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 8,
2009
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 21, 2009 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, 2009, 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 21, 2009
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 21, 2009 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 the Dime Community Bancshares, Inc. Annual Incentive
Plan;
|
3.
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Ratification
of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2009;
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 26, 2009 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 8,
2009
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 21, 2009
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 21, 2009 (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 8, 2009.
Record
Date
The
Company's Board of Directors has fixed the close of business on March 26, 2009
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 26, 2009 will be entitled to vote at the Annual Meeting. There
were 34,179,900 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 21, 2009
The notice of meeting, proxy statement,
annual report and sample proxy card are available for review at http://www.amstock.com/proxyservices/viewmaterial.aspCoNumber=15119. The
notice of meeting, proxy statement and annual report are also available on the
Company's website at www.dime.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 21, 2009 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 the Dime Community Bancshares, Inc. Annual
Incentive Plan, FOR ratification of the appointment of Deloitte & Touche LLP
as independent auditors for the year ending December 31, 2009, 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 Proposals 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 the Dime Community
Bancshares, Inc. Annual Incentive Plan, under which executive officers of the
Company may earn performance-based incentive awards upon attainment of
performance goals. As a result, the Company’s executive officers have
personal interests in the outcome of this proposal that may be 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
2008.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal
Shareholders of the Company
The
following table sets forth, as of March 26, 2009, 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 26, 2009. 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 26,
2009. 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
|
|
3,325,783(1)
|
|
9.73%
|
Common
Stock
|
|
Compensation
Committee of Dime Community Bancshares, Inc. (includes
the 3,325,783 ESOP shares reflected above)
209 Havemeyer Street
Brooklyn, NY 11211
|
|
3,901,130(2)
|
|
11.41%
|
Common
Stock
|
|
Barclays
Global Investors (Deutschland) AG
Apianstrasse 6
D-85774
Unterfohring, Germany
|
|
2,853,249(3)
|
|
7.6%
|
______________________
(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 6, 2009. 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 Pentegra Asset Management (formerly 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 26, 2009,
1,997,156 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.
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(2)
|
The
Compensation Committee filed a Schedule 13G with the SEC on February 6,
2009. 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 141,710 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.
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(3)
|
Barclay's
Private Bank and Trust Limited ("Barclays") filed a Schedule 13G on
February 6, 2009. Barclay's holds the shares in various trust
accounts for the economic benefit of its customers who are the
beneficiaries of those accounts. The Schedule 13G states that
Barclays has sole voting power over 2,000,997 shares and dispositive power
over 2,448,966 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 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 (the "Named Executive Officers"), 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
|
|
Amount
and
Nature
of
Beneficial
Ownership
(1)(2)(3)
|
|
Percent
of
Common
Stock
Outstanding
|
|
Vested
Stock Options Included in Beneficial Ownership Total (4)
|
Other
Non-Beneficial Ownership(5)
|
Common
|
|
Vincent
F. Palagiano
|
|
Director,
Chairman of the Board
and Chief
Executive
Officer
|
|
1,460,688
|
(6)
|
4.3%
|
|
785,830
|
316,323
|
Common
|
|
Michael
P. Devine
|
|
Director,
President and Chief
Operating Officer
|
|
845,762
|
(7)
|
2.5
|
|
430,734
|
214,265
|
Common
|
|
Kenneth
J. Mahon
|
|
Director,
First Executive Vice
President and
Chief Financial
Officer
|
|
569,441
|
(8)
|
1.7
|
|
282,638
|
117,026
|
Common
|
|
Anthony
Bergamo
|
|
Director
|
|
156,493
|
(9)
|
*
|
|
51,370
|
-
|
Common
|
|
George
L. Clark, Jr.
|
|
Director
|
|
274,498
|
(10)
|
*
|
|
51,370
|
-
|
Common
|
|
Steven
D. Cohn
|
|
Director
|
|
104,631
|
(11)
|
*
|
|
34,980
|
-
|
Common
|
|
Patrick
E. Curtin
|
|
Director
|
|
121,523
|
(12)
|
*
|
|
51,370
|
-
|
Common
|
|
Fred
P. Fehrenbach
|
|
Director
|
|
126,698
|
(13)
|
*
|
|
44,980
|
-
|
Common
|
|
John
J. Flynn
|
|
Director
|
|
66,259
|
(14)
|
*
|
|
37,480
|
-
|
Common
|
|
Joseph
J. Perry
|
|
Director
|
|
33,600
|
|
*
|
|
20,000
|
-
|
Common
|
|
Omer
S.J. Williams
|
|
Director
|
|
29,000
|
|
*
|
|
20,000
|
-
|
Common
|
|
Christopher
D. Maher
|
|
Executive
Vice President
and
Chief Retail Officer
|
|
56,696
|
(15)
|
*
|
|
19,280
|
-
|
Common
|
|
Daniel
J. Harris
|
|
Executive
Vice President
and
Chief Lending Officer
|
|
16,507
|
(16)
|
*
|
|
10,640
|
-
|
All
Directors and executive officers as a group (15 persons)
|
|
7,008,346
|
|
20.5%
|
|
2,010,435
|
732,643
|
* Less
than one percent
(1)
|
See
"Security Ownership of Certain Beneficial Owners and Management –
Principal Shareholders of the Company" for a definition of "beneficial
ownership."
|
(2)
|
The
figures shown include ESOP shares held in trust that have been allocated
to individual accounts as follows: Mr. Palagiano, 55,043 shares;
Mr. Devine, 55,043 shares; Mr. Mahon, 55,043 shares; Mr. Maher, 3,284
shares, and all Directors and executive officers as a group, 268,579
shares (the Directors do not participate in the ESOP). 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 Harris do not include any portion of the 1,328,627 ESOP
shares held in trust that have not been allocated to any individual's
account and as to which Messrs. Palagiano, Devine, Mahon and Maher may be
deemed to share voting power with other ESOP participants. The
figure shown for all Directors and executive officers as a group includes
1,328,627 shares as to which the members of the Compensation Committee
(consisting of Messrs. Bergamo, 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 732,643 shares held in trust
("BMP Trust") for the benefit of Messrs. Palagiano, Devine and Mahon 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 – Executive Compensation – Compensation Plans –
ESOP").
|
(3)
|
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.
Mahon, 98,371 shares; Mr. Maher 2,795 shares and all Directors
and executive officers as a group, 101,166 shares. Such persons
have sole voting power and sole investment power as to such shares [See
"Compensation – Executive Compensation – Compensation Plans – 401(k)
Plan"].
|
(4)
|
Amounts
include stock options eligible to be exercised within 60 days as
follows: Messrs. Bergamo, Clark, Cohn, Curtin, Fehrenbach,
Flynn, Perry and Williams, 10,000 options each; Mr. Palagiano, 62,500
options; Mr. Devine, 47,033 options; Mr. Mahon, 29,176 options; Mr. Maher,
19,280 options; Mr. Harris, 10,647 options and all Directors and executive
officers as a group, 275,869 options.
|
(5)
|
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 and Mahon 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 2
above).
|
(6)
|
Includes
616,266 shares as to which Mr. Palagiano may be deemed to share voting and
investment power.
|
(7)
|
Includes
345,601 shares as to which Mr. Devine may be deemed to share voting and
investment power.
|
(8)
|
Includes
118,078 shares as to which Mr. Mahon may be deemed to share voting and
investment power.
|
(9)
|
Includes
103,763 shares as to which Mr. Bergamo may be deemed to share voting and
investment power.
|
(10)
|
Includes
84,375 shares as to which Mr. Clark may be deemed to share voting and
investment power.
|
(11)
|
Includes
68,651 shares as to which Mr. Cohn may be deemed to share voting and
investment power.
|
(12)
|
Includes
69,153 shares as to which Mr. Curtin may be deemed to share voting and
investment power.
|
(13)
|
Includes
338 shares as to which Mr. Fehrenbach may be deemed to share voting and
investment power.
|
(14)
|
Includes
27,779 shares as to which Mr. Flynn may be deemed to share voting and
investment power.
|
(15)
|
Includes
5,882 shares owned in a trust for which Mr. Maher serves as trustee and
beneficiary.
|
(16)
|
Includes
400 shares as to which Mr. Harris 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 eleven
Directors.
Michael
P. Devine, Anthony Bergamo, Fred P. Fehrenbach and Joseph J. Perry, 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 2012, 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
2009, 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.dime.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
|
Michael
P. Devine
|
|
62
|
|
1980
|
|
2009
|
|
Director,
President and Chief Operating Officer
|
Anthony
Bergamo
|
|
62
|
|
1986
|
|
2009
|
|
Director
|
Fred
P. Fehrenbach
|
|
72
|
|
1987
|
|
2009
|
|
Director
|
Joseph
J. Perry
|
|
42
|
|
2005
|
|
2009
|
|
Director
|
|
|
|
|
|
|
|
|
|
Continuing Directors
|
|
|
|
|
|
|
|
|
Vincent
F. Palagiano
|
|
68
|
|
1978
|
|
2010
|
|
Director,
Chairman of the Board and Chief Executive Officer
("CEO")
|
Kenneth
J. Mahon
|
|
58
|
|
2003
|
|
2011
|
|
Director,
First Executive Vice President and Chief Financial Officer
("CFO")
|
George
L. Clark, Jr.
|
|
68
|
|
1980
|
|
2011
|
|
Director
|
Steven
D. Cohn
|
|
60
|
|
1994
|
|
2011
|
|
Director
|
Patrick
E. Curtin
|
|
63
|
|
1986
|
|
2010
|
|
Director
|
John
J. Flynn
|
|
72
|
|
1994
|
|
2011
|
|
Director
|
Omer
S. J. Williams
|
|
68
|
|
2006
|
|
2010
|
|
Director
|
(1) As
of March 26, 2009.
(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
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. From August 2001 through September 12, 2008, Mr. Devine 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. In March 2009,
Mr. Devine was elected a director of RSI Retirement Trust, for which he is not
compensated.
