<PAGE>
SCHEDULE 14-A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. ____)
Filed by the Registrant [X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Ocean Financial Corp.
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
...............................................................
[_] Fee paid previously with preliminary materials.
[_] 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.:
............................................
3) Filing Party:
............................................
4) Date Filed:
............................................
<PAGE>
OCEAN FINANCIAL CORP.
975 HOOPER AVENUE
TOMS RIVER, NEW JERSEY 08754-2009
(908) 240-4500
March 20, 1997
Fellow Shareholders:
You are cordially invited to attend the 1997 annual meeting of
shareholders (the "Annual Meeting") of Ocean Financial Corp. (the "Company"),
the holding company for Ocean Federal Savings Bank (the "Bank"), Toms River, New
Jersey, which will be held on April 24, 1997 at 10:00 a.m., Eastern Standard
Time, at the Crystal Point Yacht Club, 3900 River Road, at the intersection of
State Highway 70, Point Pleasant, New Jersey.
The attached Notice of the Annual Meeting and the Proxy Statement
describe the business to be transacted at the Annual Meeting. Directors and
officers of the Company as well as a representative of KPMG Peat Marwick LLP,
the Company's independent auditors, will be present at the Annual Meeting to
respond to any questions that our shareholders may have regarding the business
to be transacted.
The Board of Directors of Ocean Financial Corp. has determined that
matters to be considered at the Annual Meeting are in the best interests of the
Company and its shareholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT,
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES AS
DIRECTORS SPECIFIED UNDER PROPOSAL 1 AND "FOR" PROPOSAL 2, THE RATIFICATION OF
AUDITORS.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR
COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ John R. Garbarino
John R. Garbarino
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
OCEAN FINANCIAL CORP.
975 HOOPER AVENUE
TOMS RIVER, NEW JERSEY 08754-2009
----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 1997
----------------------------------
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the
"Annual Meeting") of Ocean Financial Corp. (the "Company"), the holding company
for Ocean Federal Savings Bank (the "Bank"), will be held on April 24, 1997 at
10:00 a.m., Eastern Standard Time, at the Crystal Point Yacht Club, 3900 River
Road, at the intersection of State Highway 70, Point Pleasant, New Jersey.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of three directors to a three-year term of office.
2. The ratification of the appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending
December 31, 1997; and
3. Such other matters as may properly come before the meeting and
at any adjournments thereof, including whether or not to
adjourn the meeting.
The Board of Directors has established March 14, 1997, as the record
date for the determination of shareholders entitled to receive notice of and to
vote at the Annual Meeting and at any adjournments thereof. Only record holders
of the common stock of the Company as of the close of business on such record
date will be entitled to vote at the Annual Meeting or any adjournments thereof.
In the event there are not sufficient votes for a quorum or to approve the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of shareholders entitled to vote at the Annual Meeting will be available at
Ocean Financial Corp., 975 Hooper Avenue, Toms River, New Jersey 08754-2009, for
a period of ten days prior to the Annual Meeting and will also be available at
the Annual Meeting itself.
By Order of the Board of Directors
/s/ John K. Kelly
John K. Kelly
Corporate Secretary
Toms River, New Jersey
March 20, 1997
<PAGE>
OCEAN FINANCIAL CORP.
-----------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 24, 1997
-----------------------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to shareholders of Ocean
Financial Corp. (the "Company") in connection with the solicitation by the Board
of Directors ("Board of Directors" or "Board") of proxies to be used at the
annual meeting of shareholders (the "Annual Meeting"), to be held on April 24,
1997, at 10:00 a.m., Eastern Standard Time, at the Crystal Point Yacht Club,
3900 River Road, at the intersection of State Highway 70, Point Pleasant, New
Jersey, and at any adjournments thereof. The 1996 Annual Report to Stockholders,
including the consolidated financial statements for the fiscal year ended
December 31, 1996, accompanies this Proxy Statement which is first being mailed
to record holders on or about March 20, 1997.
Regardless of the number of shares of common stock owned, it is
important that record holders of a majority of the shares be represented by
proxy or in person at the Annual Meeting. Shareholders are requested to vote by
completing the enclosed proxy card and returning it signed and dated in the
enclosed postage-paid envelope. Shareholders are urged to indicate their vote in
the spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN
THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY CARDS WILL BE VOTED
"FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN THIS PROXY STATEMENT
AND "FOR" THE RATIFICATION OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF
THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
Other Than The Matters Listed On The Attached Notice Of Annual
Meeting Of Shareholders, The Board Of Directors Knows Of No Additional Matters
That Will Be Presented For Consideration At The Annual Meeting. EXECUTION OF A
PROXY, HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY
TO VOTE THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER
BUSINESS, IF ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND AT ANY
ADJOURNMENTS THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. However, if you are a
shareholder whose shares are not registered in your own name, you will need
appropriate documentation from your record holder to vote personally at the
Annual Meeting.
The cost of solicitation of proxies on behalf of management will be
borne by the Company. In addition to the solicitation of proxies by mail,
Kissel-Blake Inc., a proxy solicitation firm, will assist the Company in
soliciting proxies for the Annual Meeting and will be paid a fee of $3,500, plus
out-of-pocket expenses. Proxies may also be solicited personally
<PAGE>
or by telephone by directors, officers and other employees of the Company and
its subsidiary, Ocean Federal Savings Bank (the "Bank"), without additional
compensation therefor. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others, to send proxy material to, and obtain
proxies from, such beneficial owners, and will reimburse such holders for their
reasonable expenses in doing so.
VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of common stock of the Company ("Common Stock"), with each share
entitling its owner to one vote on all matters to be voted on at the Annual
Meeting, except as described below.
The close of business on March 14, 1997, has been fixed by the Board
of Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 9,059,124 shares.
As provided in the Company's Certificate of Incorporation, for quorum
purposes, holders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote in
respect of the shares held in excess of the Limit and are not treated as
outstanding for voting purposes. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as, by persons acting in concert
with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit to supply information
to the Company to enable the Board of Directors to implement and apply the
Limit.
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 (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of directors, the proxy card being provided by the
Board of Directors enables a shareholder to vote "FOR" the election of the
nominees proposed by the Board, or to "WITHHOLD" authority to vote for one or
more of the nominees being proposed. Under Delaware law and the Company's
Bylaws, directors are elected by a plurality of votes cast, without regard to
either (i) broker non-votes or (ii) proxies as to which authority to vote for
one or more of the nominees being proposed is withheld.
