SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-12
Codorus Valley Bancorp, Inc.
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.......................................................
2) Aggregate number of securities to which transaction applies:
.......................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
.......................................................
4) Proposed maximum aggregate value of transaction:
.......................................................
5) Total fee paid:
......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by the
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount Previously Paid:
.......................................................
2) Form, Schedule or Registration Statement No.:
.......................................................
3) Filing Party:
.......................................................
4) Date Filed:
.......................................................
[LETTERHEAD OF CODORUS VALLEY BANCORP, INC.]
April 3, 2003
Dear Fellow Shareholders of Codorus Valley Bancorp, Inc.:
On behalf of the corporation's board of directors, I am pleased to invite you to
attend Codorus Valley Bancorp, Inc.'s Annual Meeting of Shareholders to be held
on Tuesday, May 20, 2003, at 9:00 a.m., Eastern Time. The location of the annual
meeting is the Codorus Valley Corporate Center, 105 Leader Heights Road, York,
Pennsylvania 17403. At the annual meeting, you will have the opportunity to ask
questions and to make comments. Enclosed with the proxy statement and notice of
meeting is your proxy and Codorus Valley Bancorp, Inc.'s 2002 Annual Report to
Shareholders.
The principal business of the meeting is to elect 3 Class A Directors to serve a
term of 3 years and to transact any other business that is properly presented at
the annual meeting. The notice of meeting and proxy statement accompanying this
letter describe the specific business to be acted upon in more detail.
I am delighted that you have invested in Codorus Valley Bancorp, Inc., and I
hope that, whether or not you plan to attend the annual meeting, you will vote
as soon as possible by completing, signing and returning the enclosed proxy in
the envelope provided. The prompt return of your proxy will save Codorus Valley
Bancorp, Inc. expenses involved in further communications. Your vote is
important. Voting by written proxy will ensure your representation at the annual
meeting if you do not attend in person.
I look forward to seeing you on May 20, 2003, at the corporation's annual
meeting.
Sincerely,
/s/ Larry J. Miller
Larry J. Miller, President
and Chief Executive Officer
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF CODORUS VALLEY BANCORP, INC.
TO BE HELD ON MAY 20, 2003
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that Codorus Valley Bancorp, Inc. will hold its Annual
Meeting of Shareholders on Tuesday, May 20, 2003, at 9:00 a.m., Eastern Time,
at the Codorus Valley Corporate Center, 105 Leader Heights Road, York,
Pennsylvania, 17403 to consider and vote upon the following proposals:
1. To elect the following individuals as Class A Directors, each to serve a 3
year term:
o Rodney L. Krebs;
o Dallas L. Smith; and
o George A. Trout, D.D.S.
2. To transact any other business properly presented at the annual meeting.
Shareholders of record as of March 13, 2003 are entitled to notice of the
meeting and may vote at the annual meeting, either in person or by proxy.
Management welcomes your attendance at the annual meeting. Whether or not you
expect to attend the annual meeting in person, we request you complete, sign,
date and promptly return the enclosed proxy in the accompanying postage-paid
envelope. The prompt return of your proxy will save the corporation expenses
involved in further communications. Even if you return a proxy, you may vote
in person if you give written notice to the Secretary of the corporation and
attend the annual meeting. Returning your proxy will ensure that your shares
will be voted in accordance with your wishes and that the presence of a quorum
will be assured.
The corporation's board of directors is distributing the proxy statement, form
of proxy and Codorus Valley Bancorp, Inc.'s 2002 Annual Report to Shareholders
on or about April 3, 2003.
By Order of the Board of Directors,
/s/ Harry R. Swift
Harry R. Swift, Esquire
Secretary
York, Pennsylvania
April 3, 2003
YOUR VOTE IS IMPORTANT.
TO VOTE YOUR SHARES, PLEASE SIGN, DATE AND COMPLETE THE ENCLOSED
PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
CODORUS VALLEY BANCORP, INC.
CODORUS VALLEY CORPORATE CENTER
105 LEADER HEIGHTS ROAD
YORK, PENNSYLVANIA 17403
NASDAQ TRADING SYMBOL: CVLY
PROXY STATEMENT
2003 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 2003
Mailed to Shareholders on or about April 3, 2003
TABLE OF CONTENTS
PROXY STATEMENT PAGE
--------------- ----
GENERAL INFORMATION
Date, Time and Place of the Annual Meeting............................1
Description of Codorus Valley Bancorp, Inc............................1
VOTING PROCEDURES
Solicitation and Voting of Proxies....................................2
Quorum and Vote Required for Approval.................................3
Revocability of Proxy.................................................3
Methods of Voting ....................................................4
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Governance ...........................................................4
Directors and Executive Officers of Codorus
Valley Bancorp, Inc............................................5
Executive Officers of PeoplesBank.....................................5
Committees and Meetings of the Corporation's and
the Bank's Boards of Directors.................................6
Compensation of the Boards of Directors...............................8
Independent Directors' Deferred Compensation Plan.....................8
Independent Directors' Stock Option Plan..............................8
AUDIT COMMITTEE REPORT ......................................................9
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
Compensation Committee Report........................................10
Chief Executive Officer's Compensation...............................11
Executive Officers' Compensation.....................................12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
Participation...............................................................12
EXECUTIVE COMPENSATION
Summary Compensation Table...........................................13
Qualified Stock OptionsAggregated Options/SAR
Exercises in Last Fiscal Year and FY-end
Options/SAR Values............................................14
Equity Compensation Plan Information.................................14
Stock Incentive Plan.................................................15
401(k) Plan..........................................................15
Employment Contract..................................................16
Change of Control Agreement..........................................16
Salary Continuation Agreements.......................................17
Supplemental Retirement Plans........................................17
PAGE
----
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................17
ELECTION OF DIRECTORS
Qualification and Nomination of Directors............................18
Information as to Nominees and Directors.............................19
Board of Directors - Continuing as Directors.........................19
BENEFICIAL OWNERSHIP OF CODORUS VALLEY BANCORP, INC.'S
STOCK OWNED BY PRINCIPAL OWNERS AND MANAGEMENT
Principal Shareholders...............................................20
Share Ownership by the Directors, Officers and Nominees..............21
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.....................22
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING...............................22
PERFORMANCE GRAPH...........................................................23
PROPOSAL
Election of 3 Class A Directors......................................24
ANNUAL REPORT ..............................................................24
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING.......................24
ADDITIONAL INFORMATION .....................................................25
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS OF
CODORUS VALLEY BANCORP, INC.
TO BE HELD ON MAY 20, 2003
GENERAL INFORMATION
DATE, TIME AND PLACE OF THE ANNUAL MEETING
Codorus Valley Bancorp, Inc., a Pennsylvania business corporation and
registered bank holding company, furnishes this proxy statement in connection
with the solicitation by the board of directors of proxies to be voted at the
corporation's annual meeting of shareholders. The annual meeting will be held
at the Codorus Valley Corporate Center, 105 Leader Heights Road, York,
Pennsylvania 17403 on Tuesday, May 20, 2003 at 9:00 a.m., Eastern Time.
The corporation's principal executive office is located at the Codorus
Valley Corporate Center, 105 Leader Heights Road, York, Pennsylvania 17403.
The corporation's telephone number is (717) 747-1519 or (800) 646-1970. All
inquiries regarding the annual meeting should be directed to Harry R. Swift,
Esquire, Secretary and General Counsel of Codorus Valley Bancorp, Inc.
DESCRIPTION OF CODORUS VALLEY BANCORP, INC.
Codorus Valley Bancorp, Inc. was incorporated in October 1986 under
Pennsylvania law; and, in March 1987, it became a one-bank holding company
pursuant to the Bank Holding Company Act of 1956. PeoplesBank, A Codorus
Valley Company and SYC Realty Company, Inc. are the corporation's wholly-owned
subsidiaries. PeoplesBank is a Pennsylvania chartered banking institution with
deposits insured by the FDIC. PeoplesBank wholly-owns SYC Settlement Services,
Inc. and SYC Insurance Services, Inc.
