167 $ 49,167 $ 59,167
$125,000 $36,458 $48,958 $ 61,458 $ 73,958
$210,000 $61,250 $82,250 $103,250 $124,250
Under Section 401(a)(17) of the Code, the maximum amount of compensation
that may be taken into account under the Retirement Plan in the 2005 Plan Year
is $210,000.
As of December 31, 2005, Thomas W. Schneider had 17 years of credited
service (i.e., benefit service), and Edward A. Mervine had 4 years of credited
service under the Retirement Plan.
EMPLOYEE SAVINGS PLAN. The Company maintains the Employee Savings Plan
which is a qualified, tax-exempt profit sharing plan with a cash or deferred
feature that is tax-qualified under Section 401(k) of the Internal Revenue Code
(the "401(k) Plan"). All employees who have attained age 21 and have completed
at least one year of employment during which they worked at least 1,000 hours
are eligible to participate.
Participants may contribute, and receive a deduction for, up to 25% of
compensation to the 401 (k) Plan. For these purposes, "compensation" includes
total compensation (including salary reduction contributions made under the
401(k) Plan or the flexible benefits plan sponsored by the Company), but does
not include compensation in excess of $200,000. The Company, in its discretion,
may match participants' salary reduction contributions based upon Company
profits for the current fiscal year. All employee contributions and earnings
thereon are fully and immediately vested. All employer matching contributions
vest at the rate of 20% per year beginning at the end of a participant's third
year of service with the Company until a participant is 100% vested after seven
years of service. Participants also will vest in employer matching contributions
when they reach the normal retirement age of 65 or later, or upon death or
disability regardless of years of service.
Plan benefits will be paid to each participant in a lump sum. At December
31, 2005, the market value of the 401(k) Plan trust fund was approximately
$2,721,000. For the plan year ended December 31, 2005, the Company made a
contribution in the amount of $145,000 to the 401(k) Plan Trust. The 2005
contributions to the Company 401(k) plan on behalf of Mr. Schneider and Mr.
Mervine are set forth in note (3) to the Summary Compensation Table.
EXECUTIVE SUPPLEMENTAL RETIREMENT INCOME MASTER AGREEMENT. The Company
maintains a non-tax-qualified executive supplemental retirement income master
agreement (the "Master Agreement") for qualifying executives of the Company. One
executive and the former Chairman of the Board are currently eligible to
participate in the Master Agreement. The Master Agreement provides a
supplemental retirement income benefit in an annual amount equal to highest
average compensation received by the executive during any 36 month period while
employed by the Company, multiplied by a wage replacement percentage designated
in the individual executive's joinder agreement, less the actual annual amount
available to the executive from the Company's other tax-qualified or
nonqualified plans. Benefits under the Master Agreement are payable to the
executive upon the benefit age designated in the individual executive's joinder
agreement. Benefits will be payable in monthly installments beginning on the
executive's benefit age and continuing for a period of months designated in the
individual executive's joinder agreement. Payments to an executive, or to his
beneficiary, may be made from the Master Agreement upon the executive's death,
total or permanent disability, or termination of service with the Company.
The Master Agreement is considered an unfunded plan for tax and ERISA
purposes. All obligations arising under the Master Agreement are payable from
the general assets of the Company. The 2005 contribution made on behalf of Mr.
Schneider in connection with the Master Agreement is set forth in note (3) to
the Summary Compensation Table.
STOCK OPTION PLAN. The Pathfinder Bancorp, Inc. 1997 Stock Option Plan (the
"Stock Option Plan") authorizes the grant of stock options and limited rights to
purchase 132,249 shares of Common Stock. The Stock Option Plan authorizes grants
of (i) options intended to qualify as "incentive stock options," (ii) options
that do not qualify as incentive stock options ("non-statutory options") and
(iii) limited rights (described below) that are exercisable only upon a change
in control of the Company (as defined). Non-employee directors are eligible to
receive only non-statutory options. No options were granted during the past
year.