As to the ratification of KPMG Peat Marwick LLP as independent
auditors of the Company and all other matters that may properly come before the
Annual Meeting, by checking the appropriate box, a shareholder may: (i) vote
"FOR" the item; (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" from voting on
such item. Under the Company's Bylaws, unless otherwise
2
<PAGE>
required by law, all such matters shall be determined by a majority of the votes
cast, without regard to (a) broker non-votes, or (b) proxies marked "ABSTAIN" as
to that matter.
Proxies solicited hereby are to be returned to the Company's transfer
agent, American Stock Transfer & Trust Company ("ASTT"). The Board of Directors
has designated ASTT to act as inspectors of election and tabulate the votes at
the Annual Meeting. ASTT is not otherwise employed by, or a director of, the
Company or any of its affiliates. After the final adjournment of the Annual
Meeting, the proxies will be returned to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons
believed by management to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock on the Record Date or as disclosed in certain
reports received to date regarding such ownership filed by such persons with the
Company and with the Securities and Exchange Commission ("SEC"), in accordance
with Sections 13(d) and 13(g) of the Securities Exchange Act of 1934, as amended
("Exchange Act"). Other than those persons listed below, the Company is not
aware of any person, as such term is defined in the Exchange Act, that owns more
than 5% of the Company's Common Stock as of the Record Date.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP CLASS
-------------- --------------------------------------------------- ----------------- ----------------
<S> <C> <C> <C>
Common Stock Ocean Federal Savings Bank Employee Stock Ownership 671,046(1) 7.40%
Plan ("ESOP")
975 Hooper Avenue
Toms River, New Jersey 08753-8396
Common Stock Ocean Federal Foundation 642,546(2) 7.09%
975 Hooper Avenue
Toms River, New Jersey 08753-8396
Common Stock Wellington Management Co. LLP 476,700 5.26%
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ----------------------------
(1) Shares of Common Stock were acquired by the ESOP in the Bank's conversion
from mutual to stock form of organization (the "Conversion"). The ESOP
Committee administers the ESOP. Corestates Bank, N.A. has been appointed as
the trustee for the ESOP ("ESOP Trustee"). The ESOP Trustee must vote all
allocated shares held in the ESOP in accordance with the instructions of
the participants. At March 14, 1997, 55,732 shares had been allocated under
the ESOP and 615,314 shares remain unallocated. Under the ESOP, unallocated
shares and allocated shares as to which voting instructions are not given
by participants are to be voted by the ESOP Trustee in a manner calculated
to most accurately reflect the instructions received from participants
regarding the allocated stock so long as such vote is in accordance with
the fiduciary provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
(2) Ocean Federal Foundation (the "Foundation") was established and funded by
the Company in connection with the Bank's Conversion with an amount of the
Company's Common Stock equal to 7.4% of the total amount of Common Stock
issued in the Conversion. The Foundation is a Delaware non-stock
corporation and is dedicated to charitable purposes within Ocean County,
New Jersey and its neighboring communities. The Foundation is governed by a
board of directors with 13 members, nine of whom are civic or community
leaders in the Bank's local community who are not affiliated with the
Company or the Bank, or their officers, directors and employees. The
remaining four members of the Foundation's board of directors are directors
of the Company and the Bank. Pursuant to the terms of the contribution of
Common Stock, as mandated by the Office of Thrift Supervision, all shares
of Common Stock held by the Foundation must be voted in the same ratio as
all other shares of the Company's Common Stock on all proposals considered
by stockholders of the Company.
3
<PAGE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL I. ELECTION OF DIRECTORS
The Board of Directors of the Company currently consists of nine (9)
directors and is divided into three classes. Each of the nine members of the
Board of Directors also presently serves as a director of the Bank. Directors
are elected for staggered terms of three years each, with the term of office of
only one of the three classes of directors expiring each year. Directors serve
until their successors are elected and qualified.
The three nominees proposed for election at the Annual Meeting are
Carl Feltz, Jr., Robert E. Knemoller and Diane F. Rhine. No person being
nominated as a director is being proposed for election pursuant to any agreement
or understanding between any such person and the Company.
In the event that any such nominee is unable to serve or declines to
serve for any reason, it is intended that proxies will be voted for the election
of the balance of those nominees named and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE DIRECTORS IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD WILL BE VOTED "FOR" THE
ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND CERTAIN EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of
nominees and continuing directors and the Named Executive Officers (as defined
below), their ages, a brief description of their recent business experience,
including present occupations and employment, the year in which each became a
director of the Bank and the year in which their terms (or, in the case of
nominees, their proposed terms) as director of the Company expire. This table
also sets forth the amount of Common Stock and the percent thereof beneficially
owned by each director and all directors and executive officers as a group as of
the Record Date.
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND OWNERSHIP
EXPIRATION NATURE OF AS A
NAME AND PRINCIPAL OCCUPATION OF DIRECTOR OF TERM AS BENEFICIAL PERCENT OF
PRESENT AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNERSHIP(2) CLASS
- ----------------------------------------- ----- ------------ -------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
NOMINEES
Carl Feltz, Jr. 58 1990 2000 1,700(3)(4) .02%
Principal, Feltz Associates,
Architects.
Robert E. Knemoller 67 1982 2000 4,850(3)(4) .05
Retired, Former Executive
Officer of the Bank.
Diane F. Rhine 47 1997 2000 2,500(4)(5) .03
President/Owner of Citta
& Cobb, Inc., Realtors.
CONTINUING DIRECTORS
Michael E. Barrett 57 1989 1998 9,741(6)(7) .11
Executive Vice President
of the Bank.
Thomas F. Curtin 65 1991 1999 10,000(3)(4) .11
Partner, The Foristall
Company, Inc., an investor
relations firm.
John R. Garbarino 47 1984 1999 17,385(6)(7) .19
Chairman of the Board,
President and Chief Executive
Officer of the Company and the Bank.
Donald E. McLaughlin 49 1985 1998 2,000(3)(4) .02
President, Donald E.
McLaughlin, CPA, P.C.
Frederick E. Schlosser 74 1968 1999 8,750(3)(4) .10
Retired, former Vice
President for Steinbach's
department stores.
