proxy2009.htm
UNITED
STATES
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 (Amendment No. [ ])
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[xx]
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Filed
by Registrant
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Filed
by a Party other than the Registrant
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)2)
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[xx]
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to Section 240.14a-12
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Citizens
Financial Services, Inc.
(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement if other than the
Registrant)
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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Title
of each class of securities to which transaction
applies:
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2)
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Aggregate
number of securities to which transaction applies:
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Per
unit price or other underlying value of transaction computed pursuant to
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calculated and state how it was determined):
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statement number, or the Form or Schedule and the date of its
filing.
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Previously Paid:
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Form,
Schedule or Registration Statement No.:
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Party:
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Filed:
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CITIZENS
FINANCIAL SERVICES, INC.
15
South Main Street
Mansfield,
Pennsylvania 16933-1590
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON APRIL 21, 2009
NOTICE IS HEREBY GIVEN that the Annual
Meeting of Shareholders of Citizens Financial Services, Inc. (the “Company”)
will be held at 12:00 noon, local time, on Tuesday, April 21, 2009 at
the Tioga County
Fairgrounds Main Building, 2258 Charleston Road, Wellsboro, Pennsylvania 16901,
for the following
purposes:
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1.
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To
elect four
Class 3 directors to serve for three-year terms and until their successors
are duly elected and qualified;
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2.
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To
ratify the appointment of S.R. Snodgrass, A.C., Certified Public
Accountants, as the independent registered public accounting firm for the
Company for the fiscal year ending December 31, 2009;
and
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3.
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To
transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement
thereof.
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NOTE:
The Board of Directors is not aware of any other business to come before
the meeting.
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Record holders of Company common stock
at the close of business on March 2, 2009 are entitled to receive notice of the
Annual Meeting and to vote at the meeting and any adjournment or postponement of
the meeting. The Annual Meeting may be adjourned to permit the
Company to solicit proxies in the event that there are insufficient votes for a
quorum or to approve any of the proposals at the time of the
meeting. A list of shareholders entitled to vote at the Annual
Meeting will be available at Citizens Financial Services, Inc., 15 South Main
Street, Mansfield, Pennsylvania 16933-1590, for a period of ten days prior to
the Annual Meeting and will also be available at the Annual Meeting
itself.
BY ORDER OF THE BOARD OF
DIRECTORS,
/s/ Randall E. Black
Randall E. Black
Chief Executive Officer and
President
March 12,
2009
Mansfield,
Pennsylvania
IMPORTANT: The prompt return of proxies
will save the Company the expense of further requests for proxies in order to
ensure a quorum. Shareholders of record may vote their proxies by
mail, by Internet, or in person. Voting instructions are printed on
your proxy card or vote authorization. A printed proxy card for
the Annual Meeting and a self-addressed envelope will be mailed to all
shareholders of record on March 23, 2009. No postage is
required if mailed in the United States.
_____________________________________________________________________________________________
PROXY
STATEMENT
OF
CITIZENS
FINANCIAL SERVICES, INC.
_____________________________________________________________________________________________
This
Proxy Statement is furnished in connection with the solicitation of proxies by
the Board of Directors of Citizens Financial Services, Inc., (the “Company”), a
Pennsylvania corporation headquartered at 15 South Main Street, Mansfield,
Pennsylvania 16933-1590, to be used at the Annual Meeting of
Shareholders. The Annual Meeting will be held at the Tioga County
Fairgrounds Main Building, 2258 Charleston Road, Wellsboro, Pennsylvania 16901
on Tuesday, April 21, 2009 at 12:00 noon, local time. This Proxy
Statement and the enclosed proxy card are being first made available on March
12, 2009 to shareholders of record as of March 2, 2009.
GENERAL
INFORMATION ABOUT VOTING
Who
Can Vote at the Meeting
You are entitled to vote your shares of
Company common stock only if the records of the Company show that you held your
shares as of the close of business on March 2, 2009. As of the close
of business on March 2, 2009, a total of 2,837,776 shares of
common stock were outstanding. Each share of common stock has one
vote.
Attending
the Meeting
If your shares are registered directly
in your name, you are the holder of record of these shares and we are sending
these proxy materials directly to you. As the holder of record, you
have the right to give your proxy directly to us by mail or by voting via the
Internet or to vote in person at the meeting.
If you are the beneficial owner of
Company common stock held by a broker, bank or other nominee (i.e., in “street
name”), you will need proof of your ownership of such stock to be admitted to
the meeting. A recent brokerage statement or letter from a bank or
broker are examples of proof of ownership. If you want to vote your
shares of Company common stock held in street name in person at the meeting, you
must obtain a written proxy in your name from the broker, bank or other nominee
who is the record holder of your shares.
Quorum
and Vote Required
Quorum. The
Annual Meeting will be held only if there is a quorum. A quorum
exists if a majority of the outstanding shares of common stock entitled to vote
is represented at the meeting.
Votes Required
for Proposals. In voting for the election of directors, you
may vote in favor of all nominees, withhold votes as to all nominees or withhold
votes as to specific nominees. There is no cumulative voting for the
election of directors. Directors must be elected by a plurality of
the votes cast at the Annual Meeting. The term “plurality” means that
the four nominees for Class 3 director receiving the largest number of votes
cast will be elected as Class 3 directors.
In voting
for the ratification of the appointment of S.R. Snodgrass, A.C., Certified
Public Accountants (“S.R. Snodgrass, A.C.”), as our independent registered
public accounting firm, you may vote in favor of the proposal, against the
proposal or abstain from voting. This proposal will be decided by the
affirmative vote of a majority of the votes cast at the Annual Meeting by all
shareholders entitled to vote, assuming a quorum is present.
Routine and
Non-Routine Proposals. The rules of the New York Stock
Exchange determine whether proposals presented at shareholder meetings are
routine or non-routine. If a proposal is routine, a broker, bank or
other entity holding shares for an owner in street name may vote for the
proposal without receiving voting instructions from the owner. If a
proposal is non-routine, the broker, bank or other entity may vote on the
proposal only if the owner has provided voting instructions. A broker
non-vote occurs when a broker, bank or other entity holding shares for an owner
in street name is unable to vote on a particular proposal and has not received
voting instructions from the owner. The election of directors and the
ratification of S.R. Snodgrass, A.C. as our independent registered public
accounting firm for 2009 are currently considered routine matters.
How We Count
Votes. If you return valid proxy instructions, vote via the
Internet or attend the meeting in person, your shares will be counted for
purposes of determining whether there is a quorum, even if you abstain from
voting. Broker non-votes, if any, also will be counted for purposes
of determining the existence of a quorum.
In the
election of directors, votes that are withheld will have no effect on the
outcome of the election. In counting votes on the proposal to ratify
the selection of the independent registered public accountants, abstentions will
have no effect on the proposal.
Voting
By Proxy
The Board of Directors is making
available this Proxy Statement for the purpose of requesting that you allow your
shares of Company common stock to be represented at the Annual Meeting by the
persons named in the proxy card. All shares of common stock
represented at the Annual Meeting by properly executed and dated proxy cards
will be voted according to the instructions indicated on the proxy card or as
indicated when you vote via the Internet. If you sign, date and
return a proxy card without giving voting instructions, your shares will be
voted as recommended by the Company’s Board of Directors.