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, Chairman of the Federal
Law Enforcement Foundation and Audit Chairman of SP Acquisition Holdings,
Inc. In 2002, Mr. Bergamo was elected a director of Lonestar
Steakhouse and Saloon, Inc., a publicly traded company. Mr. Bergamo
also serves as a member of the New York State Judicial Screening Committee and
as a board member of the New York City division of Off Track
Betting.
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., 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.
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 CEO 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.
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 CFO of both the Company and the Bank since
1996. Mr. Mahon was named First Executive Vice President of both the
Company and the Bank in 2008 and 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 48 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.
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.
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.
Omer S.J. Williams has served
as a Director of both the Company and Bank since July 2006. Prior to
his retirement in early 2009, Mr. Williams was a partner at Thacher Proffitt
& Wood LLP ("Thacher"), where he 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 fourteen times during the year ended December 31,
2008. No incumbent Directors during 2008 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, 2008.
The Compensation Committee
consists of Messrs. Bergamo (Chairman), Fehrenbach, Flynn and Perry. The
Compensation Committee establishes the compensation of the CEO, 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 utilizes Mercer Consulting,
a nationally recognized compensation consulting firm, and the Company’s outside
legal counsel, to assist in performing its duties. Mercer is
instructed to analyze the Company’s performance and executive pay
levels. A peer group of public banks and thrifts is used for
comparison of both pay level and corporate performance. 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. 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 Committee
considers the expectations of executive management with respect to their own
compensation, and their recommendations with respect to the compensation of
Directors and more junior executive officers.
The
Compensation Committee may delegate such of its powers and responsibilities as
it deems appropriate to subcommittees of its membership or officers of the
Company. The Compensation Committee operates pursuant to a charter, which is
available on the Company's website at www.dime.com, by initially
selecting "Investor Relations" and subsequently selecting "Governance
Documents." 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 six times during the year ended
December 31, 2008.
The Nominating Committee
consists of Messrs. Williams (Chairman), Flynn, and Cohn, 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 2008. In
addition, the Nominating Committee met on March 19, 2009 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 "2009 Annual Meeting Stockholder Proposals" in the
proxy statement for the annual meeting held in May 2008. 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.dime.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
three times during 2008.
The Audit Committee
currently consists
of Messrs. Bergamo (Chairman), Clark, Cohn, and Perry, each of whom is
independent as defined in Rule 4350(d). Donald E. Walsh also served
as a member of the Audit Committee prior to his death on December 2,
2008. 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.dime.com. The Audit
Committee charter requires that it meet at least four times annually or more
frequently as circumstances dictate. The Audit Committee met seven
times during the year ended December 31, 2008.
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, 2008 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 accountant required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent accountant's communication
with the Audit Committee concerning independence, 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, 2008 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
The Board
of Directors has determined that Messrs. Bergamo and Perry qualify as Audit
Committee financial experts as defined in Item 407(d)(5) of SEC Regulation
S-K. Messrs. Bergamo and Perry are independent as independence for
Audit Committee members is defined in NASDAQ listing standards. Prior
to his death in December 2008, Mr. Walsh also qualified as an Audit Committee
financial expert as defined in Item 407(d)(5) of SEC Regulation
S-K.
Directors'
Compensation
Fee
Arrangements. During the entire year ended December 31, 2008,
each of the Company's non-officer Directors (each an "Outside Director")
received a retainer of $30,000, and meeting attendance fees of $1,000 for the
Audit Committee and $900 for all other committees. The Chairman of
the Audit Committee additionally received 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. During the period January 1, 2008 through March 19,
2008, each Outside Director received a fee of $1,000 for each of the Company's
or the Bank's Board meetings attended. This remuneration was increased from
$1,000 to $1,500 effective March 20, 2008, based upon the recommendations of a
nationally recognized compensation consulting firm. The
recommendations of the compensation consulting firm were based on a comparative
analysis of thirteen peer 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, 2008, there were up to 75,866 stock options eligible for future grant under
the 2001 Stock Option Plan, of which up to 29,625 were eligible for future grant
to Outside Directors and 46,241 were eligible for future grant to officers and
employees of the Company or its subsidiaries. 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 Dime Community Bancshares, Inc. 2004 Stock Incentive
Plan (the "2004 Stock Incentive Plan") was initially adopted by the Company's
Board of Directors and subsequently approved by its shareholders at its annual
meeting held in 2004. Amendment Number One to the 2004 Stock
Incentive Plan was adopted by the Company's Board of Directors in March 2008 and
subsequently approved by its shareholders at its annual meeting held in
2008. At December 31, 2008, 1,057,161 shares remained eligible for
future grant to either Outside Directors or officers and employees of the
Company and 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. 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 vested 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 vested on May 1, 2008. On May 30, 2008, 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. The award
made to Mr. Walsh vested upon his death in December 2008. All of the
remaining awards under this grant vest on May 30, 2009. In addition
on May 30, 2008, a grant of 10,000 non-qualified stock options with an exercise
price of $18.18 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. The options awarded to Mr. Walsh vested immediately upon his
death and expire on December 2, 2009. All of the remaining option
awards under this grant expire on May 30, 2018 and vest on May 30,
2009.
The
following table sets forth information regarding compensation earned by each
Outside Director during the year ended December 31, 2008:
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
|
|
$60,800
|
|
$16,700
|
|
$37,593
|
|
—
|
|
$35,942
|
|
$560
|
|
$151,595
|
George
L. Clark, Jr.
|
|
56,700
|
|
16,700
|
|
37,593
|
|
—
|
|
—
|
|
560
|
|
111,553
|
Steven
D. Cohn
|
|
59,500
|
|
16,700
|
|
37,593
|
|
—
|
|
24,006
|
|
560
|
|
138,359
|
Patrick
E. Curtin
|
|
57,100
|
|
16,700
|
|
37,593
|
|
—
|
|
45,767
|
|
560
|
|
157,720
|
Fred
P. Fehrenbach
|
|
55,200
|
|
16,700
|
|
37,593
|
|
—
|
|
—
|
|
560
|
|
110,053
|
John
J. Flynn
|
|
58,000
|
|
16,700
|
|
37,593
|
|
—
|
|
—
|
|
560
|
|
112,853
|
Joseph
J. Perry
|
|
58,800
|
|
33,400
|
|
37,593
|
|
—
|
|
—
|
|
1,120
|
|
130,913
|
Donald
E. Walsh(6)
|
|
40,200
|
|
33,400
|
|
37,593
|
|
—
|
|
—
|
|
1,120
|
|
112,313
|
Omer
S. J. Williams
|
|
58,900
|
|
33,400
|
|
37,593
|
|
—
|
|
—
|
|
1,120
|
|
131,013
|
(1)
|
Includes
retainer payments, meeting fees, and committee and/or chairmanship fees
earned during the year, whether such fees were paid currently or
deferred.
|
(2)
|
Represents
the compensation cost recognized for the 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 2008 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 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 2008 Annual Report on Form
10-K.
|
(4)
|
Includes
for each individual the increase (if any) for the 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 - $7,445; Mr. Fehrenbach - $8,581 and Mr.
Flynn - $8,629.
|
(5)
|
Amount
represents dividends paid on unvested restricted stock awards that were
granted on May 1, 2007 and May 30,
2008.
|
(6)
|
Represents
fees earned by Mr. Walsh prior to his death on December 2, 2008, along
with equity award compensation recognized associated with the grants made
to him on May 1, 2007 and May 30,
2008.
|
Executive
Officers
The
following individuals are executive officers of the Company, holding the offices
set forth opposite their names:
Name
|
|
Position
Held
|
Vincent
F. Palagiano
|
|
Chairman
of the Board and CEO
|
Michael
P. Devine
|
|
President
and Chief Operating Officer ("COO")
|
Kenneth
J. Mahon
|
|
First
Executive Vice President ("FEVP") and CFO
|
Christopher
D. Maher
|
|
Executive
Vice President ("EVP") and Chief Retail Officer ("CRO")
|
Daniel
J. Harris
|
|
EVP
and Chief Lending Officer ("CLO")
|
Timothy
B. King
|
|
EVP
and Chief Investment Officer ("CIO")
|
Michael
Pucella
|
|
EVP
and Chief Accounting Officer
("CAO")
|
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
42, joined the
Bank as EVP in charge of retail banking in November 2005, and was named an EVP
and CRO of the Company in January 2009. 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.
Daniel J. Harris, age 52, was
hired by the Bank in January 2008 as EVP and Chief Lending Officer, and was
named an EVP and CLO of the Company in January 2009. Prior to joining
the Bank, Mr. Harris served as EVP & 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.
Timothy B. King, age 50, has
over 27 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 EVP of both the Company
and the Bank in 2008. In 2002, Mr. King was named the CIO of both the Company
and Bank, as he oversees the securities investment function of the
Bank.
Michael Pucella, age 55, 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, Senior Vice President of both
the Company and the Bank in 1999, and EVP of both the Company and Bank in
2009. He currently serves as the CAO 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 34 years of banking experience.
Compensation
Discussion and Analysis
Introduction
Set
forth below are (i) a description of the Company’s decision making process for
compensating 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, 2008 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 an appropriate mix
of risk and return. To accomplish this goal, the Company sets a base
salary to provide a reasonable level of predictable base income and near- and
long-term performance-based compensation to provide executives and officers with
clear opportunities to increase the value of their compensation by positive
contribution to stockholder interests. Annual incentive awards are
designed to provide incentives to encourage efforts to attain near-term goals
which do not encourage excessive risk taking. Longer term incentive
and stock awards provide goals which also align the executive’s interest with
those of the Company’s shareholders and serve to retain executives over the long
term. 2008 was a year of economic difficulty as evidenced by the
turmoil in the financial services and banking industries. 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 2008 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
2008, 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
2008, base salary increases for the Named Executive Officers were as
follows:
|
|
|
Resulting
Annual
Base
Salary Rate
|
Vincent
F. Palagiano
|
3.1
|
$20,400
|
$686,000
|
Michael
P. Devine
|
3.0
|
$15,800
|
$541,000
|
Kenneth
J. Mahon
|
3.1
|
$11,520
|
$388,000
|
Christopher
D. Maher
|
3.9
|
$12,000
|
$324,000
|
Daniel
Harris
|
N/A
|
N/A
|
$290,000
|
These
decisions resulted from an assessment of the Company’s 2007 performance within
the context of a competitive compensation review produced by Mercer Consulting
that evaluated corporate and individual performance during
2007. These targeted salary increases were designed to reward effort
and accomplishment in a challenging 2008 operating environment and to assist in
the retention of executives directly responsible for managing the Company and
the key operating units within the Company.
