proxystatement.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 o
Check the
appropriate box:
o Preliminary Proxy
Statement
o Confidential, for Use of the
Commission Only (as permitted by Rule 14a-16(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to
§240.14a-12
DIME COMMUNITY BANCSHARES,
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.
o Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) 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:
o Fee paid
previously with preliminary materials.
o
Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify
the previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
April 1,
2008
Dear
Shareholder:
You are
cordially invited to attend the Annual Meeting of Shareholders (the "Annual
Meeting") of Dime Community Bancshares, Inc. (the "Company"), which will be held
on May 15, 2008 at 10:00 a.m. Eastern Time, at Giando on the Water, 400 Kent
Avenue, Brooklyn, New York 11211.
The
attached Notice of the Annual Meeting of Shareholders and Proxy Statement
describe the business to be transacted at the Annual Meeting. The
Directors and several officers of the Company, as well as a representative of
Deloitte & Touche LLP, the accounting firm appointed by the Audit Committee
of the Board of Directors to be the Company's independent auditors for the year
ending December 31, 2008, will be present at the Annual Meeting.
The
Company's Board of Directors has determined that an affirmative vote on each
matter to be considered at the Annual Meeting is in the best interests of the
Company and its shareholders and unanimously recommends a vote "FOR" each of
these matters.
Please
complete, sign and return the enclosed proxy card promptly, whether or not you
plan to attend the Annual Meeting. Your vote is important regardless of
the number of shares you own. Voting by proxy will not prevent you
from voting in person at the Annual Meeting, but will assure that your vote is
counted if you are unable to attend. If you
are a shareholder whose shares are not registered in your own name, you will
need additional documentation from your record holder to attend and vote
personally at the Annual Meeting. Examples of such documentation
include a broker's statement, letter or other document confirming your ownership
of the Company's shares.
On behalf
of our Board of Directors and employees, we thank you for your continued support
and hope to see you at the Annual Meeting.
Sincerely
yours,
Vincent
F. Palagiano
Chairman
of the Board
and Chief
Executive Officer
Dime
Community Bancshares, Inc.
209
Havemeyer Street
Brooklyn,
New York 11211
(718)
782-6200
NOTICE
OF THE ANNUAL MEETING OF SHAREHOLDERS
To
Be Held on May 15, 2008
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Shareholders of Dime Community
Bancshares, Inc. (the "Annual Meeting") will be held at Giando on the Water, 400
Kent Avenue, Brooklyn, New York 11211, on Thursday, May 15, 2008 at 10:00 a.m.
Eastern Time, to consider and vote upon the following:
1.
|
Election
of four Directors for terms of three years
each;
|
2.
|
Approval
of Amendment No. 1 to the Dime Community Bancshares, Inc. 2004 Stock
Incentive Plan;
|
3.
|
Ratification
of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2008;
and
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4.
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Transaction
of such other business as may properly come before the Annual Meeting or
any adjournment or postponement thereof. As of the date hereof,
management is
not aware of any other such
business.
|
The Board
of Directors has fixed March 17, 2008 as the record date for the Annual Meeting
and any adjournment or postponement thereof. Only shareholders of
record at the close of business on that date will be entitled to notice of, and
to vote at, the Annual Meeting and any adjournment or postponement
thereof. A list of such shareholders will be available for inspection
by any shareholder for any lawful purpose germane to the Annual Meeting at the
Company's corporate headquarters at 209 Havemeyer Street, Brooklyn, NY 11211 at
any time during regular business hours for 10 days prior to the Annual
Meeting.
By Order
of the Board of Directors
Lance J.
Bennett
Secretary
Brooklyn,
New York
April 1,
2008
YOU
ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER OF
SHARES YOU OWN. THE BOARD OF DIRECTORS URGES YOU TO MARK, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE. RETURNING THE PROXY CARD WILL NOT PREVENT YOU FROM VOTING IN
PERSON IF YOU ATTEND THE ANNUAL
MEETING.
|
DIME
COMMUNITY BANCSHARES, INC.
PROXY
STATEMENT FOR THE
ANNUAL
MEETING OF SHAREHOLDERS
To
Be Held on May 15, 2008
GENERAL
INFORMATION
General
This
Proxy Statement and accompanying proxy card are being furnished to the
shareholders of Dime Community Bancshares, Inc. (the "Company") in connection
with the solicitation of proxies by the Company's Board of Directors from
holders of the shares of the Company's issued and outstanding common stock, par
value $0.01 per share (the "Common Stock"), for use at the Annual Meeting of
Shareholders to be held on May 15, 2008 (the "Annual Meeting") at Giando on the
Water, 400 Kent Avenue, Brooklyn, New York, at 10:00 a.m. Eastern Time, and at
any adjournment or postponement thereof. The Company is a Delaware
corporation and operates as a unitary savings and loan holding company for The
Dime Savings Bank of Williamsburgh (the "Bank"). This Proxy
Statement, together with the enclosed proxy card, is first being mailed to
shareholders on or about April 4, 2008.
Record
Date
The
Company's Board of Directors has fixed the close of business on March 17, 2008
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting (the "Record Date"). Accordingly,
only holders of record of shares of Common Stock at the close of business on
March 17, 2008 will be entitled to vote at the Annual Meeting. There
were 33,869,390 shares of Common Stock outstanding on the Record
Date. The presence, in person or by proxy, of the holders of at least
a majority of the total number of shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum.
Important
Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
to Be Held on May 15, 2008
The proxy statement and annual report
are available on the Company's website at www.dimewill.com.
Voting
Rights
Each
holder of Common Stock on the Record Date will be entitled to one vote at the
Annual Meeting for each share of record held (other than Excess Shares as
defined below). As provided in the Company's Certificate of
Incorporation, record holders (other than any compensation plan maintained by
the Company and certain affiliates) of Common Stock who beneficially own in
excess of 10% of the issued and outstanding shares of Common Stock (such shares
in excess of 10% referred to herein as "Excess Shares") shall be entitled to
cast only one-hundredth of one vote per share for each Excess
Share. A person or entity is deemed to beneficially own shares owned
by an affiliate or associate as well as by persons acting in concert with such
person or entity. The Company's Certificate of Incorporation
authorizes a majority of the Board of Directors to interpret the provisions of
the Certificate of Incorporation governing Excess Shares, and to determine, on
the basis of information known to them after reasonable inquiry, all facts
necessary to ascertain compliance with the Excess Shares provisions of the
Certificate of Incorporation, including, without limitation, (i) the number of
shares of Common Stock beneficially owned by any person or purported owner, (ii)
whether a person or purported owner is an affiliate or associate of, or is
acting in concert with, any other person or purported owner, and (iii) whether a
person or purported owner has an agreement or understanding with any other
person or purported owner as to the voting or disposition of any shares of
Common Stock.
You may
vote your shares by marking and signing the enclosed Proxy Card and returning it
in the enclosed postage-paid envelope, by telephone or internet by following the
instructions stated on the Proxy Card or by attending the Annual Meeting and
voting in person. All properly executed proxies received by the
Company on or before the close of voting on May 15, 2008 will be voted in
accordance with the instructions indicated thereon. If no instructions are given,
executed proxies will be voted FOR election of each of the four nominees for
Director, FOR the approval of Amendment No. 1 to the Dime Community Bancshares,
Inc. 2004 Stock Incentive Plan, FOR ratification of the appointment of Deloitte
& Touche LLP as independent auditors for the year ending December 31, 2008,
and FOR each other proposal identified in the Notice of the Annual Meeting of
Shareholders.
Management
is not aware of any matters other than those set forth in the Notice of the
Annual Meeting of Shareholders that may be brought before the Annual
Meeting. If any other matters properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote the shares
represented by all properly executed proxies on such matters in such manner as
shall be determined by a majority of the Company's Board of
Directors.
If you are a shareholder whose shares
are not registered in your own name, you will need appropriate documentation
from your shareholder of record to vote personally at the Annual
Meeting. Examples of such documentation include a broker's
statement, letter or other document that will confirm your ownership of the
Common Stock.
Vote
Required
Directors
are elected by a plurality of the votes cast in person or by proxy at the Annual
Meeting. The holders of Common Stock may not vote their shares
cumulatively for the election of Directors. Proposals 2 and 3 require
the affirmative vote of the holders of a majority of the number of votes
eligible to be cast by the holders of Common Stock represented, in person or by
proxy, and entitled to vote at the Annual Meeting.
Shares as
to which the "ABSTAIN" box has been selected on the Proxy Card with respect to
Proposals 2 and 3 will be counted as present and entitled to vote and will have
the effect of a vote against that proposal. In contrast, shares
underlying broker non-votes will not be counted as present and entitled to vote
and will have no effect on the vote on Proposal 2 and 3.
With
respect to the election of the four nominees for Director, shares as to which
the "WITHHOLD AUTHORITY" box has been selected for either all or some of the
nominees will be counted as being present for the matter but not as voting "for"
the election of the respective nominees. Therefore, the proxy
represented by these shares will have the same effect as voting against the
respective nominees. In contrast, shares underlying broker non-votes
will not be counted as present and entitled to vote and will have no effect on
the vote on Proposal 1.
Revocability
of Proxies
A proxy
may be revoked at any time before it is voted by filing a written revocation of
the proxy with the Company's Secretary at 209 Havemeyer Street, Brooklyn, New
York 11211 or by submitting a duly executed proxy bearing a later
date. A proxy also may be revoked by attending and voting at the
Annual Meeting, only if a written revocation is filed with the Secretary prior
to the voting of such proxy.
Solicitation
of Proxies
The
Company will bear the costs of soliciting proxies from its
shareholders. In addition to the use of mail, proxies may be
solicited by officers, Directors or employees of the Company or the Bank by
telephone or other forms of communication. The Company will also
request persons, firms and corporations holding shares in their names or in the
names of their nominees, which are beneficially owned by others, to send proxy
materials to, and obtain proxies from, such beneficial owners, and will
reimburse such holders for reasonable expenses incurred in connection
therewith. In addition, the Company has retained American Stock
Transfer & Trust Company to assist in the solicitation of
proxies. The cost of such solicitation, which will be comprised of
reimbursement for reasonable out-of-pocket expense, will be paid by the
Company.
Interest
of Directors and Management in Certain Proposals
At the
Annual Meeting, shareholders are being asked to approve Amendment No. 1 to the
Dime Community Bancshares, Inc. 2004 Stock Incentive Plan (the "2004 Stock
Incentive Plan") to increase the number of shares of Common Stock available for
grants to Directors and executive officers of stock options, stock appreciation
rights and restricted stock. As a result, the Company’s Directors and
executive officers have personal interests in the outcome of this proposal that
are different from the interests of the Company’s other
shareholders.
Director
Attendance at Annual Meetings
The
Company considers Board attendance at shareholder meetings a
priority. It is the policy of the Company that Directors exercise
their best efforts to attend every meeting. All twelve individuals
who were members of the Board at the time attended the annual meeting held in
2007.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal
Shareholders of the Company
The
following table sets forth, as of March 17, 2008, certain information as to
persons known to the Company to be the beneficial owner of in excess of 5% of
the shares of Common Stock. Management knows of no person, except as
listed below, who beneficially owned more than 5% of the Common Stock as of
March 17, 2008. Except as otherwise indicated, the information
provided in the table was obtained from filings with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Addresses provided are those listed in
the filings as the address of the person authorized to receive notices and
communications. For purposes of the table below and the table set
forth under "Security Ownership of Management," in accordance with Rule 13d-3
under the Exchange Act, a person is deemed to be the beneficial owner of any
shares of Common Stock (1) over which he or she has or shares, directly or
indirectly, voting or investment power, and (2) of which he or she has the right
to acquire beneficial ownership at any time within 60 days after March 17,
2008. As used herein, "voting power" includes the power to vote, or
direct the voting of, Common Stock and "investment power" includes the power to
dispose, or direct the disposition, of such shares. Unless otherwise
noted, each beneficial owner has sole voting and sole investment power over the
shares beneficially owned.
Title of Class
|
|
Name and Address of Beneficial
Owner
|
|
Amount
and Nature
of
Beneficial
Ownership
|
|
Percent
Of Class
|
Common
Stock
|
|
The
Employee Stock Ownership Plan Trust of Dime Community Bancshares,
Inc. and Certain Affiliates
452 Fifth Avenue
New York, NY 10018
|
|
3,390,445(1)
|
|
10.01%
|
Common
Stock
|
|
Compensation
Committee of Dime Community Bancshares, Inc. (includes
the 3,390,445 ESOP shares reflected
above)
209 Havemeyer Street
Brooklyn, NY 11211
|
|
4,037,881(2)
|
|
11.92%
|
______________________
(1)
|
The
Employee Stock Ownership Plan of Dime Community Bancshares, Inc. and
Certain Affiliates (the "ESOP") filed a Schedule 13G with the SEC on
February 5, 2008. The ESOP is administered by the Compensation
Committee of the Company's Board of Directors (the "Compensation
Committee"). The ESOP's assets are held in a trust (the "ESOP
Trust") for which RS Group Trust Company serves as trustee (the "ESOP
Trustee"). The ESOP Trust purchased these shares with funds
borrowed from the Company and placed them in a suspense account for
release and allocation to participants’ accounts in annual
installments. As of March 17, 2008, 1,983,663 shares held by
the ESOP Trust were allocated. The terms of the ESOP provide
that, subject to the ESOP Trustee's fiduciary responsibilities under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), the
ESOP Trustee will vote, tender or exchange shares of Common Stock held in
the ESOP Trust in accordance with instructions received from the
participants. The ESOP Trustee will vote allocated shares as to which no
instructions are received and any shares that have not been allocated to
participants' accounts in the same proportion as allocated shares with
respect to which the ESOP Trustee receives instructions are voted, subject
to fiduciary duties of the ESOP Trustee. The ESOP Trustee will
tender or exchange any shares in the suspense account or that otherwise
have not been allocated to participants' accounts in the same proportion
as allocated shares with respect to which the ESOP Trustee receives
instructions are tendered or exchanged, subject to fiduciary duties of the
ESOP Trustee. With respect to allocated shares as to which no
instructions are received, the ESOP Trustee will be deemed to have
received instructions not to tender or exchange such
shares. Each member of the Compensation Committee disclaims
beneficial ownership of such shares. See footnote 2 for a
discussion of the voting and investment powers of the Compensation
Committee.
|
(2)
|
The
Compensation Committee filed a Schedule 13G with the SEC on February 5,
2008. The Compensation Committee serves certain administrative
functions for the ESOP, the Recognition and Retention Plan for Outside
Directors, Officers and Employees of Dime Community Bancshares, Inc. (the
"RRP"), and The Dime Savings Bank of Williamsburgh 401(k) Plan [the
"401(k) Plan"]. In addition, the Compensation Committee serves
as trustee for 60,304 restricted stock awards granted to certain officers
of the Company or Bank under the 2004 Stock Incentive Plan. The
Compensation Committee has the authority to direct the trustee of the RRP
with respect to the exercise of voting rights, but has assigned voting and
tender rights over allocated shares to participating
officers. Shares indicated in the table as beneficially
owned by the Compensation Committee include all shares indicated in the
table as beneficially owned by the ESOP Trust. The Compensation
Committee has the authority to direct the ESOP Trustee with respect to the
investment of the ESOP's assets (including the acquisition or disposition
of both allocated and unallocated shares) in the absence of a tender
offer, but has no voting power with respect to any shares. With
respect to the ESOP, ERISA, in limited circumstances, may confer upon the
ESOP Trustee the power and duty to control the voting and tendering of
Common Stock allocated to the accounts of participating employees and
beneficiaries who fail to exercise their voting and/or tender rights. Each
member of the Compensation Committee disclaims beneficial ownership of
such shares.
|
Security
Ownership of Management
The
following table sets forth information with respect to the shares of Common
Stock beneficially owned by each of the Company's Directors and the Named
Executive Officers identified in the Summary Compensation Table included
elsewhere herein, and all of the Company's Directors and executive officers as a
group as of the Record Date. Except as otherwise indicated, each
person and each group shown in the table has sole voting and investment power
with respect to the shares of Common Stock indicated.
Title
of Class
|
|
Name
of Beneficial Owner
|
|
Position
(1)
|
|
Amount
and
Nature
of
Beneficial
Ownership
(2)(3)(4)
|
|
Percent
of
Common
Stock
Outstanding
|
|
Vested
Stock Options Included in Beneficial Ownership
Total
(5)
|
Other
Non-Beneficial Ownership (6)
|
Common
|
|
Vincent
F. Palagiano
|
|
Director,
Chairman of the Board
and
Chief Executive
Officer
|
|
1,482,629
|
(7)
|
4.4%
|
|
723,330
|
316,323
|
Common
|
|
Michael
P. Devine
|
|
Director,
President and Chief
Operating Officer
|
|
870,688
|
(8)
|
2.6
|
|
460,787
|
214,265
|
Common
|
|
Kenneth
J. Mahon
|
|
Director,
First Executive Vice
President
and Chief Financial
Officer
|
|
536,278
|
(9)
|
1.6
|
|
253,462
|
117,026
|
Common
|
|
Anthony
Bergamo
|
|
Director
|
|
153,493
|
(10)
|
*
|
|
41,370
|
-
|
Common
|
|
George
L. Clark, Jr.
|
|
Director
|
|
263,858
|
(11)
|
*
|
|
41,370
|
-
|
Common
|
|
Steven
D. Cohn
|
|
Director
|
|
104,631
|
(12)
|
*
|
|
34,980
|
-
|
Common
|
|
Patrick
E. Curtin
|
|
Director
|
|
111,883
|
(13)
|
*
|
|
41,370
|
-
|
Common
|
|
Fred
P. Fehrenbach
|
|
Director
|
|
122,448
|
(14)
|
*
|
|
41,370
|
-
|
Common
|
|
John
J. Flynn
|
|
Director
|
|
55,259
|
(15)
|
*
|
|
27,480
|
-
|
Common
|
|
Joseph
J. Perry
|
|
Director
|
|
19,500
|
|
*
|
|
10,000
|
-
|
Common
|
|
Donald
E. Walsh
|
|
Director
|
|
15,000
|
|
*
|
|
10,000
|
-
|
Common
|
|
Omer
S.J. Williams
|
|
Director
|
|
17,000
|
|
*
|
|
10,000
|
-
|
Common
|
|
Christopher
D. Maher
|
|
Executive
Vice President and
Director of
Retail Banking
|
|
40,947
|
|
*
|
|
17,000
|
-
|
Common
|
|
Timothy
B. King
|
|
Executive
Vice President and
Chief
Investment Officer
|
|
233,115
|
(16)
|
*
|
|
87,569
|
40,107
|
All
Directors and executive officers as a group (16 persons)
|
|
6,354,252
|
|
18.8%
|
|
1,887,622
|
729,097
|
________________________
* Less
than one percent
(1)
|
Titles
are for positions with the Company and the Bank except for Mr. Maher,
whose title is with the Bank only.
|
(2)
|
See
"Security Ownership of Certain Beneficial Owners and Management -
Principal Shareholders of the Company" for a definition of "beneficial
ownership."
|
(3)
|
The
figures shown include ESOP shares held in trust that have been allocated
to individual accounts as follows: Mr. Palagiano, 54,078 shares;
Mr. Devine, 54,078 shares; Mr. Mahon, 54,078 shares; Mr. Maher 2,319
shares, Mr. King, 50,913 shares, and all Directors and executive officers
as a group, 262,789 shares. Such persons have voting power
(subject to the legal duties of the ESOP Trustee) but no investment power,
except in limited circumstances, as to such shares. The figures
shown for Messrs. Palagiano, Devine, Mahon, Maher and King do not include
any portion of the 1,406,782 ESOP shares held in trust that have not been
allocated to any individual's account and as to which Messrs. Palagiano,
Devine, Mahon, Maher and King may be deemed to share voting power with
other ESOP participants. The figure shown for all Directors and
executive officers as a group includes 1,406,782 shares as to which the
members of the Compensation Committee (consisting of Messrs. Fehrenbach,
Flynn and Perry) may be deemed to have sole investment power, except in
limited circumstances, thereby causing each such Compensation Committee
member to be deemed a beneficial owner of such shares. Each
member of the Compensation Committee disclaims beneficial ownership of
such shares and, accordingly, such shares are not attributed to the
members of the Compensation Committee individually. In
addition, the figure shown for all Directors and executive officers as a
group includes 732,364 shares held in trust ("BMP Trust") for the benefit
of Messrs. Palagiano, Devine, Mahon and King and other officers under the
Benefit Maintenance Plan of Dime Community Bancshares, Inc. (the
"BMP"). The BMP Trust, as directed by the Company, exercises
voting and investment power over these shares (See "Compensation of
Executive Officers - Benefits – ESOP").
|
(4)
|
The
figures shown include shares held pursuant to the 401(k) Plan that were
allocated as of the Record Date to individual accounts as follows:
Mr. Palagiano, 85,405 shares; Mr. Mahon, 93,736 shares; Mr. Maher
1,377 shares and all Directors and executive officers as a
group, 228,662 shares. Such persons have sole voting power and
sole investment power as to such shares [See "Compensation – Compensation
Plans – Benefits - 401(k) Plan"].
|
(5)
|
Amounts
include stock options eligible to be exercised within 60 days as
follows: Messrs. Bergamo, Clark, Cohn, Curtin, Fehrenbach,
Flynn, Perry, Walsh and Williams, 10,000 options each; Mr. Palagiano,
62,500 options; Mr. Devine, 42,500 options; Mr. Mahon, 26,250 options; Mr.