James T. Snyder 62 1991 1998 10,000(3)(4) .11
Retired, Former 50% owner
of Wallach's Inc., a New
Jersey retail company.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND OWNERSHIP
EXPIRATION NATURE OF AS A
NAME AND PRINCIPAL OCCUPATION AT DIRECTOR OF TERM AS BENEFICIAL PERCENT OF
PRESENT AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNERSHIP(2) CLASS
- ------------------------------------------ ---------- ------------- ----------------- -------------------- --------------
<S> <C> <C> <C> <C> <C>
NAMED EXECUTIVE OFFICER
(who are not also directors)
Karl E. Reinheimer 49 -- -- 317(6)(7) *%
Executive Vice President and
Chief Operating Officer of
the Bank
Michael J. Fitzpatrick 41 -- -- 10,613(6)(7) .12
Executive Vice President and
Chief Financial Officer of the
Company and Bank.
John K. Kelly 47 -- -- 13,053(6)(7) .14
Senior Vice President and
Corporate Secretary of the
Company. Senior Vice President
and General Counsel of Bank.
All directors and executive officers as
a group (12 persons)..................... -- -- -- 90,909(8) 1.00%
</TABLE>
- -----------------------
* Less than .01%.
(1) Includes years of service as a director of the Bank.
(2) Each person effectively exercises sole (or shared with spouse or other
immediate family members) voting and dispositive power as to shares
reported.
(3) Excludes 14,379 shares awarded to each outside director, other than Ms.
Rhine, under the Ocean Financial Corp. 1997 Incentive Plan (the "Incentive
Plan"). Awards to these directors under the Incentive Plan vest at a rate
of 20% per year commencing on February 4, 1998; provided, however, that
25% of the third annual installment, and 50% of each of the fourth and
fifth annual installments will only vest if the performance criteria to be
established by the Compensation Committee (as defined below) is satisfied.
Each participant will have voting power as to the shares awarded.
(4) Excludes 33,552 options granted to each outside director under the
Incentive Plan. Options granted pursuant to the Incentive Plan become
exercisable at a rate of 20% per year commencing on February 4, 1998,
except for Ms. Rhine whose options become exercisable at a rate of 20% per
year commencing February 19, 1998.
(5) Excludes 3,595 shares awarded to Ms. Rhine under the Incentive Plan, upon
her appointment as a director of the Company, which vest at a rate of 20%
per year commencing on February 19, 1998; provided, however, that 25% of
the third annual installment, and 50% of each of the fourth and fifth
annual installments will only vest if the performance criteria to be
established by the Compensation Committee is satisfied. Ms. Rhine will
have voting power as to the shares awarded.
(6) Excludes 83,881, 26,842, 10,066, 26,842 and 16,776 shares awarded to
Messrs. Garbarino, Barrett, Reinheimer, Fitzpatrick, and Kelly,
respectively, under the Incentive Plan. Awards to officers under the
Incentive Plan vest at a rate of 20% per year beginning on February 4,
1998; provided, however, that 25% of the third annual installment, and 50%
of each of the fourth and fifth annual installments will only vest if the
performance criteria to be established by the Compensation Committee is
satisfied. Each participant will have voting power as to the shares
awarded.
(7) Excludes 201,314, 41,940, 75,493, 75,493 and 25,164 options granted to
Messrs. Garbarino, Barrett, Reinheimer, Fitzpatrick, and Kelly,
respectively. Options granted pursuant to the Incentive Plan become
exercisable at a rate of 20% per year commencing on February 4, 1998. See
"Executive Compensation - Incentive Plan."
(8) Excludes a total of 254,276 shares awarded under the Incentive Plan. No
options granted under the Incentive Plan are currently exercisable.
6
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company conducts its business through
meetings of the Board of Directors and through activities of its committees. The
Board of Directors of the Company generally meets on a quarterly basis and may
have additional meetings as needed. During 1996, the Board of Directors of the
Company, which was formed on November 21, 1995, held five meetings primarily
related to organizational and other matters in connection with the formation of
the Company and the acquisition of the Bank during Conversion. All of the
directors of the Company attended 100% of the total number of the Company's
Board meetings held and committee meetings on which such directors served during
1996. The Board of Directors of the Company maintains committees, the nature and
composition of which are described below:
AUDIT COMMITTEE. The Audit Committee of the Company and the Bank
consists of Messrs. McLaughlin, Knemoller and Schlosser. This committee
generally meets on a quarterly basis and is responsible for the review of the
audit and loan review reports and management actions regarding the
implementation of audit findings. The Bank's Internal Auditor and Loan Review
Officer report to this committee, and the committee also maintains a liaison
with outside auditors and reviews the adequacy of internal controls. The Audit
Committee of the Company and the Bank met four times in 1996.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 1997
Annual Meeting consists of Messrs. Barrett, McLaughlin and Snyder. The committee
considers and recommends the nominees for director to stand for election at the
Company's annual meeting of shareholders. The Company's Certificate of
Incorporation and Bylaws provide for shareholder nominations of directors. These
provisions require such nominations to be made pursuant to timely notice in
writing to the Secretary of the Company. The shareholder's notice of nomination
must contain all information relating to the nominee which is required to be
disclosed by the Company's Bylaws and by the Exchange Act. See "Additional
Information - Notice of Business to be Conducted at an Annual Meeting." The
Nominating Committee met one time in 1996 and three times in early 1997.
COMPENSATION COMMITTEE. The Compensation and Benefits Committee of
the Company and the Human Resources/Compensation Committee of the Bank
(collectively, the "Compensation Committee") consists of Messrs. Knemoller,
Schlosser and Curtin. The Compensation Committee meets to establish compensation
for the executive officers, and to review the incentive compensation programs
when necessary. The Compensation Committee is also responsible for establishing
certain guidelines and limits for compensation and benefit programs for other
salaried officers and employees of the Company and the Bank. See "Executive
Compensation - Compensation Committee Report on Executive Compensation." The
Compensation Committee of the Company and the Bank met four times in 1996.
7
<PAGE>
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Currently, all outside directors of the Bank and the
Company receive an annual retainer of $15,000 for service on the Bank's Board
and $5,000 for service on the Company's Board. All fees are paid to directors
quarterly. Outside directors of the Bank also receive a fee of $900 for each
regular board meeting attended and $300 for each committee meeting attended.
Committee chairmen receive $500 per committee meeting attended. The Bank's
directors are also provided with medical and dental insurance for which they
contribute part of the cost of coverage.