Included with this proxy statement is a copy of the corporation's
annual report to shareholders for the fiscal year ended December 31, 2002. You
may obtain a copy of the corporation's annual report for the 2001 fiscal year,
at no cost, by contacting the Treasurer, Codorus Valley Bancorp, Inc., Codorus
Valley Corporate Center, 105 Leader Heights Road, P.O. Box 2887, York,
Pennsylvania 17405-2887, or by calling (717) 747-1519.
We have not authorized anyone to provide you with information about the
corporation; therefore, you should rely only on the information contained in
this document or on documents to which we refer. Although we believe we have
provided you with all the information helpful to you in your decision to vote,
events may occur at Codorus Valley Bancorp, Inc. subsequent to printing this
proxy statement that might affect your decision or the value of your stock.
1
VOTING PROCEDURES
SOLICITATION AND VOTING OF PROXIES
The board of directors solicits this proxy for use at the corporation's
2003 Annual Meeting of Shareholders. The corporation's directors, officers and
other employees may solicit proxies in person or by telephone, facsimile,
telegraph or mail, but only for use at the annual meeting. The corporation
will pay the cost of preparing, assembling, printing, mailing and soliciting
proxies and any additional material that the corporation sends to its
shareholders. Codorus Valley Bancorp, Inc. will make arrangements with
brokerage firms and other custodians, nominees, and fiduciaries to forward
proxy solicitation materials to the owners of stock held by these persons. The
corporation will reimburse these persons for their reasonable forwarding
expenses.
Only shareholders of record as of the close of business on Thursday,
March 13, 2003, (the voting record date), may vote at the annual meeting. The
corporation's records show that, as of the voting record date, 2,697,035
shares of the corporation's common stock were outstanding. On all matters to
come before the annual meeting, shareholders may cast one vote for each share
held. Cumulative voting rights do not exist with respect to the election of
directors. See "Principal Shareholders" on pages 21 and 22 for a list of the
persons known by the corporation to be the beneficial owner of 5% or more of
the corporation's outstanding common stock as of the voting record date.
If you are also a participant in the Codorus Valley Bancorp, Inc.
Dividend Reinvestment and Stock Purchase Plan, the enclosed proxy will NOT
serve as a voting instruction card for your shares held in the plan. Instead,
Wells Fargo Bank Minnesota, N.A., the plan administrator, will provide plan
participants with a separate voting instruction card/proxy representing those
shares held in the Dividend Reinvestment and Stock Purchase Plan. The separate
voting instruction cards must be signed and returned to Wells Fargo or your
shares held in the plan will not be voted.
If your voting instruction card is signed but does not indicate your
voting preferences, the plan administrator will vote your shares FOR the 3
nominees for Class A Director. Whole and fractional shares credited to your
dividend reinvestment account as of March 13, 2003, are included on your
voting instruction card.
By properly completing a proxy, the shareholder appoints Dallas L.
Darr, Mildred L. Lackey and George E. McCullough as proxy holders to vote his
or her shares as specified on the proxy. The proxy holders will vote any
signed proxy not specifying to the contrary as follows:
FOR the election of the following individuals as Class A Directors for
a term of 3 years expiring in 2006:
o Rodney L. Krebs;
o Dallas L. Smith; and
o George A. Trout, D.D.S.
2
Codorus Valley Bancorp, Inc.'s board of directors proposes to mail this
proxy statement to the corporation's shareholders on or about April 3, 2003.
QUORUM AND VOTE REQUIRED FOR APPROVAL
Codorus Valley Bancorp, Inc.'s Articles of Incorporation authorize the
corporation to issue up to 10,000,000 shares of common stock, par value $2.50
per share.
At the close of business on March 13, 2003, the corporation had
2,697,035 shares of common stock issued and outstanding. The corporation's
common stock is the only issued and outstanding class of stock.
In order to hold the annual meeting, a "quorum" of shareholders must be
present. Under Pennsylvania law and the corporation's bylaws, the presence, in
person or by proxy, of the holders of a majority of the shares entitled to
vote (meaning a majority of the number of shares outstanding on the voting
record date) is required to constitute a quorum for the transaction of
business at the meeting. The proxy holders will count votes withheld and
abstentions when determining the presence of a quorum. However, the proxy
holders will not count broker non-votes when determining the presence of a
quorum for the particular matter as to which the broker withheld authority.
Assuming the presence of a quorum, the affirmative vote of a majority
of the number of shares that constitutes a quorum for the transaction of
business at the annual meeting is required to elect the director candidates.
The proxy holders will not cast votes for or against any director candidates
where the broker withheld authority. Cumulative voting rights do not exist for
the election of directors. Each share of common stock is entitled to cast only
one vote for each nominee. For example, if a shareholder owns 10 shares of
common stock, he or she may cast up to 10 votes for each of the 3 Class A
Director nominees.
REVOCABILITY OF PROXY
Shareholders who sign proxies may revoke them at any time before they
are voted by:
o delivering written notice of the revocation or delivering a
properly executed later-dated proxy to Harry R. Swift,
Esquire, Secretary of Codorus Valley Bancorp, Inc., at Codorus
Valley Corporate Center, 105 Leader Heights Road, York,
Pennsylvania, 17403 or by mailing the notice or proxy to Harry
R. Swift, Esquire, Secretary, at Codorus Valley Bancorp, Inc.,
P. O. Box 2887, York, Pennsylvania 17405-2887; or by
o attending the meeting and voting in person after giving
written notice to the Secretary of Codorus Valley Bancorp,
Inc.
3
YOU HAVE THE RIGHT TO VOTE AND, IF DESIRED, TO REVOKE YOUR PROXY ANY
TIME BEFORE THE ANNUAL MEETING. SHOULD YOU HAVE ANY QUESTIONS, PLEASE CALL
HARRY R. SWIFT, ESQUIRE, SECRETARY, AT (717) 747-1519 OR (800) 646-1970.
METHODS OF VOTING
Voting by Proxy
o Mark your selections.
o Date your proxy and sign your name exactly as it appears on
your proxy.
o Mail the proxy to Wells Fargo Bank Minnesota, N.A. in the enclosed
postage-paid envelope.
Voting in Person
o Attend the annual meeting and show proof of eligibility to vote.
o Obtain a ballot.
o Mark your selections.
o Date your ballot and sign your name exactly as it appears in the
corporation's transfer books.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GOVERNANCE
The board of directors oversees all of the corporation's business,
property, and affairs. The chairman and officers keep the members of the board
informed of the corporation's business through discussions at board meetings
and by providing them reports and other materials. The members also keep
themselves informed by attending board and committee meetings.
During 2002, the corporation's board of directors held 10 meetings and
the bank's board of directors held 27 meetings. Each director attended at
least 75% of the combined total number of meetings of the corporation's and
the bank's boards and the committees of which he or she was a member, except
Director Donald H. Warner, due to medical reasons.
4
DIRECTORS AND EXECUTIVE OFFICERS OF CODORUS VALLEY BANCORP, INC.
The following table sets forth (in alphabetical order) selected
information about the corporation's directors and executive officers. The
officers are elected by the board of directors and each holds office at the
board's discretion.
POSITION HELD AGE AS OF
NAME POSITION SINCE MARCH 13, 2003
---- -------- ----- --------------
D. Reed Anderson, Esquire Class C Director 1994 60
M. Carol Druck Class B Director 1988 54
MacGregor S. Jones Class C Director 1993 57
Rodney L. Krebs Class A Director 1988 62
Vice Chairman of the Board 2000
Larry J. Miller Class C Director 1986 51
President 1986
Chief Executive Officer 1986
Dallas L. Smith Class A Director 1986 57
George A. Trout, D.D.S. Class A Director 1986 68
Chairman of the Board 1994
Donald H. Warner Class B Director 1990 64
Michael L. Waugh Class B Director 2002 47
Diane E. Hill, CPA Vice President 2002 32
Internal Auditor 1998
Harry R. Swift, Esquire Secretary 1998 55
Vice President 1998
General Counsel 1997
Jann Allen Weaver, CPA Treasurer 2000 53
Assistant Secretary 1991
Chief Financial Officer 1989
EXECUTIVE OFFICERS OF PEOPLESBANK
The following table sets forth selected information about the bank's
executive officers, each of whom is elected by the bank's board of directors
and each of whom holds office at the board's discretion.