Annual
Incentives. Annual incentive opportunities are provided to the
Named Executive Officers to link the achievement of annual goals with executive
compensation. In
2008, the Company established a formal Annual Incentive Plan ("AIP") for
consideration of 2008 bonuses for senior executives using the key measures of
Return on Equity ("ROE") and Core Earnings Per Share ("Core
EPS"). The AIP applied ROE and Core EPS to assess the Bank’s
performance and management's operation of the Bank in 2008, a turbulent year in
the financial services and banking industry. In this difficult
operating environment, management led the Bank to a performance that under both
measures of the AIP resulted in the highest level of performance. In
addition, Mercer Consulting conducted a survey of the 2007 performance of a
comparable group of competitor public banks, and the Company’s one year total
stock return (“TSR”) placed in the 75th
quartile while the cash ROE and cash return on assets both placed the Company
above the 50th
percentile of such competitor public banks. The competitor public
banks are discussed below under “Material Policies and
Procedures.”
After reviewing the Company's performance as measured by Return on Average
Equity and Core EPS, the Compensation Committee approved the targeted award
amount to the Named Executive Officers, which totaled $716,000. Based
on the Company’s 2008 performance as measured by ROE and Core EPS,
the Named Executive Officers became eligible for a 2008 total bonus payment
under the AIP of $825,832, However, in light of current economic uncertainties,
the aggregate payout was reduced by 13%, to $716,000. The reduction
was recommended by management and concurred with by the Compensation
Committee.
For 2008, 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. Harris, $100,000. In each case, the bonus paid
represented no increase to the 2007 bonus received by each Named Executive
Officer except for Mr. Harris, who commenced employment with the Company in
2008. 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 2008. 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
2008 peer group median. This reflects historical Company compensation
practice as well as constraints on the size of the bonus pool related to the
Company’s profitability for 2008, rather than concerns with the individual
performance of the Named Executive Officers. Mr. Harris commenced
employment with the Bank on January 28, 2008, and received cash remuneration of
$110,000 on February 15, 2008 to reimburse compensation and benefits he
forfeited with his previous employer.
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 consideration of the Company’s performance for the year ended December 31,
2007, the Compensation Committee granted awards of restricted stock and options
to 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 2007 operating environment and competitive market
conditions.
In 2008, the following grants of stock options and restricted stock shares were
made to the Named Executive Officers:
|
|
|
|
|
Vincent
F. Palagiano
|
-
|
-
|
-
|
-
|
Michael
P. Devine
|
30,261
|
18,135
|
12,126
|
$270,500
|
Kenneth
J. Mahon
|
19,533
|
11,706
|
7,827
|
174,600
|
Christopher
D. Maher
|
15,223
|
9,123
|
6,100
|
136,080
|
Daniel Harris
|
48,051(1)
|
42,591(1)
|
5,460
|
231,800
|
(1)
Amount includes a March 3, 2008 grant of 34,425 options under the 2001 Stock
Option Plan with a grant date
aggregate
value of $110,000, and fair value of $3.195 per option. This grant
was made to reimburse compensation
and
benefits Mr. Harris forfeited with his previous employer.
All
of the above grants to Messrs. Devine, Mahon and Maher were made on July 31,
2008 under the 2004 Stock Incentive Plan, vest over four years and had a grant
date fair value of $3.73 per option and $16.73 per restricted stock
share. Mr. Harris received an equity award grant on July 31, 2008,
with a total value of $121,800, comprised of 8,166 options and 5,460 restricted
stock awards. 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 received shareholder approval in 2008 to increase the
number of shares available for such grants.
The
amendments to the 2004 Stock Option Plan increasing the number of shares
available provide that Mr. Palagiano is ineligible to receive stock options or
awards under that plan. Instead, the Company has adopted a
cash-based, multi-year long-term incentive plan under which Mr. Palagiano is
eligible to participate. The plan was designed to provide a
competitive long-term incentive arrangement instead of the opportunities that
Mr. Palagiano would otherwise have received under the 2004 Stock Option
Plan. The plan enhances the overall pay for performance since the
value earned relates directly to the Company’s performance on selected key
metrics. The initial period for measurement is August 1, 2008 through
December 31, 2010. The plan sets an incentive target for this period
of 62.5% of base salary of $686,000, and a range of payout levels for this
period as follows: threshold payout level represents a payment of 50%
of the target ($214,375) and is paid for a baseline level of acceptable
performance to receive any award; target payout represents a payment of 100% of
target ($428,750) and is paid for performance at expectation; and maximum payout
represents a payment of 150% of target ($643,125) and is paid for exceptional
performance. The Compensation Committee established the target using
the same approach applied in determining grants to other Named Executive
Officers under the 2004 Stock Incentive Plan. The criteria for
payment for this period are based on performance relative to peer companies and
are weighted as follows: 50% weight is given to TSR relative to peers
for the measurement period, 25% weight is given to cumulative core earnings per
share versus internal standard and 25% weight is given to reported GAAP return
on equity. The peer group companies for 2007 are discussed below
under “Material Policies and
Procedures.” The Committee does not have discretion to reduce
or increase the size of the payout or to award compensation if
the goals
are not met.
Payment
will be made in cash in the first quarter of 2011 if Mr. Palagiano is employed
on December 31, 2010. If Mr. Palagiano’s employment terminates prior
to that date due to death, disability or retirement, the Company's obligation
will be prorated for performance as of the
effective date of the termination and paid at the end of the performance period
unless the Compensation Committee has determined otherwise. The
Compensation Committee may provide for immediate payout in the case of
death. In the event of a change of control,
performance will be assessed through the end of the change of control date and
prorated payment made as soon as
possible after that date. If the actual performance results cannot be
calculated, the target will be used.
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, 2008 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, 2009, 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 ("Section 409A")] in a
single lump sum and to bring it into compliance with Section 409A.
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, 2008, there were up to 75,866 stock options
eligible for future grant under the 2001 Stock Option Plan, of which up to
29,625 were eligible for future grant to Outside Directors and 46,241 were
eligible for future grant to officers and employees of the Company or its
subsidiaries. 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 made prior to December 30, 2005 under the 2001
Stock Option Plan vested as of 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 and additional shares were approved by shareholders at their 2008
annual meeting. At December 31, 2008, 1,057,161 shares remained eligible for
future grant to either Outside Directors or officers and employees of the
Company and 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 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 as of December 30,
2005.
Perquisites – Certain
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. Messrs. Maher and
Harris have been provided with change of control agreements that provide
severance benefits that are payable only upon a change of control and 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).
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.
The
Employment Agreements and Change in Control Agreements were amended and restated
in 2008 to include provisions required to comply with Section
409A. Generally, under these provisions, if the Named Executive
Officer is a “specified employee” under Section 409A, payments upon certain
terminations of employment will be paid on the first day of the seventh month
after termination of employment. In addition, the amendments added
provisions required to comply with the Emergency Economic Stabilization Act of
2008 in the event that the Company or the Bank became subject to those
requirements, which did not apply to them during 2008.
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 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, 2010 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. Maher and Harris. The Bank has, jointly with the
Company, entered into Employee Retention Agreements (“Retention Agreements”)
with Messrs. Maher and Harris (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 Agreement for Mr. Maher
contains an Assurance Period of three years. The Retention Agreement
for Mr. Harris initially contained an Assurance Period of two years and was
amended March 19, 2009 to provide for an Assurance Period of three
years. The applicable Assurance Periods for the present agreements
with Mr. Maher and Mr. Harris 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, 2010, 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. Maher and
Harris, 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. Maher and Harris 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. Maher and
Harris 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 2008, the Comparison Group
consisted of 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, Sterling Bancorp and Smithtown Bancorp
Inc. Because a determination was made that Hudson City Bancorp was no
longer comparably sized, it was removed from this group in 2008 and Smithtown
Bancorp Inc. was added to maintain comparable balance within the overall
Comparison Group. 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 2008 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 2009 Annual Meeting of Shareholders.
COMPENSATION
COMMITTEE OF
DIME
COMMUNITY BANCSHARES, INC.
Anthony
Bergamo, (Chairman)
Fred P.
Fehrenbach
John J.
Flynn, Member
Joseph J.
Perry, Member
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee consists of Messrs. Bergamo, 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 2008 by the Named Executive
Officers.
SUMMARY
COMPENSATION TABLE
Name and Principal
Positions
|
Year
|
Salary (1)
|
Bonus(1)
|
Stock
Awards (2)
|
Option
Awards (3)
|
Non-Equity
Incentive Plan Compensation
(4)
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings (5)
|
All
Other
Compensation (6)
|
Total
|
Vincent
F. Palagiano,
|
2008
|
$686,000
|
$225,000
|
$54,781
|
$192,444
|
$75,779
|
—
|
$69,327
|
$1,303,331
|
Chairman
of the Board and CEO
|
2007
|
665,600
|
225,000
|
54,781
|
128,296
|
—
|
—
|
65,464
|
1,139,141
|
|
2006
|
640,000
|
140,000
|
54,781
|
—
|
—
|
—
|
66,051
|
900,832
|
Michael
P. Devine,
|
2008
|
$541,000
|
$170,000
|
$57,404
|
$138,375
|
—
|
$127,124
|
$31,639
|
$1,065,542
|
President
and COO
|
2007
|
525,200
|
170,000
|
34,864
|
87,241
|
—
|
—
|
30,910
|
848,215
|
|
2006
|
505,000
|
115,000
|
34,864
|
—
|
—
|
—
|
33,087
|
687,951
|
Kenneth
J. Mahon
|
2008
|
$388,000
|
$127,000
|
$33,726
|
$85,676
|
—
|
$31,899
|
$28,173
|
$694,474
|
FEVP
and CFO
|
2007
|
376,480
|
127,000
|
19,176
|
53,884
|
—
|
—
|
27,542
|
604,082
|
|
2006
|
362,000
|
100,000
|
19,176
|
—
|
—
|
—
|
29,761
|
510,937
|
Christopher
D. Maher,
|
2008
|
$324,000
|
$94,000
|
$40,559
|
$56,125
|
—
|
—
|
$23,956
|
$538,640
|
EVP
and CRO
|
2007
|
312,000
|
94,000
|
29,220
|
34,896
|
—
|
—
|
22,901
|
493,017
|
|
2006
|
300,000
|
75,000
|
29,220
|
—
|
—
|
—
|
19,690
|
423,910
|
Daniel
J. Harris
|
2008
|
$290,000
|
$100,000
|
$10,150
|
$25,383
|
—
|
—
|
$110,000
|
$535,533
|
EVP
and CLO
|
|
|
|
|
|
|
|
|
|
(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. The salary amount shown for Daniel Harris
represents the base salary earned from his commencement as an employee of
the Company on January 28, 2008 through December 31,
2008.