Maher, 17,000 options; Mr. King, 12,500 options and all Directors and
executive officers as a group, 262,000 options.
|
(6)
|
Other
non-beneficial ownership amounts represent shares that are held in trust
for the benefit of the respective Named Executive Officers under the
BMP. Messrs. Palagiano, Devine, Mahon and King have neither
voting nor investment power with respect to these
shares. However, since the Company maintains full voting and
dispositive powers over these shares, they are included in the total
beneficial ownership amount for the full Directors and executive officers
group (see footnote 3 above).
|
(7)
|
Includes
612,719 shares as to which Mr. Palagiano may be deemed to share voting and
investment power.
|
(8)
|
Includes
351,307 shares as to which Mr. Devine may be deemed to share voting and
investment power.
|
(9)
|
Includes
132,518 shares as to which Mr. Mahon may be deemed to share voting and
investment power.
|
(10)
|
Includes
110,763 shares as to which Mr. Bergamo may be deemed to share voting and
investment power.
|
(11)
|
Includes
84,375 shares as to which Mr. Clark may be deemed to share voting and
investment power.
|
(12)
|
Includes
68,651 shares as to which Mr. Cohn may be deemed to share voting and
investment power.
|
(13)
|
Includes
69,153 shares as to which Mr. Curtin may be deemed to share voting and
investment power.
|
(14)
|
Includes
225 shares as to which Mr. Fehrenbach may be deemed to share voting and
investment power.
|
(15)
|
Includes
26,779 shares as to which Mr. Flynn may be deemed to share voting and
investment power.
|
(16)
|
Includes
85,665 shares as to which Mr. King may be deemed to share voting and
investment power.
|
______________________________________
PROPOSAL
1
ELECTION
OF DIRECTORS
______________________________________
General
The
Company's Certificate of Incorporation and Bylaws provide for the election of
Directors by the shareholders. For this purpose, the Company's Board
of Directors is divided into three classes, each class to be as nearly equal in
number as possible. The terms of office of the members of one class
expire, and a successor class is to be elected, at each annual meeting of
shareholders. The Company currently has twelve
Directors.
Kenneth
J. Mahon, George L. Clark, Jr., Steven D. Cohn and John J. Flynn, incumbent
Directors whose terms expire at the Annual Meeting, have been nominated by the
Nominating Committee of the Board of Directors to be re-elected at the Annual
Meeting for a term expiring at the annual meeting to be held in 2011, or when
their successors are otherwise duly elected and qualified.
Each
nominee has consented to being named in this Proxy Statement and to serve, if
elected. In the event that any nominee for election as a Director at
the Annual Meeting is unable or declines to serve, which the Board of Directors
has no reason to expect, the persons named in the Proxy Card will vote with
respect to a substitute nominee designated by the present Board of Directors,
unless the shareholder has elected to "withhold authority" with respect to all
nominees.
Information
as to Nominees and Continuing Directors
In March
2008, the Board determined that all of its current Directors with the exception
of Messrs. Palagiano, Devine, Mahon and Curtin were independent pursuant to its
Policy Regarding Director Independence (the “Director Independence Policy”) and
National Association of Securities Dealers, Inc. ("NASD") Rule 4200. Messrs.
Palagiano, Devine and Mahon were not independent because they were officers of
the Company. Mr. Curtin was deemed not independent because he was a
member of a law firm providing various legal services to the Company or its
subsidiaries. See "Transactions with Certain Related
Persons." The Director Independence Policy is available on the
Company's website at www.dimewill.com by clicking
Investor Relations and then Corporate Governance within the Investor Relations
menu.
The
Nominating Committee is responsible for identifying, evaluating and recommending
nominees for election by the Company’s shareholders. The Nominating
Committee is authorized to retain search firm(s) to assist in the identification
of candidates. The Nominating Committee is not limited to a specific
process in identifying candidates and will consider potential nominees from
various sources, including recommendations from shareholders as well as
Directors and officers of the Company. Individuals recommended by
shareholders are evaluated in a manner identical to other potential
nominees.
The
Nominating Committee has adopted general criteria for nomination to the Board,
which establish the minimum qualifications and experience to be examined in
determining candidates for election. Pursuant to the general
criteria, Directors should possess personal and professional ethics, integrity
and values; be committed to representing the long-term interests of the
Company’s shareholders and other constituencies; possess the ability to (a)
exercise sound business judgment, (b) work with others as an effective group,
and (c) commit adequate time to their responsibilities; be independent as
defined in applicable law, the Director Independence Policy and the Company's
Code of Business Ethics and be able to impartially represent the interests of
the Company’s shareholders and other constituencies; possess experience and
expertise relevant to the business of the Company; and possess such other
knowledge, experience or skills as required or which may be useful considering
the composition of the Board, the operating requirements of the Company and the
long-term interests of the shareholders.
The
following table sets forth certain information with respect to each nominee for
election as a Director and each Director whose term does not expire at the
Annual Meeting ("Continuing Director"). There are no arrangements or
understandings between the Company and any Director or nominee pursuant to which
such person was selected as a Director or nominee. For information
with respect to security ownership by Directors, see "Security Ownership of
Certain Beneficial Owners and Management - Security Ownership of
Management."
Nominees
|
|
Age(1)
|
|
Director
Since(2)
|
|
Term
Expires
|
|
Position(s)
Held with the Company and the Bank
|
|
|
|
|
|
|
|
|
|
Kenneth
J. Mahon
|
|
57
|
|
2003
|
|
2008
|
|
Director,
First Executive Vice President and Chief Financial
Officer
|
George
L. Clark, Jr.
|
|
67
|
|
1980
|
|
2008
|
|
Director
|
Steven
D. Cohn
|
|
59
|
|
1994
|
|
2008
|
|
Director
|
John
J. Flynn
|
|
71
|
|
1994
|
|
2008
|
|
Director
|
Continuing Directors
|
|
|
|
|
|
|
|
|
Vincent
F. Palagiano
|
|
67
|
|
1978
|
|
2010
|
|
Director,
Chairman of the Board and Chief Executive Officer
|
Michael
P. Devine
|
|
61
|
|
1980
|
|
2009
|
|
Director,
President and Chief Operating Officer
|
Anthony
Bergamo
|
|
61
|
|
1986
|
|
2009
|
|
Director
|
Patrick
E. Curtin
|
|
62
|
|
1986
|
|
2010
|
|
Director
|
Fred
P. Fehrenbach
|
|
71
|
|
1987
|
|
2009
|
|
Director
|
Joseph
J. Perry
|
|
41
|
|
2005
|
|
2009
|
|
Director
|
Donald
E. Walsh
|
|
63
|
|
2006
|
|
2010
|
|
Director
|
Omer
S. J. Williams
|
|
67
|
|
2006
|
|
2010
|
|
Director
|
(1) As
of March 17, 2008.
(2) Includes
service as a Director or Trustee with the Bank prior to the Company's
incorporation on December 12, 1995.
The
principal occupation and business experience of each nominee for election as a
Director and each Continuing Director are set forth below.
Nominees
for Election as Director
Kenneth J. Mahon has served
as a Director of the Company since 2002 and of the Bank since 1998. Mr. Mahon
has served as the Chief Financial Officer of both the Company and the Bank since
1996. Mr. Mahon was named the First Executive Vice President of both
the Company and the Bank in 2008 and was elected an Executive Vice President of
both the Company and Bank in 1997. Prior to serving as Executive Vice
President, Mr. Mahon served as the Bank's Comptroller and Senior Vice President.
Mr. Mahon is a member of the Financial Managers Society, the National Investor
Relations Institute and the National Association of Corporate Directors, and
serves on the Neighborhood Advisory Board of Brooklyn Legal Services Corporation
A. Prior to joining the Bank in 1980, Mr. Mahon served in the financial areas of
several New York City metropolitan area savings banks.
George L. Clark, Jr. has
served as a Director of the Company since its formation in 1995 and as a Trustee
or Director of the Bank since 1980. Mr. Clark is President of George L. Clark
Inc. (Realtors), a New York State licensed real estate firm. Mr. Clark was a
director of the Federal National Mortgage Association between 1986 and 1992, and
a former Chairman of the New York State Republican Committee. Mr. Clark has been
a licensed real estate broker for 47 years.
Steven D. Cohn has served as
a Director of the Company since its formation in 1995 and as a Trustee or
Director of the Bank since 1994. Mr. Cohn is the managing partner in the law
firm of Goldberg and Cohn LLP, in Brooklyn Heights, New York.
John J. Flynn has
served as a Director of the Company since its formation in 1995 and as a Trustee
or Director of the Bank since October 1994, and before that from February 1983
to February 1993. From February 1993 through August 1994, Mr. Flynn was
Executive Vice President of Flushing Savings Bank, FSB in Flushing, New
York. Since September 1994, Mr. Flynn has been a self-employed real
estate mortgage broker and consultant.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
NOMINEES FOR ELECTION AS DIRECTORS.
Continuing
Directors
Vincent F. Palagiano has
served as the Chairman of the Board and Chief Executive Officer of the Company
since its formation in 1995 and of the Bank since 1989. He has served as a
Trustee or Director of the Bank since 1978. In addition, Mr.
Palagiano has served on the Board of Directors of the Boy Scouts of America,
Brooklyn Division since 1999, and served on the Boards of Directors of the
Institutional Investors Capital Appreciation Fund from 1996 to 2006, and The
Community Banker's Association of New York from 2001 to 2005. Mr.
Palagiano joined the Bank in 1970 as an appraiser and has also served as
President of both the Company and the Bank, and as Executive Vice President,
Chief Operating Officer and Chief Lending Officer of the Bank. Prior to 1970,
Mr. Palagiano served in the real estate and mortgage departments at other
financial institutions and title companies.
Michael P. Devine has served
as a Director of the Company since its formation in 1995 and as a Trustee or
Director of the Bank since 1980. Mr. Devine has served as President
of both the Company and Bank since January 1, 1997 and as Chief Operating
Officer of the Company since its inception in 1995 and of the Bank since
1989. Prior to Mr. Devine’s appointment as President, he served as
Executive Vice President and Secretary of both the Company and the
Bank. Mr. Devine joined the Bank in 1971 and has served as the
Internal Auditor, Comptroller and Investment Officer. Prior to 1971, Mr. Devine
served as a Senior Accountant with the firm of Peat Marwick Mitchell &
Co. Since August 2001, Mr. Devine has served on the Board of
Directors of Retirement Systems Group, Inc. In September 2007, Mr.
Devine joined the Board of Trustees of Long Island University and serves on its
Audit and Budget and Finance Committees.
Anthony Bergamo has served as
a Director of the Company since its formation in 1995 and as a Trustee or
Director of the Bank since 1986. Mr. Bergamo is a licensed attorney in New York
and New Jersey and currently serves as Vice Chairman of MB Real Estate,
headquartered in Manhattan, New York. Mr. Bergamo is also the chief
executive officer of Niagara Falls Redevelopment LLC and Chairman of the Federal
Law Enforcement Foundation. In 2002, Mr. Bergamo was elected a
director of Lonestar Steakhouse and Saloon, Inc., a publicly traded
company.
Patrick E. Curtin has served
as a Director of the Company since its formation in 1995 and as a Trustee or
Director of the Bank since 1986. Mr. Curtin is a senior partner in the law firm
of Conway Farrell Curtin & Kelly, P.C. ("Conway Farrell") in New York, New
York.
Fred P. Fehrenbach has served
as a Director of the Company since its formation in 1995 and as a Trustee or
Director of the Bank since 1987. Mr. Fehrenbach is President of
Consolidated Brokerage Corp., a retail insurance brokerage located in Great
Neck, New York. Mr. Fehrenbach has been with Consolidated Brokerage
Corp. since 1975. Mr. Fehrenbach is also the President of Shell
Realty Corp., a real estate holding company.
Joseph J. Perry has served as
a Director of both the Company and Bank since September 2005, and from January
2004 through August 2005 as a Director of Havemeyer Equities, Inc., ("HEC"), a
previously wholly-owned subsidiary of the Bank. He is currently a partner at
Marcum & Kliegman LLP, a public accounting and consulting firm headquartered
in Melville, New York, where he has served as the partner-in-charge of the Long
Island Tax Department since July 2004. Prior to joining Marcum & Kliegman
LLP, Mr. Perry was a tax partner at one of the leading "Big 5" accounting firms
and provided services to several financial services companies throughout the New
York metropolitan area. Mr. Perry is a member of the American Institute of
Certified Public Accountants and the New York State Society of Public
Accountants. He has additionally served as a member of the advisory board to
Suffolk Community College.
Donald E. Walsh has served as
a Director of both the Company and Bank since July 2006, as a Director of HEC
from November 2005 through June 2006. Mr. Walsh retired in 2005 as one of three
partners in the Office of the Vice Chairman of Audit and Advisory Services of
KPMG LLP ("KPMG"), an auditing and advisory services firm. Mr. Walsh was a
Partner-in-Charge of the Audit Quality Office of KPMG from 2002 through 2005,
where he developed and executed the national implementation of new initiatives
in the areas of resource management, client satisfaction and service pricing.
Prior to this responsibility, Mr. Walsh served as Chief Operating Partner of the
Northeast Risk and Advisory Services practice of KPMG, where he managed the
combination of the Information Risk Management and Advisory Services practices.
From 1998 through 2001, Mr. Walsh served as the first leader of the Northeast
Audit Advisory Services practice of KPMG.
Omer S.J. Williams has served
as a Director of both the Company and Bank since July 2006. Mr.
Williams is a partner at Thacher Proffitt & Wood LLP ("Thacher"), where he
has served as both the Chairman of the firm's Executive Committee and the
Managing Partner of the firm. Mr. Williams has more than 40 years of experience
in corporate and financial institution law, including securities and mortgage
finance issues.
Meetings
and Committees of the Company's Board of Directors
The Board
of Directors meets on a monthly basis and may have additional special meetings
upon the request of the Chairman of the Board, President or at least 60% (but
not less than five) of the Directors then in office. The Company's
Board of Directors met twelve times during the year ended December 31,
2007. No incumbent Directors during 2007 attended fewer than 75% of
the aggregate of: (1) the total number of Board meetings conducted during the
period for which he was a Director, and (ii) the total number of meetings
conducted by committees of the Board on which he served during the periods that
he served.
The
Company's Board of Directors has established the following
committees:
The Executive Committee
consists of Messrs. Palagiano (Chairman), Devine, Bergamo, Clark, Cohn
and Fehrenbach. The purpose of the Executive Committee is to exercise
all the powers of the Board in the management of the business and affairs of the
Company in the intervals between the meetings of the Board. The
Executive Committee meets at the call of the Chairman, President or a majority
of the members of the Executive Committee. The Executive Committee
conducted no meetings during
the year ended December 31, 2007.
The Compensation Committee
consists of Messrs. Fehrenbach (Chairman), Flynn and Perry. The
Compensation Committee establishes the compensation of the Chief Executive
Officer, approves the compensation of executive management, oversees
administration of the process for determining the compensation and benefits of
officers and employees of the Bank, recommends Director compensation to the
Board and assists the Board in its oversight of the human resources activities
of the Company and its subsidiaries. The Compensation Committee's
charter requires that it meet annually and as requested by the Chairman of the
Board of Directors. The Compensation Committee met four times during the year ended
December 31, 2007.
The Nominating Committee
consists of Messrs. Williams (Chairman), Fehrenbach, and Bergamo, each of
whom is independent as defined in Rule 4350(d) ["Rule 4350(d)"] of the NASD
listing standards. The Nominating Committee identifies and selects
nominees for all Directorships, recommends committee memberships to the Board,
and establishes criteria for the selection of new Directors to serve on the
Board. The Nominating Committee met twice during 2007. In
addition, the Nominating Committee met on March 20, 2008 to, among other
matters, select the nominees for election as Directors at the Annual
Meeting. In accordance with the Company's Bylaws, provided the
Nominating Committee makes such nominations, no nominations for election
as
Director except those made by the Nominating Committee shall be voted upon at
the Annual Meeting unless properly made by a shareholder in accordance with the
procedures set forth under "2008 Annual Shareholder Meeting Proposals" in the
proxy statement for the annual meeting held in May 2007. The
Nominating Committee operates pursuant to a charter. A current copy
of the Nominating Committee charter is available on the Company's website, at
www.dimewill.com, by clicking Investor Relations and then Corporate Governance
within the Investor Relations menu.
The Governance Committee
consists of Messrs. Williams (Chairman), Cohn and Perry. The
Governance Committee develops and recommends to the Board corporate governance
principles applicable to the Company, and otherwise assumes a leadership role in
the corporate governance of the Company. The Governance Committee met
twice during 2007.
The Audit Committee consists
of Messrs. Bergamo (Chairman), Clark, Cohn, Perry and Walsh, each of whom is
independent as defined in Rule 4350(d). The Audit Committee is
appointed by the Board of Directors of the Company to assist the Board in (1)
monitoring the integrity of the financial statements of the Company, (2)
monitoring Company compliance with legal and regulatory requirements and
internal controls, (3) monitoring the independence and performance of the
Company’s internal and independent auditors, and (4) maintaining an open means
of communication among the independent auditor, senior management, the internal
auditors, and the Board. The Audit Committee operates pursuant to a
written charter. A current copy of the charter may be viewed on the
Company's website at www.dimewill.com. The
Audit Committee charter requires that it meet at least four times annually or
more frequently as circumstances dictate. The Audit Committee met six
times during the year ended December 31, 2007.
Report
of Audit Committee
The
following Report of the Company's Audit Committee is provided in accordance with
the rules and regulations of the SEC.
Under
rules promulgated by the SEC, the Company is required to provide certain
information regarding the activities of its Audit Committee. In
fulfillment of this requirement, the Audit Committee, at the discretion of the
Board, has prepared the following report for inclusion in the Proxy
Statement:
1. The
Audit Committee has reviewed and discussed the audited consolidated financial
statements of the Company as of and for the year ended December 31, 2007 with
management;
2. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by the Statement on Auditing Standards No. 61, as amended
(AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the
Public Company Accounting Oversight Board in Rule 3200T;
3. The
Audit Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1
(Independence Standards Board Standard No. 1, Independence Discussions with
Audit Committees), as adopted by the Public Company Accounting Oversight Board
in Rule 3600T, and has discussed with the independent accountant the independent
accountant's independence; and
4. Based
on the review and discussions referred to in paragraphs 1 through 3 above, the
Audit Committee recommended to the Board of Directors that the audited
consolidated financial statements be included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2007 for filing with the Securities
and Exchange Commission.