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE:
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“FOR”
THE ELECTION OF FOUR CLASS 3 DIRECTORS TO SERVE FOR THREE-YEAR TERMS OR
UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND
QUALIFIED;
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“FOR”
RATIFICATION OF S.R. SNODGRASS, A.C. AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
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If any matter not described in this
Proxy Statement is properly presented at the Annual Meeting, the persons named
on the proxy card will use their own best judgment to determine how to vote your
shares. The Company does not know of any other matters to be
presented at the Annual Meeting.
You may revoke your proxy at any time
before the vote is taken at the meeting. To revoke your proxy you
must either advise the Secretary of the Company in writing before your common
stock has been voted at the Annual Meeting, deliver a signed later dated proxy,
vote on a later date via the Internet, or attend the meeting and vote your
shares in person. Please note all votes cast via the Internet must be
cast prior to 3:00 a.m., local time, April 21, 2009. Attendance at
the Annual Meeting will not in itself constitute revocation of your
proxy.
If your common stock is held in “street
name,” you will receive instructions from your broker, bank or other nominee
that you must follow in order to have your shares voted. Your broker,
bank or other nominee may allow you to deliver your voting instructions via
telephone or the Internet. Please see the instruction form provided
by your broker, bank or other nominee that accompanies this Proxy
Statement.
IF YOU HAVE ANY QUESTIONS ABOUT VOTING,
PLEASE CONTACT OUR JUDGE OF ELECTION, MATTHEW M. LUNDGREN, AT
800-326-9486.
CORPORATE
GOVERNANCE
Director
Independence
The Company’s Board of Directors
currently consists of ten members, all of whom are independent under the listing
standards of the Nasdaq Stock Market, as well as the director independence
standards adopted by the Board of Directors, except for Mr. Black, who is Chief
Executive Officer and President of the Company and First Citizens National Bank
(the “Bank”). In determining the independence of its directors, the
Board considered transactions, relationships and arrangements between the
Company and its directors that are not required to be disclosed in this Proxy
Statement under the heading “Transactions with Related
Persons,” including loans or lines of credit that the Bank has directly
or indirectly made to Directors Coolidge, Tama, van der Hiel, Dalton, Graham,
Kosa, Landy, Chappell, Black and DePaola. The director independence
standards adopted by the Board of Directors are included in the Company’s
Corporate Governance Guidelines, which are available in the Corporate Governance
section of our website (www.firstcitizensbank.com).
Code
of Ethics
The Company and its wholly-owned
subsidiary, the Bank, have adopted a Code of Ethics that is designed to ensure
that the Company’s and Bank’s directors, executive officers and employees meet
the highest standards of ethical conduct. The Code of Ethics requires
that the Company’s and Bank’s directors, executive officers and employees avoid
conflicts of interest, comply with all laws and other legal requirements,
conduct business in an honest and ethical manner and otherwise act with
integrity and in the Company’s and Bank’s best interest. Under the
terms of the Code of Ethics, directors, executive officers and employees are
required to report any conduct that they believe in good faith to be an actual
or apparent violation of the Code.
Committees
of the Board of Directors
The following table identifies the
members of our Audit and Examination, Compensation/Human Resource and Governance
and Nominating Committees as of March 2, 2009. All members of each
committee are independent in accordance with the listing standards of the Nasdaq
Stock Market, Inc., except for Mr. Black, the Company’s Chief Executive Officer
and President, who serves on the Governance and Nominating
Committee. Based on the number of independent directors currently
serving on the Governance and Nominating Committee, the Company believes that
the functions of this committee are sufficiently performed by the current
members. The Board’s Audit and Examination, Compensation/Human
Resource and Governance and Nominating Committees each operate under a written
charter that is approved by the Board of Directors. Each committee
reviews and reassesses the adequacy of its charter at least
annually. The charters of all three committees are available in the
Corporate Governance section of our website (www.firstcitizensbank.com).
Director
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Audit
and
Examination
Committee
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Compensation/
Human
Resource
Committee
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Governance
and
Nominating
Committee
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Randall
E.
Black
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X
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Robert
W.
Chappell
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X
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R.
Lowell
Coolidge
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X
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Mark
L.
Dalton
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X
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X*
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Rinaldo
A.
DePaola
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X
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X
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Roger
C. Graham,
Jr.
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X
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E.
Gene
Kosa
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X*
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R.
Joseph
Landy
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X*
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Carol
J.
Tama
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X
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X
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Number
of Meetings in 2008
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5
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5
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3
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*
Denotes Chairperson
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Audit and
Examination Committee. The Audit and Examination Committee
oversees the Company's accounting and financial reporting
processes. It meets periodically with the independent registered
public accounting firm, management and the internal auditors to review
accounting, auditing, internal control structure and financial reporting
matters. The Audit and Examination Committee does not have an “audit
committee financial expert.” The Board of Directors believes that the
cost to retain a financial expert at this time is
prohibitive. However, the Board of Directors believes that each Audit
and Examination Committee member has sufficient knowledge in financial and
auditing matters to serve on the committee. The committee has the
authority to engage legal counsel or other experts or consultants as it deems
appropriate to carry out its responsibilities. The report of the Audit and
Examination Committee required by the rules of the Securities and Exchange
Committee is included in this proxy statement. See “Report of the Audit and Examination
Committee.”
Compensation/Human
Resource Committee. The Compensation/Human Resource
Committee is responsible for all matters regarding the Company’s and Bank’s
employee compensation and benefit programs. As a basis for
determining compensation, the Committee examines information from a peer group
of banks relative to performance and compensation. The peer group for
overall bank performance analysis consists primarily of community banks and
thrifts in Pennsylvania and New York with total assets between $500 million and
$1.5 billion. The peer group for analysis of compensation paid to
other bank holding company and banking institution executives is obtained
primarily from L. R. Webber Associates, Inc. (such data is compiled on both a
regional and asset size basis), and the same peer group, as stated above, is
utilized for financial performance comparison. The Chief Executive
Officer and President also provides input to the Board of Directors regarding
the performance of the executive officers who directly report to
him.
Governance and
Nominating Committee. The Governance and Nominating Committee takes a leadership role
in shaping governance policies and practices, including recommending to the
Board of Directors the corporate governance policies and guidelines that should
be adopted by the Company and monitoring compliance with these policies and
guidelines. In addition, the Governance and Nominating Committee is
responsible for identifying individuals qualified to become Board members,
considering the candidates recommended by shareholders for Board membership, and
recommending to the Board the director nominees for election at the next Annual
Meeting of Shareholders. It manages the Board’s annual review of its
performance and recommends director candidates for each committee for
appointment by the Board. The procedures of the Governance and
Nominating Committee required to be disclosed by the rules of the Securities and
Exchange Committee are set forth below.
Governance
and Nominating Committee Procedures
Minimum
Qualifications. The Governance and Nominating Committee has
adopted a set of criteria that it considers when it selects individuals to be
nominated for election to the Board of Directors. A candidate must
meet the eligibility requirements set forth in the Company’s Articles of
Incorporation and Bylaws (including an age restriction), and must meet any
qualification requirements set forth in any Board or committee governing
documents. In particular, to encourage directors to demonstrate
confidence and support of the Company, the Board of Directors has adopted a
stock ownership requirement whereby each outside director, within 12 months of
appointment, own Company common stock having a value equal to the lesser of
three times the annual cash retainer or 1,000 shares.