|
(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 2008 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 2008 Annual Report on Form
10-K.
|
(4)
|
Amount
represents awards accrued for future payment to Mr. Palagiano under the
Long Term Cash Incentive Payment Plan. Please see the section
entitled "Compensation Plans" commencing on this page for a discussion of
the Long Term Cash Incentive Payment
Plan.
|
(5)
|
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 - $56,166 in 2008,
$453,597 in 2007 and $220,115 in 2006 ; Mr. Devine - $152,553
in 2007 and $5,676 in 2006, and Mr. Mahon - $118,581 in 2007
and $35,562 in 2006.
|
(6)
|
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)
|
|
Other
|
|
Total
|
|
Vincent
F. Palagiano
|
2008
|
$30,210
|
|
$16,883
|
|
$6,900
|
|
$15,334
|
|
-
|
|
$69,327
|
|
|
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
|
2008
|
$9,405
|
|
-
|
|
$6,900
|
|
$15,334
|
|
-
|
|
$31,639
|
|
|
2007
|
$9,531
|
|
-
|
|
$6,750
|
|
$14,629
|
|
-
|
|
30,910
|
|
|
2006
|
9,417
|
|
-
|
|
6,600
|
|
17,070
|
|
-
|
|
33,087
|
|
Kenneth
J. Mahon
|
2008
|
$5,939
|
|
-
|
|
$6,900
|
|
$15,334
|
|
-
|
|
$28,173
|
|
|
2007
|
$6,163
|
|
-
|
|
$6,750
|
|
$14,629
|
|
-
|
|
27,542
|
|
|
2006
|
6,091
|
|
-
|
|
6,600
|
|
17,070
|
|
-
|
|
29,761
|
|
Christopher
D. Maher
|
2008
|
$1,722
|
|
-
|
|
$6,900
|
|
$15,334
|
|
-
|
|
$23,956
|
|
|
2007
|
$1,522
|
|
-
|
|
$6,750
|
|
$14,629
|
|
-
|
|
22,901
|
|
|
2006
|
1,322
|
|
-
|
|
930
|
|
17,438
|
|
-
|
|
19,690
|
|
Daniel
J. Harris
|
2008
|
-
|
|
-
|
|
-
|
|
$-
|
|
$110,000(b)
|
|
$110,000
|
|
(a)
The amount reported for ESOP allocation was determined based upon the
average price of the Common Stock of $15.89 per share in 2008, $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 2008 Annual Report on Form 10-K,
which discusses the manner in
which ESOP expense is
recognized).
|
|
(b)
Amount represents a cash remuneration paid to Mr. Harris on February 15,
2008 to reimburse compensation and benefits he forfeited with his previous
employer.
|
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 3,325,783 shares of Common Stock, all of which
were purchased during the Company's initial public offering. Of this total,
1,997,156 shares were allocated to individual participant accounts, while
1,328,627 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, 2008 with respect to the 401(k) Plan and ESOP are included in the
Summary Compensation Table under the column "All Other Compensation" (See
"Compensation - 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 for all of the Named Executive
Officers. 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) in a single lump
sum. Effective December 31, 2008, the Company amended the BMP in
order to bring it in full compliance with Section 409A.
Long Term Cash Incentive Payment
Plan - On October 16, 2008, pursuant to authority granted under the
("AIP"), the Compensation Committee made an incentive award to Vincent F.
Palagiano, Chairman and Chief Executive Officer, in lieu of an equity award
under the Company's 2004 Stock Incentive Plan. Pursuant to an
amendment to the 2004 Stock Incentive Plan, Mr. Palagiano is no longer eligible
for equity awards thereunder.
The
threshold, target and maximum award opportunities are $214,375, $428,750 and
$643,125, respectively, and are earned based on performance relative to three
performance goals measured over the period beginning August 1, 2008 and ending
December 31, 2010. The three performance measures and their relative
weight are as follows:
Goal
|
Weight
|
Threshold
|
Target
|
Maximum
|
TSR
Relative to Compensation Peer Group for the measurement
period
|
50%
|
40th
Percentile
|
50th
Percentile
|
74th
Percentile
|
Cumulative
Core EPS
|
25%
|
$2.23
|
$2.48
|
$2.73
|
GAAP
ROE
|
25%
|
10.3%
|
12.1%
|
13.9%
|
At
December 31, 2008, based upon actual results for the period August 1, 2008
through December 31, 2008, the Company determined that the Target payment has
the greatest probability of ultimately being made to Mr. Palagiano, and
established a reserve of $75,779 related to this future award
payment. During the year ended December 31, 2008, total expense
recognized related to this award was $75,779.
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, 2008, there were up to 75,866 stock options eligible for future
grant under the 2001 Stock Option Plan, of which up to 29,625 were eligible for
future grant to Outside Directors and 46,241 were eligible for future grant to
officers and employees of the Company or its subsidiaries. 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 1,602,346 were outstanding and
1,567,921 were exercisable. On March 3, 2008, a grant of 34,425 stock
options was made to Mr. Harris 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, 2008, 1,057,161 shares
remained eligible for future grant to either Outside Directors or officers and
employees of the Company and 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 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; and Mr. Mahon - 4,967 shares. 75% of these restricted
stock awards vested in equal 25% installments on May 1, 2006, 2007 and 2008,
with the remainder vesting on May 1, 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; and Mr. Mahon - 49,462 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 vested in equal 20% installments on
February 1, 2007, 2008 and 2009, with the remainder vesting in equal 20%
installments on February 1, 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; and Mr. Maher - 68,000
shares. All of these options expire on May 1, 2017, and 25% vested on
May 1, 2008, with the remainder vesting in equal 25% annual installments on May
1, 2009, 2010 and 2011. On July 31, 2008, a grant of stock options
was made to Named Executive Officers as follows: Mr. Devine – 18,135 shares; Mr.
Mahon – 11,706 shares; Mr. Maher – 9,123 shares and Mr. Harris -
8,166 shares. All of these options expire on July 31, 2018 and vest
in equal 25% installments on May 1, 2009, 2010, 2011 and 2012. On
July 31, 2008, a grant of restricted stock awards was made to Named Executive
Officers as follows: Mr. Devine – 12,126 shares; Mr. Mahon – 7,827 shares; Mr.
Maher – 6,100 shares and Mr. Harris - 5,460 shares. These
restricted stock awards vest in equal 25% installments (as adjusted for
rounding) on May 1, 2009, 2010, 2011 and 2012.
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 (1)
|
|
Estimated
Future Payouts Under Non-Equity
Incentive
Plan Awards (2)
|
|
|
|
|
Name
|
Grant
Date
|
Threshold(2)
|
Target(2)
|
Maximum(2)
|
All
Other Stock Awards: Number of Shares of Stock or Units(3)
|
All
Other Option Awards: Number of Securities Underlying Options
(3)
|
Exercise
Price of Option Awards
|
Grant
Date
Fair
Value of Equity Awards (4)
|
Vincent
F. Palagiano
|
10/16/2008
|
$214,375
|
$428,750
|
$643,125
|
-
|
-
|
-
|
-
|
Michael
P. Devine
|
7/31/2008
|
-
|
-
|
-
|
12,126
|
-
|
-
|
$202,875
|
Michael
P. Devine
|
7/31/2008
|
-
|
-
|
-
|
-
|
18,135
|
$16.73
|
67,625
|
Kenneth
J. Mahon
|
7/31/2008
|
-
|
-
|
-
|
7,827
|
-
|
|
130,950
|
Kenneth
J. Mahon
|
7/31/2008
|
-
|
-
|
-
|
-
|
11,706
|
$16.73
|
43,650
|
Christopher
D. Maher
|
7/31/2008
|
-
|
-
|
-
|
6,100
|
-
|
-
|
102,060
|
Christopher
D. Maher
|
7/31/2008
|
-
|
-
|
-
|
-
|
9,123
|
$16.73
|
34,020
|
Daniel
J. Harris
|
3/3/2008
|
-
|
-
|
-
|
-
|
34,425
|
$14.92
|
110,000
|
Daniel
J. Harris
|
7/31/2008
|
-
|
-
|
-
|
5,460
|
-
|
-
|
91,350
|
Daniel
J. Harris
|
7/31/2008
|
-
|
-
|
-
|
-
|
8,166
|
$16.73
|
30,450
|
(1)
|
There were no estimated future
payouts under equity incentive plan awards during the years ended December
31, 2008, 2007 and 2006. |
(2)
|
Amount
represents awards accrued for future payment to Mr. Palagiano under the
Long Term Cash Incentive Payment Plan. Please see the section
entitled "Compensation Plans" commencing on page 19 for a discussion of
the Long Term Cash Incentive Payment
Plan.
|
(3)
|
The
reported awards were restricted stock awards and stock options granted
under the 2004 Stock Incentive Plan and vest as stated in the section
entitled "2004 Stock Incentive Plan" commencing on this
page.