AUDIT
COMMITTEE OF DIME COMMUNITY BANCSHARES, INC.
Anthony
Bergamo, Chairman
George L.
Clark, Jr., Member
Steven D.
Cohn, Member
Joseph J.
Perry, Member
Donald E.
Walsh, Member
The Board
of Directors has determined that Messrs. Bergamo, Perry and Walsh qualify as
Audit Committee financial experts as defined in Item 407(d)(5) of SEC Regulation
S-K.
Directors'
Compensation
Fee
Arrangements. During the year ended December 31, 2007, each of
the Company's non-officer Directors (each an "Outside Director") received a
retainer of $30,000 and a fee of $1,000 for each of the Company's or the Bank's
Board meetings attended. The meeting attendance fee was $1,000 for the Audit
Committee and $900 for all other committees. The Chairman of the
Audit Committee additionally receives an annual retainer of
$5,000. If both of the Company's and the Bank's Boards of Directors
or corresponding committees met on the same day, such Directors received only
one fee for the Board meetings and only one fee for the committee
meetings. On March 20, 2008, the remuneration paid to each of
the Outside Directors for each of the Company's or the Bank's Board meetings
attended was increased from $1,000 to $1,500. This adjustment was
based upon the recommendations of a nationally recognized compensation
consulting firm retained by the Company, and the specific recommendations made
by the compensation consulting firm were based on a comparative analysis
of thirteen comparably sized and similarly located public
banks.
Directors' Retirement
Plan. The Company has adopted the Retirement Plan for Board
Members of Dime Community Bancshares, Inc. (the "Directors' Retirement Plan"),
which provides benefits to each eligible Outside Director commencing on
termination of Board service at or after age 65. An eligible Outside Director
retiring at or after age 65 will be paid an annual retirement benefit equal to
the amount of the aggregate compensation for services as a Director (excluding
stock compensation) paid to him or her for the twelve-month period immediately
prior to termination of Board service, multiplied by a fraction, the numerator
of which is the number of years of service, up to a maximum of 10, as an Outside
Director (including service as a Director or trustee of the Bank or any
predecessor) and the denominator of which is 10. An individual who terminates
Board service after having served as an Outside Director for 10 years may elect
to begin collecting benefits under the Directors' Retirement Plan at or after
attainment of age 55, however, the annual retirement benefits will be reduced
pursuant to an early retirement reduction formula to reflect the commencement of
benefit payments prior to age 65. An Outside Director may elect to have benefits
distributed in any one of the following forms: (i) a single life annuity; (ii) a
50% or 100% joint and survivor annuity; or (iii) a single life annuity with a 5,
10, or 15 year guaranteed term. In the event that an Outside Director dies prior
to the commencement of benefit payments under the Directors' Retirement Plan, a
50% survivor annuity will automatically be paid to his or her surviving spouse,
unless the decedent has elected otherwise. This plan was frozen effective March
31, 2005.
2001 Stock Option
Plan. The Dime Community Bancshares, Inc. 2001 Stock Option
Plan for Outside Directors, Officers and Employees (the "2001 Stock Option
Plan") was adopted by the Company's Board of Directors and subsequently approved
by its shareholders at its annual meeting held in 2001. At December
31, 2007, up to 29,625 stock options were eligible for grant to Outside
Directors under the 2001 Stock Option Plan. On November 21, 2001, the
effective date of the 2001 Stock Option Plan, each of the Company's Outside
Directors was granted non-qualified stock options to purchase 6,750 shares of
Common Stock. All of these options vested on November 21, 2002. On February 1,
2003, each of the Company's Outside Directors was additionally granted
non-qualified stock options to purchase 7,500 shares of Common Stock. All of
these options vested on February 1, 2004. On January 27, 2004, each of the
Company's Outside Directors was additionally granted non-qualified stock options
to purchase 9,000 shares of Common Stock. All of these options vested on January
27, 2005.
2004 Stock Incentive
Plan. The 2004 Stock Incentive Plan was adopted by the
Company's Board of Directors and subsequently approved by its shareholders at
its annual meeting held in 2004. At December 31, 2007, 13,184 shares remained
eligible for future grant to Outside Directors of the Company under the 2004
Stock Incentive Plan. These may be granted in the form of either stock options
or restricted stock awards, or a combination thereof. On January 31,
2005, a grant of 8,480 non-qualified stock options with an exercise price of
$16.45 per share was made to each Outside Director of the Company under the 2004
Stock Incentive Plan, for a total grant of 76,320 options. All of these options
expire on January 31, 2015. On December 30, 2005, vesting was accelerated for
all unvested options of this grant. On May 1, 2007, a grant of 1,000
restricted stock awards was made to each of Messrs. Bergamo, Clark, Cohn,
Curtin, Flynn and Fehrenbach and a grant of 2,000 restricted stock awards was
made to each of Messrs. Perry, Walsh and Williams under the 2004 Stock Incentive
Plan, for a total grant of 12,000 restricted stock awards. All of
these awards fully vest on May 1, 2008. In addition on May 1, 2007, a
grant of 10,000 non-qualified stock options with an exercise price of $13.74 per
share was made to each Outside Director of the Company under the 2004 Stock
Incentive Plan, for a total grant of 90,000 options. All of these
options expire on May 1, 2017 and vest on May 1, 2008.
The
following table sets forth information regarding compensation earned by each
Outside Director during the year ended December 31, 2007:
DIRECTOR
COMPENSATION
|
Name
|
|
Fees
Earned or Paid in Cash (1)
|
|
Stock
Awards
(2)
|
|
Option
Awards (3)
|
|
Non-Equity
Incentive Plan Compensation
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
(4)
|
|
All
Other Compensation (5)
|
|
Total
|
Anthony
Bergamo
|
|
$54,800
|
|
$9,160
|
|
$19,029
|
|
—
|
|
$30,127
|
|
$280
|
|
$113,396
|
George
L. Clark, Jr.
|
|
48,500
|
|
9,160
|
|
19,029
|
|
—
|
|
—
|
|
280
|
|
76,969
|
Steven
D. Cohn
|
|
51,500
|
|
9,160
|
|
19,029
|
|
—
|
|
20,286
|
|
280
|
|
100,255
|
Patrick
E. Curtin
|
|
49,900
|
|
9,160
|
|
19,029
|
|
—
|
|
38,153
|
|
280
|
|
116,522
|
Fred
P. Fehrenbach
|
|
49,800
|
|
9,160
|
|
19,029
|
|
—
|
|
—
|
|
280
|
|
78,269
|
John
J. Flynn
|
|
48,000
|
|
9,160
|
|
19,029
|
|
—
|
|
—
|
|
280
|
|
76,469
|
Joseph
J. Perry
|
|
49,500
|
|
18,320
|
|
19,029
|
|
—
|
|
—
|
|
560
|
|
87,409
|
Donald
E. Walsh
|
|
50,600
|
|
18,320
|
|
19,029
|
|
—
|
|
—
|
|
560
|
|
88,509
|
Omer
S. J. Williams
|
|
50,800
|
|
18,320
|
|
19,029
|
|
—
|
|
—
|
|
560
|
|
88,709
|
(1)
|
Includes
retainer payments, meeting fees, and committee and/or chairmanship fees
earned during the fiscal year, whether such fees were paid currently or
deferred.
|
(2)
|
Represents
the compensation cost recognized for the fiscal year in connection with
restricted stock of the Company granted to the Outside Director,
regardless of the year of grant and calculated in accordance with
Statement of Financial Accounting Standards No. 123 (revised 2004),
"Share-Based Payment", ("SFAS 123R") for financial statement
purposes. For more information concerning the assumptions used
for these calculations, please refer to the discussion under the caption
"Nature of Operations and Summary of Significant Accounting Policies" in
the notes to the audited consolidated financial statements included in the
Company's 2007 Annual Report on Form 10-K. This amount does not
reflect the value of dividends paid on unvested restricted stock, which is
included under the caption "All Other
Compensation."
|
(3)
|
Represents
the compensation cost recognized for the fiscal year in connection with
stock options granted to the Outside Director, regardless of the year of
grant and calculated in accordance with SFAS 123R for financial statement
purposes. For more information concerning the assumptions used
for these calculations, please refer to the discussion under the caption
"Nature of Operations and Summary of Significant Accounting Policies" in
the notes to the audited consolidated financial statements included in the
Company's 2007 Annual Report on Form
10-K.
|
(4)
|
Includes
for each individual the increase (if any) for the fiscal year in the
present value of the individual's accrued benefit (whether or not vested)
under each tax-qualified and non-qualified actuarial or defined benefit
plan calculated by comparing the present value of each individual's
accrued benefit under each such plan in accordance with Statement of
Financial Accounting Standards No. 158, "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" ("SFAS 158") as of the plan's
measurement date in such fiscal year to the present value of the
individual's accrued benefit as of the plan's measurement date in the
prior fiscal year. The following individuals experienced
year-to-year declines in the actuarial value of their accrued benefits
under defined benefit or actuarial plans that are not reflected in the
reported figures: Mr. Clark - $7,103; Mr. Fehrenbach - $8,362
and Mr. Flynn - $8,415.
|
(5)
|
Amount
represents dividends paid on unvested restricted stock awards that were
granted on May 1, 2007.
|
Executive
Officers
The
following individuals are executive officers of the Company or Bank, holding the
offices set forth opposite their names:
Name
|
|
Position
Held
|
Vincent
F. Palagiano
|
|
Chairman
of the Board and Chief Executive Officer
|
Michael
P. Devine
|
|
President
and Chief Operating Officer
|
Kenneth
J. Mahon
|
|
First
Executive Vice President and Chief Financial Officer
|
Christopher
D. Maher
|
|
Executive
Vice President and Director of Retail Banking (Bank
Only)
|
Timothy
B. King
|
|
Executive
Vice President and Chief Investment Officer
|
Daniel
J. Harris
|
|
Executive
Vice President and Chief Lending Officer
|
Michael
Pucella
|
|
Senior
Vice President and Chief Accounting
Officer
|
The
executive officers are elected annually and hold office until their respective
successors have been elected and qualified, or until death, resignation or
removal by the Board of Directors. The Company has entered into
Employment Agreements with certain of its executive officers which set forth the
terms of their employment. See "Compensation Discussion and Analysis
– Potential Payments Upon Termination and Change of Control."
Biographical
information of the executive officers who are not Directors of the Company or
Bank is set forth below.
Christopher D. Maher, age
41, joined the
Bank as Executive Vice President in charge of retail banking in November 2005.
Prior to joining the Bank, Mr. Maher was a Senior Vice President at BISYS
Information Services, L.P., a unit of the BISYS Group, Inc., a diversified
financial services firm. Mr. Maher's banking experience includes work for
several New York City metropolitan area banks, including The Dime Savings Bank
of New York, Chemical Bank, and Chatham Savings. Mr. Maher was a Senior Vice
President in the Retail Banking division of The Dime Savings Bank of New York,
where he served from 1989 through 2000. Mr. Maher is a former
Director of the IFX Forum, a financial services technology standards
organization and has served as a Trustee for Helen Keller Services for the Blind
since 1998.
Timothy B. King, age 49, has
over 26 years of banking experience, and has been with the Bank since
1983. Mr. King was promoted to Treasurer of the Bank in 1989,
Vice President of the Bank in 1993, Treasurer of the Company at its inception in
1995, First Vice President of both the Company and Bank in 1997, Senior Vice
President of both the Company and the Bank in 1999 and Executive Vice President
of both the Company and the Bank in 2008. In 2002, Mr. King was named the Chief
Investment Officer of both the Company and Bank, as he oversees the securities
investment function of the Bank.
Daniel J. Harris, age 51, was
hired in January 2008 as the Bank's Executive Vice President and Chief Lending
Officer. Prior to joining the Bank, Mr. Harris served as Executive
Vice President & Chief Credit Officer at Hudson Valley Bank, a commercial
bank and financial services company. Prior to that role, Mr. Harris
held senior positions at Credit Re Mortgage Capital, The Greater New York
Savings Bank and Dollar Dry Dock Bank. Mr. Harris earned a Juris
Doctor from St. John's University and has practiced law, with a specialty in
real estate, as an employee of Manufacturers Hanover Trust Co. as well as two
New York law firms.
Michael Pucella, age 54, was
promoted to Comptroller of the Bank in 1989 and of the Company at its inception
in 1995, Vice President of both the Company and Bank in 1996, First Vice
President of both the Company and Bank in 1997 and Senior Vice President of both
the Company and the Bank in 1999. He currently serves as the Chief
Accounting Officer of both the Company and Bank, and is responsible for
financial reporting, budgeting, corporate planning and tax
administration. Mr. Pucella has been with the Bank since 1981, and
has over 33 years of banking experience.
COMPENSATION
OF NAMED EXECUTIVE OFFICERS
Processes
and Procedures for Consideration and Determination of Executive and Director
Compensation
The
Compensation Committee assists the Board of Directors in discharging its
responsibilities regarding the Company’s compensation and benefit plans and
practices. All authority granted to the Compensation Committee is
established in its charter, a copy of which may be viewed on the Company's
website at www.dimewill.com. The Compensation Committee meets as
necessary. It meets in executive session with its advisors and with
invited management present. It considers the expectations of the
Chief Executive Officer, Chief Operating Officer and Chief Financial Officer
with respect to their own compensation, their recommendations with respect to
the compensation of more junior executive officers and their recommendations
with respect to Director compensation, as well as empirical data and the
recommendations of advisors. Executive officer compensation matters
are also presented for discussion at meetings of the full Board of
Directors.
The
Compensation Committee may delegate such of its responsibilities and duties as
it deems appropriate to (i) subcommittees comprised of one or more Compensation
Committee members, or (ii) officers of the Company or the Bank.
Use of Outside Advisors and Survey
Data. In early 2007, the Compensation Committee selected and
engaged Mercer Consulting, a nationally recognized compensation consulting firm,
to assist in performing its duties, including but not limited to, conducting a
competitive review of executive officer compensation levels and
practices. The Compensation Committee communicates directly with, and
receives written reports directly from, its consultant. The
Compensation Committee determines the compensation of its consultant and meets
with the consultant both in executive session and with invited executive
officers present. The Compensation Committee relies on consultants
for survey data, assistance in understanding market practices and trends, and
recommended compensation strategies. The Compensation Committee
relies on the Company’s legal counsel for advice as
to its
obligations under applicable corporate, securities, tax and employment laws, for
assistance in interpreting its obligations under compensation plans and
agreements, and for drafting plans and agreements to document business
decisions, however, the Compensation Committee has the right to select other
legal counsel.
Compensation
Discussion and Analysis
Introduction
Set forth below are (i) a description
of the Company's decision making process for compensating the principal
executive officer, principal financial officer, and three most highly
compensated executive officers (other than the principal executive and principal
financial officers) of the Company or Bank (each a "Named Executive Officer" and
collectively the "Named Executive Officers"), (ii) a discussion of the
background and objectives of the Company's compensation programs for Named
Executive Officers, and (iii) a description of the material elements of the
compensation of each of the Named Executive Officers.
The
descriptions of compensation plans, programs and individual arrangements
referred to in the Compensation Discussion and Analysis that are governed by
written documents are qualified in their entirety by reference to the full text
of their governing documents. Other than broad-based plans applicable
to substantially all salaried employees, these documents have been filed as
exhibits to the Company's Annual Report on Form 10-K for the year ended December
31, 2007 and are incorporated herein by this reference.
1. Objectives.
The goal
of the executive compensation program is to enable the Company to attract,
develop and retain strong executive officers capable of maximizing the Company’s
performance for the benefit of its shareholders. The Company's
compensation philosophy is to provide competitive compensation opportunities
that are strongly aligned with its financial performance and the generation of
value for shareholders through stock price appreciation. In 2007, the
Company continued to experience an adverse interest rate environment that
negatively affected profitability. As a result, the Company's focus
was on retaining and motivating key executives while aggressively controlling
expense, including executive compensation.
2. Key
Elements of the Compensation Package.
In General. The
Company's 2007 compensation program for Named Executive Officers consisted of
three key elements:
·
|
base
salary to provide a reasonable level of recurring
income;
|
·
|
annual
incentives to motivate the Named Executive Officers to achieve short-term
operating objectives; and
|
·
|
long-term
incentives in the form of stock options and/or restricted stock, designed
to retain talented employees and provide an incentive to maximize
shareholder return in the longer
term.
|
The
Company additionally provides certain retirement plans, termination benefits,
fringe benefits and perquisites, in some instances for a large group of
employees and in others limited to one or more executives.
Base
Salary. Executive base salary levels are generally reviewed on
an annual basis and adjusted as appropriate. The Company desires to compensate
executives fairly while being sensitive to increasing fixed costs in light of
the performance of the Common Stock.
For 2007,
the Compensation Committee considered the prevailing market conditions and
determined, with the input of Mercer Consulting, a nationally recognized
compensation consulting firm, to increase the base salary for the Named
Executive Officers of the Company.
In 2007,
base salary increases for the Named Executive Officers were as
follows:
Name
|
|
%
Increase
|
|
Dollar
Increase
|
|
Resulting
Annual Base Salary Rate
|
Vincent
F. Palagiano
|
|
4.0%
|
|
$25,600
|
|
$665,600
|
Michael
P. Devine
|
|
4.0
|
|
20,200
|
|
525,200
|
Kenneth
J. Mahon
|
|
4.0
|
|
14,480
|
|
376,480
|
Timothy
B. King
|
|
4.0
|
|
9,920
|
|
257,920
|
Christopher
D. Maher
|
|
4.0
|
|
12,000
|
|
312,000
|
These
decisions resulted from a competitive base salary review produced by Mercer
Consulting that evaluated corporate and individual performance during 2006
within the context of the Company’s ongoing efforts to control fixed
costs. Following these decisions, the base salary of each of the
Named Executive Officers was at or slightly below the median for the Company's
peer group. These targeted salary increases were designed to reward
effort in a challenging operating environment and assist in the retention of
executives directly responsible for key operating units.
Annual
Incentives. Annual incentive opportunities are provided to the
Named Executive Officers to link the achievement of annual goals with executive
compensation. Continuing a practice initiated in 2004, a bonus pool
in an amount based on the Company's net income is distributed at the discretion
of the Compensation Committee. The Compensation Committee determines
each Named Executive Officer's bonus (if any) based on a retrospective review of
a variety of corporate performance factors and each Named Executive Officer's
contributions to the Company in light of the operating environment existing
during the year. In contrast to a strict formula-based bonus program,
this approach better enables the Company to manage the potential profit dilution
of the bonus program and reward executives for conduct responsive to the
Company's needs.
The
Compensation Committee approved awards totaling $691,000 to the Company’s Named
Executive Officers for the year ended 2007, based on assessment of management's
success in operating the Company in a period characterized by the continued
movement away from historical low interest rates and heightened competition in
the Bank’s multifamily lending and deposit operations.
For 2007,
the Named Executive Officers’ bonuses were as follows: Mr. Palagiano,
$225,000; Mr. Devine, $170,000; Mr. Mahon, $127,000; Mr. Maher, $94,000 and Mr.
King, $75,000. In the case of Mr. Palagiano, this was an increase of
$85,000 from the prior year’s bonus of $140,000. In the case of the
other Named Executive Officers, this was an increase from the prior year's bonus
of $55,000 for Mr. Devine, $27,000 for Mr. Mahon, $19,000 for Mr. Maher and
$10,000 for Mr. King. These bonuses reflected the strong assessment
of the Named Executive Officer’s management of the Company during the tumultuous
times in the financial markets during 2007. The Company expects that these bonus
amounts, and the resultant total cash compensation paid to each of the Named
Executive Officers, may result in annual cash compensation that is less than the
2007 peer group median. This reflects constraints on the size of the
bonus pool related to the Company’s profitability for 2007, rather than concerns
with the individual performance of the Named Executive Officers.
Long-term
Incentives. The Compensation Committee believes that grants of
long-term incentives in the forms of stock options and/or restricted stock are
the most effective method, where appropriate, of aligning executive rewards with
the creation of value for shareholders through stock appreciation.