The Governance and Nominating Committee
will consider the following criteria in selecting nominees for initial election
or appointment to the Board: financial, regulatory and business experience;
familiarity with and participation in the local community; integrity, honesty
and reputation; dedication to the Company and its shareholders; independence;
and any other factors the Governance and Nominating Committee deems relevant,
including age, diversity, geographies, size of the Board of Directors and
regulatory disclosure obligations.
In addition, prior to nominating an
existing director for re-election to the Board of Directors, the Governance and
Nominating Committee will consider and review an existing director’s Board and
committee attendance and performance; length of Board service; experience;
skills and contributions that the existing director brings to the Board; and
independence.
Process for
Identifying and Evaluating Nominees. The process the Governance and
Nominating Committee follows when it identifies and evaluates individuals to be
nominated for election to the Board of Directors is as follows:
Identification. For
purposes of identifying nominees for the Board of Directors, the Governance and
Nominating Committee relies on personal contacts of the committee and other
members of the Board of Directors as well as its knowledge of members of the
Bank’s local communities. The Governance and Nominating Committee
will also consider director candidates recommended by shareholders in accordance
with the policy and procedures set forth above. The Governance and
Nominating Committee has not previously used an independent search firm in
identifying nominees.
Evaluation. In
evaluating potential nominees, the Governance and Nominating Committee
determines whether the candidate is eligible and qualified for service on the
Board of Directors by evaluating the candidate under the selection criteria set
forth above. In addition, the Governance and Nominating Committee
will conduct a check of the individual’s background and interview the
candidate.
Consideration of
Recommendations by Shareholders. It is the policy of the
Governance and Nominating Committee of the Board of Directors of the Company to
consider director candidates recommended by shareholders who appear to be
qualified to serve on the Company’s Board of Directors. The
Governance and Nominating Committee may choose not to consider an unsolicited
recommendation if no vacancy exists on the Board of Directors and the Governance
and Nominating Committee does not perceive a need to increase the size of the
Board of Directors. In order to avoid the unnecessary use of the
Governance and Nominating Committee’s resources, the Governance and Nominating
Committee will consider only those director candidates recommended in accordance
with the procedures set forth below.
Procedures to be
Followed by Shareholders. To submit a recommendation of a
director candidate to the Governance and Nominating Committee, a shareholder
should submit the following information in writing, addressed to the Secretary
of the Company at the main office of the Company:
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1.
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The
name and address of the person recommended as a director
candidate;
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2.
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All
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors pursuant to Regulation
14A under the Securities Exchange Act of 1934, as
amended;
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3.
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The
written consent of the person being recommended as a director candidate to
be named in the Proxy Statement as a nominee and to serve as a director if
elected;
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4.
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As
to the person making the recommendation, the name and address, as they
appear on the Company’s books, of such person, and number of shares of
common stock of the Company owned by such person; provided, however, that
if the person is not a registered holder of the Company’s common stock,
the person should submit his or her name and address along with a current
written statement from the record holder of the shares that reflects the
recommending person’s beneficial ownership of the Company’s common stock;
and
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5.
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A
statement disclosing whether the person making the recommendation is
acting with or on behalf of any other person and, if applicable, the
identity of such person.
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In order for a director candidate to be
considered for nomination at the Company’s Annual Meeting of Shareholders, the
recommendation must be received by the Governance and Nominating Committee at
least 120 calendar days prior to the date the Company’s Proxy Statement was
released to shareholders in connection with the previous year’s Annual Meeting,
advanced by one year.
Meetings
of the Board of Directors
The Board of Directors oversees all of
the Company’s business, property and affairs. The Chairman of the
Board and the executive officers keep the members of the Board informed of the
Company’s business through discussions at Board meetings and by providing them
reports and other materials. During 2008, the Company’s Board of
Directors held twelve regular meetings. Each of the directors
attended at least 75% of aggregate of the total number of meetings of the Board
and the total number of meetings held by all committees of the Board on which he
or she served.
Meetings of the Advisory
Board
Advisory boards are composed of well
respected people from the community, the office manager and a non-voting member
of the Board of Directors. The Board member serves as a communication
link to share, with the advisory board, the appropriate information occurring at
Board of Directors’ meetings, as well as communicating to the Board of Directors
advisory board issues and suggestions. Advisory boards meet
monthly. A fee of $185 is paid for attendance at the monthly advisory
board meeting.
Attendance
at the Annual Meeting
The Company expects its directors to
attend annual meetings of shareholders. All directors attended
the 2008 Annual Meeting of Shareholders.
STOCK
OWNERSHIP
The following table sets forth, as of
March 2, 2009, the name and address of each person who owns of record or who is
known by the Board of Directors to be the beneficial owner of more than 5% of
the Company’s outstanding common stock, the number of shares beneficially owned
by such person and the percentage of the Company’s outstanding common stock so
owned. A person or entity may be considered to beneficially own any
shares of common stock over which the person or entity has, directly or
indirectly, sole or shared voting or investing power.
Name
and Address
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Number
of Shares
Beneficially
Owned
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Percent
of Outstanding
Common
Stock
Beneficially
Owned
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R.
Lowell Coolidge
Post
Office Box 41
Wellsboro,
Pennsylvania 16901
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172,808(1)
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6.1%
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(1)
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Includes
34,821 shares held by Mr. Coolidge’s
spouse.
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The following table sets forth the
information concerning the number of shares of Company common stock beneficially
owned, as of March 2, 2009, by each present director, nominee for director,
named executive officer in the compensation table set forth elsewhere herein and
by all directors and executive officers as a group. A person may be considered
to beneficially own any shares of common stock over which he or she has,
directly or indirectly, sole or shared voting or investment
power. Unless otherwise indicated, none of the shares listed are
pledged as security, and each of the named individuals has sole voting power and
sole investment power with respect to the number of shares shown.
Name
of Beneficial Owner
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Amount
and Nature of
Beneficial
Ownership
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Percent
of Class
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Randall
E. Black
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7,191(1)
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*
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Robert
W. Chappell
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3,181(2)
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*
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R.
Lowell Coolidge
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172,808(3)
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6.1%
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Mark
L. Dalton
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1,295
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*
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Rinaldo
A. DePaola
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2,225(4)
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*
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Roger
C. Graham, Jr.
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24,411
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*
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Mickey
L. Jones
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1,844(5)
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*
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E.
Gene Kosa
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1,451(6)
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*
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R.
Joseph Landy
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9,817(7)
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*
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Terry
B. Osborne
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3,246(8)
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*
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Carol
J. Tama
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78,424(9)
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2.8%
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Rudolph
J. van der Hiel
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15,694(10)
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*
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Executive
Officers and Directors as a Group (16 persons)
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328,144(11)
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11.6%
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* Less
than 1%.
(1)
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Mr.
Black beneficially owns 1,007 shares individually, 3,995 shares jointly
with his spouse and 256 shares are held by his spouse. Also
includes 1,933 shares of restricted stock for which Mr. Black has voting
but not investment power.
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(2)
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Mr.
Chappell beneficially owns 1,485 shares individually, 923 shares jointly
with his mother, and his remaining 773 shares are hold jointly with a
friend.
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(3)
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Includes
34,821 shares held by Mr. Coolidge’s
spouse.
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(4)
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Mr.