5
POSITION HELD AGE AS OF
NAME POSITION SINCE MARCH 13, 2003
---- -------- ----- --------------
Larry J. Miller President 1981 51
Chief Executive Officer 1981
Harry R. Swift, Esquire General Counsel 1997 55
Executive Vice President 1999
Cashier 1999
Jann Allen Weaver, CPA Chief Financial Officer 1989 53
Senior Vice President 1994
Executive Vice President 2001
COMMITTEES AND MEETINGS OF THE CORPORATION'S AND THE BANK'S BOARDS OF
DIRECTORS
The corporation's board of directors has, at present, no standing
committees, except the audit and risk management committees, which jointly
serve the corporation and the bank. The corporation does not maintain a
compensation or a nominating committee. A shareholder who intends to nominate
a candidate for election to the board of directors must provide written notice
to the corporation's Secretary in accordance with the informational
requirements of Section 10.1 of the corporation's bylaws. The shareholder's
notice must be delivered or received at the corporation's principal executive
office not less than 90 days prior to the anniversary date of the preceding
shareholder meeting called for the election of directors.
During 2002, the bank's board of directors maintained 6 standing
committees: executive, audit, risk management, trust and investment services,
asset-liability and marketing steering. The function and composition of each
of these committees is described below.
EXECUTIVE: This committee is authorized to meet at the call of an
officer, primarily to take action regarding loans presented
for discount between regularly scheduled board meetings. This
committee did not meet in 2002. Rodney L. Krebs chairs this
committee.
AUDIT: This committee held 4 meetings during 2002. The Audit
Committee oversees the accounting function of the corporation
and the bank, recommends to the board the engagement of
independent auditors for the year, reviews with management and
the auditors the plan and scope of the audit engagement,
reviews the interim and annual financial statements of the
corporation and any recommended changes or modifications to
control procedures and accounting practices and policies, and
monitors with management and the auditors the bank's system of
internal controls and its accounting and reporting practices.
Dallas L. Smith chairs this committee.
RISK This committee met 12 times in 2002. The committee addresses
MANAGEMENT: risks inherent in the corporation and its affiliates relating
6
to the following broadly identified risk categories: credit,
interest rate, liquidity, price, transaction, compliance,
strategic and reputation. Larry J. Miller chairs this
committee.
TRUST AND This committee provides general oversight and supervises
INVESTMENT the operation of the bank's trust and investment services
SERVICES: division. This committee met 12 times in 2002. D. Reed
Anderson, Esquire, chairs this committee.
ASSET- This committee reviews the bank's asset-liability and interest
LIABILITY: rate risk management. This committee met 6 times in 2002. Jann
Allen Weaver, CPA chairs this committee.
MARKETING This committee provides broad oversight and guidance to the
STEERING: bank's marketing activities. Its goals are to increase the
bank's identity in the marketplace, and increase market share
and profitability. This committee met 11 times in 2002. Cheryl
L. Keener chairs this committee.
MEETINGS HELD
COMMITTEE MEMBERS IN 2002
--------- ------- -------
EXECUTIVE Rodney L. Krebs, chair, MacGregor S. Jones, Larry J. Miller, Dallas --
L. Smith, George A. Trout, D.D.S., Donald H. Warner, M. Carol
Druck, and D. Reed Anderson, Esquire
AUDIT Dallas L. Smith, chair, Donald H. Warner and D. Reed Anderson, 4
Esquire
RISK MANAGEMENT Larry J. Miller, chair, George A. Trout, D.D.S., non-directors 12
Harry R. Swift, Esquire, Diane E. Hill, CPA, Steven E. Miller,
Linda D. Senft, Jann Allen Weaver, CPA, and Scott T. Weaver
TRUST AND INVESTMENT D. Reed Anderson, Esquire, chair, M. Carol Druck, and MacGregor S. 12
SERVICES Jones
ASSET-LIABILITY Jann Allen Weaver, CPA, non-director chair, Larry J. Miller, and 6
non-directors Todd A. Tyson, Cheryl L. Keener, Kent A. Ketterman
and Elaine M. Miller
MARKETING STEERING Cheryl L. Keener, non-director chair, D. Reed Anderson, Esquire, 11
MacGregor S. Jones, and non-directors James W. Coombes, David J.
Cover, Kent A. Ketterman, Jann Allen Weaver, CPA and Elaine M.
Miller
7
COMPENSATION OF THE BOARDS OF DIRECTORS
In 2002, members of the corporation's board of directors were not paid
for attendance at board meetings or committee meetings. The bank does not
compensate employee directors for attendance at board of directors meetings or
committee meetings.
In 2002, the bank's non-employee directors were compensated for their
services rendered as follows:
o a monthly retainer of $700; and
o directors' fees of $425 for each regular or special meeting
attended; and
o committee meeting fees paid at the rate of $125 per hour for
attendance.
The bank's chairman of the board received a monthly retainer of $800 in
2002. In addition, the bank paid life insurance premiums on behalf of the
non-employee bank directors, which amounted to $1,922 in 2002. In the
aggregate, the bank paid $148,772 to the board of directors in 2002.
INDEPENDENT DIRECTORS' DEFERRED COMPENSATION PLAN
The corporation maintains a deferred compensation plan for non-employee,
or "independent" directors. Participants may elect to defer receipt of
compensation in order to gain certain tax benefits under Internal Revenue Code
Section 451. This plan is not funded by the corporation.
INDEPENDENT DIRECTORS' STOCK OPTION PLAN
The corporation maintains the Codorus Valley Bancorp, Inc. 1998
Independent Directors Stock Option Plan. The corporation's shareholders
approved the plan at the 1998 annual meeting and the board of directors
originally reserved 100,000 shares, or 121,550 shares as of December 31, 2002,
as adjusted for stock dividends, for issuance under the plan. The purposes of
the plan are to advance the corporation's and the bank's development, growth
and financial condition by providing additional incentives to non-employee
members of the corporation's board of directors by encouraging them to acquire
stock ownership in the corporation and to secure, retain and motivate
non-employee directors.
Directors who are not employees of the corporation or its subsidiaries
are eligible to receive awards under the plan. Pursuant to the terms of the
plan, each non-employee director who attended at least 75% of the total number
of board of directors and committee meetings during the previous fiscal year
is granted non-qualified stock options at each annual reorganization meeting
of the corporation. The first award under the plan was made at the 1998
organization meeting. The purchase price of common stock subject to each stock
option granted is the fair market value at the time of grant. The recipient
may exercise these stock options for ten years from the grant date. As of
December 31, 2002, the corporation had granted 101,756 qualified stock options
8
under this plan, as adjusted for applicable stock dividends and/or stock
splits. This aggregate amount includes stock options that may have been
cancelled and/or exercised prior to December 31, 2002.
AUDIT COMMITTEE REPORT
On June 12, 2001, the boards of directors of Codorus Valley Bancorp,
Inc. and PeoplesBank, A Codorus Valley Company, the corporation's wholly-owned
banking subsidiary, approved a resolution, based on the recommendations of the
audit committees of Codorus Valley and the bank, to engage Beard Miller
Company LLP as Codorus Valley's independent accountant. Beard Miller Company
LLP replaced Ernst & Young LLP (Ernst & Young), the prior independent
accountant.
Ernst & Young's report on Codorus Valley's consolidated financial
statements for 2000 contained no adverse opinion or disclaimer of opinion or
qualification as to uncertainty, audit scope or accounting principles.