On December 19, 2000, the Board of Directors accepted the voluntary
rescission of all issued and unvested incentive stock options and non-statutory
stock options under the Pathfinder Bank 1997 Stock Option Plan.
In July 2001, the Board approved the re-issuance of 38,499 stock options
remaining in the 1997 Stock Option Plan. The exercise price is equal to the
market value of the Company's shares at the date of grant ($8.34). The options
granted under the re-issuance have a 10-year term. At December 31, 2005, all
options have vested under the Stock Option Plan.
Simultaneously with the grant of any stock option, the Committee may grant
a Dividend Equivalent Right with respect to all or some of the shares covered by
such stock option. The Dividend Equivalent Right provides the grantee with a
separate cash benefit equal to 100% of the amount of any extraordinary dividend
on shares of Common Stock subject to a stock option. Under the terms of the
Stock Option Plan, an extraordinary dividend is any dividend paid on shares of
Common Stock that exceeds the Company's weighted average cost of interest
bearing liabilities for the current and preceding three quarters. Upon the
payment of an extraordinary dividend, Dividend Equivalent Right will receive at
the time the related stock option vests cash or some other payment as determined
under the Stock Option Plan, equal to 100% of the extraordinary dividend paid on
shares of Common Stock plus any earnings thereon, minus any tax withholding
amounts. The Dividend Equivalent Right is transferable only when the underlying
stock option is transferable and under the same conditions.
During the year, neither Mr. Schneider nor Mr. Mervine acquired any company
stock through the exercise of options. As of December 31, 2005, Mr. Schneider
held 450 unexercised in-the-money options valued at approximately $2,126.
The Board of Directors may amend, suspend or terminate the Stock Option
Plan except that such amendments may not impair awards previously granted.
Shareholders of the Company must approve any amendment to the Stock Option Plan
that would increase the number of options, decrease an option exercise price,
extend the term of the Stock Option Plan or any option, or change the persons or
category of persons eligible to be granted options. The exercise of options will
have a dilutive effect on the ownership interests of existing shareholders.
Further, the exercise of options may render more difficult or discourage a
merger, tender offer or other takeover attempt even if such transaction or event
would be beneficial to shareholders generally, the assumption of control by a
holder of a large block of the Company's securities, a proxy contest or the
removal of incumbent management.
RECOGNITION AND RETENTION PLAN. The Board of Directors of the Company
adopted the 1997 Recognition and Retention Plan (the "Recognition Plan") as a
method of providing certain employees and non-employee directors of the Company
with a proprietary interest in the Company and to provide these individuals with
an incentive to increase the value of the Company.
The Stock Benefits Committee, composed of the non-employee directors of the
Company, administers the Recognition Plan, and makes awards to officers and
employees pursuant to the Recognition Plan. Awards to non-employee directors are
fixed by the terms of the Recognition Plan. Awards of Common Stock that have not
vested under the Recognition Plan ("Restricted Stock") are nontransferable and
nonassignable. Participants in the Recognition Plan become vested in shares of
Restricted Stock over a six-year period beginning on January 24, 1999; provided,
however, that the Stock Benefits Committee may accelerate or extend the vesting
rate on any awards made to officers and employees after the effective date of
the Recognition Plan. On December 19, 2000 ("the rescission date"), the Board of
Directors accepted the voluntary rescission of all issued and unvested awards
under the 1997 Recognition and Retention Plan. Accordingly, the shares, which
would have been earned by participants since the rescission date, will be
retained by the Recognition Plan. Awards to executive officers and outside
directors become fully vested upon termination of employment or service due to
normal retirement, death or disability, or following a termination of employment
or service in connection with a change in control (as defined therein) of the
Company. Upon termination of employment or service for any other reason,
unvested shares are forfeited. When a participant's Restructured Stock vests,
the participant will recognize ordinary income equal to the fair market value of
the shares vested, unless the participant previously made an irrevocable
election to be taxed on the shares of Restricted Stock awarded to him in the
year of the award. The amount of income recognized by a participant will be a
deductible expense of the Company for Federal income tax purposes. A participant
is entitled to receive any cash dividends paid on the Restricted Stock both
before and after vesting of the Restricted Stock. Stock dividends declared by
the Company and paid on Restricted Stock that have not vested are subject to the
same restrictions as the Restricted Stock until such shares vest.