|
(4)
|
Calculated
based upon a grant date fair value of $16.73 per award for non-option
stock awards granted on July 31, 2008, a grant date fair value
approximating $3.73 per option for option grants made on July 31, 2008 and
a grant date fair value approximating $3.20 per option for the option
grant made on March 31, 2008. The major assumptions underlying
the calculation of the fair value of option grants on July 31, 2008 were
as follows: Expected life of 5.9 years; Risk free interest rate of
3.36%; Volatility of 28.54%; and dividend yield of
3.35%. The major assumptions underlying the calculation of the
fair value of the option grant on March 3, 2008 were as follows: Expected
life of 6.3 years; Risk free interest rate of 2.77%, Volatility of 30.00%;
and dividend yield of 3.75%
|
Stock
Awards And Stock Option Grants Outstanding
The following tables set forth
information regarding stock awards, stock options and similar equity
compensation outstanding at December 31, 2008, whether granted in 2008 or
earlier, including awards that have been transferred other than for
value:
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END (1)
|
|
Option
Awards
|
Stock
Awards
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
(2)
|
Equity
Incentive Plan Awards:
Number
of Securities Underlying Unexercised Unearned Options (#)
|
Option
Exercise Price
($)
|
Option
Expiration
Date
|
Number
of Shares of Stock That Have Not Vested (#)
(2)
|
Market
Value of Shares of Stock That Have Not Vested ($)
(3)
|
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
|
62,500
|
187,500
|
-
|
13.74
|
5/1/2017
|
-
|
-
|
|
3/17/2005
|
|
|
|
|
|
3,549
|
$47,202
|
Michael
P. Devine
|
11/21/2001
|
28,664
|
-
|
-
|
$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
|
42,500
|
127,500
|
-
|
13.74
|
5/1/2017
|
-
|
-
|
|
7/31/2008
|
-
|
18,135
|
-
|
16.73
|
7/31/2018
|
-
|
-
|
|
3/17/2005
|
|
|
|
|
|
2,258
|
30,031
|
|
7/31/2008
|
|
|
|
|
|
12,126
|
161,276
|
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
|
26,250
|
78,750
|
-
|
13.74
|
5/1/2017
|
-
|
-
|
|
7/31/2008
|
-
|
11,706
|
|
16.73
|
7/31/2018
|
-
|
-
|
|
3/17/2005
|
|
|
|
|
|
1,242
|
16,519
|
|
7/31/2008
|
|
|
|
|
|
7,827
|
104,099
|
Christopher
D. Maher
|
5/1/2007
|
-
|
51,000
|
-
|
13.74
|
5/1/2017
|
-
|
-
|
|
7/31/2008
|
-
|
9,123
|
|
16.73
|
7/31/2018
|
-
|
-
|
|
1/3/2006
|
|
|
|
|
|
4,000
|
53,200
|
|
7/31/2008
|
|
|
|
|
|
6,100
|
81,130
|
Daniel
J. Harris
|
3/3/2008
|
-
|
34,425
|
-
|
$14.92
|
3/3/2018
|
-
|
-
|
|
7/31/2008
|
-
|
8,166
|
|
16.73
|
7/31/2018
|
-
|
-
|
|
7/31/2008
|
|
|
|
|
|
5,460
|
72,618
|
(1)
|
At
December 31, 2008, there were no unearned shares, units or other rights
that had not vested under Equity Incentive Plan
awards. |
(2)
|
Please
refer to the sections entitled "2001 Stock Option Plan" and "2004 Stock
Incentive Plan" commencing on page 21 for a detailed discussion of the
expiration and vesting dates for each of the these unexercisable options
and unvested restricted stock awards.
|
(3)
|
Market
value is calculated on the basis of $13.30 per share for 2008, the closing
sales price of the Common Stock on the Nasdaq Stock Market on the final
trading day of the 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(2)
|
Vincent
F. Palagiano
|
-
|
|
-
|
3,548
|
|
$66,560
|
Michael
P. Devine
|
77,086
|
|
$601,494
|
2,258
|
|
42,360
|
Kenneth
J. Mahon
|
-
|
|
-
|
1,242
|
|
23,300
|
Christopher
D. Maher
|
17,000
|
|
86,042
|
2,000
|
|
30,760
|
(1)
|
Value
realized is calculated by multiplying the number of shares of Common Stock
as to which an option was exercised times the difference between the
closing sales price for a share of Common Stock on the Nasdaq Stock Market
on the date of exercise and the exercise price per share of the applicable
option.
|
(2)
|
Amount
calculated on the basis of $18.76 per share (the closing sales price for a
share of Common Stock on the Nasdaq Stock Market on the vesting date of
May 1, 2008) for Messrs. Palagiano, Devine, and Mahon, and $15.38 per
share (the closing sales price for a share of Common Stock on the Nasdaq
Stock Market on the vesting date of February 1, 2008) for Mr.
Maher. Unexercised stock options and unvested restricted stock
may not be transferred for value.
|
Post-Employment
Compensation
Pension
Benefits
The following table sets forth
information regarding pension benefits accrued by the Named Executive Officers
through the end of the Company's last fiscal year:
PENSION
BENEFITS
Name
|
|
Plan
Name
|
|
Number
of Years
Credited
Service (#) (1)
|
|
Present
Value of
Accumulated Benefit ($)(1)
|
|
Payments
During Last Fiscal
Year
|
Vincent
F. Palagiano
|
|
Retirement
Plan
|
|
29.6
|
|
$982,517
|
|
—
|
|
|
BMP
(Defined Benefit Portion)
|
|
29.6
|
|
$1,631,969
|
|
—
|
Michael
P. Devine
|
|
Retirement
Plan
|
|
28.7
|
|
$722,884
|
|
—
|
|
|
BMP
(Defined Benefit Portion)
|
|
28.7
|
|
$858,342
|
|
—
|
Kenneth
J. Mahon
|
|
Retirement
Plan
|
|
19.7
|
|
$315,760
|
|
—
|
|
|
BMP
(Defined Benefit Portion)
|
|
19.7
|
|
$86,793
|
|
—
|
(1)
|
The
figures shown are determined as of the plan's measurement date during 2008
under SFAS 158 as disclosed in Notes 1 and 15 to the Company's audited
consolidated financial statements, included in the Company's 2008 Annual
Report on Form 10-K. The discount rate and other assumptions
used for this purpose are discussed in Note 15 to the audited consolidated
financial statements, included in the Company's 2008 Annual Report on Form
10-K. The assumed mortality rates were as
follows: Mr. Palagiano, 1.44%; Mr. Devine, 0.68% and Mr. Mahon,
0.39%.
|
Non-Qualified
Deferred Compensation
The following table sets forth
information regarding nonqualified deferred compensation earned by the Named
Executive Officers during the last fiscal year under non-qualified defined
contribution plans:
NON-QUALIFIED
DEFERRED COMPENSATION (1)
Name
|
|
Executive
Contributions
in Last Fiscal Year ($)
|
|
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
|
|
—
|
|
—
|
|
$(1,141)
|
|
—
|
|
$4,690,548
|
Michael
P. Devine
|
|
—
|
|
—
|
|
$(3,736)
|
|
—
|
|
$3,184,622
|
Kenneth
J. Mahon
|
|
—
|
|
—
|
|
$(753)
|
|
—
|
|
$1,732,618
|
(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,
2008.
|
|
Vincent F. Palagiano
|
|
Michael P. Devine
|
|
Kenneth J. Mahon
|
|
Christopher
D. Maher
|
|
Daniel J. Harris
|
Death
|
|
|
|
|
|
|
|
|
|
|
Death Benefit(1)
|
|
$2,058,000
|
|
$1,623,000
|
|
$1,164,000
|
|
N/A
|
|
N/A
|
Stock Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted Stock Vesting(9)
|
|
47,201
|
|
191,307
|
|
120,631
|
|
$100,083
|
|
$72,618
|
Incentive Award Vesting(10)
|
|
428,750
|
|
-
|
|
-
|
|
-
|
|
-
|
Disability
|
|
|
|
|
|
|
|
|
|
|
Disability Benefit(2)
|
|
$2,058,000
|
|
$1,623,000
|
|
$1,164,000
|
|
N/A
|
|
N/A
|
Stock Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
Restricted Stock Vesting(9)
|
|
47,201
|
|
191,307
|
|
120,631
|
|
$100,083
|
|
$72,618
|
Incentive Award Vesting(10)
|
|
428,750
|
|
-
|
|
-
|
|
-
|
|
-
|
Discharge
without Cause or Resignation with Good Reason - No Change in
Control
|
|
|
Severance Pay(3)
|
|
$1,884,592
|
|
$1,486,245
|
|
$1,065,920
|
|
-
|
|
-
|
Bonus(3)
|
|
1,201,859
|
|
955,786
|
|
703,208
|
|
-
|
|
-
|
ESOP(4)
|
|
34,305
|
|
34,305
|
|
34,305
|
|
-
|
|
-
|
Insurance(5)
|
|
69,861
|
|
46,173
|
|
50,390
|
|
-
|
|
-
|
401(k) Payment(6)
|
|
19,647
|
|
19,647
|
|
19,647
|
|
-
|
|
-
|
BMP-ESOP Payout(7)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Stock Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted Stock Vesting(9)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Incentive Award Vesting(10)
|
|
428,750
|
|
-
|
|
-
|
|
-
|
|
-
|
Discharge
without Cause or Resignation with Good Reason - Change in
Control Related
|
|
|
Transaction Related
Payment(3)
|
|
$1,996,359
|
|
$1,574,338
|
|
$1,129,136
|
|
-
|
|
-
|
Severance Pay(3)
|
|
1,330,906
|
|
1,049,592
|
|
752,757
|
|
$961,512
|
|
$575,804
|
Bonus(3)
|
|
1,979,541
|
|
1,574,243
|
|
1,158,231
|
|
243,000
|
|
200,000
|
ESOP(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Insurance(5)
|
|
69,861
|
|
46,173
|
|
50,390
|
|
47,638
|
|
29,013
|
401(k) Payment(6)
|
|
30,961
|
|
30,961
|
|
30,961
|
|
19,647
|
|
-
|
BMP-ESOP Payout(7)
|
|
2,559,360
|
|
1,733,601
|
|
946,844
|
|
-
|
|
-
|
Stock Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted Stock Vesting(9)
|
|
47,201
|
|
191,307
|
|
120,631
|
|
100,083
|
|
72,618
|
Incentive Award Vesting(10)
|
|
428,750
|
|
-
|
|
-
|
|
-
|
|
-
|
Lump Sum Pension
Payment(11)
|
|
4,549,333
|
|
4,443,383
|
|
1,796,090
|
|
N/A
|
|
N/A
|
Tax Indemnity(12)
|
|
5,734,400
|
|
4,802,360
|
|
2,837,067
|
|
482,657
|
|
-
|
Change
in Control – No Termination of Employment
|
|
|
|
|
Transaction Related
Payment(3)
|
|
$1,996,359
|
|
$1,574,338
|
|
$1,129,136
|
|
-
|
|
-
|
Severance Pay(3)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Bonus(3)
|
|
1,201,859
|
|
955,786
|
|
703,208
|
|
-
|
|
-
|
ESOP(4)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Insurance(5)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
401(k) Payment(6)
|
|
19,647
|
|
19,647
|
|
19,647
|
|
-
|
|
-
|
BMP-ESOP Payout(7)
|
|
2,559,360
|
|
1,733,601
|
|
946,844
|
|
-
|
|
-
|
Stock Option Vesting(8)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Restricted Stock Vesting(9)
|
|
47,201
|
|
191,307
|
|
120,631
|
|
$100,083
|
|
$72,618
|
Incentive Award Vesting(10)
|
|
428,750
|
|
-
|
|
-
|
|
-
|
|
-
|
Lump Sum Pension
Payment(11)
|
|
4,549,333
|
|
4,443,383
|
|
1,796,090
|
|
N/A
|
|
N/A
|
Tax Indemnity(12)
|
|
4,541,923
|
|
3,887,429
|
|
2,163,949
|
|
-
|
|
-
|
(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 would have been 6% for 2008] 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. Mr. Maher’s Assurance Period is 3
years. As of December 31, 2008, Mr. Harris’ Assurance Period
was 2 years. Amendments made in 2009 to Mr. Harris’ Agreement
to extend the Assurance Period to 3 years are not reflected in this
table. The Employment Agreements and Retention Agreements were
amended in 2008 to provide that, in the event that the employee is a
“specified employee” within the meaning of Section 409A of the Code, then,
if necessary to comply with Section 409A, payments will be held in a
grantor trust which meets the requirements of Revenue Procedure 92-65 and
paid on the first day of the seventh month following separation from
service.