DEFERRED COMPENSATOIN PLAN FOR DIRECTORS. The Bank maintains a
deferred compensation plan for the benefit of directors. The plan is a
non-qualified arrangement which offers participating directors the opportunity
to defer compensation through a reduction in fees in lieu of a promise of future
benefits. Such benefits are payable commencing at an age mutually agreed upon by
the Bank and the participating director (the "Benefit Age"). The benefits equal
the account balance of the director annuitized over a period of time mutually
agreed upon by the Bank and the director, and then reannuitized at the beginning
of each calendar year thereafter. Lump sum payouts are also available upon
eligibility for distribution of benefits or in the event of the death of the
director. The account balance equals deferrals and interest. Currently the plan
credits interest on deferrals at a rate equal to the sum of (i) the "Stable
Fund" investment option in the Bank's qualified 401(k) plan plus (ii) 200 basis
points. The plan offers a death benefit which may be funded through the proceeds
of Corporate Owned Life Insurance and is equal to the estimated benefit which
would have been payable if the director had participated in the plan for the
entire period up to the Benefit Age. Early distribution of benefits may occur
under certain circumstances which include, change in control, financial
hardship, termination for cause or disability.
INCENTIVE PLAN. Under the Incentive Plan maintained by the Company,
each director who is not an officer or employee of the Company or Bank, other
than Diane F. Rhine who was not a director at the time of the original grant,
received non-statutory options to purchase 33,552 shares of common stock at an
exercise price of $28.82, which was the fair market value of the shares on the
date of grant (February 4, 1997) as defined under the Incentive Plan and an
award of 14,379 shares of Common Stock. Ms. Rhine received non-statutory options
to purchase 33,552 shares of Common Stock at an exercise price of $30.00, which
was the fair market value on the date of grant (February 19, 1997) and an award
of 3,595 shares of Common Stock (collectively, the "Directors' Awards"). The
Incentive Plan was approved by shareholders on February 4, 1997. The Directors'
Awards granted under the Incentive Plan will vest over a five year period, at a
rate of 20% each year commencing one year from the date of grant; provided,
however, that 25% of the third annual installment, and 50% of each of the fourth
and fifth annual installments will only vest if the performance criteria to be
established by the Compensation Committee is satisfied. All Directors' Awards
will immediately vest upon death or disability. On or after July 2, 1997, the
Board of Directors intends to amend the Directors' Awards to provide for
acceleration of the vesting of such awards upon a change in control of the
Company or the Bank (as defined in the Incentive Plan). All options granted
under the Incentive Plan expire in 10
8
<PAGE>
years following the date of grant. When share awards vest and are distributed,
the recipients will also receive an amount equal to accumulated cash and stock
dividends (if any) with respect thereto, plus earnings thereon.
EXECUTIVE COMPENSATION
The report of the Compensation Committee and the stock performance
graph shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
except as to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
Chief Executive Officer and other executive officers of the Company. The
disclosure requirements for the Chief Executive Officer and other executive
officers include the use of tables and a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting those
individuals. In fulfillment of this requirement, the Compensation and Benefits
Committee (the "Compensation Committee" or "Committee"), at the direction of the
Board of Directors, has prepared the following report for inclusion in this
proxy statement.
Compensation Policies. The Compensation Committee is responsible for
administering the compensation and benefit program for the Company's and the
Bank's employees including the executive officers. The Committee annually
reviews and evaluates base salary and annual bonus recommendations made for
executive officers by the Chief Executive Officer (other than for himself) along
with the rationale for such recommendations. The Committee also approves the
compensation for the President and Chief Executive Officer ("CEO"), who does not
participate in the Committee's decision as to his compensation package. In
establishing compensation levels, the Committee considers the Company's overall
objectives and performance, peer group comparisons and individual performance.
The Committee has adopted the following goals in establishing
executive compensation: (1) attracting, retaining and rewarding highly qualified
and productive persons; (2) relating compensation to both Company and individual
performance; (3) establishing compensation levels that are internally equitable
and externally competitive; and (4) to provide motivation for the executive
officers to enhance shareholder value by linking compensation to the performance
of the Company's Common Stock.
The Company's compensation program for executive officers consists of
(1) a base salary, (2) a performance-based annual bonus, and (3) periodic grants
of stock awards and stock options. In addition, executive officers may
participate in other benefit plans available to all employees, including the
Employee Stock Ownership Plan and the 401(K) Plan. To the extent that benefits
9
<PAGE>
under these plans are limited by Internal Revenue Code restrictions, the Bank
makes the Executive whole through the Supplemental Executive Retirement Plan.
Base Salaries. Salary levels are intended to be consistent and
competitive with the practices of comparable financial institutions, and each
executive's level of responsibility. The Committee reviewed surveys of
compensation paid to executive officers performing similar duties for depository
institutions and their holding companies with particular focus on the level of
compensation paid by comparable institutions in New Jersey and the Mid-Atlantic
region. The surveys primarily used by the Committee were the 1995 SNL Executive
Compensation Review for Thrifts and the 1995 SNL Executive Compensation Review
for Commercial Banks.
Although the Compensation Committee's recommendations are
discretionary and no specific formula is used for decision making, salary
increases are aimed at reflecting the overall performance of the Company and the
performance of the individual executive officer.
Annual Incentive. Under the Performance Achievement Award Program, a
significant portion of each executive officer's annual compensation is
contingent on the financial performance of the Company and the Bank. The program
compares actual performance against targets which are approved by the Committee
at the beginning of each year. The bonus targets are weighed between individual
objectives and the Company's success in achieving its budgeted financial goals.
The annual incentive program is based upon the relative achievement of the
predetermined bankwide goals as determined on an annual basis supplemented by
individual goals (generally subjective in nature). The weighting of the
performance and individual goals depends on the position of the executive.
This program is discussed further below under "Chief Executive Officer."
Long Term Incentive Compensation. On February 4, 1997, shareholders
of the Company approved the 1997 Incentive Plan under which executive officers
received stock awards and options. Awards to executive officers under the
Incentive Plan vest at a rate of 20% per year; provided, however, that 25% of
the third annual installment, and 50% of each of the fourth and fifth annual
installments will only vest if the performance criteria to be established by the
Committee is satisfied. The specific grants and awards for executive officers
are reflected in the "Summary Compensation Table" and in the "Option Grants in
Last Fiscal Year" Table. The Committee believes that stock ownership by
executive officers is a significant incentive in building stockholder value and
aligning the interests of employees with those of stockholders. Stock options
and stock awards under such plans were allocated by the Committee based upon
regulatory practices and policies, the practices of other recently converted
financial institutions as verified by external surveys and based upon the
executive officers' level of responsibility and contributions to the Company and
the Bank. The Committee takes into account the outstanding stock incentives when
determining overall compensation.
Chief Executive Officer. The Chief Executive Officer was evaluated
for the successful level of the Company's and the Bank's operational and
administrative changes during 1996 taking into account both subjective
performance criteria and certain objective performance measures.