DePaola beneficially owns 2,022 shares jointly with his spouse, and his
remaining 203 shares are held by his spouse as custodian for their
son.
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(5)
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Mr.
Jones beneficially owns 417 shares and 500 shares are held by his
spouse. Also includes 927 shares of restricted stock for which
Mr. Jones has voting but not investment
power.
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(6)
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Mr. Kosa beneficially owns 1,374 shares
jointly with his spouse, 57 shares in an investor club, and his remaining
20 shares are held by his spouse.
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(7)
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Mr.
Landy beneficially owns 6,241 shares individually, 3,187 jointly with his
spouse, and his remaining 389 shares are held as custodian for a
child.
|
(8)
|
Mr.
Osborne beneficially owns 48 shares individually, 1,737 shares jointly
with his spouse and 143 shares are held by his spouse. Also
includes 1,318 shares of restricted stock for which Mr. Osborne has voting
but not investment power.
|
(9)
|
Includes
673 shares held in a partnership.
|
(10)
|
Mr.
van der Hiel beneficially owns 14,070 shares individually, 22 shares
jointly with his spouse, and his remaining 1,602 shares are held by his
spouse.
|
(11)
|
Includes
1,735 shares of restricted stock beneficially owned by executive officers
not individually listed in the table for which the executive officer has
voting but not investment power.
|
PROPOSAL
1. ELECTION OF DIRECTORS
The Company’s Board of Directors
consists of ten members. The Board is divided
into three classes with three-year staggered terms, known as Class 1, Class 2
and Class 3. The Class 3 directors elected at
this Annual Meeting will serve for three-year terms. The Class
2 and Class 1 directors will continue to serve for one and two years,
respectively, in order to complete their three-year terms.
The Board of Directors fixed the number
of directors in Class 3 at four and has nominated E. Gene Kosa, R. Joseph Landy,
Roger C. Graham, Jr. and Robert W. Chappell for election as Class 3 directors to
hold office for three-year terms to expire at the 2012 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified. These nominees are currently directors of the
Company.
Unless you indicate on your proxy card
or by vote via the Internet that your shares should not be voted for certain
nominees, the Board of Directors intends that the proxies solicited by it will
be voted for the election of all of the Board’s nominees. If any
nominee is unable to serve, the persons named on the proxy card would vote your
shares to approve the election of any substitute nominee proposed by the Board
of Directors. At this time, the Board of Directors knows of no reason
why any nominees might be unable to serve.
The
Board of Directors recommends that you vote “FOR” the election of the Board’s
nominees.
Information
regarding the Board of Directors’ nominees and the directors continuing in
office is provided below.
Nominees
for Election as Class 3 Directors – Terms Expire in 2012
Name
|
|
Age
as of
March
2,
2009
|
|
Principal
Occupation
for
Past Five Years
|
|
Director
Since
Company
(Bank)
|
|
|
|
|
|
|
|
E.
Gene Kosa
|
|
62
|
|
Partner
in EDKO Farms, an agricultural production and service business, located in
Ulysses, PA. Since November 2004 has been operating a
restaurant, GENA Holdings Inc., located in Ulysses, PA.
|
|
2001
(2001)
|
R.
Joseph Landy
|
|
54
|
|
Attorney-at-Law
with the firm of Landy & Landy, located in Sayre, PA.
|
|
2001
(2001)
|
Roger
C. Graham, Jr.
|
|
53
|
|
Retired
Owner of Graham Excavating.
|
|
2001
(2001)
|
Robert
W. Chappell
|
|
42
|
|
Attorney-at-Law
with the firm of van der Hiel, Chappell & Loomis, located in
Mansfield, PA and Rome, PA.
|
|
2006
(2006)
|
Continuing
Class 2 Directors – Terms Expire in 2010
Name
|
|
Age
as of
March
2, 2009
|
|
Principal
Occupation
for
Past Five Years
|
|
Director
Since
Company
(Bank)
|
Rudolph
J. van der Hiel
|
|
69
|
|
As
of August 2005 is in an “of Counsel” capacity for the Law Offices of van
der Hiel, Chappell & Loomis located in Mansfield, PA and Rome, PA.
Part time Episcopal Priest for various churches in Ontario, Canada, and
Pennsylvania. Retired Attorney-at-Law with the Law Offices of
van der Hiel & Chappell, located in Mansfield, PA. and Rome,
PA.
|
|
1984
(1975)
|
Mark
L. Dalton
|
|
54
|
|
Since
November 2008 is an independent Consultant/
Producer
for Gannon Associates, an insurance company, located in Mansfield, PA and
Towanda, PA. From November 2003 to October 2008 was an Agent/
Broker with Gannon Associates.
|
|
1998
(1997)
|
Continuing
Class 1 Directors – Terms Expire in 2011
Name
|
|
Age
as of
March
2,
2009
|
|
Principal
Occupation
for
Past Five Years
|
|
Director
Since
Company
(Bank)
|
Carol
J. Tama
|
|
68
|
|
Retired
President of Monaghan Transportation Company.
|
|
1986
(1984)
|
R.
Lowell Coolidge
|
|
68
|
|
Attorney-at-Law
with the firm of Walrath and Coolidge, located in Wellsboro,
PA.
|
|
1984
(1984)
|
Randall
E. Black
|
|
42
|
|
Since
April 2004 has been Chief Executive Officer and President of the Company
and the Bank. Prior to April 2004, was the Chief Financial
Officer for the Bank.
|
|
2004
(2004)
|
Rinaldo
A. DePaola
|
|
53
|
|
Attorney-at-Law
with the firm of Griffin, Dawsey, DePaola & Jones, located in Towanda,
PA.
|
|
2006
(2006)
|
Executive
Officers Who Are Not Directors
Name
|
|
Age
as of
March
2,
2009
|
|
Principal
Occupation
for
Past Five Years
|
Gregory
J. Anna
|
|
47
|
|
Vice
President, Technology & Operations since 2008. Prior to
2008 was Assistant Vice President, Data Operations Manager for the Bank
since 2002. Mr. Anna is the husband of Kathleen M.
Campbell.
|
Kathleen
M. Campbell
|
|
48
|
|
Senior
Vice President, Marketing and Training Manager for the Bank since
2002. Ms. Campbell is the wife of Gregory J.
Anna.
|
Mickey
L. Jones
|
|
48
|
|
Since
June 2004 has been Senior Vice President, Chief Financial Officer and
Treasurer of the Company and Bank. In 2007 was named Executive
Vice President, Chief Financial Officer for the Company and
Bank. Previously was Director of Finance and Claims for
Keystone Health Plan Central, Inc.
|
Robert
B. Mosso
|
|
38
|
|
Vice
President, Wealth Management Division Manager since 2004. Prior
to 2004 was a Trust Officer for the Bank. President of First
Citizens Insurance Agency, Inc.
|
Terry
B. Osborne
|
|
55
|
|
Executive
Vice President and Secretary of the Company and Bank since December 1991
and September 1983, respectively.
|
Cynthia
T. Pazzaglia
|
|
50
|
|
Vice
President, Human Resources Manager for the Bank since
1999.
|
Executive
officers are elected annually and serve at the discretion of the
Board.