In 2007,
no grants of restricted stock were made to the Named Executive
Officers. In consideration of the Company’s performance for the year
ended December 31, 2006, the Compensation Committee decided that no awards of
restricted stock be granted to any of the Named Executive Officers after
considering Mercer Consulting’s assessment of comparable practices at a
comparison group of banks as well as Company and individual performance, the
2006 operating environment and competitive market conditions.
In 2007,
the following grants of stock options were made to the Named Executive
officers:
Name
|
|
Number
of Securities Underlying Options
|
|
Grant
Date Fair
Value of Option Awards
|
Vincent
F. Palagiano
|
|
250,000
|
|
$769,775
|
Michael
P. Devine
|
|
170,000
|
|
$523,447
|
Kenneth
J. Mahon
|
|
105,000
|
|
$323,306
|
Christopher
D. Maher
|
|
68,000
|
|
$209,379
|
Timothy
B. King
|
|
50,000
|
|
$153,955
|
In
consideration of the Company's performance for the year ended December 31, 2006,
the Compensation Committee made these grants after considering Mercer
Consulting's assessment of comparable practices at a comparison group of banks
as well as the Company and individual performance, the 2006 operating
environment and competitive market conditions. All grants were made
under the 2004 Stock Incentive Plan, vest over four years and had a grant date
fair value of $3.08 per option. The Company intends to make selective
equity awards in the future as part of its ongoing competitive executive
compensation program. To this end, the Company is seeking shareholder approval
of Amendment No. 1 to the 2004 Stock Incentive Plan to increase the number of
shares available for such grants. See "Approval of Amendment No. 1 to
the 2004 Stock Incentive Plan."
Other Elements of the Executive
Compensation Package. The
Company's compensation program for Named Executive Officers consisted of the
following additional elements:
Retirement
Plan — The Bank
maintains the Retirement Plan of The Dime Savings Bank of Williamsburgh (the
"Retirement Plan"), a non-contributory, tax-qualified defined benefit pension
plan for eligible employees, however, all participant benefits under the
Retirement Plan were frozen in March of 2000, and no benefits have been accrued
under the Retirement Plan since that date.
401(k)
Plan — The Bank maintains the 401(k) Plan, which is a tax-qualified defined
contribution plan permitting salaried employees with at least one year of
service to make pre-tax salary deferrals under Section 401(k) of The Internal
Revenue Code of 1986 (the "Code"). Each participant receives a fully
vested contribution of 3% of "covered compensation" [defined as total W-2
compensation including amounts deducted from W-2 compensation for pre-tax
benefits such as health insurance premiums and contributions to the 401(k) Plan]
up to applicable Internal Revenue Service ("IRS") limits. The 3%
contribution was required through 2006 and is discretionary in years after
2006.
ESOP —
The Company has established, and the Bank has adopted, the ESOP and related
trust for the benefit of eligible employees. All of the Company's and
the Bank's salaried employees are eligible to become participants in the ESOP
after one year of employment.
BMP — The
Bank maintains a BMP, which provides eligible employees with benefits that would
be due under the Retirement Plan, ESOP and 401(k) Plan, if such benefits were
not limited under the Code. Effective January 1, 2005, the BMP
benefit accruals associated with the 401(k) Plan and ESOP were terminated,
therefore, no BMP benefits were provided to the Named Executive Officers for the
year ended December 31, 2007 with respect to the 401(k) Plan and
ESOP. Effective April 1, 2000, Retirement Plan benefit accruals were
terminated, thus eliminating related benefit accruals under the
BMP. However, the present value of such benefits continues to
increase as the Named Executive Officers approach normal retirement
age. These increases in present value are reported in the Summary
Compensation Table under the column Change in Pension Value and Nonqualified
Deferred Compensation Earnings. Effective January 1, 2008, the BMP
was amended to provide for a payout of all benefits under the plan on the
occurrence of a change in control (within the meaning of Section 409A of the
Code) in a single lump sum. The Company intends to further amend the
BMP in 2008 in order to bring it in full compliance with Section 409A of the
Code.
2001
Stock Option Plan — The Company's Board of Directors adopted the 2001 Stock
Option Plan, which was approved by the Company's shareholders at their 2001
annual meeting. At December 31, 2007, up to 76,166 stock options were
eligible for grant to officers and employees of the Company or its subsidiaries
under the 2001 Stock Option Plan. Under the terms of the 2001 Stock
Option Plan, the eligible grant amounts may be increased by the amount of
options granted under the 2001 Stock Option Plan that are subsequently forfeited
by the recipient. All grants of stock options under the 2001 Stock
Option Plan vested on December 30, 2005.
2004
Stock Incentive Plan — The Company's Board of Directors has adopted the 2004
Stock Incentive Plan, which was approved by the Company's shareholders at their
2004 annual meeting. At December 31, 2007, 13,184 shares remained
eligible for future grant to officers and employees of the Company under the
2004 Stock Incentive Plan. These may be granted in the form of either stock
options or restricted stock awards, or a combination thereof. Under
the terms of the 2004 Stock Incentive Plan, the eligible grant amount may be
increased by the amount of shares granted under the 2004 Stock Incentive Plan
that are subsequently forfeited by the recipient. All grants made
prior to December 30, 2005 under the 2004 Stock Incentive Plan vested on
December 30, 2005.
Perquisites
— Named Executive Officers are provided with modest perquisites, including use
of a company car and professional financial planning and tax preparation
services. The Company provides these benefits in kind, but the
Compensation Committee considers the cost of these items in establishing the
other elements of compensation. The Company provides these benefits
because they are usual and customary in the industry.
Potential
Payments Upon Termination and Change of Control
The
Company believes it is in its best interests to provide severance benefits to
the Named Executive Officers in the event of their termination of employment
under certain circumstances. Specifically, Messrs. Palagiano, Mahon
and Devine are entitled to severance benefits upon their termination of
employment by the Company without cause, their resignation for good reason or
the occurrence of a change of control during their employment period and Messrs.
King and Maher are entitled to severance benefits upon their termination of
employment by the Company without cause or their resignation for good reason, in
each case, within certain periods following or preceding a change of
control. The Company and Bank have determined that these types of
protections are required in order to retain talented and qualified executive
officers. It has been determined that a more comprehensive employment
agreement with change of control triggers is necessary to retain the senior
executive officers (Messrs. Palagiano, Devine and Mahon). Mr. King
and Mr. Maher have been provided with change in control agreements which have no
effect until a change of control occurs.
Employment Agreements and Change in
Control Agreements. Consistent with the practices of other
financial institutions of similar size and business mix in the greater New York
metropolitan area, the Company and Bank have entered into employment or change
in control severance agreements with each of their executive
officers. The Company considers these arrangements important
retention devices. They also provide a measure of financial security
for executive officers so that, when faced with the prospect of a negotiated or
unsolicited merger opportunity, they can focus on the business of the Company
with reduced personal distractions. The Company periodically reviews
the terms of these agreements against the publicly disclosed terms and
conditions of contracts in place at other institutions and compares their
projected costs to those disclosed for similar contracts in the merger proxy
statements in recent financial institution mergers. The Company
conducted such a review in 2007.
Employment
Agreements for Messrs. Palagiano, Mahon and Devine
The
Company and the Bank are parties to employment agreements ("Employment
Agreements") with each of Messrs. Palagiano, Devine and Mahon ("Senior
Executives"). These Employment Agreements establish the respective duties and
compensation of the Senior Executives and are intended to ensure that both the
Company and the Bank will be able to maintain a stable and competent management
base. The continued success of the Company and Bank depends to a
significant degree on the skills and competence of the Senior
Executives.
The
Employment Agreements provide for three-year terms (the "Employment
Period"). The Bank's Employment Agreements provide that, prior to the
first anniversary date and continuing each anniversary date thereafter, the
Bank’s Board of Directors may agree, after conducting a performance evaluation
of the Senior Executive, to extend his Employment Agreement for an additional
year, so that the remaining term shall be three years. Each of the
Bank's Employment Agreements has been extended to a December 31, 2009 expiration
date. The Company's Employment Agreements provide for automatic daily
extensions unless written notice of non-renewal is provided by the Board of
Directors or the Senior Executive, in which event the Employment Agreement shall
end on the third anniversary of such notice.
The
Employment Agreements provide for termination by the Bank or the Company at any
time for cause as defined in the Employment Agreements. In the event
that either the Company or the Bank chooses to terminate the Senior Executive's
employment other than for cause, or the Senior Executive resigns from the Bank
or the Company for "good reason" as defined in the Employment Agreements, the
Senior Executive or, in the event of death, his beneficiary, would be entitled
to a lump sum cash payment in an amount equal to the remaining base salary and
bonus payments due to the Senior Executive and the additional
contributions
or benefits that would have been earned under any employee benefit plans during
the remaining term of the Employment Agreement and payments that would have been
made under any incentive compensation plan during the remaining term of the
Employment Agreement. The Senior Executive would also have the right
to receive a lump sum cash payment of benefits to which the Senior Executive
would have been entitled under the BMP. Both the Bank and the Company
would also continue the Senior Executive's life, health and disability insurance
coverage for the remaining term of the Employment Agreement. For
purposes of the Employment Agreements, "good reason" generally means (i)
assignment of duties inconsistent with the Senior Executive's status or a
substantial adverse alteration in the nature or status of responsibilities or a
requirement to report to a different position, (ii) reduction in annual base
salary (unless mandated at the initiation of applicable regulatory authority),
(iii) failure to pay compensation or deferred compensation within seven days of
when due unless inadvertent, immaterial or cured after notice, (iv) failure to
continue in effect compensation plans material to total compensation (or
substitute plans) with respect to the Senior Executive, (v) failure to continue
to provide certain benefits or materially maintain benefits (unless mandated at
the initiation of applicable regulatory authority), (vi) failure of the Bank to
obtain satisfactory agreement from a successor to assume and agree to perform
the Employment Agreements, (vii) any purported termination by the Bank not for
cause or disability, (viii) any or no reason during the period of sixty (60)
days beginning on the first anniversary of the effective date of a change of
control, as defined in the Employment Agreement, (ix) a change in the majority
of the Board, unless approved by a vote of at least two-thirds of the members of
the Board at the time the Employment Agreements were entered into or members
elected or nominated by such members, (x) a relocation of the Senior Executive's
principal place of employment outside of the New York metropolitan area, or (xi)
a material breach of the Employment Agreements, unless cured within 30
days.
In
general, for purposes of the Employment Agreements, a "change of control" will
be deemed to occur when a person or group of persons acting in concert acquires
beneficial ownership of 25% or more of any class of equity security, such as the
Common Stock, or in connection with mergers or consolidations of assets or a
contested election of Directors which results in a change of control of the
majority of the Company's or Bank's Board of Directors or liquidation or sale of
substantially all the assets of the Company or the Bank. In the event
of a change in control of the Company or Bank, the Company's Employment
Agreements provide that (1) the term of employment will be converted to a fixed
two year period beginning on the date of the change in control, and (2) if the
Senior Executive signs a release of any further rights under his Employment
Agreement with the Bank, an immediate lump sum payment will be paid (whether or
not employment has terminated) equal to the present value of three years salary,
bonus and fringe benefits plus an additional lump sum equal to the present value
x minus y, where x is a specified target pension for each Senior Executive and y
is the actual pension benefits due to the Senior Executive under the Bank's and
the Company's qualified and nonqualified defined benefit pension
plans. The target pension is 26-2/3% of highest aggregate salary and
bonus for Mr. Palagiano; 25% of highest aggregate salary and bonus for Mr.
Devine; and 16-2/3% of highest aggregate salary and bonus for Mr.
Mahon. Highest aggregate salary and bonus for this purpose is the
highest salary and bonus for the three consecutive years during the final 10
years of employment for which the aggregate is the highest.
Payments
to the Senior Executives under the Bank's Employment Agreements are guaranteed
by the Company in the event that payments or benefits are not paid by the
Bank. The Company will make all payments under its own Employment
Agreements. To the extent that payments under the Company's Employment
Agreements and the Bank's Employment Agreements are duplicative, payments due
under the Company's Employment Agreements would be offset by amounts actually
paid by the Bank. Senior Executives would be entitled to reimbursement of
certain costs incurred in interpreting or enforcing the Employment Agreements up
to $50,000 for each Senior Executive.
Cash and
benefits paid to a Senior Executive under the Employment Agreements together
with payments under other benefit plans following a change of control of the
Bank or the Company may constitute an “excess parachute” payment under Section
280G of the Code, resulting in the imposition of a 20% excise tax on the
recipient and the denial of the deduction for such excess amounts to the Company
and the Bank. The Company's Employment Agreements include a provision
indemnifying each Senior Executive on an after-tax basis for any "excess
parachute" excise taxes.
Employee
Retention Agreements for Messrs. King and Maher
The Bank
has, jointly with the Company, entered into Employee Retention Agreements
("Retention Agreements") with Messrs. King and Maher (each a "Contract Employee"
or together "Contract Employees"). The purpose of the Retention
Agreements is to secure the Contract Employees' continued availability and
attention to the Bank's affairs, relieved of distractions arising from the
possibility of a change of control, as defined in the Retention
Agreements. The Retention Agreements do not impose an obligation on
the Bank to continue the Contract Employees' employment, but provide for a
period of assured compensation (the "Assurance Period") following a change of
control. The Retention Agreements for Messrs. Maher and King contain
Assurance Periods of three years. The Assurance Period for Mr. King
had been five years, however, was changed to three years effective January 1,
2008. The applicable Assurance Periods for the present agreements
with Mr. King and Mr. Maher will be
automatically
extended on a daily basis under the Retention Agreements until written notice of
non-extension is provided by the Bank or the Contract
Employee. Both Retention Agreements expire as of December 31,
2009, on which date, or prior to that date, the Bank may choose to extend either
or both Retention Agreements.
If,
during the Assurance Period, or prior to commencement of the Assurance Period
but within three months of and in connection with a change of control (as
defined in the Retention Agreements), a Contract Employee is discharged without
“cause” (as defined in the Retention Agreements) or voluntarily resigns within
ninety days following: (i) a failure to appoint or elect the Contract Employee
to the same position in which he was serving; (ii) a material failure, after
notice, to vest in the Contract Employee his responsibilities on the day before
the Assurance Period commenced (or the functions, duties and responsibilities of
a more senior office to which he may be appointed); (iii) a failure of the Bank
to cure a material breach of the Retention Agreement after notice; (iv) a
reduction in compensation or a material reduction in benefits; or (v) relocation
of the Contract Employee's principal place of employment which results in
certain adverse commuting increases, the Contract Employee (or, in the event of
his death, his estate) would be entitled to, subject to certain restrictions,
(a) continued group life, health, accident and long-term disability insurance
benefits for the unexpired Assurance Period, (b) a lump sum cash payment equal
to the remaining base salary (present value) and bonus payments the Contract
Employee would have earned during the unexpired Assurance Period, and (c) any
additional contributions and benefits that the Contract Employee would have
earned under the Bank's or the Company's employee benefit plans during the
unexpired Assurance Period.
The cash
and benefits paid under the Retention Agreements for Messrs. King and Maher,
together with payments under other benefit plans following a “change of
control,” may constitute an “excess parachute” payment under Section 280G of the
Code, resulting in the imposition of a 20% excise tax on the recipient and the
denial of the deduction for such excess amounts to the Company and the Bank
under Section 4999 of the Code. The Retention Agreements include a
provision whereby the Company pays Messrs. King and Maher the net amount of
their termination benefits after any tax imposed under Section 4999 of the Code
or the maximum amount which may be paid without giving rise to any tax under
Section 4999, whichever is greater. Payments to Messrs. King and
Maher under their respective Retention Agreements are guaranteed by the Company
to the extent that the required payments are not made by the Bank.
3. Material
Policies and Procedures
Benchmarking and Survey
Data. The Compensation
Committee utilizes legal counsel and a nationally recognized compensation
consulting firm, Mercer Consulting, to assist in performing its
duties. The Committee relies on legal counsel to advise on its
obligations under applicable corporate, securities and employment laws, to
assist in interpreting the Company's obligations under compensation plans and
agreements, and to draft plans and agreements to document business
decisions. The consulting firm regularly analyzes the Company’s
executive pay levels, by each of the three key elements cited and in total, and
the Company’s performance. A group of thirteen comparably sized and
similarly located public banks and thrifts (the “Comparison Group”) is used for
comparison of both pay level and corporate performance. The companies
included in this group changed slightly from the prior year as a result of
merger activity within the industry. For 2007, the Comparison Group
consisted of Hudson City Bancorp, New York Community Bancorp, Astoria Financial
Corporation, Valley National Bancorp, First Niagara Financial Group Inc., New
Alliance Bancshares Inc., Provident Financial Services Inc., Investors Bancorp
Inc., Signature Bank, Sun Bancorp Inc., Flushing Financial Corp, OceanFirst
Financial Corporation, and Sterling Bancorp. The Compensation
Committee uses this analysis to assist it in understanding market practices and
trends and to develop and evaluate the effectiveness of recommended
performance-linked compensation strategies. Generally, the
Compensation Committee endorses a median pay level approach, with actual pay
commensurate with relative performance. To that end, the flexibility
provided by the bonus program permits the Compensation Committee to take market
conditions into account each year.
Impact
of Accounting and Tax Treatment.
Section
162(m) — Section
162(m) of the Code imposes a $1,000,000 annual limit per executive officer on
the Company’s federal tax deduction for certain types of compensation paid to
the Named Executive Officers. It has been the Compensation
Committee’s practice to structure the compensation and benefit programs offered
to the Named Executive Officers with a view to maximizing the tax deductibility
of amounts paid. However, in structuring compensation programs and
making compensation decisions, the Compensation Committee considers a variety of
factors, including the Company’s tax position, the materiality of the payments
and tax deductions involved, and the need for flexibility to address unforeseen
circumstances. After considering these factors, the Compensation
Committee may decide to authorize payments all or part of which would be
nondeductible for federal tax purposes. It is not anticipated that
any discretionary bonuses awarded for 2007 will be made nondeductible by this
limit. Payments made on account of a change of control under the
agreements described above might include non-deductible payments.
Sections
4999 and 280G — Section 4999 of the Code imposes a 20% excise tax on certain
“excess parachute payments” made to “disqualified individuals.” Under
section 280G of the Code, such excess parachute payments are also nondeductible
to the Company. If payments that are contingent on a change of
control to a disqualified individual (which includes the Named Executive
Officers) exceed three times the individual’s “base amount,” they constitute
“excess parachute payments” to the extent they exceed one time the individual’s
base amount.
Pursuant
to the Employment Agreements and Retention Agreements, the Company or Bank will
reimburse the Named Executive Officers for the amount of the excise tax, if any,
and make an additional gross-up payment so that, after payment of the excise tax
and all income and excise taxes imposed on the reimbursement and gross-up
payments, the Named Executive Officer would retain approximately the same net
after-tax amounts under the Employment Agreement or Retention Agreement that he
would have retained if there was no excise tax. Neither the Bank nor
the Company is permitted to claim a federal income tax deduction for the portion
of the change of control payment that constitutes an excess parachute payment,
the excise tax reimbursement payment or the gross-up payment.
Accounting
Considerations. The Compensation
Committee is informed of the financial statement implications of the elements of
the Named Executive Officer compensation program. However, the
probable contribution of a compensation element to the objectives of the
Company's Named Executive Officer compensation program and its projected
economic cost, which may or may not be reflected on the Company's financial
statements, are the primary drivers of Named Executive Officer compensation
decisions.
Compensation
Committee Report
The
following Report of the Company's Compensation Committee is provided in
accordance with the rules and regulations of the SEC.
Under the rules promulgated by the SEC,
the Company is required to provide certain data and information regarding the
activities of its Compensation Committee. In fulfillment of this
requirement, the Compensation Committee, at the discretion of the Board, has
prepared the following report for inclusion in the Proxy Statement.