Set forth below is certain information as of December 31, 2005 regarding
equity compensation to directors, director's emeriti and executive officers of
the Company approved by shareholders. Other than the employee stock ownership
plan, the Company did not have any equity plans in place that were not approved
by shareholders.
Number of securities to be
issued upon exercise of Number of securities
outstanding options and Weighted average remaining available for
Plan rights Exercise price issuance under plan
-------------------------------------------------------------------------------------------------------
Equity compensation to directors
and executive officers approved by
shareholders 45,550 $ 7.41 30
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Sarbanes-Oxley Act of 2002 generally prohibits an issuer from (i)
extending or maintaining credit; (ii) arranging for the extension of credit; or
(iii) renewing an extension of credit in the form of a personal loan for an
officer or director. There are several exceptions to this general prohibition,
however, one of which is applicable to the Company. Namely, this prohibition
does not apply to loans made by a depository institution that is insured by the
FDIC and is subject to the insider lending restrictions of the Federal Reserve
Act. All loans to the Company's directors and officers by the Bank are made in
conformity with the Federal Reserve Act and regulations promulgated thereunder.
All other transactions between the Company and its executive officers,
directors, holders of 10% or more of the shares of its Common Stock and
affiliates thereof, are on terms no less favorable to the Company than could
have been obtained by it in arm's-length negotiations with unaffiliated persons.
Such transactions must be approved by a majority of independent outside
directors of the Company not having any interest in the transaction.
SHAREHOLDER COMMUNICATIONS
The Board of Directors of the Company has established a process for
shareholders to send communications to a director by either United States mail
or electronic mail. Any shareholder who desires to communicate directly with the
directors of the Company should send their communication to Board of Directors,
Pathfinder Bancorp, Inc., 214 West First Street, Oswego, New York 13126 or by
email to DIRECTORS@PATHFINDERBANK.COM. The communication should indicate that
the author is a shareholder and if shares are not held of record, should include
appropriate evidence of stock ownership. Depending on the subject matter,
management will:
- Forward the communication to the Director or Directors to whom it is
addressed;
- Attempt to handle the inquiry directly, for example where it is a
request for information about the Company or it is a stock-related
matter; or
- Not forward the communication if it is primarily commercial in
nature, relates to an improper or irrelevant topic, or is unduly
hostile, threatening, illegal or otherwise inappropriate.
At each Board meeting, management shall present a summary of all
communications received since the last meeting that were not forwarded and makes
those communications available to the Directors.
CODE OF ETHICS
The Company has adopted a Code of Ethics that is applicable to the
officers, directors and employees of the Company, including the Company's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. The Code of
Ethics is available on the Company's website at WWW.PATHFINDERBANK.COM.
Amendments to and waivers from the Code of Ethics will also be disclosed on the
Company's website.
--------------------------------------------------------------------------------
PROPOSAL 2 -RATIFICATION OF APPOINTMENT OF AUDITORS
--------------------------------------------------------------------------------
The Audit Committee of the Company has approved the engagement of Beard
Miller Company LLP to be the Company's Auditors for 2006 subject to the
ratification of the engagement by the Company's shareholders. At the Annual
Meeting, shareholders will consider and vote on the ratification of the
engagement of Beard Miller Company LLP, for the year ending December 31, 2006.
A representative of Beard Miller Company LLP, is expected to attend the
Meeting to respond to appropriate questions and to make a statement if he so
desires.
In order to ratify the selection of Beard Miller Company LLP, as the
Auditors for 2006, the proposal must receive at least a majority of the votes
cast, either in person or by proxy, in favor of such ratification. The Audit
Committee and the Board of Directors recommends a vote "FOR" the ratification of
Beard Miller Company LLP, as Auditors for 2006.