PROPOSAL
2. RATIFICATION OF INDEPENDENT REGISTERED
PUBLIC
ACCOUNTING FIRM
The Audit and Examination Committee of
the Board of Directors has appointed S.R. Snodgrass, A.C. to be the Company’s
independent registered public accounting firm for the 2009 fiscal year, subject
to ratification by shareholders. A representative of S.R. Snodgrass,
A.C. will be present at the Annual Meeting to respond to appropriate questions
from shareholders and will have the opportunity to make a statement should he or
she desire to do so.
If ratification of the appointment of
the auditor is not approved by a majority of the votes cast by shareholders at
the Annual Meeting, other independent registered public accounting firms will be
considered by the Audit and Examination Committee of the Board of
Directors.
The Board of Directors recommends that
you vote “FOR” ratification of the appointment of S.R. Snodgrass, A.C. as the
Company’s independent registered public accounting firm for fiscal year
2009.
Audit
Fees
The following table sets forth the fees
billed to the Company for the fiscal years ending December 31, 2008 and
2007, respectively, by S.R. Snodgrass, A.C., Certified Public
Accountants:
|
Year
Ended December 31,
|
|
2008
|
|
2007
|
Audit
Fees (1)
|
$77,575
|
|
$81,933
|
Audit-Related
Fees
|
$0
|
|
$0
|
Tax
Fees (2)
|
$10,000
|
|
$10,500
|
All
Other Fees (3)
|
$45,651
|
|
$48,741
|
TOTAL
|
$133,225
|
|
$141,174
|
(1)
|
Audit
fees consist of fees for professional services rendered for the audit of
the Company’s financial statements and review of financial statements
included in the Company’s quarterly reports and services normally provided
by the independent registered public accounting firm in connection with
statutory and regulatory filings or
engagements.
|
(2)
|
Tax
fees consist of compliance fees for the preparation of original tax
returns. Tax fees also include fees relating to other tax
advice, tax consulting and
planning.
|
(3)
|
Other
services consisted primarily of consulting services for the facilitating
of strategic planning meetings and regulatory compliance
reviews.
|
Policy
on Audit and Examination Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Auditing Firm
The Audit and Examination Committee is
responsible for appointing and overseeing the work of the independent auditing
firm. In accordance with its charter, the Audit and Examination
Committee approves, in advance, all audit and permissible non-audit services to
be performed by the independent auditing firm. Such approval process
ensures that the external auditor does not provide any non-audit services to the
Company that are prohibited by law or regulation.
In addition, the Audit and Examination
Committee has established a policy regarding pre-approval of audit and
permissible non-audit services provided by the independent auditing
firm. Management’s requests that particular services by the
independent auditing firm be pre-approved under the auditor services policy must
be specific as to the particular services to be provided.
The request may be made with respect to
either specific services or a type of service for predictable or recurring
services.
During the year ended December 31,
2008, all audit and non-audit services were approved, in advance, by the Audit
and Examination Committee in compliance with these procedures.
Report
of Audit and Examination Committee
The Audit and Examination Committee met
with management periodically during the year to consider the adequacy of the
Company’s internal controls and the objectivity of its financial reporting. The
Audit and Examination Committee discussed these matters with the Company’s
independent auditing firm and with appropriate Company financial personnel and
internal auditors. The Audit and Examination Committee also discussed with the
Company’s senior management and independent registered public accounting firm
the process used for certifications by the Company’s Chief Executive Officer and
Chief Financial Officer which are required for certain Company filings with the
Securities and Exchange Commission.
The Audit and Examination Committee
meets with the independent auditing firm, the internal auditors, the Chief
Financial Officer and the Risk/Compliance Officer on a number of occasions, each
of whom has unrestricted access to the Audit and Examination
Committee.
The Audit and Examination Committee
appointed S.R. Snodgrass, A.C. as the independent registered public accounting
firm for the Company after reviewing the firm’s performance and
independence.
Management has primary responsibility
for the Company’s financial statements and the overall reporting process,
including the Company’s system of internal controls.
The independent registered public
accounting firm audited the annual financial statements prepared by management,
expressed an opinion as to whether those financial statements fairly present the
financial position, results of operations and cash flows of the Company in
conformity with U.S. generally accepted accounting principles and discussed with
the Audit and Examination Committee any issues the independent auditing firm
believed should be raised with the Audit and Examination Committee.
The Audit and Examination Committee
reviewed with management and S.R. Snodgrass, A.C. the Company’s audited
financial statements and met separately with both management and S.R. Snodgrass,
A.C. to discuss and review those financial statements and reports prior to
issuance. Management has represented, and S.R. Snodgrass, A.C. has
confirmed, to the Audit and Examination Committee, that the financial statements
were prepared in accordance with U.S. generally accepted accounting
principles.
The Audit and Examination Committee has
received the written disclosures and the letter from S.R. Snodgrass, A.C.
required by applicable requirements of the Public Company Accounting Oversight
Board regarding S.R. Snodgrass, A.C.’s communications with the Audit and
Examination Committee concerning independence, and has discussed with S.R.
Snodgrass, A.C. its independence. The Audit and Examination Committee
also discussed with S.R. Snodgrass, A.C., Certified Public Accountants, matters
required to be discussed by the Statement on Auditing Standards No. 61, as
amended (AICPA, Professional Standards, Vo. 1. AU Section 380), as adopted by
the Public Company Accounting Oversight Board in Rule 3200T. The
Audit and Examination Committee implemented a procedure to monitor auditor
independence, reviewed audit and non-audit services performed by S.R. Snodgrass,
A.C., Certified Public Accountants, and discussed with the auditors their
independence.
In reliance on these reviews and
discussions referred to above, the Audit and Examination Committee recommended
to the Board of Directors that the Company’s audited financial statements be
included in the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, for filing with the Securities and Exchange
Commission. The Audit and Examination Committee and the Board have
also recommended the selection of S.R. Snodgrass, A.C., Certified Public
Accountants, as the Company’s independent registered public accounting firm for
the year ending December 31, 2009.
The Audit
and Examination Committee
of
Citizens Financial Services, Inc. and First Citizens National Bank
E. Gene
Kosa (Chairman)
Carol J.
Tama
Roger C.
Graham, Jr.
EXECUTIVE
AND DIRECTOR COMPENSATION
Summary
Compensation Table
The following table sets forth
information for the year ended December 31, 2008, concerning the
compensation of the Company’s principal executive officer and its two other most
highly compensated executive officers (or executive officers of its
subsidiaries) whose compensation was $100,000 or more who served in such
capacities at December 31, 2008 (the “Named Executive
Officers”).