1. The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis required by Item 402(b) of Regulation S-K with management;
and
2. Based
on the review and discussions referred to in paragraph 1 above, the Compensation
Committee recommended to the Board of Directors that the Compensation Discussion
and Analysis be included in the Company's Proxy Statement on Schedule 14A for
the 2008 Annual Meeting of Shareholders.
COMPENSATION
COMMITTEE OF
DIME
COMMUNITY BANCSHARES, INC.
Fred P.
Fehrenbach, (Chairman)
John J.
Flynn, Member
Joseph J.
Perry, Member
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee consists of Messrs. Fehrenbach, Flynn and
Perry. There are no interlocks, as defined under the rules and
regulations of the SEC, between the Company and the members of the Compensation
Committee and corporations with respect to which they are affiliated, or
otherwise.
COMPENSATION
Executive
Compensation
The
following table provides information about the compensation paid for services
rendered in all capacities during 2007 by the Named Executive
Officers.
SUMMARY
COMPENSATION TABLE
Name and Principal
Positions
|
Year
|
Salary (1)
|
Bonus(1)
|
Stock
Awards (2)
|
Option
Awards (3)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings (4)
|
All
Other
Compensation (5)
|
Total
|
Vincent
F. Palagiano, Chairman of the
|
2007
|
$665,600
|
$225,000
|
$54,781
|
$128,296
|
—
|
$65,464
|
$1,139,141
|
Board and Chief Executive Officer
|
2006
|
640,000
|
140,000
|
54,781
|
—
|
—
|
66,051
|
900,832
|
Michael
P. Devine, President and
|
2007
|
$525,200
|
$170,000
|
$34,864
|
$87,241
|
—
|
$30,910
|
$848,215
|
Chief Operating Officer
|
2006
|
505,000
|
115,000
|
34,864
|
—
|
—
|
33,087
|
687,951
|
Kenneth
J. Mahon, First Executive Vice
|
2007
|
$376,480
|
$127,000
|
$19,176
|
$53,884
|
—
|
$27,542
|
$604,082
|
President and Chief Financial Officer
|
2006
|
362,000
|
100,000
|
19,176
|
—
|
—
|
29,761
|
510,937
|
Christopher
D. Maher, Executive Vice
|
2007
|
$312,000
|
$94,000
|
$29,220
|
$34,896
|
—
|
$22,901
|
$493,017
|
President and Director of Retail Banking
|
2006
|
300,000
|
75,000
|
29,220
|
—
|
—
|
19,690
|
423,910
|
Timothy
B. King, Executive Vice
|
2007
|
$257,920
|
$75,000
|
$36,443
|
$25,659
|
—
|
$22,216
|
$417,238
|
President and Chief Investment Officer
|
2006
|
248,000
|
65,000
|
30,400
|
—
|
—
|
24,450
|
367,850
|
(1)
|
The
figures shown for salary and bonus represent amounts earned for the fiscal
year, whether or not actually paid during such year, and include amounts
deferred pursuant to non-incentive deferred compensation plans and amounts
of salary or bonus earned but deferred on a voluntary basis in exchange
for awards of restricted stock, stock options or other forms of non-cash
compensation.
|
(2)
|
Represents
the compensation cost recognized for the fiscal year in connection with
restricted stock of the Company granted to the Named Executive Officer,
regardless of the year of grant and calculated in accordance with SFAS
123R for financial statement purposes. For more information
concerning the assumptions used for these calculations, please refer to
the discussion under the caption “Nature of Operations and Summary of
Significant Accounting Policies” in the notes to the audited consolidated
financial statements included in the Company's 2007 Annual Report on Form
10-K. This amount does not reflect the value of dividends paid
on unvested restricted stock, which is included in the Summary
Compensation Table under the caption "All Other Compensation" if it
exceeds $10,000 for an individual Named Executive
Officer.
|
(3)
|
Represents
the compensation cost recognized for the fiscal year in connection with
stock options of the Company granted to the Named Executive Officer,
regardless of the year of grant and calculated in accordance with SFAS
123R for financial statement purposes. For more information
concerning the assumptions used for these calculations, please refer to
the discussion under the caption “Nature of Operations and Summary of
Significant Accounting Policies” in the notes to the audited consolidated
financial statements included in the Company's 2007 Annual Report on Form
10-K.
|
(4)
|
Includes
for each Named Executive Officer (a) the increase (if any) for the fiscal
year in the present value of the individual's accrued benefit (whether or
not vested) under the Retirement Plan and BMP calculated by comparing the
present value of each individual's accrued benefit under each such plan in
accordance with SFAS 158 as of the plan's measurement date in such fiscal
year to the present value of the individual's accrued benefit as of the
plan's measurement date in the prior fiscal year, plus (b) the amount of
interest accrued on defined contribution deferred compensation balances at
a rate in excess of 120% of the applicable federal long-term rate under
section 1274(d) of the Code. The following individuals
experienced year-to-year declines in the actuarial value of their accrued
benefits under defined benefit or actuarial plans that are not reflected
in the reported figures: Mr. Palagiano - $453,597; Mr.
Devine - $152,553; Mr. Mahon - $118,581 and Mr. King
- $43,538.
|
(5)
|
No
amounts were earned for services rendered during the fiscal year under a
non-equity incentive plan. The Named Executive Officers
participate in certain group life, health, disability insurance and
medical reimbursement plans, not disclosed in the Summary Compensation
Table, that are generally available to salaried employees and do not
discriminate in scope, terms and operation. The figure shown
for each Named Executive Officer includes the following items exceeding
$10,000 in value:
|
|
Name
|
Year
|
Life
Insurance Premiums
|
|
Automobile
|
|
401(k)
Plan
Employer
Cash Contribution
|
|
ESOP
Allocation (a)
|
|
Total
|
|
Vincent
F. Palagiano
|
2007
|
$29,999
|
|
$14,086
|
|
$6,750
|
|
$14,629
|
|
$65,464
|
|
|
2006
|
29,683
|
|
12,698
|
|
6,600
|
|
17,070
|
|
66,051
|
|
Michael
P. Devine
|
2007
|
$9,531
|
|
-
|
|
$6,750
|
|
$14,629
|
|
$30,910
|
|
|
2006
|
9,417
|
|
-
|
|
6,600
|
|
17,070
|
|
33,087
|
|
Kenneth
J. Mahon
|
2007
|
$6,163
|
|
-
|
|
$6,750
|
|
$14,629
|
|
$27,542
|
|
|
2006
|
6,091
|
|
-
|
|
6,600
|
|
17,070
|
|
29,761
|
|
Christopher
D. Maher
|
2007
|
$1,522
|
|
-
|
|
$6,750
|
|
$14,629
|
|
$22,901
|
|
|
2006
|
1,322
|
|
-
|
|
930
|
|
17,438
|
|
19,690
|
|
Timothy
B. King
|
2007
|
$837
|
|
-
|
|
$6,750
|
|
$14,629
|
|
$22,216
|
|
|
2006
|
780
|
|
-
|
|
6,600
|
|
17,070
|
|
24,450
|
(a)
|
The
amount reported for ESOP allocation was determined based upon the average
price of the Common Stock of $13.36 per share during 2007 and $14.25 per
share during 2006. (See
Note 15 to the audited consolidated financial statements in the Company's
2007 Annual Report on Form 10-K, which discusses the manner in which ESOP
expense is
recognized).
|
The Company
or Bank provides certain non-cash perquisites and personal benefits to each
Named Executive Officer that do not exceed $10,000 in the aggregate for any
individual, and are not included in the reported figures.
Compensation
Plans
Retirement Plan. The Bank
maintains the Retirement Plan, a non-contributory, tax-qualified defined benefit
pension plan for eligible employees. All salaried employees at least age 21 who
have completed a minimum of one year of service are eligible to participate in
the Retirement Plan. The Retirement Plan provides for a benefit for each
participant, including the Named Executive Officers, equal to 2% of the
participant's average annual earnings multiplied by the participant's years (and
any fraction thereof) of eligible employment (up to a maximum of 30 years). Such
benefit is not reduced by a Social Security offset. A participant is fully
vested in his or her benefit under the Retirement Plan after five years of
service. The Retirement Plan is funded by the Bank on an actuarial basis and all
assets are held in trust by the Retirement Plan trustee. Effective March 31,
2000, all participant benefits under the Retirement Plan were frozen, and no
benefits have been accrued under the Retirement Plan since that
date.
401(k) Plan. The Bank
maintains the 401(k) Plan, which is a tax-qualified defined contribution plan
permitting salaried employees with at least one year of service to make pre-tax
salary deferrals under Section 401(k) of the Code.
Under a 401(k) Plan amendment effective
July 1, 2000, the 401(k) Plan annually receives the proceeds from a 100% vested
cash contribution to all participants in the ESOP in the amount of 3% of
“covered compensation” [defined as total W-2 compensation including amounts
deducted from W-2 compensation for pre-tax benefits such as health insurance
premiums and contributions to the 401(k) Plan] up to applicable IRS limits. This
contribution is allocated to eligible participants, regardless of their
participant contribution level.
The 401(k) Plan permits participating
employees to elect to invest all or any part of their 401(k) Plan account
balances in Common Stock. Common Stock held by the 401(k) Plan may be newly
issued shares or outstanding shares purchased on the open market or in privately
negotiated transactions. All Common Stock held by the 401(k) Plan is held by an
independent trustee and allocated to the accounts of individual participants.
Participants control the exercise of voting and investment rights relating to
Common Stock held in their accounts.
ESOP. The Company
has established, and the Bank has adopted, the ESOP and related trust for the
benefit of eligible employees. All of the salaried employees of the
Company and its subsidiaries are eligible to become participants in the ESOP. As
of the Record Date, the ESOP held 3,390,415 shares of Common Stock, all of which
were purchased during the Company's initial public offering. Of this total,
1,983,633 shares were allocated to individual participant accounts, while
1,406,782 remained unallocated. In order to fund the ESOP's purchase of such
Common Stock, the ESOP borrowed the aggregate purchase price from the
Company. Effective July 1, 2000, the loan maturity period was
extended by approximately 20 years from June 2006 to June 2026, and it continues
to bear interest at the rate of 8% per annum. The loan calls for level annual
payments of principal and interest designed to amortize the loan over its term,
except that payments in any year may be deferred, in whole or in part, in
prescribed circumstances. Prepayments are also permitted.
Shares purchased by the ESOP were
pledged as collateral for the loan from the Company and are held in a suspense
account until released for allocation among participants in the ESOP as the loan
is repaid. The pledged shares will be released annually from the suspense
account in an amount proportional to the repayment of the ESOP loan for each
plan year. The released shares will be allocated among the accounts of
participants on the basis of the participant's compensation for the calendar
year preceding allocation. Benefits generally become vested at the rate of 25%
per year after two years with 100% vesting after five years
of
service. Participants become immediately vested upon termination of employment
due to death, retirement at age 65, permanent disability or the occurrence of a
"change of control," as defined by the ESOP. Forfeitures will be utilized to
reduce the contribution required by the Bank. Vested benefits may be paid in a
single payment of cash or shares of common stock or installment payments of cash
and are payable upon death, retirement at age 65, disability or separation from
service.
Effective July 1, 2000, either the
Company or the Bank became required to make a 100% vested cash contribution
annually to all ESOP participants in the amount of 3% of “covered compensation.”
This contribution was guaranteed through December 31, 2006 and is discretionary
thereafter. This contribution is automatically transferred to the 401(k)
Plan.
BMP. The BMP
provides eligible employees with benefits that would be due under the Retirement
Plan, ESOP and 401(k) Plan, if such benefits were not limited under the Code.
BMP benefits provided to the Named Executive Officers for the year ended
December 31, 2007 with respect to the 401(k) Plan and ESOP are included in the
Summary Compensation Table under the column "All Other Compensation" (See
"Compensation of Named Executive Officers - Executive Compensation"). Effective
April 1, 2000, Retirement Plan benefit accruals were terminated, thus
eliminating related benefit accruals under the BMP. Effective January 1, 2005,
the BMP benefit accruals associated with the 401(k) Plan and ESOP were
terminated. Effective January 1, 2008, the BMP was amended to provide
for a payout of all benefits under the plan on the occurrence of a change in
control (within the meaning of Section 409A of the Code) in a single lump
sum. The Company intends to further amend the BMP in 2008 in order to
bring it in full compliance with Section 409A of the Code.
2001 Stock Option Plan. The Company's
Board of Directors has adopted the 2001 Stock Option Plan, which was approved by
the Company's shareholders at the annual meeting held in 2001. At
December 31, 2007, up to 76,166 stock options were eligible for grant to
officers and employees of the Company or its subsidiaries under the 2001 Stock
Option Plan. Under the terms of the 2001 Stock Option Plan, the
eligible grant amounts may be increased by the amount of options granted under
the 2001 Stock Option Plan that are subsequently forfeited by the
recipient. As of the Record Date, 2,035,287 stock options were
granted to Outside Directors, officers and employees of the Company or the Bank,
of which 1,782,847 were outstanding and 1,748,422 were
exercisable. On March 3, 2008, a grant of 34,425 stock options was
made to an executive officer of the Bank under the 2001 Stock Option
Plan. All of these options expire on May 1, 2018 and vest in equal
25% installments on May 1, 2009, 2010, 2011 and 2012. All options currently
granted under the 2001 Stock Option Plan are subject to earlier expiration in
the event of termination of employment. In the case of termination due to death,
disability, retirement, or under a "change of control," as defined by the 2001
Stock Option Plan, all options become immediately vested. Options granted under
the 2001 Stock Option Plan are intended to qualify as "incentive stock options"
under Section 422 of the Code.
2004 Stock Incentive
Plan. The Company's Board of Directors has adopted the 2004
Incentive Stock Plan, which was approved by the Company's shareholders at the
annual meeting held in 2004. At December 31, 2007, 13,184 shares
remained eligible for future grant to officers and employees of the Company or
its subsidiaries under the 2004 Stock Incentive Plan. These may be granted in
the form of either stock options or restricted stock awards, or a
combination thereof. Under the terms of the 2004 Stock Incentive
Plan, the eligible grant amounts may be increased by the amount of shares
granted under the 2004 Stock Incentive Plan that are subsequently forfeited by
the recipient. The Compensation Committee of the Board of Directors
administers the 2004 Stock Incentive Plan and authorizes all equity grants. On
January 31, 2005, a grant of 8,480 non-qualified stock options was made to each
Outside Director of the Company, for a total grant of 76,320 options. All of
these options were vested as of December 31, 2007 and expire on January 31,
2015. On March 17, 2005, a grant of restricted stock awards was made to Named
Executive Officers as follows: Mr. Palagiano - 14,193 shares; Mr. Devine - 9,032
shares; Mr. Mahon - 4,967 shares; and Mr. King - 1,935 shares. All of these
restricted stock awards vest in equal 25% installments on May 1, 2006, 2007,
2008 and 2009. On May 31, 2005, a grant of stock options was made to Named
Executive Officers as follows: Mr. Palagiano - 142,580 shares; Mr. Devine -
90,537 shares; Mr. Mahon - 49,462 shares and Mr. King - 19,569
shares. All of these stock options were vested as of December 31, 2005 and
expire on May 31, 2015. On January 3, 2006, a grant of 10,000 shares
of restricted stock awards was made to Mr. Maher, which vests in equal 20%
installments on February 1, 2007, 2008, 2009, 2010, and 2011. On
March 16, 2006, a grant of 10,000 restricted stock awards was made to Mr. King,
which vests in equal 20% installments on May 1, 2007, 2008, 2009, 2010 and
2011. All equity grants under the 2004 Stock Incentive Plan fully
vest in the event of a change in control. On May 1, 2007, a grant of
stock options was made to Named Executive Officers as follows: Mr. Palagiano -
250,000 shares; Mr. Devine - 170,000 shares; Mr. Mahon - 105,000 shares; Mr.
Maher. - 68,000 shares and Mr. King 50,000 - shares. All of these
options expire on May 1, 2017 and vest in equal 25% installments on May 1, 2008,
2009, 2010 and 2011.
The
following table sets forth information regarding plan-based awards granted
to the Named Executive Officers during the last fiscal year:
GRANTS
OF PLAN-BASED AWARDS
|
|
Estimated
Future Payouts Under
Equity
Incentive Plan Awards
|
|
|
|
|
Name
|
Grant
Date
|
Threshold
|
Target
|
Maximum
|
All
Other Stock Awards: Number of Shares of Stock or Units
|
All
Other Option Awards: Number of Securities Underlying Options
(1)
|
Exercise
Price of Option Awards
|
Grant
Date
Fair
Value of Option Awards (2)
|
Vincent
F. Palagiano
|
5/1/2007
|
-
|
-
|
-
|
-
|
250,000
|
$13.74
|
$769,775
|
Michael
P. Devine
|
5/1/2007
|
-
|
-
|
-
|
-
|
170,000
|
$13.74
|
$523,447
|
Kenneth
J. Mahon
|
5/1/2007
|
-
|
-
|
-
|
-
|
105,000
|
$13.74
|
$323,306
|
Christopher
D. Maher
|
5/1/2007
|
-
|
-
|
-
|
-
|
68,000
|
$13.74
|
$209,379
|
Timothy
B. King
|
5/1/2007
|
-
|
-
|
-
|
-
|
50,000
|
$13.74
|
$153,955
|
(1)
|
The
reported awards were stock options granted under the 2004 Stock Incentive
Plan and vest as stated on the previous
page.
|
(2)
|
Calculated based upon a grant date fair value approximating $3.08 per
option, which was based upon the following assumptions:
Expected life of 6.2 years; Risk free interest rate of
4.56%; Volatility of 28.49%; and dividend yield of
4.08%
|
Stock
Awards And Stock Option Grants Outstanding
The following tables set forth
information regarding stock awards, stock options and similar equity
compensation outstanding at December 31, 2007, whether granted in 2007 or
earlier, including awards that have been transferred other than for
value.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END
|
|
Option
Awards
|
Stock
Awards
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options (#) Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
(1)
|
Equity
Incentive Plan Awards:
Number
of Securities Underlying Unexercised
Unearned
Options (#)
|
Option
Exercise
Price ($)
|
Option
Expiration
Date
|
Number
of Shares of Stock That Have Not Vested
(#)
(1)
|
Market
Value of Shares of Stock That Have Not Vested
($)
(2)
|
Vincent
F. Palagiano
|
11/21/2001
|
168,750
|
-
|
-
|
$10.91
|
11/21/2011
|
-
|
-
|
|
2/1/2003
|
174,750
|
-
|
-
|
13.16
|
2/1/2013
|
-
|
-
|
|
1/27/2004
|
174,750
|
-
|
-
|
19.90
|
1/27/2014
|
-
|
-
|
|
5/31/2005
|
142,580
|
-
|
-
|
15.10
|
5/31/2015
|
-
|
-
|
|
5/1/2007
|
250,000
|
250,000
|
-
|
13.74
|
5/1/2017
|
|
|
|
3/17/2005
|
|
|
|
|
|
7,097
|
$90,629
|
Michael
P. Devine
|
11/21/2001
|
105,750
|
-
|
-
|
$10.91
|
11/21/2011
|
-
|
-
|
|
2/1/2003
|
111,000
|
-
|
-
|
13.16
|
2/1/2013
|
-
|
-
|
|
1/27/2004
|
111,000
|
-
|
-
|
19.90
|
1/27/2014
|
-
|
-
|
|
5/31/2005
|
90,537
|
-
|
-
|
15.10
|
5/31/2015
|
-
|
-
|
|
5/1/2007
|
170,000
|
170,000
|
-
|
13.74
|
5/1/2017
|
|
|
|
3/17/2005
|
|
|
|
|
|
4,516
|
$57,669
|
Kenneth
J. Mahon
|
11/21/2001
|
56,250
|
-
|
-
|
$10.91
|
11/21/2011
|
-
|
-
|
|
2/1/2003
|
60,750
|
-
|
-
|
13.16
|
2/1/2013
|
-
|
-
|
|
1/27/2004
|
60,750
|
-
|
-
|
19.90
|
1/27/2014
|
-
|
-
|
|
5/31/2005
|
49,462
|
-
|
-
|
15.10
|
5/31/2015
|
-
|
-
|
|
5/1/2007
|
105,000
|
105,000
|
-
|
13.74
|
5/1/2017
|
|
|
|
3/17/2005
|
|
|
|
|
|
2,484
|
$31,721
|
Christopher
D. Maher
|
5/1/2007
|
-
|
68,000
|
-
|
13.74
|
5/1/2017
|
|
|
|
1/3/2006
|
|
|
|
|
|
8,000
|
$102,160
|
Timothy
B. King
|
11/21/2001
|
7,500
|
-
|
-
|
$10.91
|
11/21/2011
|
|
|
|
2/1/2003
|
24,000
|
-
|
-
|
13.16
|
2/1/2013
|
|
|
|
1/27/2004
|
24,000
|
-
|
-
|
19.90
|
1/27/2014
|
|
|
|
5/31/2005
|
19,569
|
-
|
-
|
15.10
|
5/31/2015
|
|
|
|
5/1/2007
|
50,000
|
50,000
|
-
|
13.74
|
5/1/2017
|
|
|
|
3/17/2005
|
|
|
|
|
|
968
|
$12,361
|
|
3/16/2006
|
|
|
|
|
|
8,000
|
$102,160
|
|
(1) The
grant of options to each of the Named Executive Officers on May 1, 2007
will vest 25% on each anniversary of the grant date over four
years. The grant of restricted stock awards to Messrs.