10
<PAGE>
Mr. Garbarino's salary for 1996 was increased to $325,000, primarily as a result
of the conversion from the mutual to stock form of ownership. The Committee
determined that such form of ownership places significantly greater demands and
expectations on the CEO position. In addition, other performance measures
evaluated by the Committee in determining the compensation of the Chief
Executive Officer included the creation of a revised strategic business plan
developed in conjunction with the plan of conversion and the continued operation
of the Bank in a safe and sound manner. Mr. Garbarino's salary is at the median
level as compared to other institutions in the peer group survey.
Consistent with the Bank's policy of linking compensation and
performance, Mr. Garbarino participated in a formal annual incentive program
which was first adopted for the Bank's officers in 1993. Awards made under the
Incentive Program are based upon the relative achievement of a predetermined
bankwide goal for annual return on assets (excluding nonrecurring items)
supplemented by individual goals (generally subjective in nature) agreed to at
the beginning of each year. These goals are structured with a target level
determined by the Committee, a threshold level which must be attained to fund
any award and a superior level that is above target and tied to a maximum award
opportunity. Mr. Garbarino's award is weighted so that 75% of the award is
determined by the Bank-wide performance goal and 25% of the award is determined
by individual goals. The award earned by Mr. Garbarino for fiscal year 1996 of
$92,930 represented 114% of his targeted award amount based upon the Committee's
evaluation of Mr. Garbarino's performance.
In addition, Mr. Garbarino has been granted 201,314 options and
awarded 83,881 shares under the Company's 1997 Incentive Plan, which will vest
at a rate of 20% per year beginning on February 4, 1998. The awards were made
consistent with the criteria stated under "Long Term Incentive Compensation."
Although certain quantitative and qualitative factors were reviewed
to determine the Chief Executive Officer's compensation (as well as that of all
executive officers), no specific formula was utilized in the Committee's
decisions nor did the Committee establish a direct link between base salary
levels and the Bank's performance.
The goal of the above referenced compensation policies, as
implemented by the Committee, is to be certain that all executives are
compensated consistent with the above guidelines. Compensation levels will be
reviewed as frequently as necessary to ensure this result.
THE COMPENSATION COMMITTEE
ROBERT E. KNEMOLLER FREDERICK E. SCHLOSSER
THOMAS F. CURTIN
11
<PAGE>
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of
total stockholder return on the Company's Common Stock, based on the market
price of the Common Stock with the cumulative total return of companies on The
Nasdaq Stock Market (U.S.) Index and the SNL Thrift Index for the period
beginning on July 3, 1996, the day the Company's Common Stock began trading,
through December 31, 1996. The graph was derived from a very limited period of
time, and, as a result, may not be indicative of possible future performance of
the Company's Common Stock.
CUMULATIVE MONTHLY RETURN AMONG
OCEAN FINANCIAL CORP. COMMON STOCK,
ALL NASDAQ U.S. STOCKS AND SNL THRIFT INDEX
[GRAPH APPEARS HERE]
Summary
07/02/96 09/30/96 12/31/96
-------- -------- --------
Ocean Financial Corp. 100.00 119.37 127.50
All Nasdaq U.S. Stocks 100.00 103.03 108.09
SNL Thrift Index 100.00 109.13 123.50
Notes:
A. The lines represent quarterly index levels derived from compounded
daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the quarterly interval, based on the fiscal year-end, is not a trading
day, the preceeding trading day is used.
D. The index level for all series was set to $100.00 on 07/02/96.
12
<PAGE>
SUMMARY COMPENSATION TABLE. The following table shows, for the years
ended December 31, 1996 and 1995, the cash compensation paid, as well as certain
other compensation paid or accrued for that year to the Chief Executive Officer
of the Company and the Bank and three other executive officers of the Company
and the Bank who earned and/or received salary and bonus in excess of $100,000
in fiscal year 1996 ("Named Executive Officers"). No other executive officer of
the Company or the Bank earned and/or received salary and bonus in excess of
$100,000 in fiscal year 1996.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION(1) AWARDS PAYOUTS
--------------------------------------- --------------------------- ---------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
POSITIONS(2) YEAR ($) ($)(3) ($)(4) ($)(5) (#)(6) ($)(7) ($)(8)
- ---------------------------- ---- ---------- ----------- -------------- ------------- ------------ --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John R. Garbarino,
President and Chief
Executive Officer of 1996 $325,000 $92,930 $ -- $ -- $ -- $ -- $88,655
the Company and the Bank. 1995 225,600 63,099 -- -- -- 158,600 11,625
Michael E. Barrett
Executive Vice 1996 $144,400 $26,838 $ -- $ -- $ -- $ -- $46,346
President of the Bank... 1995 138,200 24,108 -- -- -- 74,996 10,819
Michael J. Fitzpatrick
Executive Vice President
and Chief Financial
Officer of the Company 1996 $139,500 $33,533 $ -- $ -- $ -- $ -- $42,454
and the Bank............ 1995 118,200 30,534 -- -- -- 63,200 6,750
John K. Kelly
Senior Vice President and
Corporate Secretary of
the Company and Senior
Vice President and
General Counsel of the 1996 $116,300 $26,114 $ -- $ -- $ -- $ -- $37,079
Bank.................... 1995 105,700 22,042 -- -- -- 45,948 5,812
</TABLE>
- -------------------------------------
(1) Under Annual Compensation, the column titled "Salary" includes amounts
deferred by the Named Executive Officer pursuant to the Bank's 401(k) Plan
and Deferred Compensation Plan.
(2) On July 15, 1996, the Bank employed Karl E. Reinheimer as Director of the
Commercial Loan Division. On October 16, 1996, Mr. Reinheimer was appointed
Executive Vice President and Chief Operating Officer of the Bank.
(3) Consists of bonuses paid pursuant to the Bank's Performance Achievement
Awards Program, which awards bonuses based on the attainment of certain
predetermined annual performance goals. See "Compensation Committee Report
on Executive Compensation."
(4) For 1996, there were no (a) perquisites over the lesser of $50,000 or 10%
of the individual's total salary and bonus for the year; (b) payments of
above-market preferential earnings on deferred compensation; (c) payments
of earnings with respect to long-term incentive plans prior to settlement
or maturation; (d) tax payment reimbursements; nor (e) preferential
discounts on stock.