During the fiscal year 2000 and subsequent interim periods, there were
no disagreements or reportable events relating to any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which Ernst & Young would have referred to in connection with their
report if the disagreement wasn't resolved to their satisfaction. Codorus
Valley acknowledges that disagreements required to be reported in response to
the preceding sentence include both those resolved to Ernst & Young's
satisfaction and those not resolved to Ernst & Young's satisfaction. Codorus
Valley further acknowledges that disagreements contemplated by this rule are
those which occurred at the decision-making level; i.e., between Codorus
Valley personnel responsible for the presentation of its financial statements
and Ernst & Young personnel responsible for rendering its report. There have
been no reportable events within the meaning of Item 304 of Regulation S-K.
On June 13, 2000, the board of directors adopted a written charter for
the Audit Committee, a copy of which was attached to the 2001 proxy statement.
As required by the charter, the Audit Committee, in fulfilling its oversight
responsibilities regarding the audit process:
o reviewed and discussed the fiscal year 2002 audited financial
statements with management; and
o discussed with the independent auditors, Beard Miller Company LLP,
the matters required to be discussed by Statement on Accounting
Standards No. 61, 89 and 90 (Codification of Statements on Auditing
Standards, AU 380, as amended or supplemented); and
o reviewed the written disclosures and the letter from the
independent accountants required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees, as
modified or supplemented), and discussed with the independent
auditors any relationships that may impact their objectivity and
independence.
9
Based upon the review and discussions referred to above, the Audit
Committee's review of management's representations, and the report of the
independent accountants to the Audit Committee, the Audit Committee
recommended to the board of directors that the audited financial statements
for the year ended December 31, 2002, be included in the corporation's annual
report on Form 10-K and filed with the Securities and Exchange Commission.
Fees pertaining to services rendered to the corporation and the bank by
Beard Miller Company LLP, the independent accountants, during the year ended
December 31, 2002, were as follows:
Audit Fees $49,253
Financial Information Systems
Design and Implementation Fees 0
All Other Fees $11,370*
* "All Other Fees" include completion of 2001
tax return, tax planning/compliance,
assistance with stock options, and
assistance with an insurance company
acquisition.
The Audit Committee is comprised of 3 directors, all of whom are
considered "independent," as defined in Rule 4200(a)(15) of the National
Association of Securities Dealers listing standards.
This report of the Audit Committee shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, except to the extent that the
corporation specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
The foregoing report has been furnished by the current members of the
Audit Committee.
MEMBERS OF THE AUDIT COMMITTEE
DALLAS L. SMITH, CHAIRMAN
D. REED ANDERSON, ESQUIRE
DONALD H. WARNER
BOARD OF DIRECTORS REPORT ON
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
The corporation's board of directors governs the corporation and its
subsidiaries. In fulfilling its fiduciary duties, the board of directors
endeavors to act in the best long-term interests of the corporation's
10
shareholders, customers, and the communities served by the corporation and its
subsidiaries. To accomplish the corporation's strategic goals and objectives,
the board of directors engages competent persons, who undertake to accomplish
these objectives with integrity and with cost-effectiveness. The board of
directors fulfills part of its strategic mission through the compensation of
these individuals. The bank, the corporation's wholly-owned financial
subsidiary, provides compensation to the bank's directors and employees.
The corporation seeks to offer competitive compensation opportunities
for all employees based on the individual's contribution and personal
performance. The entire board of directors (comprised of the individuals named
below) administers the compensation program. The board seeks to establish a
fair compensation policy to govern the executive officers base salaries and
incentive plans to attract and motivate competent, dedicated, and ambitious
managers, whose efforts will enhance the corporation's products and services
and will result in improved profitability, increased dividends to the
shareholders, and subsequent appreciation in the market value of the
corporation's shares.
The board reviews and annually approves the compensation of the
corporation's and the bank's top executives, including the chief executive
officer, executive vice presidents, senior vice presidents, and all other vice
presidents. As a guideline in determining base salaries, the board uses
information composed of a Pennsylvania bank peer group. This peer group of
banks with assets of $300 million to $500 million is different than the peer
group used for the performance graph. The peer group on the performance graph
includes bank holding companies and banks listed on NASDAQ, which may not be
located in Pennsylvania. The corporation uses Pennsylvania peer group banks
because of common industry issues and competition for the same executive
talent group.
The board of directors does not deem Section 162(m) of the
Internal Revenue Code (the IRC) to be applicable to the corporation at this
time. The board of directors intends to monitor the future application of IRC
Section 162(m) to the compensation paid to its executive officers; and, in the
event that this section becomes applicable, the board of directors intends to
amend the corporation's and the bank's compensation policies to preserve the
deductibility of the compensation payable under the policies.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The board of directors determined that the chief executive officer's
2002 compensation be set at $194,365, which was appropriate in light of the
following 2002 Codorus Valley Bancorp, Inc. major accomplishments: the
addition of a full service financial center, acquisition of Market Street
Financial Services, Inc; and successful installation of the STeller System.
Additionally, the chief executive officer was actively and effectively
involved in numerous community activities and served in leadership positions
as chairman of the York County Economic Development Corporation, vice-chairman
of the William F. Goodling Regional Advanced Skills Center, vice president of
the York-Adams Council of the Boy Scouts of America and on the Board of
Directors of Better York, Inc. and the York Foundation. No direct correlation
11
exists between the chief executive officer's compensation, any change in the
chief executive officer's compensation, and any of the above criteria, nor
does the board give any weight to any of the above specific individual
criteria. The board subjectively determines the chief executive officer's
compensation based on a review of all relevant information.
EXECUTIVE OFFICERS' COMPENSATION
The board of directors increased the 2002 compensation of the
corporation's and the bank's executive officers by approximately 4.75% over
2001 compensation. The board determined these increases based on its
subjective analysis of the individual's contribution to the corporation's
strategic goals and objectives. In determining whether the strategic goals
have been achieved, the board considers numerous factors. Although the board
measured the performance and increases in compensation in light of these
factors, no direct correlation exists between any specific criteria and an
employee's compensation, nor does the board, in its analysis, attribute
specific weight to any such criteria. The board makes a subjective
determination after review of all relevant information, including the above.
In addition to base salary, the corporation's and the bank's executive
officers may participate in annual and long-term incentive plans, including
the bank's 401(k) plan and the corporation's stock incentive plan.
(See page 15 for more information.)
General labor market conditions, the individual's specific
responsibilities and the individual's contributions to the corporation's
success influence total compensation opportunities available to the
corporation's and the bank's employees. The board reviews individuals annually
on their anniversary date of hire and strives to offer compensation that is
competitive with that offered by employers of comparable size in our industry.
Through these compensation policies, the corporation strives to meet its
strategic goals and objectives to its constituencies and provide compensation
that is fair and meaningful to its executive officers.
This report is furnished by Codorus Valley Bancorp, Inc.'s board of
directors, which performs the functions of a compensation committee.
Board of Directors
D. REED ANDERSON, ESQUIRE RODNEY L. KREBS GEORGE A. TROUT, D.D.S.
M. CAROL DRUCK LARRY J. MILLER DONALD H. WARNER
MACGREGOR S. JONES DALLAS L. SMITH MICHAEL L. WAUGH
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Larry J. Miller, President and Chief Executive Officer of the
corporation and the bank, participated in the discussion relating to the
compensation of all bank employees; but, he neither participates in conducting
his own review nor takes part in determining his own compensation.