--------------------------------------------------------------------------------
SHAREHOLDER PROPOSALS
--------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials for next
year's Annual Meeting of Shareholders, any shareholder proposal to take action
at such meeting must be received at the Company's executive office, 214 West
First Street, Oswego, New York 13126, no later than December 2, 2006. Any such
proposals shall be subject to the requirements of the proxy rules adopted under
the Securities Exchange Act of 1934.
--------------------------------------------------------------------------------
OTHER MATTERS
--------------------------------------------------------------------------------
The Board of Directors is not aware of any business to come before the
Annual Meeting other than the matters described above in the Proxy Statement.
However, if any matters should properly come before the Annual Meeting, it is
intended that holders of the proxies will act as directed by a majority of the
Board of Directors, except for matters related to the conduct of the Annual
Meeting, as to which they shall act in accordance with their best judgment. The
Board of Directors intends to exercise its discretionary authority to the
fullest extent permitted under the Securities Exchange Act of 1934.
The Bylaws of the Company provide an advance notice procedure for certain
business, or nominations to the Board of Directors, to be brought before an
annual meeting. In order for a shareholder to properly bring business before an
annual meeting, or to propose a nominee to the Board, the shareholder must give
written notice to the Secretary of the Company at least five (5) days before the
date fixed for such meeting. The notice must include the shareholder's name,
record address, and number of shares owned by the shareholder, describe briefly
the proposed business, the reasons for bringing the business before the annual
meeting, and any material interest of the shareholder in the proposed business.
In the case of nominations to the Board, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement and proxy relating to an annual
meeting any shareholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such proposal is
received.
--------------------------------------------------------------------------------
MISCELLANEOUS
--------------------------------------------------------------------------------
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Edward A. Mervine
--------------------
Edward A. Mervine
Secretary
Oswego, New York
March 31, 2006
PLEASE MARK VOTES
AS IN THIS EXAMPLE
| X |
REVOCABLE PROXY
PATHFINDER BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
April 26, 2006
The undersigned hereby appoints the full Board of Directors, with full
powers of substitution to act as attorneys and proxies for the undersigned
to vote all shares of Common Stock of the Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders ("Meeting") which will
be held at the Econolodge, 70 East First Street, Oswego, New York on April
26, 2006 at 10:00 a.m., Eastern Time. The Board of Directors is authorized to
cast all votes to which the undersigned is entitled as follows:
1) The election as directors of all nominees listed below (except as
marked to the contrary below)
For
All
For Withhold Except
|__| |__| |__|
Bruce E. Manwaring
L. William Nelson, Jr.
George P. Joyce
Lloyd "Buddy" Stemple
INSTRUCTION: To withhold your vote for one or more nominees, write the name of
the nominee(s) on the lines below.
_____________________________________
_____________________________________
2) The ratification of Beard Miller Company LLP as independent
auditors for the year ending December 31, 2006.
For Against Abstain
|__| |__| |__|
__
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING |__|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED
PROPOSALS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THIS PROXY WILL BE VOTED AS
DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE
PROPOSITIONS STATED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT SUCH
MEETING, THIS PROXY WILL BE VOTED BY THE ABOVE-NAMED PROXIES AT THE DIRECTION OF
A MAJORITY OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME, THE BOARD OF
DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY IN THE BOX BELOW.
DATE
SHAREHOLDER SIGN ABOVE_________CO-HOLDER (IF ANY) SIGN ABOVE
.................................................................................
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
PATHFINDER BANCORP, INC.
Should the undersigned be present and elect to vote at the Meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the Annual Meeting of the shareholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. This proxy may also be revoked by sending written
notice to the Secretary of the Company at the address set forth on the Notice
of Annual Meeting of Shareholders, or by the filing of a later proxy
statement prior to a vote being taken on a particular proposal at the
Meeting.
The above signed acknowledges receipt from the Company prior to
the execution of this proxy of Notice of the Meeting, Annual Report
containing financial statements, and a proxy statement dated March 31, 2006.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give full title.
If shares are held jointly, each should sign.
PLEASE COMPLETE AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
----------------------------
----------------------------
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