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)(1)
|
Non-Equity
Incentive
Plan
Compensation ($)(2)
|
All
Other
Compensation
($)
|
Total
($)
|
Randall
E. Black
CEO
& President of
the
Company and
Bank
|
2008
2007
|
$181,731
$163,000
|
-
$12,000
|
$13,614
$3,710
|
$33,245
$17,978
|
$13,508
$11,129
|
$242,098
$207,817
|
Terry
B. Osborne
Executive
Vice President & Secretary of the Company and the Bank
|
2008
2007
|
$155,475
$146,155(3)
|
-
$1,553
|
$10,171
$3,171
|
$18,916
$13,913
|
$8,091
$6,158
|
$192,653
$170,950
|
Mickey
L. Jones
Executive
Vice President, CFO & Treasurer of the Company and Bank
|
2008
2007
|
$124,615
$112,000
|
-
$5,000
|
$6,926
$2,289
|
$14,607
$10,364
|
$5,980
$4,391
|
$152,128
$134,044
|
(1)
|
Reflects
the compensation expense recognized for financial statement reporting
purposes in accordance with FAS 123(R) for shares of restricted
stock. For information on the assumptions used in the valuation
of the stock awards, see Note 10 to the Notes to the Financial Statements
contained in the Company’s Annual Report on Form
10-K.
|
(2)
|
Represents
payments made to each executive under the Bank’s performance based annual
incentive plan.
|
(3)
|
Includes
$4,500 for services as Corporate Secretary at Company and Bank board
meetings.
|
Employment
Agreement
On December 16, 2005, the Company
and the Bank entered into an employment agreement with Randall E. Black, Chief
Executive Officer and President of the Company and the Bank. The
employment agreement was amended and restated on September 19,
2006. The employment agreement provides for a three-year term, which
automatically renews on June 1st of each
year to maintain a three-year term, unless either party notifies in writing the
other party at least 90 days prior to June 1st of such
party’s intent not to renew the agreement beyond the existing term, or the
agreement is terminated by the Company or the Bank for cause, death or
disability or if the agreement is terminated by Mr. Black. Under
the employment agreement, Mr. Black’s current base salary is $210,000,
which may be increased in the future. The base salary is reviewed
annually, but may not be reduced below the base salary in effect at the time of
such review. In addition to base salary, the employment agreement
provides for, among other things, participation in various employee benefit
plans as well as furnishing certain fringe benefits available to
similarly-situated executive personnel.
The employment agreement provides for
termination by the Company or the Bank for cause (as described in the agreement)
at any time, death or disability. If Mr. Black is terminated for
cause, the Company shall pay Mr. Black his full annual base salary through
the date of termination at the rate in effect at the time of termination and the
Company and Bank shall have no further obligation to Mr. Black under the
agreement. If Mr. Black is terminated due to a disability, Mr. Black
shall be entitled to the same benefit as provided by the Company’s long term
disability plan. Upon Mr. Black’s death, the employment agreement
terminates automatically. In the event that the Company or the Bank
chooses to terminate Mr. Black’s employment for reasons other than for
cause or, in the event of Mr. Black’s resignation from the Company or the
Bank for good reason, the Company shall pay Mr. Black a lump sum amount
equal to and no greater than two times Mr. Black’s base salary minus
applicable taxes and withholdings. If such termination had occurred
on December 31, 2008, Mr. Black would have been entitled to receive $350,000
(minus taxes and withholdings). In addition, for a period of one year
from the date of termination, Mr. Black shall receive a continuation of
health care, life and disability insurance in effect during the one year prior
to his termination.
Under the agreement, if Mr. Black
delivers a notice of termination following a change in control (as defined in
the agreement), Mr. Black shall be entitled to receive a lump sum amount
equal to 2.99 times Mr. Black’s base salary. If such termination
had occurred on December 31, 2008, Mr. Black would have been entitled to receive
$523,250 (minus taxes and withholdings). In addition, for a period of
one year from the date of termination or until Mr. Black secures substantially
similar benefits through other employment, whichever shall occur first,
Mr. Black shall receive a continuation of health care, life and disability
insurance in effect during the one year prior to his termination.
The employment agreement provides for
non-competition and non-solicitation (as described in the agreement) during the
term of Mr. Black’s employment or for one year following the date of
termination, as well as a restrictive covenant period (as described in the
agreement), with the exception being Mr. Black may engage in the practice of
public accounting.
Retirement
Benefits
Supplemental
Executive Retirement Agreement. On October 21, 2008, the Bank
entered into a supplemental executive retirement agreement (the “SERP”) with its
Chief Executive Officer and President, Randall E. Black, its Executive Vice
President, Chief Financial Officer and Treasurer, Mickey L. Jones, and its
Executive Vice President and Secretary, Terry B. Osborne (collectively the
“executives”). The SERP is effective as of January 1, 2008.
The SERP
provides the executives with an annual retirement benefit, for 15 years,
following separation from service (other than for cause) on or after attaining
age 62. This retirement benefit equals a benefit percentage (16.4% for Mr.
Black, 14.7% for Mr. Osborne and 13.6% for Mr. Jones) multiplied by the average
annual cash compensation during the three completed calendar years preceding the
termination of employment. Subject to the terms of the SERP, the
executive may elect to receive the retirement benefit in an actuarially
equivalent lump sum payment.
If the
executive separates from service prior to age 62 for reasons other than death,
disability, termination for cause or following a change in control, he would
receive the vested early retirement benefit based on the extent to which the
annual retirement benefit described above should be accrued by the Bank under
generally accepted accounting principles as of the date of termination. If the
executive terminates employment due to disability, this benefit will be fully
vested. If the executive separates from service due to death or
following a change-in-control of the Company but before the executive attains
age 62, he or his beneficiary will receive the normal retirement benefit,
regardless of his age at the time of separation from service or
death.
Incentive
Plan
During 2007, the Bank redesigned its
performance-based annual incentive plan (the “Plan”) in order to align the
incentive goals with the overall strategic plan. For all employees,
the Plan has three components: corporate; departmental / branch; and
individual. For 2008, corporate goals consisted of return on equity
compared with a regionalized peer group (“Peer Group”), earnings per share
growth compared to the Peer Group as well as internally developed targets,
efficiency ratio targets and regulatory performance
measurements. Departmental / branch objectives included various
measures, most notably loan and deposit growth, and branch profitability
targets. The individual component was based upon the individual
employee’s performance appraisal. The Plan’s components have varying
weights assigned based upon job function. Each job function is
categorized into one of seven different tiers. Each tier has
different award opportunities based upon job categorization.
On
December 17, 2008, approximately fifty percent of the estimated incentive was
paid to employees using data and compensation through October 31,
2008. The remaining incentive will be paid to employees in the
first half of 2009 based upon actual results through December 31, 2008 for
the Company as well as the Peer Group. Management’s incentive is
based on the same criteria, except for different award opportunities and
weighting of components as noted above. Additionally, a portion of
Management’s incentive can be in the form of restricted stock at the discretion
of the Board of Directors.
Outstanding
Equity Awards
The
following table sets forth information concerning stock awards that have not
vested at December 31, 2008 for each of the Named Executive
Officers.
|
Stock
Awards
|
Name
|
|
Number
of Shares
or
Units of Stock
That
Have Not
Vested
(#)
|
|
Market
Value of Shares
or
Units of Stock
That
Have Not
Vested
($) (1)
|
Randall
E. Black
|
|
1,933(2)
|
|
$37,694
|
Mickey
L. Jones
|
|
927(3)
|
|
$18,077
|
Terry
B. Osborne
|
|
1,318(4)
|
|
$25,701
|
(1)
|
Based
upon the Company’s closing stock price of $19.50 on December 31,
2008.
|
(2)
|
Includes
1,445 shares that vest in three equal annual installments commencing on
April 30, 2009 and 488 shares that vest in two equal annual installments
on May 11, 2009 and May 11, 2010.
|
(3)
|
Includes
627 shares that vest in three equal annual installments commencing on
April 30, 2009 and 300 shares that vest in two equal annual installments
on May 11, 2009 and May 11, 2010.
