[YONKERS FINANCIAL CORPORATION LETTERHEAD]
January 8, 1998
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of Yonkers Financial
Corporation (the "Company"), I cordially invite you to attend the Annual Meeting
of Stockholders. The meeting will be held at 4:30 p.m. on January 28, 1998 at
the downtown office of The Yonkers Savings and Loan Association, FA, located at
One Manor House Square, Yonkers, New York.
An important aspect of the meeting process is the stockholder vote on
corporate business items. I urge you to exercise your rights as a stockholder to
vote and participate in this process. Stockholders are being asked to consider
and vote upon the proposals to elect two directors and ratify the appointment of
the Company's independent auditors. The Board of Directors has carefully
considered both of these proposals and unanimously recommends that you vote
"For" both of the proposals.
In addition to the annual stockholder vote on corporate business items,
the meeting will include management's report to you on Yonkers Financial
Corporation's 1997 financial and operating performance.
I encourage you to attend the meeting in person. Whether or not you
attend the meeting, however, please read the enclosed Proxy Statement and then
complete, sign and date the enclosed proxy card and return it in the postage
prepaid envelope provided as promptly as possible. This will save the Company
additional expense in soliciting proxies and will ensure that your shares are
represented. Please note that you may vote in person at the meeting even if you
have previously returned the proxy.
Thank you for your attention to this important matter.
Sincerely,
Richard F. Komosinski
President and Chief Executive Officer
<PAGE>
YONKERS FINANCIAL CORPORATION
6 Executive Plaza
Yonkers, New York 10701
(914) 965-2500
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on January 28, 1998
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Yonkers Financial Corporation (the "Company") will be held at The
Yonkers Savings and Loan Association, FA, located at One Manor House Square,
Yonkers, New York, at 4:30 p.m., Yonkers, New York, time, on January 28, 1998.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of KPMG Peat Marwick LLP
as the independent auditors of the Company for the fiscal year
ending September 30, 1998;
and such other matters as may properly come before the Meeting, or any
adjournments thereof. The Board of Directors is not aware of any other business
to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on December 22, 1997
are the stockholders entitled to vote at the Meeting and any adjournments
thereof. A complete list of stockholders entitled to vote at the Meeting will be
available for inspection by stockholders at the offices of the Company during
the ten days prior to the Meeting, as well as at the Meeting.
You are requested to complete and sign the enclosed form of proxy,
which is solicited on behalf of the Board of Directors, and to mail it promptly
in the enclosed envelope. The proxy will not be used if you attend and vote at
the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
William G. Bachop
Chairman of the Board
Yonkers, New York
January 8, 1998
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED WITHIN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
YONKERS FINANCIAL CORPORATION
6 Executive Plaza
Yonkers, New York 10701
(914) 965-2500
ANNUAL MEETING OF STOCKHOLDERS
January 28, 1998
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of Yonkers Financial Corporation (the
"Company"), the parent company of The Yonkers Savings and Loan Association, FA
("Yonkers Savings" or the "Association"), of proxies to be used at the Annual
Meeting of Stockholders of the Company (the "Meeting") which will be held at the
Association, located at One Manor House Square, Yonkers, New York, on January
28, 1998 at 4:30 p.m., Yonkers, New York, time, and all adjournments of the
Meeting. The accompanying Notice of Annual Meeting and this Proxy Statement are
first being mailed to stockholders on or about January 8, 1998.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon the election of two directors and the appointment of KPMG Peat
Marwick LLP as independent auditors for the Company.
Vote Required and Proxy Information
All shares of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting, and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the proposals set forth
in this Proxy Statement. The Company does not know of any matters, other than as
described in the Notice of Annual Meeting, that are to come before the Meeting.
If any other matters are properly presented at the Meeting for action, the
persons named in the enclosed form of proxy and acting thereunder will have the
discretion to vote on such matters in accordance with their best judgment.
The directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. The ratification of the appointment of KPMG Peat Marwick
LLP as independent auditors requires the affirmative vote of a majority of
shares present in person or represented by proxy at the Meeting and entitled to
vote on the matter. Proxies marked to abstain with respect to this proposal have
the same effect as votes against the proposal. Broker non-votes have no effect
on the vote. One-third of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
A proxy given pursuant to the solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Joseph L.
Macchia, Secretary, Yonkers Financial Corporation, 6 Executive Plaza, Yonkers,
New York 10701.
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on December 22, 1997
will be entitled to one vote for each share of Common Stock then held. As of
that date, the Company had 3,020,763 shares of Common Stock issued and
outstanding. The following table sets forth information regarding share
ownership of those persons or entities known by management to beneficially own
more than five percent of the Common Stock and all directors and executive
officers of the Company and the Association as a group.