12
EXECUTIVE COMPENSATION
The following table sets forth information with regard to the annual
compensation for service in all capacities to the corporation and to the bank
for the fiscal years ended December 31, 2002, 2001 and 2000 for those persons
who were, at December 31, 2002:
o the chief executive officer; and
o the other four most highly compensated executive officers of
the corporation, to the extent that these
persons' total annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Other Securities
Name Annual Restricted Underlying
and Compen- Stock Options/ LTIP All Other
Principal Salary Bonus sation Awards SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#)(1) ($) ($)(2)(3)(4)
-------- ---- --- --- --- --- --- --- ------------
Larry J. Miller, 2002 194,365 0 0 0 0 0 12,153
President and 2001 180,000 0 0 0 8,000 0 10,369
Chief Executive 2000 180,000 0 0 0 0 0 32,066(5)
Officer of the
corporation and the
bank
Harry R. Swift, 2002 156,481 250 0 0 0 0 5,548
Esquire, Secretary, 2001 148,000 600 0 0 1,500 0 5,976
General Counsel and 2000 145,635 200 0 0 1,653 0 4,806
Vice President of
the corporation,
General Counsel,
Executive Vice
President and
Cashier of the bank
(1) As adjusted for all stock dividends paid through December 31, 2002.
(2) Includes bank contributions to the 401(k) plan on behalf of Mr. Miller
of $5,500, $5,100 and $5,100 for 2002, 2001 and 2000, respectively.
(3) Includes life insurance premiums paid on behalf of Mr. Miller in the
amount of $658, $565 and $530 for 2002, 2001 and 2000, respectively;
life insurance premiums paid on behalf of Mr. Swift in the amount of
$748, $651, and $578 for 2002, 2001 and 2000, respectively.
(4) Includes the payment for Mr. Miller's vehicle valued at $2,245, $1,269
and $2, 205 for 2002, 2001 and 2000, respectively; payment for Mr.
Swift's vehicle valued at $4,550, $4,725 and $4,026 for 2002, 2001 and
2000, respectively. Also includes payments for Well days program to Mr.
Miller of $3,750, $3,462 and $3,462 for 2002, 2001 and 2000,
respectively.
(5) This includes a non-recurring payment of $20,769 in 2000 for accrued
vacation due to a company-wide policy change.
13
QUALIFIED STOCK OPTIONS
During 2002, the corporation did not grant any options or stock
appreciation rights to any of the executives listed on the preceding table.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTIONS/SAR
VALUES
The following table sets forth information relating to the exercise of
and year-end value of qualified stock options granted pursuant to the Codorus
Valley Bancorp, Inc. 1996 and 2000 Stock Incentive Plans.
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs In-The-Money Options/SARs
Shares Acquired Value Realized at FY-End (#)(1) at FY-End ($)(1)(2)
Name on Exercise (#) ($)(2) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ -------------- ------------------------- -------------------------
Larry J. Miller 0 0 51,813/16,734 92,521/11,138
Harry R. Swift, Esquire 0 0 5,742/0 2,153/0
(1) As adjusted for all stock dividends paid through December 31, 2002.
(2) The fair market value of the corporation's common stock on December 31,
2002 was $15.23 share.
EQUITY COMPENSATION PLAN INFORMATION
The following table summarized our equity compensation plan information
as of December 31, 2002. Information is included for both equity compensation
plans approved by Codorus Valley Bancorp, Inc. shareholders and equity
compensation plans not approved by Codorus Valley Bancorp, Inc. shareholders.
[Intentionally Left Blank]
14
Number of common shares
available for future
issuance under equity
Number of common shares to Weighted-average exercise compensation plans
be issued upon exercise of price of outstanding (excluding securities
Plan Category outstanding options (1) options (1) reflected in column (a)(1)
------------- -------------------------- ------------------------- ---------------------------
(a) (b) (c)
Equity compensation plans 191,747 $14.86 112,194
approved by Codorus Valley
Bancorp Inc. shareholders
Equity compensation plans not n/a n/a 10,348(2)
approved by Codorus Valley
Bancorp, Inc. shareholders
Totals 191,747 $14.86 122,542
(1) As adjusted for stock dividends paid through December 31, 2002.
(2) In 2001, Codorus Valley Bancorp, Inc. implemented an Employee Stock Bonus
Plan, administered by nonemployee members of the Corporation's board of
directors, under which the Corporation may issue shares of its common stock
to employees as performance based compensation. As of December 31, 2002,
10,348 shares of common stock were available for issuance under this plan,
subject to future adjustment in the event of specified changes in the
Corporation's capital structure. Total shares of common stock issued under
the plan were 152 as of December 31, 2002.
STOCK INCENTIVE PLAN
On March 14, 2000, the board of directors adopted the Codorus Valley
Bancorp, Inc. 2000 Stock Incentive Plan and the plan was adopted by the
shareholders at the 2000 annual meeting. The corporation originally reserved
100,000 shares under the plan or 110,250 shares as of December 31, 2002, as
adjusted for stock dividends, for issuance under the plan. The plan provides for
awards of qualified stock options and non-qualified stock options to officers,
and is administered by a disinterested committee of the corporation's board of
directors. In 2002, no qualified stock options were granted under the plan.
401(K) PLAN
The bank maintains and sponsors a defined contribution 401(k) savings
and investment plan. The 401(k) plan is administered by a committee which is
appointed by the board of directors. The 401(k) plan is subject to the Internal
Revenue Code of 1986 and to the regulations promulgated thereunder. Participants
are entitled to certain rights and protection under the Employee Retirement
Income Security Act of 1974.
Each bank employee who attains the age of 21, successfully completes
any probationary period(s) and, if part time, completes 1,000 hours of service
per year may participate in the 401(k) plan. An eligible employee may elect to
contribute certain portions of salary, wages, bonus (other than year-end bonus),
or other direct remuneration to the 401(k) plan. Generally, eligible employees
may not contribute more than 20% of their compensation. In 2002, 2001, and 2000,
15
the bank matched 50% of the first 6% of the employee's contributions. The bank's
contributions to the 401(k) plan for each participant vest in 3 years from plan
enrollment. The employee's contributions to the 401(k) plan vest immediately.
The bank incurred expenses of $92,000, $77,000 and $67,000, for financial
reporting purposes during 2002, 2001 and 2000, respectively, in connection with
the 401(k) plan.
EMPLOYMENT CONTRACT
In 1993, the corporation, the bank and Larry J. Miller, President and
Chief Executive Officer of the corporation and the bank, entered into an
employment agreement for a term of 3 years, which term renews automatically for
an additional 12 months at the end of each calendar year unless the corporation
and the bank provide written notice to Mr. Miller of non-renewal. The agreement
specifies Mr. Miller's positions and duties, compensation and benefits, and
indemnification and termination provisions. The agreement also contains a
non-competition provision and a confidentiality provision.
Under the terms of his employment agreement, Mr. Miller serves as the
President and Chief Executive Officer of the corporation and of the bank and as
a member of the boards of directors of the corporation and of the bank. Pursuant
to his employment agreement, Mr. Miller was entitled to an annual direct salary
of $195,000 in 2002. This salary may be increased in subsequent years as the
board of directors deems appropriate. In addition, the boards of directors of
the corporation and the bank have discretion to pay a periodic bonus to Mr.
Miller. Mr. Miller is not entitled to receive director's fees or other
compensation for serving on the corporation's or the bank's board of directors
or their committees. Mr. Miller is also entitled to receive the employee
benefits made available to bank employees and to use a vehicle provided by the
bank.
As amended in October 1997, the agreement with Mr. Miller provides that
if his employment is terminated by the corporation or the bank, due to death,
disability or "for cause", then he is entitled to the full annual direct salary
through the date of termination. If Mr. Miller's employment is terminated by the
corporation or the bank other than pursuant to death, disability or "for cause",
then he is entitled to his full annual direct salary from the date of
termination through the last day of the term of the agreement, or an amount
equal to his current annual direct salary, whichever is greater. If Mr. Miller
terminates his employment for "good reason", then he is entitled to an amount
equal to his direct annual salary. As amended in 1997, if Mr. Miller's
employment is terminated as a result of a change in control, then he is entitled
to receive a lump sum payment equal to 2.99 times his then current direct annual
salary and will continue his eligibility to participate in all employee benefit
plans and programs in which he was previously entitled to participate.