Palagiano, Devine, Mahon and King on March 17, 2005 will vest 25% on each
anniversary of the grant date over four years. The grant of a
restricted stock award to Mr. Maher on January 3, 2006 will vest 20% on
each anniversary of the grant date over five years. The grant
of a restricted stock award to Mr. King on March 16, 2006 will vest 20% on
each anniversary of the grant date over five years. See the
previous discussion of the 2001 Stock Option Plan and 2004 Stock Incentive
Plan for information on the grant and vesting of the stock
awards.
|
|
(2) Market
value is calculated on the basis of $12.77 per share for 2007 and $14.17
per share for 2006, the closing sales price of the Common Stock on the
Nasdaq Stock Market on the final trading day of the respective
year.
|
The
following table sets forth the stock awards that vested and the option awards
that were exercised for the Named Executive Officers during the last fiscal
year.
|
OPTION
EXERCISES AND STOCK VESTED
|
|
|
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of Shares Acquired on
Exercise
|
|
Value
Realized on Exercise(1)
|
Number
of Shares
Acquired
on
Vesting
|
|
Value
Realized
on
Vesting(1)
|
Vincent
F. Palagiano
|
-
|
|
-
|
3,548
|
|
$48,750
|
Michael
P. Devine
|
-
|
|
-
|
2,258
|
|
31,025
|
Kenneth
J. Mahon
|
-
|
|
-
|
1,242
|
|
17,065
|
Christopher
D. Maher
|
-
|
|
-
|
2,000
|
|
26,760
|
Timothy
B. King
|
-
|
|
-
|
2,484
|
|
34,130
|
(1)
|
Includes
the amount realized during the fiscal year upon exercise of vested stock
options by the named individual and the vesting of restricted stock, which
is calculated on the basis of $13.74 per share (the closing sales price
for a share of Common Stock on the Nasdaq Stock Market on the vesting date
of May 1, 2007) for Messrs. Palagiano, Devine, Mahon and King, and $13.38
per share (the closing sales price for a share of Common Stock on the
Nasdaq Stock Market on the vesting date of February 1, 2007) for Mr.
Maher. Unexercised stock options and unvested restricted stock
may not be transferred for value.
|
Post-Employment
Compensation
Pension
Benefits
The following table sets forth
information regarding pension benefits accrued by the Named Executive Officers
through the end of the Company's last fiscal year.
PENSION
BENEFITS
Name
|
|
Plan Name
|
|
Number
of Years Credited
Service (#) (1)
|
|
Present
Value of Accumulated Benefit
($)(1)
|
|
Payments
During Last Fiscal
Year
|
Vincent
F. Palagiano
|
|
Retirement
Plan
|
|
29.6
|
|
$1,003,195
|
|
—
|
|
|
BMP
(Defined Benefit Portion)
|
|
29.6
|
|
$1,666,315
|
|
—
|
Michael
P. Devine
|
|
Retirement
Plan
|
|
28.7
|
|
$663,060
|
|
—
|
|
|
BMP
(Defined Benefit Portion)
|
|
28.7
|
|
$787,307
|
|
—
|
Kenneth
J. Mahon
|
|
Retirement
Plan
|
|
19.7
|
|
$290,147
|
|
—
|
|
|
BMP
(Defined Benefit Portion)
|
|
19.7
|
|
$79,753
|
|
—
|
Timothy
B. King
|
|
Retirement
Plan
|
|
16.5
|
|
$95,508
|
|
—
|
|
|
BMP
(Defined Benefit Portion)
|
|
—
|
|
—
|
|
—
|
(1)
|
The
figures shown are determined as of the plan's measurement date during 2007
under SFAS 158 as disclosed in Notes 1 and 15 to the Company's audited
consolidated financial statements, included in the Company's 2007 Annual
Report on Form 10-K. The discount rate and other assumptions
used for this purpose are discussed in Note 15 to the audited consolidated
financial statements, included in the Company's 2007 Annual Report on Form
10-K. The assumed mortality rates were as
follows: Mr. Palagiano, 1.98%; Mr. Devine, 1.01%; Mr. Mahon,
0.66% and Mr. King, 0.35%..
|
Non-Qualified
Deferred Compensation
The following table sets forth
information regarding nonqualified deferred compensation earned by the Named
Executive Officers during the last fiscal year under non-qualified defined
contribution plans.
NON-QUALIFIED
DEFERRED COMPENSATION (1)
Name
|
|
Executive
Contributions
in Last Fiscal Year ($)
|
|
Company
Contributions in Last Fiscal
Year($) (2)
|
|
Aggregate
Earnings
in
Last Fiscal
Year($) (3)
|
|
Aggregate
Withdrawals/ Distributions($)
|
|
Aggregate
Balance at Last Fiscal
Year End ($)
|
Vincent
F. Palagiano
|
|
—
|
|
—
|
|
$(401,088)
|
|
—
|
|
$4,662,807
|
Michael
P. Devine
|
|
—
|
|
—
|
|
$(271,955)
|
|
—
|
|
$3,170,027
|
Kenneth
J. Mahon
|
|
—
|
|
—
|
|
$(148,487)
|
|
—
|
|
$1,723,644
|
Timothy
B. King
|
|
—
|
|
—
|
|
$(51,141)
|
|
—
|
|
$603,647
|
(1)
|
Non-qualified
deferred compensation includes benefits provided under the
BMP.
|
(2)
|
Company
contributions are included under the caption "All Other Compensation" in
the Summary Compensation Table.
|
(3)
|
Earnings
did not accrue at above-market or preferential rates. These
numbers are not reflected in the Summary Compensation
Table.
|
Termination
and Change in Control Benefits
The Company provides additional
benefits, not included in the previous tables, to the Named Executive Officers
in the event of retirement or termination of employment in certain circumstances
and in the event of a change in control.
Employment
Agreements
The Company and the Bank are parties to
the Employment Agreements with each of the Senior Executives. See "Compensation
Discussion and Analysis – Potential Payments Upon Termination and Change of
Control" for a discussion of the Employment Agreements.
Retention
Agreements
The Bank has, jointly with the Company,
entered into the Retention Agreements with the Contract
Employees. See "Compensation Discussion and Analysis – Potential
Payments Upon Termination and Change in Control" for a discussion of the
Retention Agreements.
The following table provides an
estimate of the value of termination and change of control benefits, assuming
termination of employment or a change in control occurred on December 31,
2007.
|
|
Vincent
F. Palagiano
|
|
Michael
P. Devine
|
|
Kenneth
J. Mahon
|
|
Christopher
D. Maher
|
|
Timothy
B. King
|
Death
|
|
|
|
|
|
|
|
|
|
|
Death
Benefit(1)
|
|
$1,996,800
|
|
$1,575,600
|
|
$1,129,440
|
|
N/A
|
|
N/A
|
Stock
Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted
Stock Vesting(9)
|
|
90,629
|
|
57,669
|
|
31,721
|
|
$102,160
|
|
$114,521
|
Disability
|
|
|
|
|
|
|
|
|
|
|
Disability
Benefit(2)
|
|
$1,996,800
|
|
$1,575,600
|
|
$1,129,440
|
|
N/A
|
|
N/A
|
Stock
Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted
Stock Vesting(9)
|
|
90,629
|
|
57,669
|
|
31,721
|
|
$102,160
|
|
114,521
|
Discharge
without Cause or Resignation with Good Reason - No Change in
Control
|
|
|
|
|
Severance
Pay(3)
|
|
$1,936,992
|
|
$1,528,408
|
|
$1,095,611
|
|
-
|
|
-
|
Bonus(3)
|
|
1,166,119
|
|
927,873
|
|
682,330
|
|
-
|
|
-
|
ESOP(4)
|
|
40,889
|
|
40,889
|
|
40,889
|
|
-
|
|
-
|
Insurance(5)
|
|
75,236
|
|
44,234
|
|
52,374
|
|
-
|
|
-
|
401(k)
Payment(6)
|
|
18,444
|
|
18,444
|
|
18,444
|
|
-
|
|
-
|
BMP-ESOP
Payout(7)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Stock
Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted
Stock Vesting(9)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Discharge
without Cause or Resignation with Good Reason - Change in
Control Related
|
|
|
|
|
Severance
Pay(3)
|
|
$3,228,320
|
|
$2,547,347
|
|
$1,826,019
|
|
$893,673
|
|
$738,770
|
Bonus(3)
|
|
1,920,675
|
|
1,528,268
|
|
1,123,843
|
|
234,000
|
|
401,953
|
ESOP(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Insurance(5)
|
|
75,236
|
|
44,234
|
|
52,374
|
|
44,855
|
|
41,962
|
401(k)
Payment(6)
|
|
29,065
|
|
29,065
|
|
29,065
|
|
18,444
|
|
18,444
|
BMP-ESOP
Payout(7)
|
|
2,569,397
|
|
1,740,399
|
|
950,557
|
|
-
|
|
325,777
|
Stock
Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted
Stock Vesting(9)
|
|
90,629
|
|
57,669
|
|
31,721
|
|
102,160
|
|
114,521
|
Lump
Sum Pension Payment(10)
|
|
4,870,059
|
|
4,665,559
|
|
1,430,938
|
|
N/A
|
|
N/A
|
Tax
Indemnity(11)
|
|
5,404,404
|
|
4,817,010
|
|
2,545,545
|
|
469,655
|
|
612,329
|
Change
in Control – No Termination of Employment
|
|
|
|
|
|
|
|
|
Severance
Pay(3)
|
|
$1,936,992
|
|
$1,528,408
|
|
$1,095,611
|
|
-
|
|
-
|
Bonus(3)
|
|
1,166,119
|
|
927,873
|
|
682,330
|
|
-
|
|
-
|
ESOP(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Insurance(5)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
401(k)
Payment(6)
|
|
18,444
|
|
18,444
|
|
18,444
|
|
-
|
|
-
|
BMP-ESOP
Payout(7)
|
|
2,569,397
|
|
1,740,399
|
|
950,557
|
|
-
|
|
$325,777
|
Stock
Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted
Stock Vesting(9)
|
|
90,629
|
|
57,669
|
|
31,721
|
|
$102,160
|
|
114,521
|
Lump
Sum Pension Payment(10)
|
|
4,870,059
|
|
4,665,559
|
|
1,430,938
|
|
N/A
|
|
N/A
|
Tax
Indemnity(11)
|
|
4,243,524
|
|
3,929,305
|
|
1,890,756
|
|
-
|
|
-
|
(1)
|
The
Employment Agreements provide no severance benefits on termination by
reason of death, except for (i) earned but unpaid salary, (ii) benefits
such executive is entitled to as a former employee, and (iii) payment for
all unused vacation days and floating holidays in the year of termination
at the highest rate of annual salary for such year; provided, however,
that such executive’s designated beneficiary(ies) shall receive a death
benefit, payable through life insurance or otherwise, which is the
equivalent on a net after-tax basis of the death benefit payable under a
term life insurance policy, with a stated death benefit of three times
such executive’s then Annual Base Salary. This death benefit
shall be paid within thirty days of death. The Retention
Agreements provide no severance benefits on termination by reason of
death, except for (a) earned but unpaid salary, and (b) benefits such
executive is entitled to as a former
employee.
|
(2)
|
The
Employment Agreements provide no severance benefits on termination by
reason of disability, except for (i) earned but unpaid salary, (ii)
benefits such executive is entitled to as a former employee, and (iii)
payment for all unused vacation days and floating holidays in the year of
termination at the highest rate of annual salary for such year; provided,
however, that in the event of the Senior Executive's disability
while in the employment of the Company, the Company will pay to such
Senior Executive a lump sum amount equal to three times his then annual
base salary, payable within thirty days after such Senior Executive’s
termination due to disability. The Retention Agreements provide
no severance benefits on termination by reason of
disability.
|
(3)
|
In
the event of a termination without cause, a resignation with good reason
and/or a change in control, the Employment Agreements provide for a lump
sum payment in an amount equal to the present value of the salary and
bonus that such Senior Executive would have earned if he had worked for
the Company during the remaining unexpired employment period at the
highest annual rate of salary [assuming, if a Change in Control has
occurred, that the annual increases under section 5(c) of the Employment
Agreements would apply] and the highest bonus as a percentage of the rate
of salary provided for under the Employment Agreement, where such present
value is to be determined using a discount rate of six percent (6%) per
annum, compounded, in the case of salary, with the frequency corresponding
to the Company’s regular payroll periods with respect to its officers,
and, in the case of bonus, annually. In the event of a
termination without cause or resignation with good reason, in either event
following a change in control, the Retention Agreements provide for (i) a
lump sum payment, in an amount equal to the present value of the salary
that such Contract Employee would have earned if he had continued working
for the Bank during the remaining unexpired Assurance Period at the
highest annual rate of salary achieved during such Contract Employee’s
period of actual employment with the Bank, where such present value is to
be determined using a discount rate equal to the applicable short-term
federal rate prescribed under section 1274(d) of the Code, compounded
using the compounding periods corresponding to the Bank’s regular payroll
periods for its officers; plus (ii) payments that would have been made to
such Contract Employee under any cash bonus or long-term or
short-term cash incentive compensation plan maintained by, or covering
employees of, the Bank, if he had continued working for the Bank during
the remaining unexpired Assurance Period and had earned the maximum bonus
or incentive award in each calendar year that ends during the remaining
unexpired Assurance Period, such payments to be equal to the product
of: (a) the maximum percentage rate at which an award was ever
available to such Contract Employee under such incentive compensation
plan, multiplied by (b) the salary that would have been paid to such
Contract Employee during each such calendar year at the highest annual
rate of salary achieved during the remaining unexpired Assurance
Period.
|
(4)
|
In
the event of a termination without cause or a resignation with good reason
in the absence of a change in control, the Employment Agreements provide
for a lump sum payment in an amount approximately equal to the present
value of three years of participation in the ESOP, where such present
value is determined using a discount rate of six percent per annum,
compounded with the frequency corresponding to the Company’s regular
payroll periods with respect to its officers. The Retention
Agreements provide for no severance benefits in the event of a termination
without cause or a resignation for good reason in the absence of a change
in control. Market value is calculated on the basis of $12.77
per share, which is the closing sales price for the Common Stock on the
Nasdaq Stock Market on December 31,
2007.
|
(5)
|
In
the event of a termination without cause, a resignation with good reason
and/or a change in control, the Employment Agreements provide for
continued group life, health (including hospitalization, medical, major
medical, and dental), accident and long-term disability insurance
benefits, in addition to that provided pursuant to section 9(b)(ii) of the
Employment Agreements and after taking into account the coverage provided
by any subsequent employer, if and to the extent necessary to provide such
Senior Executive and his family and dependents for a period of three years
following termination of employment, coverage identical to, and in any
event no less favorable than, the coverage to which they would have been
entitled under such plans (as in effect on the date of his termination of
employment, or, if his termination of employment occurs after a change in
control, on the date of his termination of employment or during the
one-year period ending on the date of such change in control, whichever
results in more favorable benefits as determined by such Senior Executive)
if he had continued working for the Company during the remaining unexpired
employment period as defined in the Employment Agreement at the highest
annual rate of compensation [assuming, if a change in control has
occurred, that the annual increases under section 5(c) of the Employment
Agreements would apply] under the Employment Agreement. The
figure shown represents the present value of continued insurance benefits
for a fixed period of three years and assumes no offset for benefits
provided by a subsequent employer, calculated on the basis of the
assumptions used by the Company in measuring its liability for retiree
benefits other than pensions for financial statement purposes under
Statement of Financial Accounting Standards No. 106 "Employers’ Accounting
for Postretirement Benefits Other Than Pensions" ("SFAS
106"). For purposes of valuing these benefits, the assumed
mortality rates were as follows: Mr. Palagiano, 1.76%; Mr.
Devine, 0.92%; and Mr. Mahon, 0.61%. For more information
concerning other major assumptions used for these calculations, please
refer to Note 15 to the audited consolidated financial statements included
in the Company's 2007 Annual Report on Form 10-K. In the event
of a termination without cause or resignation with good reason, in either
event following a change in control, the Retention Agreements provide for
continued group life, health (including hospitalization, medical and major
medical), accident and long term disability insurance benefits, in
addition to that provided pursuant to section 8(b)(ii) of the Retention
Agreements and after taking into account the coverage provided by any
subsequent employer, if and to the extent necessary to provide for such
Contract Employee, for the remaining unexpired Assurance Period, coverage
equivalent to the coverage to which such Contract Employee would have been
entitled under such plans (as in effect on the date of his termination of
employment, or, if his termination of employment occurs after a change of
control, whichever benefits are greater) if the Contract Employee had
continued working for the Bank during the remaining unexpired Assurance
Period at the highest annual rate of compensation achieved during the
Contract Employee’s period of actual employment with the
Bank. The figure shown represents the present value of
continued insurance benefits for a fixed period of three years and assumes
no offset for benefits provided by a subsequent employer, calculated on
the basis of the assumptions used by the Company in measuring its
liability for retiree benefits other than pensions for financial statement
purposes under SFAS 106. For more information concerning other
major assumptions used for these calculations, please refer to Note 15 to
the audited consolidated financial statements included in the Company's
2007 Annual Report on Form 10-K.
|
(6)
|
In
the event of a termination without cause or a resignation with good reason
in the absence of a change in control, the Employment Agreements provide
for a lump sum payment in an amount approximately equal to the present
value of three years of participation in the 401(k) Plan, where such
present value is determined using a discount rate of six percent per
annum, compounded with the frequency corresponding to the Company’s
regular payroll periods with respect to its officers. The
Retention Agreements provide for no severance benefits in the event of a
termination without cause or a resignation for good reason in the absence
of a change in control. In the event of a change in control, he
Employment Agreements provide for a lump sum payment in an amount
approximately equal to the present value of five years of participation in
the 401(k) Plan, where such present value is determined using a discount
rate of six percent per annum, compounded with the frequency corresponding
to the Company’s regular payroll periods with respect to its
officers. The Retention Agreements in effect for Messrs. Maher
and King provide for a lump sum payment in an amount approximately equal
to the present value of three years of participation in the 401(k) Plan,
where such present value is determined using a discount rate of six
percent per annum, compounded with the frequency corresponding to the
Company’s regular payroll periods with respect to its
officers.
|
(7)
|
The
ESOP provides that in the event of a change in control of the Company or
Bank, a portion of the proceeds from the sale of the shares of the Common
Stock held in a suspense account for future allocation to employees would
be applied to repay the outstanding balance on the loan used to purchase
the unallocated shares. The remaining unallocated shares (or
the proceeds from their sale) would be distributed among the accounts of
plan participants in proportion to the balances credited to such accounts
immediately prior to such allocation. The Company estimates
this distribution to be approximately $8.12 per allocated share, based on
1,664,593.18 allocated shares that are held by current participants who
were employed as of December 31, 2007, 1,406,782.00 unallocated shares, an
outstanding loan balance of $4,443,640.22, and $12.77 per share, which was
the closing sales price for the Common Stock on the Nasdaq Stock Market on
December 31, 2007. The BMP provides eligible employees with
benefits that would be due under the ESOP if such benefits were not
limited under the Code. The figures shown represent an estimated earnings
credit of $8.12 per stock unit credited to Messrs. Palagiano, Devine,
Mahon and King under the BMP.
|
(8)
|
All
stock options granted under the 2001 Stock Option Plan and 2004 Stock
Incentive Plan provide for full vesting upon death, disability,
retirement, or change in control. The figures shown reflect the
in-the-money value of those stock options that would accelerate,
calculated based on the positive difference between the option exercise
price and $12.77, which was the closing sales price for a share of Common
Stock on December 31, 2007.
|
(9)
|
All
restricted stock granted under the 2004 Stock Incentive Plan provide for
full vesting upon death, disability, retirement or change in control. The
figures shown reflect the value of those restricted stock awards that
would accelerate, calculated based on a per share value of $12.77, which
was the closing sales price for a share of Common Stock on December 31,
2007.
|
(10)
|
In
the event of a change in control of the Company or Bank, the Employment
Agreements provide that (i) the term of employment will be converted to a
fixed two year period beginning on the date of the change in control, and
(ii) if the Senior Executive signs a release of any further rights under
his Employment Agreement with the Bank, an immediate lump sum payment will
be paid (whether or not employment has terminated) equal to the present
value of three years salary, bonus and fringe benefits plus an additional
lump sum equal to the present value x minus y, where x is a specified
target pension for each Senior Executive and y is the actual pension
benefits due to the Senior Executive under the Bank's and the Company's
qualified and nonqualified defined benefit pension plans. The target
pension is 26-2/3% of highest aggregate salary and bonus for Mr.