(5) Pursuant to the Incentive Plan, stock awards of 83,881, 26,842, 26,842 and
16,776 were granted to Messrs. Garbarino, Barrett, Fitzpatrick and Kelly,
which had a market value of $2,453,519, $785,128, $785,128, and $490,698 on
February 4, 1997, the date of grant. The awards will vest in five equal
annual installments commencing on February 4, 1998. When shares become
vested and are distributed, the recipients will also receive an amount
equal to accumulated cash and stock dividends (if any) with respect thereto
plus earnings thereon; provided, however, that 25% of the third annual
installment, and 50% of each of the fourth and fifth annual installments
will only vest if the performance criteria established by the Compensation
Committee is satisfied. All awards vest immediately upon termination of
employment due to death or disability.
(6) For a discussion of options granted under the Incentive Plan which was
approved by stockholders on February 4, 1997, see the "Option Grants in
Last Fiscal Year" table.
(7) Represents the payout for the first three-year performance period and for
the first year of the second performance period under the Bank's Long-Term
Awards Program. This program was terminated as of December 31, 1995.
(8) Includes (a) $4,500, $6,463, $6,777 and $7,335 contributed by the Bank to
the accounts of Messrs. Garbarino, Barrett, Fitzpatrick, and Kelly,
respectively, under the Bank's 401(k) Plan; (b) $38,126, $36,930, $35,677
and $29,744 representing the value of shares allocated under the ESOP, as
of December 31, 1996, for the benefit of Messrs. Garbarino, Barrett,
Fitzpatrick and Kelly, respectively; and (c) $41,998 for Mr. Garbarino
representing the contributions made under the Supplemental Executive
Retirement Plan for the excess amount due under the ESOP for the fiscal
year ended December 31, 1996.
13
<PAGE>
EMPLOYMENT AGREEMENTS. The Bank and the Company have entered into
employment agreements with Messrs. Garbarino and Fitzpatrick (individually, the
"Executive"). These employment agreements are intended to ensure that the Bank
and the Company will be able to maintain a stable and competent management base.
The continued success of the Bank and the Company depends to a significant
degree on the skills and competence of Messrs. Garbarino and Fitzpatrick.
The Employment Agreements provide for a three-year term for both
Executives. The Bank employment agreement provides that, commencing on the first
anniversary date and continuing each anniversary date thereafter, the Board of
the Bank may extend the agreement for an additional year so that the remaining
term shall be three years, unless written notice of non-renewal is given by the
Board of the Bank after conducting a performance evaluation of the Executive.
The term of the Company employment agreement is extended on a daily basis unless
written notice of non-renewal is given by the Board of the Company. In addition
to the base salary, the agreements provide for, among other things,
participation in stock benefit plans and other fringe benefits applicable to
executive personnel.
The agreements provide for termination by the Bank or the Company for
cause as defined in the agreements at any time. In the event the Bank or the
Company chooses to terminate the Executive's employment for reasons other than
for cause, or in the event of the Executive's resignation from the Bank and the
Company upon: (i) failure to re-elect the Executive to his current offices; (ii)
a material change in the Executive's functions, duties or responsibilities;
(iii) a relocation of the Executive's principal place of employment by more than
25 miles; (iv) liquidation or dissolution of the Bank or the Company; or (v) a
breach of the agreement by the Bank or the Company, the Executive or, in the
event of Executive's subsequent death, his beneficiary, beneficiaries or estate,
as the case may be, would be entitled to receive an amount equal to the
remaining base salary payments due to the Executive and the contributions that
would have been made on the Executive's behalf to any employee benefit plans of
the Bank or the Company during the remaining term of the agreement. The Bank and
the Company would also continue and pay for the Executive's life, health and
disability coverage for the remaining term of the Agreement.
Under the agreements, if voluntary or involuntary termination follows
a change in control of the Bank or the Company (as defined in the employment
agreement), the Executive or, in the event of the Executive's death, his
beneficiary, would be entitled to a severance payment equal to the greater of:
(i) the payments due for the remaining term of the agreement; or (ii) three
times the average of the five preceding taxable years' compensation. The Bank
and the Company would also continue the Executive's life, health, and disability
coverage for thirty-six months. Notwithstanding that both agreements provide for
a severance payment in the event of a change in control, the Executive would
only be entitled to receive a severance payment under one agreement. In the
event of a change in control, based upon three times 1996 base salary and
incentive bonus as reported in the Summary Compensation Table, Messrs. Garbarino
and Fitzpatrick would receive approximately $1,253,790 and $503,037,
respectively, in severance payments, in addition to other cash and noncash
benefits.
14
<PAGE>
Payments under the employment agreements in the event of a change in
control may constitute some portion of an excess parachute payment under Section
280G of the Code for executive officers, resulting in the imposition of an
excise tax on the recipient and denial of the deduction for such excess amounts
to the Company and the Bank.
Payments to the Executive under the Bank's agreement will be
guaranteed by the Company in the event that payments or benefits are not paid by
the Bank. Payment under the Company's agreement would be made by the Company.
All reasonable costs and legal fees paid or incurred by the Executive pursuant
to any dispute or question of interpretation relating to the agreements shall be
paid by the Bank or Company, respectively, if the Executive is successful on the
merits pursuant to a legal judgment, arbitration or settlement. The employment
agreements also provide that the Bank and Company shall indemnify the Executive
to the fullest extent allowable under federal and Delaware law, respectively.
CHANGE IN CONTROL AGREEMENTS. For similar reasons as with the
Employment Agreements, the Bank and the Company entered into Change in Control
Agreements ("CIC Agreement") with Messrs. Barrett, Kelly, and Karl E.
Reinheimer, the recently employed Chief Operating Officer (individually, the
"Executive"). Each CIC Agreement provides for a two-year term. Commencing on the
date of the execution of the Company's CIC Agreement, the term is extended for
one day each day until such time as the Board of Directors of the Company or the
Executive elects by written notice not to extend the term, at which time the CIC
Agreement will end on the second anniversary of the date of notice. The
Company's CIC Agreement provides that in the event voluntary or involuntary
termination follows a change in control of the Bank or the Company (as defined
in the agreement), the Executive would be entitled to a severance payment equal
to two (2) times the Executive's average annual compensation for the five years
preceding termination. The Bank's CIC Agreements are similar to that of the
Company; however, any payments to the Executive under the Bank's CIC Agreement,
would be subtracted from any amount due simultaneously under the Company's CIC
Agreement. The Company and the Bank would also continue, and pay for, the
Executive's life, health and disability coverage for thirty-six (36) full
calendar months following termination. Payments to the Executive under the
Bank's CIC Agreement will be guaranteed by the Company in the event that
payments or benefits are not paid by the Bank. If a change in control occurs,
based upon two times 1996 base salary and incentive bonus as reported in the
Summary Compensation Table, pursuant to the CIC Agreements, Messrs. Barrett and
Kelly would receive approximately $354,258 and $278,016, respectively, in
addition to other cash and noncash benefits.