CHANGE OF CONTROL AGREEMENT
On October 1, 1997, the corporation, the bank and Harry R. Swift,
Esquire, Secretary, General Counsel and Vice President of the corporation and
General Counsel, Executive Vice President and Cashier of the bank, entered into
a change of control agreement that provides certain benefits to Mr. Swift in the
event of a change of control. The agreement becomes operative only upon a change
in control of the corporation or the bank or other specified event. The initial
16
term of the agreement is 39 months and each subsequent term consists of a 36
month period, which term automatically renews for an additional 12 months at the
end of each calendar year unless the corporation and the bank provide written
notice to Mr. Swift of non-renewal. The agreement specifies payments upon
termination as of the date of the change of control at not less than 2 times Mr.
Swift's then current annual direct salary.
SALARY CONTINUATION AGREEMENTS
On October 1, 1998, the bank entered into salary continuation
agreements with Larry J. Miller and Harry R. Swift, Esquire. These agreements
provide for certain payments to these named executives following the executive's
normal retirement date and continuing for 239 months for Mr. Miller and 179
months for Mr. Swift. The agreements contain provisions for early retirement,
disability benefits, death benefits and payments on specified changes of
control. The agreements also contain non-competition provisions.
SUPPLEMENTAL RETIREMENT PLANS
In 1998, the bank provided group term life insurance replacement plans
for specific executive officers. These plans are the funding vehicle for
payments to the executives upon certain specified events. The specified events
include a change of control and the executive's normal retirement. In addition,
the bank provided a director approved group term life insurance replacement plan
for the benefit of the corporation's directors. This plan provides for payments
to accrue to the directors following termination of their service as a member of
the board of directors. These supplemental retirement plans replaced, in part,
other insurance coverages.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The corporation and the bank have not entered into any material
transactions, proposed or consummated, with any director or executive officer of
the corporation or the bank, or any associate of the foregoing persons, with the
exception of that disclosed below. The corporation and the bank have engaged in
and intend to continue to engage in banking and financial transactions in the
ordinary course of business with directors and officers of the corporation and
the bank and their associates on comparable terms with similar interest rates as
those prevailing from time to time for other bank customers.
Total loans outstanding from the bank at December 31, 2002, to the
corporation's and the bank's officers and directors as a group, members of their
immediate families and companies in which they had an ownership interest of 10%
or more amounted to $3,453,000, or approximately 10.7% of the bank's total
equity capital. The bank made these loans in the ordinary course of business, on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with other persons, and did
not involve more than the normal risk of collection or present other unfavorable
features. The largest aggregate amount of indebtedness outstanding at any time
during fiscal year 2002 to officers and directors of the corporation and the
17
bank as a group was $7,130,324. The aggregate amount of indebtedness outstanding
as of the latest practicable date, March 17, 2003, to the above described group
was $3,578,000.
ELECTION OF DIRECTORS
QUALIFICATION AND NOMINATION OF DIRECTORS
Section 10.2 of the corporation's bylaws authorizes the number of
directors to be not less than 5 nor more than 25. The bylaws provide for three
classes of directors with staggered 3 year terms of office. The board of
directors may, from time to time, fix the number of directors and their
respective classifications. All candidates for director must be at least 21
years of age. No director may continue to serve after he or she attains the age
of 70 years. Each director must hold solely, in his or her name, at least 100
shares of common stock, which shares must be free of any liens or other
encumbrances.
The board of directors nominated the 3 persons named below to serve as
Class A Directors until the 2006 annual meeting of shareholders or until their
earlier death, resignation, or removal from office. All of the nominees are
presently members of the board of directors and all have consented to serve
another term as a director if re-elected. If any of the nominees should be
unavailable to serve for any reason, pursuant to Section 11.1 of the
corporation's bylaws, a majority of the board of directors then in office may
fill the vacancy until the expiration of the term of the class of directors to
which he or she was appointed.
In accordance with Section 10.3 of the corporation's bylaws, the board
of directors is divided into 3 classes whose terms expire at successive annual
meetings. Therefore, the corporation maintains a classified board with staggered
3 year terms of office. Currently, Class A consists of 3 directors, Class B
consists of 3 directors, and Class C consists of 3 directors. Shareholders will
elect 3 Class A Directors at the annual meeting to serve for a 3 year term that
expires at the corporation's 2006 annual meeting.
The proxy holders intend to vote all proxies for the election of each
of the 3 nominees named below, unless you indicate that your vote should be
withheld from any or all of them. Each nominee elected as a director will
continue in office until his or her successor has been duly elected and
qualified, or until his or her death, resignation or retirement.
The board of directors proposes the following nominees for election as
Class A Directors at the annual meeting:
o Rodney L. Krebs;
o Dallas L. Smith; and
o George A. Trout, D.D.S.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
PROPOSAL TO ELECT THE 3 NOMINEES LISTED ABOVE AS CLASS A DIRECTORS.
18
INFORMATION AS TO NOMINEES AND DIRECTORS
Set forth below is the principal occupation and certain other
information regarding the nominees and the directors whose terms of office will
continue after the annual meeting. You will find information about their share
ownership on pages 21 and 22.
BOARD OF DIRECTORS - CONTINUING AS DIRECTORS
CLASS A DIRECTORS
(TO SERVE UNTIL 2003)
AND NOMINEES FOR
CLASS A DIRECTORS
(TO SERVE UNTIL 2006, IF ELECTED)
RODNEY L. KREBS Mr. Krebs, age 62, has served as the
corporation's Vice Chairman and the
bank's Chairman since 2000 and has been
a member of the corporation's and the
bank's boards of directors since 1988.
He also served as the corporation's
Treasurer from 1990 to 2000. Mr. Krebs
is the President of Springfield
Contractors, Inc., a heavy equipment/
earth moving firm located near Glen
Rock, Pennsylvania.
DALLAS L. SMITH Mr. Smith, age 57, served as a bank
director since 1983 and as a corporation
director since 1986. He is the President
of Bruce V. Smith, Inc., a retail
furniture corporation located in
Jacobus, Pennsylvania.
GEORGE A. TROUT, D.D.S. Dr. Trout, age 68, has served as the
corporation's Chairman since 1994. Dr.
Trout has served as the bank's Vice
Chairman since 1992. He has been a
member of the bank's board of directors
since 1975 and of the corporation's
board since 1986. Dr. Trout is a retired
dentist.
CURRENT CLASS B DIRECTORS
(to serve until 2005)
M. CAROL DRUCK Ms. Druck, age 54, has been a member of
the corporation's and the bank's boards
of directors since 1988. Ms. Druck is
the President of Druck Realty, Inc. and
is a realtor with Morgan Collins
Realtors, Inc. located in York,
Pennsylvania.
DONALD H. WARNER Mr. Warner, age 64, has been a member of
the corporation's and the bank's boards
of directors since 1990. He served as
Vice President of the corporation from
1993 to 2002. Mr. Warner is the
President of Warners Motor Express,
Inc., a moving and storage company
located in Red Lion, Pennsylvania.
19
MICHAEL L. WAUGH Mr. Waugh, age 47, has served as a
member of the corporation's and the
bank's boards of directors since 2002.
Mr. Waugh has served as State Senator
from the 28th District of the
Commonwealth of Pennsylvania since 1998.
Previously, he served six years in the
State House of Representatives.
CURRENT CLASS C DIRECTORS
(to serve until 2004)
D. REED ANDERSON, ESQUIRE Mr. Anderson, age 60, has served as a
member of the corporation's and the
bank's boards of directors since 1994.
Mr. Anderson is an attorney-at-law with
the firm of Stock and Leader, located in
York, Pennsylvania.
MACGREGOR S. JONES Mr. Jones, age 57, has served as a
member of the corporation's and the
bank's boards of directors since 1993.
Mr. Jones is a retired automobile
dealer.
LARRY J. MILLER Mr. Miller, age 51, has served as the
corporation's President and Chief
Executive Officer and a director since
1986 and as the bank's President and
Chief Executive Officer and a director
since 1981.