|
(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 $13.30 per share, which is the closing sales
price for the Common Stock on the Nasdaq Stock Market on December 31,
2008.
|
(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, 1.44%; Mr.
Devine, 0.68%; and Mr. Mahon, 0.39%. 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
2008 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 2008 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, the 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 Agreement in effect for
Mr. Maher provides 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. Mr. Harris is not yet
eligible to participate in the 401(k)
Plan. |
(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 $8.09 per allocated
share, based on 1,649,465 allocated shares
that are held by current participants who were employed as of December 31,
2008, 1,328,627 unallocated
shares, an outstanding loan balance of $4,324,985, and $13.30 per share, which was the closing
sales price for the Common Stock on the Nasdaq Stock Market on December
31, 2008. 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 $8.09
per stock unit credited to Messrs. Palagiano, Devine and Mahon 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 $13.30, which was the
closing sales price for a share of Common Stock on December 31, 2008.
|
(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 $13.30, which was the closing sales price
for a share of Common Stock on December 31, 2008.
|
(10)
|
In 2008, Mr. Palagiano was granted an incentive
award with a performance period ending December 31, 2010. A
description of the payment levels and criteria are set forth in the
“Compensation Discussion and Analysis.” Upon a change of
control, death, disability or retirement, the amount is pro-rated based on
performance through the date of such event. Since the amount of
the performance award cannot be determined at this time, the estimate has
been prepared based on the December 31, 2010 target award of
$428,750.
|
(11)
|
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
benefit 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.
|
(12)
|
Cash
and benefits paid to Messrs. Palagiano, Mahon and Devine under the
Employment Agreements and Mr. Maher under his Retention Agreement,
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 Executives on an
after-tax basis for any "excess parachute" excise taxes. Mr.
Maher's Retention Agreement also includes a provision indemnifying him on
an after-tax basis for any “excess parachute” excise taxes. As of December 21, 2008, Mr. Harris’
Retention Agreement did not provide for such an
indemnification. Amendments made in 2009 to his Retention
Agreement which added an indemnification provision are not reflected in
this table.
|
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 $46,820 directly to
Conway Farrell during the year ended December 31, 2008 for other legal services
provided. In addition, Conway Farrell received fees in the amount of
approximately $1,851,775 from third parties pursuant to its representation of
the Bank in loan closings and other legal matters for the year ended December
31, 2008. Until his retirement in January 2009, Mr. Williams was a partner
at Thacher, which provides general corporate legal services to the Company and
its subsidiaries. The Company or Bank paid $241,094 in fees to
Thacher in 2008.
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 ANNUAL INCENTIVE PLAN
__________________________________________________________________
ANNUAL
INCENTIVE PLAN
Appendix
A to this Proxy Statement contains the full text of the AIP. Appendix A is
incorporated by reference into the following plan summary. The summary is
qualified in its entirety by this reference. Certain capitalized terms utilized
in this discussion are defined in the AIP.
Background
Since 1999, the Company and the Bank
have provided performance-linked compensation opportunities to their officers,
including executive officers, using cash incentives. In some years,
these cash incentives have been discretionary, based upon a satisfactory
evaluation of Company and individual performance. In other years they
are linked to the achievement of predetermined performance objectives under an
AIP. The AIP was last approved by shareholders on May 20, 2004.
Applicable law does not require that the Company obtain shareholder approval;
however, the Company cannot deduct fiscal year taxable compensation in excess of
$1,000,000 that it pays to either its Chief Executive Officer or any of its
other Named Executive Officers, unless such compensation constitutes "qualified
performance-based compensation" under section 162(m) of the Internal Revenue
Code. Cash compensation that the Company pays to such individuals
must be authorized by shareholders to be considered "qualified performance-based
compensation." Where performance-linked compensation is paid under a
shareholder-authorized plan that allows discretion in the selection of
performance goals and the establishment of specific targets, section 162(m) of
the Code requires that the range of available performance goals be disclosed to
and approved by shareholders every five years. The Company is not
implementing an additional compensation plan, but instead is seeking shareholder
approval to continue the existing AIP, with certain modifications, for another
five years. If the shareholders do not approve the AIP, the Company
will not pay bonuses under the plan.
Administration
The AIP is administered by a committee
of the Board of Directors which is comprised of at least two outside directors.
Unless otherwise determined by the Board of Directors, the Compensation
Committee will be the committee under the Annual Incentive Plan. The
Compensation Committee will interpret and adopt the rules and regulations for
carrying out the plan. Its duties include designating participants, individual
award opportunities, and/or bonus pool award opportunities; designating and
administering performance goals and other
award
terms and conditions; certifying the bonus amounts earned for any award year;
determining the effect on an award of termination of employment; and deciding
whether, under what circumstances, and subject to what terms, bonus payouts are
to be paid on a deferred basis, including automatic deferrals at the
Compensation Committee's election, as well as elective deferrals at the election
of participants. The Compensation Committee has substantial discretion to make
all other determinations related to bonus opportunities under the Annual
Incentive Plan.
Eligible
Persons and Participation
The eligible persons under the Annual
Incentive Plan are the officers and employees (including officers and employees
who are also Directors) of the Company and its subsidiaries and affiliates.
Participants under the AIP are senior executive or other key employees of the
Company and its subsidiaries and affiliates selected by the Compensation
Committee. As of March 26, 2009, there were 7 eligible employees.
Performance
Goals
Prior to the ninetieth day of each
fiscal year or longer performance measurement period (or during subsequent
periods permitted under the AIP, as amended, or applicable regulations), the
Compensation Committee will set specific performance goals for each participant
for the performance measurement period. The performance goals are limited to one
or more of the following Company or subsidiary financial performance
measures:
(i)
|
earnings
per share *
|
(ii)
|
net
income *
|
(iii)
|
return
on average equity *
|
(iv)
|
return
on average assets *
|
(v)
|
core
earnings *
|
(vi)
|
stock
price
|
(vii)
|
operating
income
|
(viii)
|
operating
efficiency ratio;
|
(ix)
|
net
interest rate spread;
|
(x)
|
loan
production volumes;
|
(xi)
|
non-performing
loans;
|
(xii)
|
cash
flow;
|
(xiii)
|
strategic
business objectives, consisting of one or more objectives based on meeting
specified cost targets, business expansion goals, and goals relating to
acquisitions
or divestitures
|
(xiv)
|
except
in the case of a Covered Officer (as defined in the AIP attached as
Appendix A), any other performance criteria established by the
Committee
|
(xv)
|
any
combination of (i) through (xiv) above.
|
*
Performance goals indicated may be established on the basis of reported
earnings or cash earnings.
|
Performance
goals indicated may be established on the basis of either reported earnings or
cash earnings. Under the AIP as amended, any performance goal may be
based on performance relative to an individual corporate goal set for the
Company, the Company's individual performance in relation to the performance of
institutions in a designated peer group or a combination individual corporate
performance and performance in relation to a peer group. Performance
goals applicable to the Company's Chief Executive Officer or other Named
Executive Officers must be selected from items (i) through (xix).
For each specific performance goal, a
predetermined bonus amount can be earned by the participant upon achievement of
the goal. Performance goals must be established while the performance relative
to the target remains substantially uncertain within the meaning of Section
162(m). Performance goals may relate to a fiscal year or to a longer
period.
Maximum
Payout
Under the Annual Incentive Plan as
amended, the maximum payment opportunity to the Chief Executive Officer or any
other Named Executive Officer for any award year may not exceed $1.5
million. Under the existing AIP, the limit is $1.0
million.
Payment
of Awards
All awards that are earned shall be
paid at such time and in such amounts (not in excess of the maximum established
for each person) as determined by the Compensation Committee and may be paid in
cash or in shares of Common Stock at the election of the Compensation Committee
and/or the participant. In general, awards will be paid within two
and one-half months after the end of the calendar year in which they are
earned. The number of shares of Common Stock delivered in
satisfaction of an award paid in Common Stock will be
based on
the dollar value of the award that has been earned and the fair market value of
a share on the date the cash award would otherwise be paid. The
Company may use authorized but unissued shares, treasury shares or outstanding
shares purchased from other investors for this purpose.