Palagiano; 25% of highest aggregate salary and bonus for Mr. Devine; and
16-2/3% of highest aggregate salary and bonus for Mr. Mahon. Highest
aggregate salary and bonus for this purpose is the highest salary and
bonus for the three consecutive years during the final 10 years of
employment for which the aggregate is the highest. The
Retention Agreements do not provide for a similar additional payment in
the event of a change in control of the Company or
Bank.
|
(11)
|
Cash
and benefits paid to Messrs. Palagiano, Mahon and Devine under the
Employment Agreements and Messrs. King and Maher under the Retention
Agreements, together with payments under other benefit plans following a
change of control of the Bank or the Company may constitute an "excess
parachute" payment under Section 280G of the Code, resulting in the
imposition of a 20% excise tax on the recipient and the denial of the
deduction for such excess amounts to the Company and the
Bank. The Employment Agreements include a provision
indemnifying the Senior Executive on an after-tax basis for any "excess
parachute" excise taxes. The Retention Agreements also include
a provision indemnifying the Contract Employee on an after-tax basis for
any “excess parachute” excise
taxes.
|
Transactions
With Certain Related Persons
Federal
Reserve Board Regulation O requires that all Bank or Company loans or extensions
of credit to certain executive officers, as defined in Regulation O,
("Regulation O Officers") and Directors must be made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with the general public and must not involve more
than the normal risk of repayment or present other unfavorable
features. The Bank has in the past made loans or extended credit to
Regulation O Officers and also to certain persons related to Regulation O
Officers and Directors. All such loans were: (i) made by the Bank in
the ordinary course of business; (ii) made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and (iii) did not involve more than
the normal risk of collectability or present other unfavorable
features. Current Bank policy prohibits it from advancing loans to
the Named Executive Officers or Directors. The Bank owned no
outstanding loans to Named Executive Officers, Regulation O Officers, Directors
or their associates as of the Record Date. The Company intends that
all loan transactions in the future between the Company and its Regulation O
Officers, or holders of more than 5% of the shares of any class of Common Stock,
and affiliates thereof, will contain terms that are no less favorable to the
Bank than those it could have obtained in arms-length negotiations with
unaffiliated persons. All such loans will further be approved by a
majority of its independent outside Directors having no interest in the
transaction.
Section
402 of the Sarbanes-Oxley Act of 2003 ("Sarbanes-Oxley") prohibits the extension
of personal loans to Directors and executive officers of issuers (as defined in
Sarbanes-Oxley). The prohibition, however, does not apply to
mortgages advanced by an insured depository institution, such as the Bank, that
is subject to the insider lending restrictions of Section 22(h) of the Federal
Reserve Act.
Mr.
Curtin is a partner in the law firm of Conway Farrell. The Bank
retains Conway Farrell to conduct loan closings and perform other requested
legal services. The Bank paid fees totaling $16,560 directly to
Conway Farrell during the year ended December 31, 2007 for other legal services
provided. In addition, Conway Farrell received fees in the amount of
approximately $1,214,556 from third parties pursuant to its representation of
the Bank in loan closings and other legal matters for the year ended December
31, 2007. Mr. Williams is a partner at Thacher, which provides general
corporate legal services to the Company and its subsidiaries. The
Company or Bank paid $300,331 in fees to Thacher in 2007.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires the Company's executive officers and
Directors, and persons who own more than 10% of the Common Stock, to file with
the SEC reports of ownership and changes in ownership of Common
Stock. Executive Officers, Directors and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on review of the
copies of such forms received by the Company, or written representations from
certain reporting persons, the Company believes that its executive officers,
Directors and greater than 10% beneficial owners complied with all applicable
filing requirements.
_______________________________________________________________
PROPOSAL
2
APPROVAL
OF AMENDMENT NO. 1 TO THE 2004 STOCK INCENTIVE PLAN
_______________________________________________________________
On March 20,
2008, the Board of Directors adopted, subject to shareholder approval, Amendment
No. 1 to the 2004 Stock Incentive Plan, to increase the number of shares that
may be issued under the 2004 Stock Incentive Plan by 1,300,000 shares, 860,000
of which may be issued as restricted stock. Provided below is a
summary of the Company's reasons for adopting Amendment No. 1 to the 2004 Stock
Incentive Plan and seeking shareholder approval. The proposed
amendment is included with this Proxy Statement as Appendix A.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF AMENDMENT NO. 1 TO THE 2004 STOCK INCENTIVE PLAN.
Discussion
of the Proposed Amendment
The 2004
Stock Incentive Plan currently permits the Company to grant up to a total of
1,496,300 restricted stock awards, incentive or non-qualified stock options or
stock appreciation rights to Outside Directors, officers and other employees of
the Company or its subsidiaries. Of the total shares eligible for
grant under the 2004 Stock Incentive Plan, only up to 374,075 shares may be
granted as restricted stock awards. Currently, only 13,184 shares
remain available for future awards under the 2004 Stock Incentive Plan, all of
which may be granted as restricted stock awards. The proposed
amendment would increase the number of shares that may be issued under the 2004
Stock Incentive Plan by 1,300,000 shares, 860,000 of which may be issued as
restricted stock awards. If the amendment is approved, a total of
1,313,184 shares will be available for future grants, of which a total of
873,184 may be in the form of restricted stock awards.
The 2004
Stock Incentive Plan currently permits the Company to make grants to Outside
Directors, officers and other employees of the Company or its
subsidiaries. The proposed amendment would continue to permit the
Company to make grants to Outside Directors, officers and other employees of the
Company or its subsidiaries,
with the exception of Vincent F. Palagiano, the Company’s Chairman of the Board
and Chief Executive Officer. Mr. Palagiano would not be eligible to
participate in the amended 2004 Stock Incentive Plan on and after May 15,
2008.
Reasons
the Company is Requesting Shareholder Approval
The Company is requesting shareholders
to approve the proposed amendment to the 2004 Stock Incentive Plan so that the
Company may continue to grant stock-based compensation to its directors and
officers. The majority of the companies with which the Company
competes for directors and management-level employees are public companies that
offer stock awards as part of their director and officer compensation
packages. By approving the proposed amendment to the 2004 Stock
Incentive Plan, the shareholders will enable the Company to continue offering a
competitive compensation package that is linked to stock price performance in
attracting and retaining highly qualified directors and officers.
In addition, as a Nasdaq Stock Market
listed company, the Company is required to seek the approval of its shareholders
before implementing such a proposed amendment to an equity compensation plan
such as the 2004 Stock Incentive Plan. The 2004 Stock Incentive Plan
also requires shareholder approval for this amendment. Shareholder
approval will also enhance the Company's ability to deduct the expense of
certain awards for federal income tax purposes.
If
the Company Does Not Receive Shareholder Approval It Will Not Implement
Amendment No. 1
If the proposed amendment to the 2004
Stock Incentive Plan is not approved by the Company’s shareholders, the 2004
Stock Incentive Plan will remain in effect in its current form, subject to
amendment from time to time by the Board in respects that do not constitute
material amendments requiring shareholder approval. In its current
form, the number of shares that may be issued is 13,184, all of which may be
issued as restricted stock awards or stock appreciation rights. In
this event, the Company expects that its Board of Directors will consider
substituting other forms of compensation to assure that the Company's
compensation packages for officers and directors are competitive with those of
other publicly traded financial services companies in the New York City
Metropolitan area.
Purpose
of the Amended 2004 Stock Incentive Plan
The
purpose of the 2004 Stock Incentive Plan is to promote the Company's growth and
profitability; provide certain key officers, employees and directors of the
Company and its affiliates with an incentive to achieve corporate objectives;
attract and retain individuals of outstanding competence; and provide such
individuals with an equity interest in the Company.
Description
of the Amended 2004 Stock Incentive Plan
Administration. Initially,
the amended 2004 Stock Incentive Plan will be administered by a committee
appointed by the Board of Directors consisting of the members of the
Compensation Committee of the Company's Board of Directors. The
administrative committee will consist of not less than two members of the Board
of Directors. The administrative committee has broad discretionary
powers. The Board of Directors may exercise any power or discretion
conferred on the administrative committee.
Stock Subject to the Amended 2004
Stock Incentive Plan. The Company will at all times reserve
and keep available such number of Common Stock as may be required to satisfy the
needs of the amended 2004 Stock Incentive Plan. A maximum of
1,313,184 shares of Common Stock may be issued under the amended 2004 Stock
Incentive Plan. As of March 17, 2008, the aggregate fair market value
of the shares to be reserved under the amended 2004 Stock Incentive Plan was
$21,365,504 based on the $16.27 closing sales price per share of the Company's
Common Stock on the Nasdaq Stock Market on March 17, 2008.
Eligibility. The
administrative committee selects the people who may participate in the amended
2004 Stock Incentive Plan. Any key employee or non-employee Director
of the Company, the Bank or any other subsidiary, with the exception of Vincent F.
Palagiano, the Company’s Chairman of the Board and Chief Executive Officer, may
be selected to participate. Mr. Palagiano is not be eligible to
participate in the amended 2004 Stock Incentive Plan on and after May 15,
2008. As of March 17, 2008, there were 82 employees and 9
non-employee Directors eligible to be selected for participation.
Terms and Conditions of
Awards. The administrative committee may, in its discretion,
grant any or all of three types of equity-linked awards to eligible
individuals: stock options, restricted stock awards and stock
appreciation rights. The administrative committee will, in its
discretion, determine the type of awards made and establish other terms and
conditions applicable to the award. In establishing terms and
conditions, it must observe the following restrictions:
1)
|
It
may not grant awards that will result in the issuance of more than
1,313,184 shares in the aggregate or more than 873,184 shares as
restricted stock awards.
|
2)
|
It
may not grant awards for more than 250,000 shares annually in the form of
options or stock appreciation rights, nor more than 60,000 shares annually
in the form of restricted stock, to any individual "covered employee"
under section 162(m) of the Code.
|
3)
|
It
may not grant awards with an effective date that is before the date that
the Company receives shareholder approval for the amendment to the 2004
Stock Incentive Plan.
|
Stock Options. The
administrative committee establishes the terms and conditions of the stock
options that it grants. In creating terms and conditions, it must observe the
following restrictions:
1.
|
It
may not grant a stock option with a purchase price that is less than the
fair market value of a share of the Company's Common Stock on the date it
grants the stock
option.
|
2.
|
It
may not grant a stock option with a term longer than 10
years.
|
The administrative committee may grant
incentive stock options to officers and employees that qualify for special
federal income tax treatment or non-qualified stock options that do not qualify
for special federal income tax treatment. Incentive stock options are
subject to certain additional restrictions under the Code and the amended 2004
Stock Incentive Plan. Unless otherwise designated by the
administrative committee, options granted under the amended 2004 Stock Incentive
Plan will be exercisable for a period of five years after the date of grant (or
for a shorter period ending three months after the option holder's termination
of employment due to discharge without cause, one year after termination of
employment due to death, disability or retirement, or immediately upon voluntary
resignation or termination for cause). The exercise period may be
further extended (but not beyond a maximum option period of ten years) by up to
three years in the event of a change of control and, in the event the option is
scheduled to expire while a securities trading suspension is in effect for an
option holder, until 90 days following the end of the suspension
period.
Upon the exercise of an option,
the exercise price must be paid in full. Payment may be made in cash, shares of
Common Stock already owned by the option holder or in such other consideration
as the administrative committee authorizes. Vested options may be transferred
prior to exercise only to certain family members and on the death of the option
holder. If permitted by the administrative committee, options may be
exercised before they are vested. In this event, the shares issued
upon exercise will carry a restrictive legend prohibiting transfer prior to the
vesting date and requiring that the shares be returned to the Company in
exchange for the lesser of the exercise price paid or the fair market value of
the shares when returned if the vesting conditions are not
satisfied. Unless otherwise specified by the administrative
committee, stock options will not be exercisable prior to vesting and will vest
at the rate of 25% per year beginning on the first anniversary of the grant
date. In the event of termination of employment due to death or
disability, the vesting of stock options scheduled to vest within six months
after the termination date will be accelerated. In the event of a
change of control, the vesting of all options is accelerated.
Restricted
Stock. As a general rule, shares of Common Stock
that are subject to a restricted stock award are held by the administrative
committee for the benefit of the award recipient until vested and, when vested,
are transferred to the award recipient. Unless the administrative
committee determines otherwise with respect to any restricted stock award,
before the shares subject to a restricted stock award are vested and transferred
to the award recipient, the award recipient shall exercise any voting or tender
rights in his or her discretion and the administrative committee shall
accumulate any dividends or distributions for distribution at the same time and
terms as the underlying shares. In the alternative, the
administrative committee may authorize the immediate distribution of the
restricted shares to the award recipient in the form of a stock certificate
bearing a legend containing the applicable vesting restrictions.
All restricted stock awards will be
subject to a vesting schedule specified by the administrative committee when the
award is made. If the administrative committee does not specify a
vesting schedule, the award will vest at the rate of 25% per year beginning on
the first anniversary of the date of grant. In the event of death or
termination due to disability prior to the vesting date, unvested awards that
would have vested within six months after death or termination for disability
will be deemed vested. All other awards that are unvested at
termination of employment will be forfeited, with the award recipient receiving
a refund equal to the lesser of the fair market value of the unvested shares at
termination of employment or the amount (if any) paid when the award was
made. All unvested awards will vest in the event of a change in
control.
Performance-Based Restricted Stock
Awards. At the time of grant, the administrative committee may
designate a restricted stock award as a performance-based restricted stock
award. If it does so, the administrative committee shall establish,
in addition to or in lieu of service-based vesting requirements, one or more
performance goals which must be attained by the award recipient as a condition
of retention of the shares. The performance goal(s) shall be based on one or
more of the following:
(i)
|
Earnings
per common share
|
(ii)
|
Net
income
|
(iii)
|
Return
on average equity
|
(iv)
|
Return
on average assets
|
(v)
|
Core
earnings
|
(vi)
|
Stock
price
|
(vii)
|
Strategic
business objectives, consisting of one or more objectives based upon
satisfying specified cost targets, business expansion goals, and goals
relating to acquisitions or divestitures
|
(viii)
|
Operating
income
|
(ix)
|
Operating
efficiency ratio
|
(x)
|
Net
interest spread
|
(xi)
|
Loan
production volumes
|
(xii)
|
Non-performing
loans
|
(xiii)
|
Cash
flow
|
(xiv)
|
Total
shareholder return
|
(xv)
|
Net
revenue
|
(xvi)
|
Gross
revenue
|
(xvii)
|
Operating
expense
|
(xviii)
|
Fee
income
|
(xix)
|
Deposit
growth
|
(xx)
|
Any
other performance criteria established by the administrative
committee
|
(xxi)
|
Any
combination of (i) through (xix)
above
|
Performance goals may be established on
the basis of reported earnings or cash earnings, and consolidated results or
individual business units and may, in the discretion of the administrative
committee, include or exclude extraordinary items and/or the results of
discontinued operations. Each performance goal may be expressed on an
absolute and/or relative basis, may be based on or otherwise employ comparisons
based on internal targets, past performance (or the past performance of
individual business units) and/or the past or current performance of other
companies. Attainment of the performance goals will be measured over
a performance measurement period specified by the administrative committee when
the award is made. Performance goals will be measured over a period
of at least three years. At least 75% of any performance measurement period will
occur after the performance goal(s) are established.
The administrative committee shall
determine in its discretion whether the award recipient has attained the
goals. If they have been satisfied, it shall certify that fact in
writing. If the performance goals are not satisfied during the
performance measurement period, the relevant awards will be
forfeited. If the performance goals and any service-based vesting
schedule are satisfied, the award will be distributed (or any vesting-related
legend removed from any stock certificates previously delivered to the award
recipient). If the performance goals are achieved prior to the end of
the performance measurement period, the awards may be distributed
early.
Career Service
Awards. At the time of grant, the administrative committee may
designate a restricted stock award as a career service award. A
career service award does not vest in full unless the recipient remains in
continuous service until attaining age 65 or completing the minimum period of
service (which must be at least five years) specified by the administrative
committee when the award is made. In the event of termination
of service before full vesting due to retirement at or after attaining age 55
and completing 10 years of service, death or disability, a pro-rata portion of
the award will vest, based on the period of service completed since the grant
date of the award relative to the total expected period of service from the
grant date to the scheduled vesting date.
Stock Appreciation
Rights. A stock appreciation right affords the holder the
right to receive, upon exercise, a payment in cash or shares of Common Stock
equal to the positive difference between the exercise price assigned to the
right and the fair market value of a share of Common Stock on the exercise
date. The administrative committee establishes the terms and
conditions of the stock appreciation rights that it grants. In setting terms and
conditions, it must observe the following restrictions:
(1)
|
It
may not grant a stock appreciation right with an exercise price that is
less than the fair market value of a share of Common Stock on the date it
grants the stock appreciation
right.
|
(2)
|
It
may not grant a stock appreciation right with a term that is longer than
10 years.
|
The
administrative committee may grant either tandem or stand-alone stock
appreciation rights. Tandem stock appreciation rights are granted in
tandem with, and are exercisable on the same terms and conditions as, a related
stock option that is granted simultaneously. The exercise of a tandem
stock appreciation right cancels the related option and the exercise of a
related stock option cancels the tandem stock appreciation
right. Tandem stock appreciation rights may only be settled in
shares of Common Stock. Unless otherwise designated by the
administrative committee, stock appreciation rights granted under the amended
2004 Stock Incentive Plan will be stand-alone stock appreciation rights, will
have an exercise price equal to the fair market value of a share on the date of
grant, will be exercisable for a period of five years after the date of grant
(or for a shorter period ending upon the holder's termination of employment for
any reason) and will vest at the rate of 25% per year beginning on the first
anniversary of the date of grant. In the event of termination of employment due
to death or disability, the vesting of stock appreciation rights scheduled to
vest within six months after the termination date will be
accelerated. In the event of a change of control, the vesting of all
stock appreciation rights is accelerated. Vested stock appreciation
rights that are not exercised prior to their expiration date will be deemed
automatically exercised on their expiration date.