BENEFICIAL OWNERSHIP OF
CODORUS VALLEY BANCORP, INC.'S STOCK OWNED BY
PRINCIPAL OWNERS AND MANAGEMENT
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 17, 2003, 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 corporation's
outstanding common stock, the number of shares beneficially owned by such
person, and the percentage of the corporation's outstanding common stock owned.
The "beneficial owner" of a security includes any person who directly or
indirectly has or shares: voting power, including the power to vote or to direct
the voting of the security; and/or investment power, including the power to
dispose or direct the disposition of the security.
AMOUNT AND NATURE OF PERCENTAGE OF
NAME AND ADDRESS BENEFICIAL OWNERSHIP CLASS
---------------- -------------------- -------------
PeoplesBank, A Codorus Valley Company 267,060(1) 9.9%
Trust and Investment Services Division
Codorus Valley Corporate Center
105 Leader Heights Road
York, PA 17403
20
(1) 117,802 shares of common stock beneficially owned by the bank are held
in its fiduciary capacity. The bank has sole dispositive power over
these shares of common stock. 112,998 shares of common stock
beneficially owned by the bank are shares for which the bank exercises
shared dispositive power. 154,062 shares of common stock beneficially
owned by the bank are shares for which the bank exercises sole voting
power. 112,998 shares of common stock beneficially owned by the bank
are shares for which the bank exercises shared voting power. 36,260
shares of common stock beneficially owned by the bank are shares for
which the bank has no dispositive power. The bank, in its fiduciary
capacity, intends to cast all shares under its control FOR the election
of the nominees for Class A Director.
SHARE OWNERSHIP BY THE DIRECTORS, OFFICERS AND NOMINEES
The following table sets forth, as of March 17, 2003, and from
information received from the respective individuals, the amount and percentage
of the common stock beneficially owned by each director, each nominee and all
officers, directors, and nominees as a group. All shares are held individually
unless otherwise indicated. The percentage of outstanding stock owned is less
than 1%, unless otherwise indicated.
AMOUNT AND
NATURE OF
NAME OF INDIVIDUAL OR BENEFICIAL PERCENTAGE
IDENTITY OF GROUP OWNERSHIP(1)(2) OF CLASS
--------------------- --------------- ----------
D. Reed Anderson, Esquire 18,532(3) --
M. Carol Druck 18,030(4) --
MacGregor S. Jones 35,838(5) 1.33%
Rodney L. Krebs 27,551(6) --
Larry J. Miller 64,487(7) 2.39%
Dallas L. Smith 20,014(8) --
George A. Trout, D.D.S. 75,507(9) 2.80%
Donald H. Warner 12,607(10) --
Michael L. Waugh 100 --
Diane E. Hill, CPA 2,569(11) --
Harry R. Swift, Esquire 5,742(12) --
Jann Allen Weaver, CPA 6,119(13) --
All Officers and Directors as a Group
(9 Directors, 4 Officers, 12 persons in total) 287,096(14) 10.64%
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definitions of "beneficial ownership" set forth in
the General Rules and Regulations of the Securities and Exchange
Commission and may include securities owned by or for the individual's
spouse and minor children and any other relative who has the same home,
as well as securities that the individual has or shares voting or
investment power, or has the right to acquire beneficial ownership
within 60 days after March 14, 2003. Beneficial ownership may be
disclaimed as to certain of the securities. All numbers here have been
rounded to the nearest whole number.
(2) Information furnished by the officers, directors and nominees.
(3) Includes 4,050 shares held in Mr. Anderson's 401(k) plan and
non-qualified stock options of 13,482.
(4) Includes 3,215 shares held jointly with her spouse, 548 shares held in
trust for her grandchildren and non-qualified stock options of 13,482.
(5) Includes 6,623 shares held in Mr. Jones' IRA, 14,639 shares held
jointly with his spouse, 2,492 shares held individually in his spouse's
IRA and non-qualified stock options of 11,277.
21
(6) Includes 3,775 shares held in Mr. Krebs' IRA, 7,859 shares held jointly
with his spouse and non-qualified stock options of 13,482.
(7) Includes 9,028 shares held jointly with his spouse, 280 shares held
jointly with his mother, 734 shares held jointly with his daughter, 734
shares held jointly with his son, 834 shares held in Mr. Miller's IRA
and non-qualified stock options of 51,813.
(8) Includes 477 shares held individually in his spouse's IRA and
non-qualified stock options of 13,482.
(9) Includes 6,867 shares held in Dr. Trout's IRA, 54,701 shares held in
trust for his children, and non-qualified stock options of 13,482.
(10) Includes 510 shares held in Mr. Warner's IRA, and non-qualified stock
options of 11,482.
(11) Includes 127 shares held jointly with her spouse, and non-qualified
stock options of 2,442.
(12) Includes non-qualified stock options of 5,742.
(13) Includes 377 shares held jointly with his spouse and non-qualified
stock options of 5,742.
(14) Includes 33,480 shares reported in Schedule 13-G, as amended, of the
Trust and Investment Services Division of PeoplesBank, A Codorus Valley
Company (21,846 shares are held for the benefit of MacGregor S. Jones
and 11,634 shares are held for the benefit of Rodney L. Krebs.)
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, requires that the
corporation's officers and directors, and persons who own more than 10% of the
registered class of the corporation's equity securities, file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% shareholders are required by SEC
regulation to furnish the corporation with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of Forms 3, 4 and 5 and
amendments thereto received by it, or written representations from certain
reporting persons that no Form 5 was required for that reporting person, the
corporation believes that during the period from January 1, 2002 through
December 31, 2002, its officers and directors were in compliance with all filing
requirements applicable to them.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Any shareholder who, in accordance with and subject to the provisions
of the proxy rules of the Securities and Exchange Commission, wishes to submit a
proposal for inclusion in the corporation's proxy statement for its 2004 Annual
Meeting of Shareholders must deliver the proposal in writing to the Secretary of
Codorus Valley Bancorp, Inc. at its principal executive offices, Codorus Valley
Corporate Center, 105 Leader Heights Road, P. O. Box 2887, York, Pennsylvania
17405-2887, not later than Friday, December 5, 2003. If a shareholder proposal
is submitted to the corporation after December 5, 2003, it is considered
untimely; and, although the proposal may be considered at the annual meeting, it
may not be included in the corporation's 2004 proxy statement. Any proposals
should be addressed to the Secretary. Section 10.1 of the corporation's bylaws
requires a shareholder to deliver a notice of nomination for election to the
board of directors to the Secretary no later than 90 days in advance of the
anniversary date of the preceding shareholders meeting. See page 17 for more
information on nomination procedures and requirements.
22
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total shareholder return on the corporation's common stock against
the cumulative total return of the S&P 500 Stock Index and the NASDAQ Bank Index
for the period of 5 fiscal years commencing January 1, 1998 and ending December
31, 2002. The graph shows that the cumulative investment return to shareholders,
based on the assumption that a $100 investment was made on December 31, 1997, in
each of the corporation's common stock, the S&P 500 Stock Index and the NASDAQ
Bank Index, and that all dividends were reinvested in such securities over the
past 5 years, the cumulative total return on such investment would be $87.80,
$91.85, $89.47, $83.11 and $100.89, respectively. The shareholder return shown
on the graph below is not necessarily indicative of future performance.
[GRAPHIC OMITTED]
PERIOD ENDING
---------------------------------------------------------------------
INDEX 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
-------------------------------------------------------------------------------------------------------------------
Codorus Valley Bancorp, Inc. 100.00 87.80 91.85 89.47 83.11 100.89
S&P 500 100.00 128.55 155.60 141.42 124.63 96.95
NASDAQ Bank Index* 100.00 99.36 95.51 108.95 117.97 120.61
*SOURCE: CRSP, CENTER FOR RESEARCH IN
SECURITY PRICES.