|
(4)
|
Includes
818 shares that vest in three equal annual installments commencing on
April 30, 2009, 406 shares that vest in two equal annual installments on
May 11, 2009 and May 11, 2010, and 94 shares that vest in two equal annual
installments on December 18, 2009 and December 18,
2010.
|
2006
Restricted Stock Plan
In 2006
we adopted, and our shareholders approved, the 2006 Restricted Stock Plan (the
"Plan"). Pursuant to the Plan we may make awards of restricted stock
to employees and non-employee directors. The purpose of these stock
awards is to attract and retain competitively superior people, further align
employees and non-employee directors with shareholder interests, closely link
employee and non-employee compensation with our performance, and maintain high
levels of executive and non-employee director stock ownership. It is
our intent to use the grant of restricted stock under the Plan as the primary
vehicle for providing long-term incentive compensation opportunities to the
Named Executive Officers and for aligning their interests with those of our
shareholders. In general, vesting of restricted stock awards under
the Plan is tied to continued service and/or satisfaction of performance
goals. The Compensation/Human Resource Committee develops its
restricted stock award determinations based, in part, on its judgment about
whether the complete compensation package provided to the Named Executive
Officers is sufficient to retain, motivate and adequately reward
them.
In
general restricted stock awarded under the Plan to a participant will become
exercisable/fully vested upon the occurrence of a “change in control” or upon
the participant’s death, "disability" or “retirement” (as such terms are defined
in the Plan). In addition, if it deems it equitable under the
circumstances, the Compensation/Human Resource Committee may accelerate or waive
any service requirement in the event that a participant terminates employment
before such service requirement has been satisfied. In general, the
committee may not accelerate or waive performance-based vesting
requirements.
Compensation
of Directors
The following table sets forth
information concerning the compensation of non-employee directors during the
year ended December 31, 2008.
Name
|
Fees
Earned or
Paid
in Cash
($)
|
Stock
Awards
($)(1)
|
All
Other
Compensation
($)
|
Total
($)
|
Robert
W. Chappell
|
$23,110
|
$2,250
|
$205
|
$25,565
|
R.
Lowell Coolidge
|
$36,828
|
$2,250
|
$205
|
$39,283
|
Mark
L. Dalton
|
$23,310
|
$2,250
|
$205
|
$25,765
|
Rinaldo
A. DePaola
|
$20,935
|
$2,250
|
$205
|
$23,390
|
Roger
C. Graham, Jr.
|
$24,425
|
$2,250
|
$2,236
|
$28,911
|
E.
Gene Kosa
|
$23,700
|
$2,250
|
$1,602
|
$27,552
|
R.
Joseph Landy
|
$24,000
|
$2,250
|
$1,478
|
$27,728
|
Carol
J. Tama
|
$26,858
|
$2,250
|
$205
|
$29,313
|
Rudolph
J. van der Hiel
|
$22,765
|
$2,250
|
$205
|
$25,220
|
(1)
|
These
amounts represent the compensation expense recognized for financial
reporting purposes in accordance with FAS 123(R) on stock awards for each
director. The amounts were calculated based upon the Company’s
stock price of $22.50 on the date of
grant.
|
The foregoing table reflects the
following arrangements:
Fees. Directors,
except for Directors Coolidge, Tama and Black, received the following fees for
services to the Company and the Bank: $300 for attended board meeting, strategic
retreat or training session; $12,750 annual retainer; $125 per attended
committee meeting; $100 for participation in a Board conference call; and $185
for attended advisory board meeting. Additionally, committee
chairpersons receive a $500 retainer, except
for Director Kosa who receives a $1,200 retainer as Audit and Examination
Committee chairman. Director Dalton receives a $3,000 retainer for
building/property guidance. Mr. Coolidge, who serves as the
Company’s and the Bank’s Chairman, and Mrs. Tama, who serves as the Company’s
and Bank’s Vice Chairman, received a fixed annual sum of $35,348 and $25,008,
respectively, in lieu of all director’s fees in 2008. Directors
Coolidge and Tama also receive the advisory board fee of $185 per attended
meeting.
Deferred
Compensation Plan. Directors are permitted to defer their fees
subject to provisions of the director’s deferred compensation
plan. The plan provides for the Bank to distribute funds to a
director whenever he or she is no longer a member of the Board.
Life
Insurance. In addition to these fees, each director is
provided a $100,000 life insurance benefit. Once a director retires,
insurance coverage continues but the benefit declines as the age of the retired
director increases. Total premiums paid in 2008 for life insurance on
behalf of the current and retired directors was $2,494.
Stock
Grants/Awards. Pursuant to our 2006 Restricted Stock Plan,
non-employee directors are eligible to receive an annual stock grant based on
Company and Bank performance. In 2008, each non-employee director
received 100 shares.
OTHER
INFORMATION RELATING TO DIRECTORS AND EXECUTIVE OFFICERS
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities
Exchange Act of 1934, as amended, requires the Company’s officers and directors,
and persons who own more than 10% of the Company’s common stock, to file reports
of ownership and changes of ownership with the Securities and Exchange
Commission. Executive officers, directors and greater than 10%
shareholders are required by regulation to furnish the Company with copies of
all Section 16(a) reports they file.
Based solely on the Company’s review of
the copies of the reports it has received and written representations provided
to it from the individuals required to file the reports, the Company believes
that each of its executive officers and directors has complied with applicable
reporting requirements for transactions in the Company’s common stock during the
year ended December 31, 2008, except that Rinaldo A. DePaola filed late one
Form 4 for two transactions.
Transactions
with Management
Loans and
Extensions of Credit. During 2008 certain directors, nominees,
and executive officers or their associates received loans or commitments from
the Bank. These transactions were made in the ordinary course of the
Bank's business and on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
unrelated persons and did not involve more than the normal risk of
collectability or present other unfavorable features. Total loans
outstanding from the Bank at December 31, 2008, to the Company’s officers,
directors and nominees as a group and members of their immediate families and
companies in which they had an ownership interest of 5% or more was $3,163,763,
or approximately 5.8% of the total equity capital of the Bank. The
aggregate amount of indebtedness outstanding as of the latest practicable
date, March 2,
2009, to the above described group was $2,856,581.
The Company's policies require that any
loan to a director that would cause his/her aggregate loan relationship to
exceed $200,000 must be approved in advance by a majority of the disinterested
members of the Board of Directors. Any loan to an executive officer
in the aggregate greater than $100,000 must be approved in advance by a majority
vote of the Board of Directors.
SUBMISSION
OF SHAREHOLDER PROPOSALS
Shareholder
Proposals for Inclusion in Proxy Statement. The Company must
receive proposals that shareholders seek to include in the Proxy Statement for
the Company’s next Annual Meeting no later than November 12,
2009. If next year’s Annual Meeting is held on a date more than 30
calendar days from April 21, 2010, a shareholder proposal must be received
by a reasonable time before the Company begins to print and mail its proxy
solicitation for such Annual Meeting. Any shareholder proposals will
be subject to the requirements of the proxy rules adopted by the Securities and
Exchange Commission.
SHAREHOLDER
COMMUNICATIONS
The Company encourages shareholder
communications to the Board of Directors and/or individual
directors. Communications regarding financial or accounting policies
may be made to the Chairman of the Audit and Examination Committee, E. Gene
Kosa, at First Citizens National Bank, 15 South Main Street, Mansfield,
Pennsylvania 16933. Other communications to the Board of Directors
may be made to the Chairman of the Governance and Nomination Committee, Mark L.