INCENTIVE PLAN. The Company maintains the Incentive Plan which was
approved by shareholders on February 4, 1997. The Incentive Plan provides
discretionary awards to officers and key employees as determined by a committee
of non-employee directors. The following table lists all grants of options under
the Incentive Plan to the Named Executive Officers made on February 4, 1997 and
contains certain information about the potential value of those options based
upon certain assumptions as to the appreciation of the Company's stock over the
life of the option.
15
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR*
<TABLE>
<CAPTION>
Individual Grants
- -------------------------------------------------------------------------------------------- ---------------------------
NUMBER OF POTENTIAL REALIZABLE
SECURITIES % OF TOTAL VALUE AT ASSUMED
UNDERLYING OPTION/SARS EXERCISE OR ANNUAL RATES OF
OPTIONS/ GRANTED TO BASE PRICE STOCK PRICE
SARS GRANTED EMPLOYEES IN PER EXPIRATION APPRECIATION FOR
NAME (2)(3)(4)(5) FISCAL YEAR SHARE DATE(6) OPTIONS (1)
---------------------------
5% 10%
- ---------------------- ------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John R. Garbarino 201,314 25.4% $28.82 2/04/07 $3,648,816 $9,246,755
Michael E. Barrett 41,940 5.3 28.82 2/04/07 760,162 1,926,388
Michael J. Fitzpatrick 75,493 9.5 28.82 2/04/07 1,368,311 3,467,544
John K. Kelly 25,164 3.2 28.82 2/04/07 456,097 1,155,833
- -----------------------------
</TABLE>
* The option awards listed in this table were made upon shareholder approval of
the Incentive Plan on February 4, 1997.
(1) The amounts represent certain assumed rates of appreciation. Actual gains,
if any, on stock option exercises and Common Stock holdings are dependent on
the future performance of the Common Stock and overall stock market
conditions. There can be no assurance that the amounts reflected in this
table will be realized.
(2) Options granted pursuant to the Incentive Plan become exercisable in equal
installments at an annual rate of 20% beginning February 4, 1998; provided
however, options will be immediately exercisable in the event the optionee
terminates employment due to death or disability. In addition, on or after
July 2, 1997, the Board intends to amend the option awards to provide for
acceleration of the vesting of such awards upon a change in control of the
Company or the Bank (as defined in the Incentive Plan).
(3) The purchase price may be paid in cash or in Common Stock.
(4) Options include limited (SAR) rights pursuant to which the options may be
exercised in the event of a change in control of the Company. Upon exercise
of a limited right, the optionee would receive a cash payment equal to the
difference between the exercise price of the related option on the date of
the grant and the fair market value of the underlying shares of common stock
on the date the limited right is exercised.
(5) All options are intended to be Incentive Stock Options to the extent
permissible under Section 422 of the Code.
(6) The option term is ten years.
16
<PAGE>
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding options and the
values of such options held by the Named Executive Officers as of February 4,
1997.
FISCAL YEAR-END OPTION/SAR VALUES*
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTION/SARS AT
FISCAL YEAR END(#)* FISCAL YEAR END($)*
------------------------------- ------------------------------
NAME EXERCISABLE/UNEXERCISABLE(1) EXERCISABLE/UNEXERCISABLE(2)
- --------------------------- ------------------------------- ------------------------------
<S> <C> <C>
John R. Garbarino --/201,314 $--/$413,700
Michael E. Barrett --/41,940 --/86,187
Michael J. Fitzpatrick --/75,493 --/155,138
John K. Kelly --/25,164 --/51,712
</TABLE>
- ---------------------------
* The option awards listed in this table were made upon shareholder approval
of the Incentive Plan on February 4, 1997.
(1) The options in this table have an exercise price of $28.82.
(2) Based on the market value of the underlying Common Stock, $30.875, at March
14, 1997, minus the exercise price.
RETIREMENT PLAN. The Bank maintains a defined benefit plan (the "Retirement
Plan") for salaried employees who have attained the age of 21 and have completed
one year of service. Benefits vest after a participant is credited with five
years of service. The Retirement Plan is designed to comply with the
requirements under Section 401(a) of the Code.
Compensation under the Retirement Plan includes all regular pay, overtime
and regular bonuses as set forth under "Summary Compensation Table." The
benefits are not subject to any social security adjustment. About the time of
the conversion from mutual to stock form, the Board of Directors froze the
future accrual of benefits under the Retirement Plan in coordination with the
adoption or amendment of other qualified employee benefit plans. The benefit
amounts listed below were computed on a 10 year certain and continuous benefit
basis, which is the normal form under the plan. Participants of the plan,
however, have the option of electing benefits to be paid on a single life
annuity basis.
17
<PAGE>
The following table sets forth the estimated annual benefits payable
upon retirement at age 65 for the year ended December 31, 1996, expressed in the
form of a 10 year certain and continuous benefit, for the final average salary
and benefit service classifications specified.
<TABLE>
<CAPTION>
OCEAN FEDERAL SAVINGS BANK EMPLOYEE PENSION PLAN
--------------------------------------------------------------------------------------------
YEARS OF SERVICE
FINAL AVERAGE ----------------
COMPENSATION 15 20 25 30 35
---------------------- -------------- -------------- --------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
$ 50,000 $ 7,500 $10,000 $12,500 $15,000 $17,500
100,000 15,000 20,000 25,000 30,000 35,000
150,000 22,500 30,000 37,500 45,000 52,500
200,000 22,500 30,000 37,500 45,000 52,500
250,000 22,500 30,000 37,500 45,000 52,500
300,000 22,500 30,000 37,500 45,000 52,500
350,000 22,500 30,000 37,500 45,000 52,500
</TABLE>
The approximate credited years of service, as of December 31, 1996,
for the named executive officers are as follows:
<TABLE>
<CAPTION>
NAME SERVICE
---- -------
<S> <C>
John R. Garbarino....................................................... 24
Michael E. Barrett...................................................... 8
Michael J. Fitzpatrick.................................................. 3
John K. Kelly .......................................................... 8
</TABLE>
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. In 1996, the Bank implemented
a non-qualified Supplemental Executive Retirement Plan ("SERP") to provide a
select group of management and highly compensated employees with additional
retirement benefits. The benefits provided under the SERP make up the difference
between an amount up to 70% of final base compensation and the benefits provided
from Bank funding of the Bank's tax qualified retirement plans and 401(k) Plan.