Mergers and
Reorganizations. The number of shares available under the
amended 2004 Stock Incentive Plan, the maximum limits on awards to individual
officers and Directors and any outstanding awards will be adjusted to reflect
any merger, consolidation or business reorganization in which the Company is the
surviving entity, and to reflect any stock split, stock dividend or other event
where the administrative committee determines an adjustment is appropriate in
order to prevent the enlargement or dilution of an award recipient's
rights. If a merger, consolidation or other business reorganization
occurs and the Company is not the surviving entity, outstanding awards may be
exchanged for awards linked to the equity of the surviving entity that are
designed to neither increase nor diminish the rights of the holders of the
outstanding awards or may be settled for a monetary or other payment when the
merger, consolidation or reorganization occurs.
Conditions of
Effectiveness. The proposed amendment to the 2004 Stock
Incentive Plan will become effective upon shareholder approval. No
performance-based restricted stock awards will be granted after May 20, 2009,
the fifth anniversary of
the 2004
Stock Incentive Plan’s effective date, unless the list of permissible
performance goals is re-approved by the shareholders.
Termination
or Amendment
The
Board of Directors has the authority to suspend or terminate the amended 2004
Stock Incentive Plan in whole or in part at any time by giving written notice to
the administrative committee, however, no amendment or termination may affect
any award granted prior to the amendment or termination without the recipient's
consent.
The Board of Directors has the
authority to amend or revise the amended 2004 Stock Incentive Plan in whole or
part at any time. As a Nasdaq Stock Market listed company, the
Company is required to seek shareholder approval for amendments to the amended
2004 Stock Incentive Plan that are deemed material under the Nasdaq Stock Market
listing rules. The amended 2004 Stock Incentive Plan does not
authorize the re-pricing of stock options without shareholder
approval. No material amendments affecting the terms of
performance-based restricted stock awards may be made without shareholder
approval.
Federal
Income Tax Consequences
The following discussion is intended to
be a summary and is not a comprehensive description of the federal tax laws,
regulations and policies affecting awards that may be granted under the amended
2004 Stock Incentive Plan. Any descriptions of the provisions of any
law, regulation or policy are qualified in their entirety by reference to the
particular law, regulation or policy. Any change in applicable law or
regulation or in the policies of various taxing authorities may have a
significant effect on this summary. The amended 2004 Stock Incentive
Plan is not a qualified plan under Section 401(a) of the Code.
Restricted Stock
Awards. Restricted stock awards under the amended 2004 Stock
Incentive Plan do not result in federal income tax consequences to either the
Company or the award recipient when they are made. Once the award is
vested and the shares subject to the award are distributed, the award recipient
will generally be required to include in ordinary income, for the taxable year
in which the vesting date occurs, an amount equal to the fair market value of
the shares on the vesting date. The Company will generally be allowed
to claim a deduction, for compensation expense, in a like amount. If
dividends are paid on unvested shares held under the amended 2004 Stock
Incentive Plan, such dividend amounts will also be included in the ordinary
income of the recipient. The Company will be allowed to claim a
deduction for compensation expense for this amount as well. In
certain cases, a recipient of a restricted stock award that is not a
performance-based restricted stock award may elect to include the value of the
shares subject to a restricted stock award in income for federal income tax
purposes when the award is made instead of when it vests.
Stock
Options. Incentive stock options will not create federal
income tax consequences when they are granted. If they are exercised during
employment or within three months after termination of employment (one year in
cases of termination due to death or disability), the exercise will similarly
not create federal income tax consequences. When the shares acquired on exercise
of an incentive stock option are sold, the seller must pay federal income taxes
on the amount by which the sales price exceeds the purchase price. This amount
will be taxed at capital gains rates if the sale occurs at least two years after
the option was granted and at least one year after the option was exercised.
Otherwise, it is taxed as ordinary income. The amount by which the fair market
value of the shares acquired on exercise exceeds the option exercise price will
be an item of adjustment in the year of exercise for purposes of determining the
option holder's liability, if any, for alternative minimum tax.
Incentive stock options that are
exercised more than one year after termination of employment due to death or
disability or three months after termination of employment for other reasons are
treated as non-qualified stock options. Non-qualified stock options will not
create federal income tax consequences when they are granted. When
they are exercised, federal income taxes at ordinary income tax rates must be
paid on the amount by which the fair market value of the shares acquired by
exercising the option exceeds the exercise price. When an option holder sells
shares acquired by exercising a non-qualified stock option, he or she must pay
federal income taxes on the amount by which the sales price exceeds the purchase
price plus the amount included in ordinary income at option exercise. This
amount will be taxed at capital gains rates, which will vary depending upon the
time that has elapsed since the exercise of the option. A cash payment, if
directed by the administrative committee on a merger or other reorganization
under the amended 2004 Stock Incentive Plan's change of control provisions, is
taxed as if it were the exercise of a non-qualified stock option followed
immediately by a resale of the stock acquired by exercising the
option.
When a non-qualified stock option is
exercised, the Company may be allowed a federal income tax deduction for the
same amount that the option holder includes in his or her ordinary income. When
an incentive stock option is exercised, there is no tax deduction unless the
shares acquired are resold sooner than two years after the option was granted or
one year after the option was exercised. A cash payment if directed by the
administrative committee on a merger or other reorganization under the
amended
2004 Stock Incentive Plan's change of control provisions is deductible as if it
were the exercise of a non-qualified stock option.
Stock Appreciation
Rights. Stock appreciation rights do not have federal income
tax consequences for recipients or the Company when they are
granted. When a stock appreciation right is exercised, the amount
paid in settlement is included in the payee's gross income for federal income
tax purposes, and the Company may be entitled to claim a federal tax deduction
for a like amount.
Deduction
Limits. Section 162(m) of the Code limits the Company's
deductions for compensation in excess of $1,000,000 per year for the Chief
Executive Officer and the four other Named Executive
Officers. Compensation amounts resulting from so-called “qualified
performance-based compensation” are not subject to this
limit. Restricted stock awards, other than performance-based
restricted stock awards, may be subject to this deduction limitation if the
amount of the restricted stock awards in addition to other compensation of the
executive that is subject to the limit exceeds $1,000,000. The
Company has designed the amended 2004 Stock Incentive Plan so that stock
options, stock appreciation rights and performance-based restricted stock awards
may qualify as qualified performance-based compensation that is not subject to
the $1,000,000 deduction limit. The Company expects that the
administrative committee will take these deduction limits into account in
establishing the size and the terms and conditions of
awards. However, the administrative committee may decide to grant
restricted stock awards all or a portion of which will exceed the deduction
limit.
The preceding statements are intended
to summarize the general principles of current federal income tax law applicable
to awards that may be granted under the amended 2004 Stock Incentive
Plan. State and local tax consequences may also be
significant.
Due to the discretionary nature
of benefits under the amended 2004 Stock Incentive Plan, no estimate of the
potential future benefits for any individual or group of individuals is
feasible.
The
following table presents equity compensation plan information as of December 31,
2007:
|
|
EQUITY
COMPENSATION PLAN INFORMATION
|
Plan
Category
|
|
Number
of Securities to be Issued Upon Exercise of Outstanding Options
(a)
|
|
Weighted
Average Exercise Price of Outstanding Options
(b)
|
|
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans [Excluding Securities Reflected in Column (a)]
(c)
|
Equity
compensation plans approved by the Holding
Company's shareholders
|
|
3,165,997
|
|
$14.63
|
|
118,975(1)
|
Equity
compensation plans not approved by
the
Holding Company's shareholders
|
|
-
|
|
-
|
|
-
|
(1)
|
Amount
comprised of 105,791 stock options that remain available for future
issuance under the 2001 Stock Option Plan, and 13,184 stock option or
restricted stock awards that remain available for future
issuance under the 2004 Stock Incentive Plan. More than 85% of
the remaining stock options available for future issuance are available
under the 2001 Stock Option Plan.
|
__________________________________________________________________
PROPOSAL
3
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
__________________________________________________________________
General
The Audit
Committee of the Board of Directors has appointed the firm of Deloitte &
Touche LLP to act as the Company's independent auditors for the year ending
December 31, 2008, subject to ratification of such appointment by the Company's
shareholders. A representative of Deloitte & Touche LLP is
expected to be present at the Annual Meeting, will be provided an opportunity to
make a statement if he or she so desires, and is expected to be available to
respond to appropriate questions. No determination has been made as
to any action the Audit Committee would take if the shareholders do not ratify
the appointment.
Audit
Fees
The following table summarizes the
aggregate fees billed to the Company by the independent auditor:
|
Year
Ended December 31,
|
|
2007
|
|
2006
|
Audit
Fees (a)
|
$521,100
|
|
$513,500
|
Audit-Related
Fees (b)
|
278,000
|
|
281,000
|
Tax
Fees (c)
|
252,000
|
|
106,200
|
All
Other Fees
|
-
|
|
-
|
Total
|
$1,051,100
|
|
$900,700
|
(a) Fees
for audit services billed in 2007 and 2006 consisted of:
§
|
Audits
of the Company’s annual financial
statements
|
§
|
Reviews
of the Company’s quarterly financial
statements
|
§
|
Comfort
letters, statutory and regulatory audits, consents and other services
related to SEC matters
|
(b) Fees
for audit-related services billed in 2007 and 2006 consisted of:
§
|
Financial
accounting and reporting
consultations
|
§
|
Internal
control reviews
|
§
|
Employee
benefit plan audits
|
(c) Fees
for tax services billed in 2007 and 2006 consisted of tax compliance services
and tax planning and advice services.
Fees for
tax compliance services totaled $120,200 for 2007 and $59,000 for
2006. Tax compliance services are services rendered based upon facts
already in existence or transactions that have already occurred to document,
compute, and obtain government approval for amounts to be included in tax
filings and consisted of:
i. Federal,
state and local income tax return assistance
ii. Sales
and use, property and other tax return assistance
iii. Research & Development tax credit documentation and
analysis for purposes of filing amended returns
iv. Requests
for technical advice from taxing authorities
Tax planning and advice service fees
paid to Deloitte & Touche LLP totaled $22,500 in 2007 and $29,200 in
2006. Tax planning and advice consists of services rendered with
respect to proposed transactions or that alter a transaction to obtain a
particular tax result.
Pre-Approval
Policy
The
services performed by the independent auditor in 2007 were pre-approved in
accordance with the Audit Committee's pre-approval policy. Pursuant
to the policy, the Audit Committee must pre-approve all audit and permitted
non-audit services to be provided by the independent auditor, including the fees
and terms thereof.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.
__________________________________________________________________
SHAREHOLDER
COMMUNICATIONS WITH THE BOARD
The
Company's Board of Directors provides a process for shareholders to send
communications to the Board. The Company's Policy Regarding
Shareholder Communication with the Board is available on its website at www.dimewill.com by selecting
Investor Relations and then Corporate Governance within the Investor Relations
menu.
OTHER
MATTERS
As of the
date of this Proxy Statement, the Company's Board of Directors is not aware of
any other matters to be brought before the shareholders at the Annual
Meeting. If, however, any other matters not known are properly
brought before the meeting, the persons named in the accompanying proxy will
vote the shares represented by all properly executed proxies on such matters in
such manner as shall be determined by a majority of the Board of
Directors.
2009
ANNUAL MEETING STOCKHOLDER PROPOSALS
In order
to be considered for inclusion in the Company's proxy statement and form of
proxy for the annual meeting to be held in 2009, all shareholder proposals must
be submitted to the Secretary of the Company at its offices at 209 Havemeyer
Street, Brooklyn, New York 11211 on or before December 15,
2008. Under the Company's Bylaws, shareholder nominations for
Director and shareholder proposals not included in the Company's 2009 proxy
statement, in order to be considered for possible action by the shareholders at
the annual meeting to be held in 2009, must be delivered to or received by the
Secretary of the Company, at the address set forth above: (i) sixty (60) days in
advance of such meeting if such meeting is to be held on a day which is within
thirty (30) days preceding the anniversary of the previous year's annual
meeting, or ninety (90) days in advance of such meeting if such meeting is to be
held on or after the anniversary of the previous year's annual meeting; and (ii)
with respect to an annual meeting held at a time other than within the time
periods set forth in the immediately preceding clause (i), the close of business
on the tenth day following the date on which notice of such meeting is first
given to shareholders. Notice shall be deemed to be first given to
shareholders when disclosure of such date of the meeting of shareholders is
first made in a press release reported to Dow Jones News Services, the
Associated Press or a comparable national news service, or in a document
publicly filed by the Company with the SEC pursuant to Section 13, 14 or 15(d)
of the Exchange Act. A shareholder's notice to the Secretary shall
set forth such information as required by, and otherwise comply with, the
Company's Bylaws. Nothing in this paragraph shall be deemed to
require the Company to include in its proxy statement and proxy card relating to
an annual meeting any shareholder proposal or nomination which does not satisfy
all of the requirements for inclusion established by the SEC in effect at the
time such proposal or nomination is received.
The Board
of Directors will review any shareholder proposals that are filed as required
and will determine whether such proposals satisfy applicable criteria for
consideration at the annual meeting to be held in 2009.
Annual
Report
A copy of
the Annual Report to shareholders for the period ended December 31, 2007,
including the consolidated financial statements prepared in conformity with
generally accepted accounting principles for the year ended December 31, 2007,
accompanies this Proxy Statement. The consolidated financial
statements have been audited by Deloitte & Touche LLP, whose report appears
in the Annual Report. Shareholders may obtain, free of
charge, a copy of the Annual Report on Form 10-K filed with the SEC (without
exhibits) by writing to Kenneth A. Ceonzo, Director of Investor Relations,
Dime Community Bancshares, Inc., 209 Havemeyer Street, Brooklyn, New York
11211, or by calling (718) 782-6200, extension 8279, or by accessing the
Company's corporate website www.dimewill.com.
By Order
of the Board of Directors
Lance J.
Bennett
Secretary
Brooklyn,
New York
April 1,
2008
TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE ANNUAL MEETING, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE POSTAGE-PAID ENVELOPE
PROVIDED.
Appendix
A
Dime
Community Bancshares, Inc. 2004 Stock Incentive Plan
(Effective
May 15, 2008,
subject
to shareholder approval)
AMENDMENT NO.
1
1. Section 2.16 – Section 2.16 of
the 2004 Stock Incentive Plan shall be amended, effective as of May 15, 2008,
subject to shareholder approval, to read in its entirety as
follows:
Section
2.16 Eligible
Employee means any employee of the Company, or of a Parent or Subsidiary,
whom the Committee may determine to be a key officer or employee and select to
receive a Restricted Stock Award or a grant of an Option or Stock Appreciation
Right pursuant to the Plan; provided, however, that on and after May 15, 2008, such
term shall not include Mr. Vincent F. Palagiano in any capacity. On and after May 15, 2008, Mr.
Palagiano is not eligible to be a participant in this Plan.
2. Section 2.17 –
Section 2.17 of the 2004 Stock Incentive Plan shall be amended, effective as of
May 15, 2008, subject to shareholder approval, to read in its entirety as
follows:
Section
2.17 Eligible
Individual means: (a) any Eligible Employee; and (b) any non-employee
director of the Company or a Parent or Subsidiary; provided, however, that on and after May 15, 2008, such
term shall not include Mr. Vincent F. Palagiano in any capacity. On
and after May 15, 2008, Mr. Palagiano is not eligible to be a participant in
this Plan.
3. Article III – Article
III of the 2004 Stock Incentive Plan shall be amended, effective as of May 15,
2008, subject to shareholder approval, to read in its entirety as
follows:
Article
III
Available
Shares
Section
3.1 Shares Available under the
2004 Stock Incentive Plan.
(a) Prior
to May 15, 2008, subject to section 9.3, the maximum aggregate number of Shares
which may be issued for Restricted Stock Awards and upon the exercise of Options
and Stock Appreciation Rights shall be 1,496,300 Shares.
(b) On
and after May 15, 2008, subject to section 9.3, the maximum aggregate number of
Shares which may be issued for Restricted Stock Awards and upon the exercise of
Options and Stock Appreciation Rights shall be the sum of (i) 1,313,184 Shares,
plus (ii) the number of shares underlying grants and awards made under the 2004
Stock Incentive Plan prior to May 15, 2008 that are subsequently forfeited
without the delivery of Shares or expire without exercise.
Section
3.2 Shares Available for
Options.
(a) Prior
to May 15, 2008, subject to section 9.3, the maximum aggregate number of Shares
which may be issued upon exercise of Options shall be 1,496,300 shares, and the
maximum aggregate number of Options which may be granted to any one individual
in any calendar year shall be 250,000 Options.
(b) On
and after May 15, 2008, subject to section 9.3, the maximum aggregate number of
Shares which may be issued upon exercise of Options shall be the sum of (i)
1,313,184 shares, plus (ii) the number of Shares underlying grants and awards
made under the 2004 Stock Incentive Plan prior to May 15, 2008 that are
subsequently forfeited without the delivery of Shares or expire without
exercise, and the maximum aggregate number of Options which may be granted to
any one individual in any calendar year shall be 250,000 Options.
Section
3.3 Shares Available for
Restricted Stock Awards.
(a) Prior
to May 15, 2008, subject to section 9.3, the maximum number of Shares which may
be issued as Restricted Stock Awards under the 2004 Stock Incentive Plan shall
be 374,075 Shares and the maximum aggregate number of Shares which may be
granted as Restricted Stock Awards to any one individual in any calendar year
shall be 60,000 Shares.
(b) On
and after May 15, 2008, subject to section 9.3, the maximum number of Shares
which may be issued as Restricted Stock Awards under the 2004 Stock Incentive
Plan shall be the sum of (i) 873,184 Shares, plus (ii) the number of Shares
underlying Restricted Stock Awards made under the 2004 Stock Incentive Plan
prior to May 15, 2008 that are subsequently forfeited, and the maximum aggregate
number of Shares which may be granted as Restricted Stock Awards to any one
individual in any calendar year shall be 60,000 Shares.
Section
3.4 Shares Available for Stock
Appreciation Rights.
(a) Prior
to May 15, 2008, subject to section 9.3, the maximum aggregate number of Shares
which may be issued upon exercise of Stock Appreciation Rights shall be
1,496,300 and the maximum aggregate number of Stock Appreciation Rights which
may be granted under the 2004 Stock Incentive Plan and to any one individual in
any calendar year shall be 250,000 Stock Appreciation Rights.
(b) On
and after May 15, 2008, subject to section 9.3, the maximum aggregate number of
Shares which may be issued upon exercise of Stock Appreciation Rights shall be
the sum of (i) 1,313,184, plus (ii) the number of Shares underlying grants and
awards made under 2004 the 2004 Stock Incentive Plan prior to May 15, 2008 that
are subsequently forfeited without the delivery of Shares or expire without
exercise, and the maximum aggregate number of Stock Appreciation Rights which
may be granted under the 2004 Stock Incentive Plan and to any one individual in
any calendar year shall be 250,000 Stock Appreciation Rights.
Section
3.5 Computation of Shares
Available.
On and
after May 15, 2008, for purposes of this Article III: in connection
with the granting of a Restricted Stock Award, Option or Stock Appreciation
Right, the number of Shares available for the granting of additional Restricted
Stock Awards, Options and Stock Appreciation Rights shall be reduced by the
number of Shares in respect of which the Option, Stock-settled Stock
Appreciation Right or Award is granted or denominated. Shares
underlying grants and awards under the 2004 Stock Incentive Plan that are
subsequently forfeited without the delivery of Shares or expire without exercise
shall not reduce the maximum aggregate number of Shares which may be issued
under the Plan. Shares withheld to pay withholding taxes shall reduce
the number of Shares available to the same extent as if a payment of cash or
Shares had been made directly to the Recipient. To the extent an
Option is exercised by using an actual or constructive exchange of Shares to pay
the Exercise Price, the number of Shares available shall be reduced by the gross
number of Options exercised rather than by the net number of Shares
issued.