Dalton, at First Citizens National Bank, 15 South Main Street, Mansfield,
Pennsylvania 16933. Communications to individual directors may be
made to such director at the principal office at First Citizens National Bank,
15 South Main Street, Mansfield, Pennsylvania 16933.
MISCELLANEOUS
The Company will pay the cost of this
proxy solicitation. 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 Company common
stock. In addition to soliciting proxies by mail, directors, officers
and regular employees of the Company may solicit proxies personally, by email or
by telephone without receiving additional compensation.
A COPY OF THE COMPANY’S ANNUAL REPORT
ON FORM 10-K, WITHOUT EXHIBITS, FOR THE YEAR ENDED DECEMBER 31, 2008, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT
CHARGE TO PERSONS WHO WERE SHAREHOLDERS AS OF THE CLOSE OF BUSINESS ON MARCH 2,
2009 UPON WRITTEN REQUEST TO MICKEY L. JONES, TREASURER, CITIZENS FINANCIAL
SERVICES, INC., 15 SOUTH MAIN STREET, MANSFIELD, PENNSYLVANIA
16933-1590.
If you and others who share your
address own shares in street name, your broker or other holder of record may be
sending only one Annual Report on Form 10-K and Proxy Statement to your
address. This practice, known as “householding,” is designed to
reduce our printing and postage costs. However, if a shareholder
residing at such an address wishes to receive a separate Annual Report on Form
10-K or Proxy Statement in the future, he or she should contact the broker or
other holder of record. If you own your shares in street name and are
receiving multiple copies of our Annual Report on Form 10-K and Proxy Statement,
you can request householding by contacting your broker or other holder of
record.
Our proxy materials are available over
the Internet. Go to the Website https://www.shareholderaccountingsoftware.com/tspweb/fcnb/pxsignon.asp,
enter your 12 digit control number and click the Reports button to view our
proxy materials. Alternatively, you may visit www.firstcitizensbank.com
and click on Investor Relations.
BY ORDER
OF THE BOARD OF DIRECTORS
/s/ Randall E. Black
Randall
E. Black
CHIEF
EXECUTIVE OFFICER AND PRESIDENT
Mansfield,
Pennsylvania
March 12,
2009
CITIZENS
FINANCIAL SERVICES, INC.
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The
shareholder signing this proxy card appoints Terry B. Osborne and Robert B.
Mosso, or either of them acting in the absence of the other, as proxyholders,
each with the power to appoint his substitute, and authorizes them to represent
and to vote, as designated below, all of the shares of the common stock, $1.00
par value per share, of Citizens Financial Services, Inc. that the shareholder
holds of record on March 2, 2009, at the Annual Meeting of Shareholders of
Citizens Financial Services, Inc. to be held on April 21, 2009, and at any
adjournment thereof.
THIS
PROXY, WHEN PROPERLY SIGNED AND DATED BY YOU, WILL BE VOTED IN THE MANNER YOU
DIRECT ON THIS CARD. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE
LISTED NOMINEES IN THE ELECTION OF DIRECTORS, FOR THE PROPOSAL TO
RATIFY ACCOUNTANTS, AND IN THE DISCRETION OF THE PROXYHOLDERS NAMED IN THIS
PROXY, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENT. THIS PROXY ALSO CONFERS DISCRETIONARY AUTHORITY
ON THE BOARD OF DIRECTORS TO VOTE WITH RESPECT TO THE ELECTION OF ANY PERSON AS
DIRECTOR WHERE THE NOMINEES ARE UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE
AND MATTERS INCIDENT TO THE CONDUCT OF THE MEETING.
THIS
PROXY MAY BE REVOKED BY YOU AT ANY TIME BEFORE IT IS VOTED AT THE ANNUAL
MEETING.
PLEASE
COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN
THE ENCLOSED ENVELOPE OR VOTE VIA THE INTERNET.
(Continued,
and to be marked, dated and signed, on the other side)
YOUR
VOTE IS IMPORTANT!
You
can vote in one of two ways:
1.
|
Via
the internet at https://www.shareholderaccountingsoftware.com/tspweb/fcnb/pxsignon.asp
and follow the instructions. Alternatively, you may visit www.firstcitizensbank.com
and click on the Vote Proxy button.
|
or
2.
|
Mark,
sign and date your proxy card and return it promptly in the enclosed
envelope.
|
PLEASE
SEE REVERSE SIDE FOR VOTING INSTRUCTIONS
THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR”
ALL
OF THE MATTERS BELOW.
1. Election
of Class 1 Directors:
NOMINEES:
|
01
– E. Gene Kosa; 02 – R. Joseph Landy; 03 – Roger C. Graham,
Jr.;
04
– Robert W. Chappell
|
[ ]
|
FOR
all nominees listed (except as marked to the contrary
below)
|
|
|
[ ]
|
WITHHOLD
authority to vote for all nominees listed
|
|
|
|
(INSTRUCTION: To
withhold authority to vote for one or more individual nominees, write the
nominees’ names or numbers on the line below.)
|
2.
|
Proposal
to ratify the appointment of S.R. Snodgrass, A.C., Certified Public
Accountants, as independent auditor for the Company for the fiscal year
ending December 31, 2009.
|
[ ]
|
For
|
[ ]
|
Against
|
[ ]
|
Abstain
|
DATE:
_________________,
2009 _____________________________
Signature
_____________________________
Signature
Please
sign exactly as your name appears on the other side of this proxy and print the
date on which you sign the proxy in the spaces provided above. If
signed on behalf of a corporation, please sign in corporate name by an
authorized officer. If signing as a representative, please give full
title as such. For joint accounts, only one owner is required to
sign.
Luncheon
Reservation
To make a reservation for you
and a guest,
please RSVP by April 1, 2009
I will attend
the luncheon, please include my reservation for
person(s)
I will be unable
to attend the luncheon
INSTRUCTIONS
FOR VOTING YOUR PROXY
Shareholders
of record have two alternative ways of voting their proxies: (1) by mail
(traditional method); or (2) by Internet.
Your
Internet vote authorizes the named proxies to vote your shares in the same
manner as if you marked, signed, dated and returned your proxy
card. Please note all votes cast via the Internet must be cast prior
to 3:00 a.m., local time, April 21, 2009.
VOTE BY
INTERNET
It’s
fast, convenient, and your vote is immediately confirmed and
posted.
Follow
these easy steps:
1. Go to the Website https://www.shareholderaccountingsoftware.com/tspweb/fcnb/pxsignon.asp.
Alternatively, you may visit www.firstcitizensbank.com
and click on the Vote Proxy button.
2. Enter your 12 digit control number
located on your Proxy Card [below/reverse
side].
3. Click the Reports button to view our
proxy materials.
4. Click the Vote Proxy button to
vote.
Your
vote is important!
Go to
https://www.shareholderaccountingsoftware.com/tspweb/fcnb/pxsignon.asp
IT IS NOT
NECESSARY TO RETURN YOUR PROXY CARD IF YOU ARE VOTING BY INTERNET
PLEASE
NOTE THAT THE LAST VOTE RECEIVED, WHETHER BY INTERNET OR BY MAIL, WILL BE THE
VOTE COUNTED.