The amounts contributed for the pension plan and 401(k) plan are tied together.
In addition, the SERP provides a benefit equal to the benefits lost from the
ESOP due to the application of limitations imposed by the Code, as amended, on
compensation and maximum benefits under the ESOP.
The Bank established an irrevocable trust in connection with the
SERP. This trust is funded with contributions from the Bank for the purpose of
providing the benefits promised under the terms of the SERP. The assets of the
trust are beneficially owned by the SERP participants, who recognize income as
contributions are made to the trust. Earnings on the trust's assets are taxable
to the participants. The 1995 and 1996 combined amounts contributed under the
SERP (exclusive of the ESOP benefits) for Messrs. Garbarino, Barrett,
Fitzpatrick and Kelly were $104,037, $44,072, $22,886, and $21,563,
respectively.
18
<PAGE>
TRANSACTIONS WITH CERTAIN RELATED PERSONS
All loans made by the Bank to its directors and executive officers
are made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectibility or
present other unfavorable features. In January 1997, the Bank determined to
offer loans to executive officers on terms not available to the public but
available to other full-time employees, in accordance with recently modified
federal regulations. Under the Bank's existing policy, any loan to an executive
officer or director, must be approved, in advance, by a majority of the
disinterested members of the Board of Directors.
PROPOSAL 2. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended
December 31, 1996 were KPMG Peat Marwick LLP. The Company's Board of Directors
has reappointed KPMG Peat Marwick LLP to continue as independent auditors for
the Bank and the Company for the year ending December 31, 1997, subject to
ratification of such appointment by the shareholders.
Representatives of KPMG Peat Marwick LLP will be present at the
Annual Meeting. They will be given an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions from
shareholders present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY CARD WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE
COMPANY.
19
<PAGE>
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement
and form of proxy relating to the 1998 Annual Meeting of Shareholders, a
shareholder proposal must be received by the Secretary of the Company at the
address set forth on the Notice of Annual Meeting of Shareholders not later than
November 20, 1997. Any such proposal will be subject to 17 C.F.R. ss. 240.14a-8
of the Rules and Regulations under the Exchange Act.
NOTICE OF BUSINESS TO BE CONDUCTED AT A SPECIAL OR ANNUAL MEETING
The Bylaws of the Company set forth the procedures by which a
shareholder may properly bring business before a meeting of shareholders.
Pursuant to the Bylaws, only business brought by or at the direction of the
Board of Directors may be conducted at a special meeting. The Bylaws of the
Company provide an advance notice procedure for a shareholder to properly bring
business before an annual meeting. The shareholder must give written advance
notice to the Secretary of the Company not less than ninety (90) days before the
date originally fixed for such meeting; provided, however, that in the event
that less than one hundred (100) days notice or prior public disclosure of the
date of the meeting is given or made to shareholders, notice by the shareholder
to be timely must be received not later than the close of business on the tenth
day following the date on which the Company's notice to shareholders of the
annual meeting date was mailed or such public disclosure was made. The advance
notice by shareholders must include the shareholder's name and address, as they
appear on the Company's record of shareholders, a brief description of the
proposed business, the reason for conducting such business at the annual
meeting, the class and number of shares of the Company's capital stock that are
beneficially owned by such shareholder and any material interest of such
shareholder in the proposed business. In the case of nominations to the Board of
Directors, certain information regarding the nominee must be provided. Nothing
in this paragraph shall be deemed to require the Company to include in its proxy
statement or the proxy relating to any annual meeting any shareholder proposal
which does not meet all of the requirements for inclusion established by the SEC
in effect at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented
for consideration at the Annual Meeting other than as stated in the Notice of
Annual Meeting of Shareholders. If, however, other matters are properly brought
before the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Whether or not you intend to be present at the Annual Meeting, you
are urged to return your proxy card promptly. If you are then present at the
Annual Meeting and wish to
20
<PAGE>
vote your shares in person, your original proxy may be revoked by voting at the
Annual Meeting. However, if you are a shareholder whose shares are not
registered in your own name, you will need appropriate documentation from your
recordholder to vote personally at the Annual Meeting.
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, AS FILED WITH THE SEC WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO LYNN RHOADS, OCEAN FINANCIAL
CORP., 975 HOOPER AVENUE, TOMS RIVER, NEW JERSEY 08754-2009.
By Order of the Board of Directors
/s/ John K. Kelly
John K. Kelly
Corporate Secretary
Toms River, New Jersey
March 20, 1997
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
21
<PAGE>
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REVOCABLE PROXY
OCEAN FINANCIAL CORP.
ANNUAL MEETING OF STOCKHOLDERS
April 24, 1997
10:00 a.m.
-------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the Proxy Committee of the Board of Ocean
Financial Corp. (the "Company"), each with full power of substitution to act as
attorneys and proxies for the undersigned, and to vote all shares of Common
Stock of the Company which the undersigned is entitled to vote only at the
Annual Meeting of Stockholders, to be held at the Crystal Point Yacht Club, 3900
River Road at the Intersection of State Highway 70, Point Pleasant, New Jersey
on April 24, 1997, at 10:00 a.m. and at any and all adjournments thereof.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" EACH OF THE NOMINEES
AS DIRECTORS SPECIFIED UNDER PROPOSAL 1 AND "FOR" PROPOSAL 2. IF ANY OTHER
BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS
KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
(Continued and to be signed on other side.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES
AS DIRECTORS SPECIFIED UNDER PROPOSAL 1 AND "FOR" PROPOSAL 2, THE
RATIFICATION OF ACCOUNTANTS.
FOR
ALL NOMINEES VOTE WITHHELD
1. Election of [_] [_] Nominees: Carl Feltz, Jr.
Directors (except Robert E. Knemoller
as marked to the Diane F. Rhine
contrary below)
INSTRUCTION: To withhold your vote for any individual nominee, write that
nominee's name on the space provided.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. The ratification of the appointment of [_] [_] [_]
KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year
ending December 31, 1997.
The undersigned acknowledges receipt from the Company prior to the execution
of this proxy of a Notice of Annual Meeting and of a Proxy Statement dated
March 20, 1997.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
Signature: Dated
------------------------------------------- -------------
NOTE: Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your
full title. If shares are held jointly, each holder may sign but only
one signature is required.
- --------------------------------------------------------------------------------