Termination
or Amendment of the Annual Incentive Plan
The Board
of Directors, subject to its delegation of powers to the Compensation Committee,
may at any time terminate, in whole or in part, or amend the AIP, provided that,
except as otherwise provided in the plan, no amendment or termination shall
adversely affect the rights of any participant under any awards previously
granted to or deferred by the participant. In the event of a termination of the
plan, the Compensation Committee may in its sole discretion direct any remaining
payments to participants in a lump sum or installments as the Committee shall
prescribe with respect to each participant. Any material amendment to the plan
(including, but not limited to, a change in the class of individuals eligible to
participate, the maximum annual award, or the authorized performance measures)
must be approved by the Company's shareholders if required by and in accordance
with section 162(m) of the Code. The Plan has a five-year term, and any
extension of the Plan beyond such five-year term will require additional
shareholder approval.
Section
409A Compliance.
The Company acknowledges that the
payments promised to the participants under this Plan must either comply with
the requirements of Section 409A and the regulations thereunder or qualify for
an exception from compliance. To that end, the Company asserts that
the payment described in section 4(b) of this Plan is intended to be a payment
upon a specified time or fixed schedule pursuant to Section
409A(a)(2)(A)(iv). In the case of a payment promised under this Plan
that is not exempt from Section 409A, and that is to be paid upon a separation
from service [within the meaning of Treasury Regulation 1.409A-1(h)] to a
participant who is a specified employee within the meaning of Section 409A at
the time of such separation from service, such payment shall not be made prior
to, and shall, if necessary, be deferred (with interest at the annual rate of
6%, compounded monthly from the date of separation from service to the date of
actual payment) to and paid on the first day of the seventh month to begin after
the separation from service and, if the participant is a specified employee
[within the meaning of Treasury Regulation Section 1.409A-1(i)] on the date of
his separation from service, the first day of the seventh month following the
participant’s separation from service. Each amount payable under this
plan that is required to be deferred beyond the participant’s separation from
service shall be deposited on the date on which, but for such deferral, the
Company would have paid such amount to the participant, in a grantor trust which
meets the requirements of Revenue Procedure 92-65 (as amended or superseded from
time to time), the trustee of which shall be a financial institution selected by
the Company with the approval of the participant (which approval shall not be
unreasonably withheld or delayed), pursuant to a trust agreement the terms of
which are approved by the participant (which approval shall not be unreasonably
withheld or delayed) (the “Rabbi Trust”), and payments made shall include
earnings on the investments made with the assets of the Rabbi Trust, which
investments shall consist of short-term investment grade fixed income securities
or units of interest in mutual funds or other pooled investment vehicles
designed to invest primarily in such securities. Furthermore, this
Plan shall be construed and administered in such manner as shall be necessary to
effect compliance with Section 409A.
Annual
Incentive Plan
The
following table sets forth the amounts paid under the AIP for 2008 for the
persons and groups indicated:
Name and Position
|
Dollar
Value
|
Vincent
F. Palagiano - Chairman
of the Board and CEO
|
$225,000
|
Kenneth
J. Mahon- FEVP and
CFO
|
127,000
|
Michael
P. Devine- President and
COO
|
170,000
|
Christopher
D. Maher- EVP and
CRO
|
94,000
|
Daniel
J. Harris- EVP and
CLO
|
100,000
|
All
Current Executive Officers as a Group (7 persons)
|
$861,000
|
Due to
the discretionary nature of final payout determinations, amounts payable under
the AIP for 2009 are not determinable.
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 Company's shareholders
|
|
3,116,564
|
|
$14.97
|
|
1,133,027(1)
|
Equity
compensation plans not approved by the Company's
shareholders
|
|
-
|
|
-
|
|
-
|
(1) Amount
comprised of 75,866 stock options that remain available for future issuance
under the 2001 Stock Option Plan and 1,057,161 equity awards that remain
available for future issuance under the 2004 Stock Incentive Plan.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE DIME COMMUNITY BANCSHARES, INC. ANNUAL INCENTIVE 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, 2009, 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,
|
|
2008
|
|
2007
|
Audit
Fees (a)
|
$552,000
|
|
$521,100
|
Audit-Related
Fees (b)
|
264,000
|
|
311,130
|
Tax
Fees (c)
|
200,100
|
|
272,000
|
All
Other Fees
|
-
|
|
-
|
Total
|
$1,010,100
|
|
$1,104,230
|
(a) Fees
for audit services billed in 2008 and 2007 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 2008 and 2007 consisted of:
§
|
Financial
accounting and reporting
consultations
|
§
|
Internal
control reviews
|
§
|
Employee
benefit plan audits
|
(c) Fees
for tax services billed in 2008 and 2007 consisted of tax compliance services
and tax planning and advice services.
Fees for
tax compliance services totaled $175,400 for 2008 and $220,200 for
2007. 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 $24,700 in 2008 and $51,800 in
2007. 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 2008 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.dime.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.
2010
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 2010, all shareholder proposals,
including, but not limited to nominations for Director, 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, 2009. Under the Company's
Bylaws, shareholder nominations for Director and shareholder proposals not
included in the Company's 2010 proxy statement, in order to be considered for
possible action by the shareholders at the annual meeting to be held in 2010,
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 2010.
Multiple
Shareholders Sharing One Address
Only one
copy of the Proxy Statement and Annual Report is being delivered to multiple
shareholders sharing an address unless the Company has received contrary
instructions from one or more of the shareholders. The Company will
deliver promptly upon written or oral request a separate copy of the Proxy
Statement and Annual Report to a shareholder at a shared address to which a
single copy of the Proxy Statement and Annual Report was
delivered. Shareholders may notify the Company that they desire to
receive a separate copy of the current or a future Proxy Statement and Annual
Report by writing Dime Community Bancshares, Inc., 209 Havemeyer Street,
Brooklyn, NY 11211, Attn: Investor Relations, or by telephoning the Investor
Relations Department at (718) 782-6200, ext. 8279. By using either of
these methods, shareholders sharing an address may additionally request delivery
of a single copy of a Proxy Statement and Annual Report if they are receiving
multiple copies.
Annual
Report
A copy of
the Annual Report to shareholders for the period ended December 31, 2008,
including the consolidated financial statements prepared in conformity with
generally accepted accounting principles for the year ended December 31, 2008,
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.dime.com.
By Order
of the Board of Directors
Lance J.
Bennett
Secretary
Brooklyn,
New York
April 8,
2009
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.
ANNUAL
INCENTIVE PLAN
Amended
and Restated as of December 31, 2008
SECTION
1. Purpose.
The purpose of the Dime Community
Bancshares, Inc. ("Dime") Annual Incentive Plan (the "Plan") is to provide
incentives for senior executives and other key employees whose performance in
fulfilling the responsibilities of their positions can have a major impact on
the profitability and future growth of Dime (the "Company"). The Plan is part of
an overall compensation program which ties the achievement of annual strategic
and operating goals with compensation. Effective as of December 31,
2008, this Plan is amended and restated in order to comply with the applicable
requirements of section 409A of the Internal Revenue Code of 1986, as amended
(“Code”).
SECTION
2. Definitions.
For the purposes of the Plan, the
following terms shall have the meanings indicated:
"Award" shall mean the payment of an
award by the Committee to a Participant pursuant to Section 4.
"Applicable Period" shall mean, with
respect to any Award Year, a period commencing on or before the first day of
such Award Year and ending no later than the earlier of (i) the 90th day of such
Award Year or (ii) the date on which 25% of such Award Year has been completed.
Any action required under the Plan to be taken within the period specified in
the previous sentence may be taken at a later date with respect to Participants
who are not Covered Officers and with respect to Covered Officers if Section
162(m) is amended to permit such later date.
"Award Year" shall mean any fiscal
year, or other performance period designated by the Committee, with respect to
the Company's performance in which an Award is granted.
"Board" shall mean the Board of
Directors of the Company.
"Committee" shall mean the Committee
designated pursuant to Section 3. Unless otherwise determined by the Board, the
Compensation Committee designated by the Board shall be the Committee under the
Plan.
"Covered Officer" shall mean at any
date (i) any individual who, with respect to the previous taxable year of the
Company, was a "covered employee" of the Company within the meaning of Section
162(m), as hereinafter defined; provided, however, that the term "Covered
Officer" shall not include any such individual who is designated by the
Committee, in its discretion, at the time of any Award or at any subsequent
time, as reasonably expected not to be such a "covered employee" with respect to
the current taxable year of the Company and (ii) any individual who is
designated by the Committee, in its discretion, at the time of any Award or at
any subsequent time, as reasonably expected to be such a "covered employee" with
respect to the current taxable year of the Company or with respect to the
taxable year of the Company in which any applicable Award will be
paid.
"Individual Award Opportunity" shall
mean the performance-based award opportunity for a Participant for a given Award
Year as specified by the Committee within the Applicable Period, which may be
expressed in dollars or on a formula basis that is consistent with the
provisions of this Plan.
"Participant" shall mean a senior
executive or other key employee of the Company selected by the Committee in
accordance with Section 4(a) who receives an Individual Award
Opportunity.
"Section 162(m)" shall mean Section
162(m) of the Internal Revenue Code of 1986 and the rules promulgated thereunder
or any successor provision thereto as in effect from time to time.
SECTION
3. Administration.
(a) Committee.