23
PROPOSAL
ELECTION OF 3 CLASS A DIRECTORS
The nominees for election are:
o Rodney L. Krebs (director since 1988);
o Dallas L. Smith (director since 1986); and
o George A. Trout, D.D.S. (director since 1986).
Each has consented to serve a 3 year term. (See page 18 for more
information.)
If any director is unable to stand for re-election, the board may
designate a substitute. The proxy holders will vote in favor of a substitute
nominee. The board of directors has no reason to believe the 3 nominees for
Class A Director will be unable to serve if elected.
Cumulative voting rights do not exist with respect to the election of
directors. The affirmative vote of a majority of the number of shares that
constitutes a quorum for the transaction of business at the annual meeting is
necessary to elect the director candidates.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF THE 3 NOMINEES AS CLASS A DIRECTORS.
ANNUAL REPORT
A copy of the corporation's annual report to shareholders for its
fiscal year ended December 31, 2002 is enclosed with this proxy statement. A
representative of Beard Miller Company LLP, the independent auditors who
examined the financial statements in the annual report, will attend the meeting.
The representative will have the opportunity to make a statement, if he desires
to do so, and will be available to respond to any appropriate shareholder
questions concerning the annual report.
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The board of directors knows of no business other than that referred to
in the accompanying Notice of Annual Meeting of Shareholders that may be
presented at the annual meeting. However, if any other matter should be properly
presented for consideration and voting at the annual meeting or any adjournments
of the meeting, the proxy holders will vote the proxies in what they determine
to be the corporation's best interests.
24
ADDITIONAL INFORMATION
Upon written request of any shareholder, a copy of the corporation's
annual report on Form 10-K for its fiscal year ended December 31, 2002,
including the financial statements, schedules and exhibits, required to be filed
with the Securities and Exchange Commission pursuant to Rule 13a-1 under the
Securities Exchange Act of 1934, may be obtained, without charge by writing to
the: Treasurer, Codorus Valley Bancorp, Inc., Codorus Valley Corporate Center,
105 Leader Heights Road, P.O. Box 2887, York, Pennsylvania 17405-2887 or via the
Internet at www.peoplesbanknet.com, select Codorus Valley Bancorp, Inc., then
select the Securities and Exchange Commission link, or visit the SEC's website
at www.sec.gov.
25
CODORUS VALLEY BANCORP, INC.
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 20, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Dallas L. Darr, Mildred L.
Lackey and George E. McCullough and each or any of them, proxies of the
undersigned, with full power of substitution to vote all of the shares of
Codorus Valley Bancorp, Inc. that the undersigned may be entitled to vote at the
corporation's Annual Meeting of Shareholders to be held on Tuesday, May 20,
2003, at 9:00 a.m., Eastern Time, at the Codorus Valley Corporate Center, 105
Leader Heights Road, York, Pennsylvania 17403, and at any adjournment or
postponement of the meeting as follows:
1. ELECTION OF 3 CLASS A DIRECTORS TO SERVE FOR A 3 YEAR TERM.
RODNEY L. KREBS DALLAS L. SMITH GEORGE A. TROUT, D.D.S.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except to vote for all
as marked to the nominees listed above
contrary below)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
--------------------------------------------------------------------------------
2. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any adjournment
or postponement of the meeting.
THIS PROXY, WHEN PROPERLY SIGNED AND DATED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED SHAREHOLDERS. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED ABOVE.
Dated: ______________________, 2003 _________________________________
Signature
Number of Shares Held of Record
on March 13, 2003 _________________________________
Signature
----------------
THIS PROXY MUST BE DATED, SIGNED BY THE SHAREHOLDER(S) AND RETURNED PROMPTLY TO
WELLS FARGO BANK MINNESOTA, N.A. IN THE ENCLOSED ENVELOPE. WHEN SIGNING AS
ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE.
IF MORE THAN ONE TRUSTEE, ALL SHOULD SIGN. IF STOCK IS HELD JOINTLY, EACH OWNER
SHOULD SIGN.
[LETTERHEAD OF CODORUS VALLEY BANCORP, INC.]
April 3, 2003
Dear Dividend Reinvestment and Stock Purchase Plan Participant:
As a participant in Codorus Valley Bancorp, Inc.'s Dividend Reinvestment and
Stock Purchase Plan, you are entitled to instruct the plan's administrator,
Wells Fargo Bank Minnesota, N.A., to vote the plan shares held on your behalf at
Codorus Valley Bancorp, Inc.'s 2003 Annual Meeting of Shareholders. To instruct
the plan administrator as to how you would like these shares voted at the annual
meeting, please complete the enclosed Voting Instruction Card/Proxy and return
it to Wells Fargo. At the annual meeting, if a participant executed and returned
a Voting Instruction Card/Proxy, the plan administrator will vote the
participant's whole and fractional interests credited to his or her account, to
the extent permitted by law or the company's bylaws.
The board of directors encloses a copy of Codorus Valley Bancorp, Inc.'s Notice
of Annual Meeting and proxy statement in connection with the 2003 Annual Meeting
of Shareholders and a copy of Codorus Valley Bancorp, Inc.'s 2002 Annual Report
to Shareholders. Also enclosed is your Voting Instruction Card/Proxy which you
should complete and promptly return to the plan administrator in the enclosed
envelope.
If you have any questions, please contact Wells Fargo Shareowner Services at
(800) 468-9716 or the undersigned at (717) 747-1519 or (800) 646-1970.
Sincerely,
/s/ Larry J. Miller
Larry J. Miller, President
and Chief Executive Officer
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
VOTING INSTRUCTION CARD/PROXY
CODORUS VALLEY BANCORP, INC.
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 20, 2003
---------------------------------
The undersigned hereby constitutes and appoints Wells Fargo Bank Minnesota,
N.A. proxy of the undersigned, with full power of substitution, to vote all of
the shares of Codorus Valley Bancorp, Inc. that the Codorus Valley Bancorp, Inc.
Dividend Reinvestment and Stock Purchase Plan holds on behalf of the undersigned
and may be entitled to vote at Codorus Valley Bancorp, Inc.'s Annual Meeting of
Shareholders to be held at the Codorus Valley Corporate Center, 105 Leader
Heights Road, York, Pennsylvania 17403, on Tuesday, May 20, 2003 at 9:00 a.m.,
Eastern Time, and at any adjournment or postponement of the meeting as follows:
1. ELECTION OF 3 CLASS A DIRECTORS TO SERVE FOR A 3 YEAR TERM.
RODNEY L. KREBS DALLAS L. SMITH GEORGE A. TROUT, D.D.S.
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
listed above (except as marked to vote for all nominees listed
to the contrary below) above
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
--------------------------------------------------------------------------------
2. In their discretion, the proxy holders are authorized to vote upon such
other business as may properly come before the meeting and any
adjournment or postponement of the meeting.
THIS VOTING INSTRUCTION CARD/PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE
MANNER DIRECTED BY THE UNDERSIGNED PLAN PARTICIPANT. IF NO DIRECTION IS MADE,
THIS VOTING INSTRUCTION CARD/PROXY WILL BE VOTED FOR ALL NOMINEES LISTED ABOVE.
Dated: , 2003
------------------------------
Signature(s) of Shareholder(s)
Plan Participant
Number of Shares Held of Signature(s) of Shareholder(s)
Record on March 13, 2003 Plan Participant
THE VOTING INSTRUCTIONS REQUEST PERTAINS TO SHARES OF COMMON STOCK HELD IN YOUR
PLAN ACCOUNT BUT NOT REGISTERED IN YOUR NAME. THESE SHARES OF COMMON STOCK CAN
BE VOTED ONLY BY THE PLAN ADMINISTRATOR AS THE RECORD HOLDER OF THE SHARES.
PLEASE DATE, SIGN AND PROMPTLY RETURN YOUR VOTING INSTRUCTION CARD/PROXY TO
WELLS FARGO BANK MINNESOTA, N.A. IN THE RETURN ENVELOPE PROVIDED.