Subject to the authority and powers of the Board in relation to the Plan as
hereinafter provided, the Plan shall be administered by a Committee designated
by the Board consisting of two or more members of the Board each of whom is an
"outside director" within the meaning of Section 162(m). The Committee shall
have full authority to
interpret
the Plan and from time to time to adopt such rules and regulations for carrying
out the Plan as it may deem best, including without limitation:
(i)
|
to
designate Participants and Individual Award Opportunities and/or bonus
pool award opportunities;
|
(ii)
|
to
designate and thereafter administer the performance goals and other Award
terms and conditions;
|
(iii)
|
to
determine and certify the bonus amounts earned for any Award
Year;
|
(iv)
|
to
determine the effect on an Award of a termination of employment;
and
|
(v)
|
to
decide whether, under what circumstances, and subject to what terms, bonus
payouts are to be paid on a deferred basis, including automatic deferrals
at the Committee's election as well as elective deferrals at the election
of
Participants.
|
(b) Committee
Determinations. All determinations by the Committee shall be made by the
affirmative vote of a majority of its members, but any determination reduced to
writing and signed by a majority of the members shall be fully as effective as
if it had been made by a majority vote at a meeting duly called and held. All
decisions by the Committee pursuant to the provisions of the Plan and all orders
or resolutions of the Board pursuant thereto shall be final, conclusive and
binding on all persons, including the Participants, the Company and its
subsidiaries, and stockholders.
SECTION
4. Eligibility
for and Payment of Awards.
(a) Eligible
Employees. Subject to the provisions of the Plan, within the Applicable Period,
the Committee may select officers or employees of the Company or any of its
subsidiaries who will be eligible to earn Awards under the Plan with respect to
such year and determine the amount of the Individual Award Opportunities and the
conditions under which they may be earned.
(b) Payment
of Awards. Awards under the Plan shall be paid in cash or shares of Company
stock, subject to applicable withholding taxes, on May 15th of the calendar year
following the end of the Plan Year.
The
Committee may require that a Participant must still be employed as of the end of
the Award Year and/or the date on which the bonus is calculated, in order to be
eligible for an award for such Award Year and the Committee may adopt such
forfeiture, proration or other rules as it deems appropriate, in its sole
discretion, regarding the impact on an Award of a Participant's termination of
employment. In such event, the shares of Company stock delivered in payment of
an award that has been earned shall have an aggregate fair market value
(determined as of the date the award is earned) equal to the dollar amount of
the earned award, and fair market value for this purpose shall be determined on
the basis of the closing sales price for a share of Company common stock on the
relevant date (or if there is no reported sale on such date, on the last
preceding date on which any reported sale occurred) as reported in the principal
consolidated reporting system with respect to securities listed or admitted to
trading on the principal United States securities exchange on which the Shares
are listed or admitted to trading (including the Nasdaq Stock Market as a
national securities exchange for this purpose), as of the close of the market in
New York City and without regard to after-hours trading activity.
(c) During
the Applicable Period, the Committee shall establish the Individual Award
Opportunities for such Award Year, which shall be based on achievement of stated
target performance goals, and may be stated in dollars or on a formula
basis.
(d) Awards
to Covered Officers.
(i) Notwithstanding the provisions of
Sections 4(a), 4(b), and 4(c) hereof, any Award to any Covered Officer shall be
granted in accordance with the provisions of this Section 4(d). Subject to the
discretion of the Committee as set forth in Section 6(b) hereof, the maximum
amount of the Award that may be granted with respect to any Award Year to any
Covered Officer at the time of such grant shall be $1,500,000.
(ii) Any
provision of the Plan to the contrary notwithstanding, no Covered Officer shall
be entitled to any payment of an Award with respect to an Award Year unless the
members of the Committee shall have certified in accordance with Section 162(m)
the extent to which the applicable performance goals have been
satisfied.
SECTION
5. Performance
Goals
For any given Award Year, the Committee
shall, within the Applicable Period, set one or more objective performance goals
for each Participant and/or each group of Participants and/or each bonus pool
(if applicable). The performance goals shall be limited to one or more of the
following Company, subsidiary, operating unit or division financial performance
measures:
(i)
|
earnings
per share *
|
(ii)
|
net
income *
|
(iii)
|
return
on average equity *
|
(iv)
|
return
on average assets *
|
(v)
|
core
earnings *
|
(vi)
|
stock
price
|
(vii)
|
operating
income
|
(viii)
|
operating
efficiency ratio;
|
(ix)
|
net
interest rate spread;
|
(x)
|
loan
production volumes;
|
(xi)
|
non-performing
loans;
|
(xii)
|
cash
flow;
|
(xiii)
|
strategic
business objectives, consisting of one or more objectives based on meeting
specified cost targets, business expansion goals, and goals relating to
acquisitions or divestitures
|
(xiv)
|
except
in the case of a Covered Officer, any other performance criteria
established by the Committee
|
(xv)
|
any
combination of (i) through (xiv) above.
|
*
Performance goals indicated may be established on the basis of reported
earnings or cash earnings.
|
Each
goal may be expressed on an absolute and/or relative basis, may be based on or
otherwise employ comparisons based on internal targets, the past performance of
the Company and/or the past or current performance of other
companies.
SECTION
6. General
Provisions.
(a) Adjustments.
If the performance criteria for any Award Year shall have been affected by
special factors (including material changes in accounting policies or practices,
material acquisitions or dispositions of property, or other unusual items) that
in the Committee's judgment should or should not be taken into account, in whole
or in part, in the equitable administration of the Plan, the Committee may, for
any purpose of the Plan, adjust such criteria and make payments accordingly
under the Plan.
(b) No
Adjustments for Covered Officers. Notwithstanding the provisions of
subparagraph (a) above, any adjustments made in accordance with or for the
purposes of subparagraph (a) shall be disregarded for purposes of calculating
the performance criteria if and to the extent that such adjustments would have
the effect of increasing the amount of an Award to a Covered Officer. In
addition, the Committee may, in the exercise of its discretion, reduce or
eliminate the amount of an Award to a Covered Officer otherwise calculated in
accordance with the provisions of Section 4(d) prior to payment
thereof.
(c) No
Assignment. No portion of any Award under the Plan may be assigned or
transferred otherwise than by will or by the laws of descent and distribution
prior to the payment thereof.
(d) Tax
Requirements. All payments made pursuant to the Plan shall be subject
to withholding in respect of income and other taxes required by law to be
withheld, in accordance with procedures to be established by the
Committee.
(e) No
Additional Participant Rights. The selection of an individual for
participation in the Plan shall not give such Participant any right to be
retained in the employ of the Company or any of its subsidiaries, and the right
of the Company or any such subsidiary to dismiss or discharge any such
Participant, or to terminate any arrangement pursuant to which any such
Participant provides services to the Company is specifically reserved. The
benefits provided for Participants under the Plan shall be in addition to, and
shall in no way preclude, other forms of compensation to or in respect of such
Participants.
(f) Liability. The
Board and the Committee shall be entitled to rely on the advice of counsel and
other experts, including the independent accountants for the Company. No member
of the Board or of the Committee or any officers of the Company or its
subsidiaries shall be liable for any act or failure to act under the Plan,
except in circumstances involving bad faith on the part of such member or
officer.
(g) Other
Compensation Arrangements. Nothing contained in the Plan shall
prevent the Company or any subsidiary or affiliate of the Company from adopting
or continuing in effect other compensation arrangements, which arrangements may
be either generally applicable or applicable only in specific
cases.
(h) Governing
Law. The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan and any Award Agreement shall be determined
in accordance with the laws of the State of Delaware.
SECTION
7. Amendment
and Termination of the Plan.
The Board may at any time terminate, in
whole or in part, or from time to time amend the Plan, provided that, except as
otherwise provided in the Plan, no such amendment or termination shall adversely
affect the rights of any Participant under any Awards deferred by such
Participant pursuant to Section 4(b). In the event of such termination, in whole
or in part, of the Plan, the Committee may in its sole discretion direct the
payment to Participants of any Awards not theretofore paid out prior to the
respective dates upon which payments would otherwise be made hereunder to such
Participants, in a lump sum or installments as the Committee shall prescribe
with respect to each such Participant. The Board may at any time and from time
to time delegate to the Committee any or all of its authority under this Section
6. Any amendment to the Plan that would affect any Covered Officer shall be
approved by the Company's stockholders if required by and in accordance with
Section 162(m).
SECTION
8. Re-approval by
Shareholders.
Any material terms of the performance
goals described in Section 5 shall be disclosed to and re-approved by
shareholders no later than the first shareholder meeting that occurs in the
fifth year following the year in which shareholders previously approved the
performance goals.
SECTION
9. Section
409A Compliance.
Dime
acknowledges that the payments promised to the Participants under this Plan must
either comply with the requirements of section 409A of the Code (“Section 409A”)
and the regulations thereunder or qualify for an exception from
compliance. To that end, Dime asserts that the payment described in
section 4(b) of this Plan is intended to be a payment upon a specified time or
fixed schedule pursuant to Section 409A(a)(2)(A)(iv). In
the case of a payment promised under this Plan that is not exempt from Section
409A, and that is to be paid upon a separation from service (within the meaning
of Treasury Regulation 1.409A-1(h)) to a Participant who is a specified employee
within the meaning of section 409A of the Code at the time of such separation
from service, such payment shall not be made prior to, and shall, if necessary,
be deferred (with interest at the annual rate of 6%, compounded monthly from the
date of separation from service to the date of actual payment) to and paid on
the first day of the seventh month to begin after the separation from service
and, if the Participant is a specified employee (within the meaning of Treasury
Regulation Section 1.409A-1(i)) on the date of his separation from service, the
first day of the seventh month following the Participant’s separation from
service. Each amount payable under this plan that is required to be
deferred beyond the Participant’s separation from service, shall be deposited on
the date on which, but for such deferral, Dime would have paid such amount to
the Participant, in a grantor trust which meets the requirements of Revenue
Procedure 92-65 (as amended or superseded from time to time), the trustee of
which shall be a financial institution selected by Dime with the approval of the
Participant (which approval shall not be unreasonably withheld or delayed),
pursuant to a trust agreement the terms of which are approved by the Participant
(which approval shall not be unreasonably withheld or delayed) (the “Rabbi
Trust”), and payments made shall include earnings on the investments made with
the assets of the Rabbi Trust, which investments shall consist of short-term
investment grade fixed income securities or units of interest in mutual funds or
other pooled investment vehicles designed to invest primarily in such
securities. Furthermore, this Plan shall be construed and
administered in such manner as shall be necessary to effect compliance with
Section 409A.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL
OF THE DIME COMMUNITY BANCSHARES, INC. ANNUAL INCENTIVE PLAN