1
<PAGE>
<TABLE>
<CAPTION>
Shares
Beneficially
Owned at Percent
Beneficial Owner December 22, 1997 of Class
- ---------------------------------------------------------------- ----------------- --------
Five Percent Beneficial Owners
- ------------------------------
<S> <C> <C>
Yonkers Financial Corporation Employee Stock Ownership Plan(1)
6 Executive Plaza
Yonkers, New York 10701 285,660 9.46%
Directors and Named Officers(2)(3)
- ----------------------------------
William G. Bachop, Chairman of the Board 25,427(5) .84
P. Anthony Sarubbi, Vice Chairman of the Board 23,714 .79
Donald R. Angelilli, Director 14,714 .49
Richard F. Komosinski, Director and President 43,437(6) 1.44
Charles D. Lohrfink, Director 18,412 .61
Michael J. Martin, Director 5,143 .17
Eben T. Walker, Director 14,961 .50
Directors and executive officers of the Company
and the Association, as a group (12 persons)(4) 209,342 6.93%
</TABLE>
(1) The amount reported represents shares held by the Employee Stock Ownership
Plan ("ESOP"), of which 42,849 shares have been allocated to accounts of
participants. Community Bank, N.A., the trustee of the ESOP, may be deemed
to beneficially own the shares held by the ESOP which have not been
allocated to accounts of participants. Participants in the ESOP are
entitled to instruct the trustee as to the voting of shares allocated to
their accounts under the ESOP. Unallocated shares held in the ESOP's
suspense account or allocated shares for which no voting instructions are
received are voted by the trustee in the same proportion as allocated
shares voted by participants.
(2) Amount includes shares held directly, shares held jointly with family
members, shares held in retirement accounts, shares held in a fiduciary
capacity or by certain family members, with respect to which shares the
group members may be deemed to have sole voting and/or investment power.
The amount also includes awards of 20,288 vested shares of restricted stock
under the Company's 1996 Management Recognition Plan ("MRP") and 52,995
vested options under the Company's 1996 Stock Option and Incentive Plan
("Stock Option Plan").
(3) The address of each Director and Named Officer is the same as that of the
Company.
(4) Includes 28,508 shares held by two directors emeriti of the Association.
(5) Includes 10,000 shares held by spouse.
(6) Includes 5,499 shares held by the 401(k) Plan and 1,812 shares held by
spouse.
PROPOSAL I - ELECTION OF DIRECTORS
The Company's Board of Directors is presently composed of seven
members, each of whom is also a director of the Association. Directors of the
Company are generally elected to serve for a three-year term or until their
respective successors shall have been elected and shall qualify. One-third of
the directors are elected annually.
The following table sets forth certain information regarding the Board
of Directors of the Company and the Association, including their terms of office
and the nominees for election as director. It is intended that the proxies
solicited on behalf of the Board of Directors (other than proxies in which the
vote is withheld as to the nominee) will be voted at the Meeting for the
election of the nominees identified in the following table. If a nominee is
unable to serve, the shares represented by all such proxies will be voted for
the election of such substitute as the Board of Directors may recommend. At this
time, the Board of Directors knows of no reason why the nominees might be unable
to serve, if elected. Except as described herein, there are no arrangements or
understandings between any director or nominee and any other person pursuant to
which such director or nominee was selected.
2
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Term Stock Beneficially Percent
to Owned at of
Name Age Position(s) Held Director Since(1) Expire December 22, 1997(2) Class
- ------------------------- ------- ----------------------------- ------------------ --------- -------------------- --------
NOMINEES
--------
<S> <C> <C> <C> <C> <C> <C>
P. Anthony Sarubbi 71 Vice Chairman of the Board 1985 2001 23,714 .79%
Charles D. Lohrfink 69 Director 1985 2001 18,412 .61
DIRECTORS CONTINUING IN OFFICE
------------------------------
William G. Bachop 69 Chairman of the Board 1982 2000 25,427 .84
Donald R. Angelilli 59 Director 1982 2000 14,714 .49
Eben T. Walker 49 Director 1994 2000 14,961 .50
Richard F. Komosinski 55 Director, President and CEO 1977 1999 43,437 1.44
Michael J. Martin 43 Director 1992 1999 5,143 .17
</TABLE>
(1) Includes service as a director of the Association.
(2) Includes shares held directly, as well as shares held in retirement
accounts, shares allocated to the ESOP accounts of certain of the named
persons, shares held by certain members of the named individuals' families,
or shares held by trusts of which the named individual is a trustee or
substantial beneficiary, with respect to which shares the named individuals
may be deemed to have sole voting and/or investment power. The amount also
includes awards of 12,858 vested shares of restricted stock under the
Company's MRP and 38,566 vested options under the Company's Stock Option
Plan.
The business experience of each director and director nominee is set
forth below. All directors have held their present positions for at least the
past five years, except as otherwise indicated.
P. Anthony Sarubbi. Mr. Sarubbi is a consulting engineer and President
of P. Anthony Sarubbi, Inc., a general contracting company located in Mt.
Vernon, New York. He has held his present position for 13 years.
Charles D. Lohrfink. Mr. Lohrfink is currently retired. Prior to his
retirement in 1990, he was Public Affairs Director for Consolidated Edison
located in New York, New York for 15 years and employed by Consolidated Edison
for 43 years.
William G. Bachop. Mr. Bachop is currently retired. Prior to his
retirement in May 1992, he was a professional engineer and President of Herbert
G. Martin, Inc., an electrical contracting company located in Yonkers, New York,
for 43 years.
Donald R. Angelilli. Mr. Angelilli is a real estate broker employed by
Prudential Ragette located in Eastchester, New York since 1992. Prior to such
time, he was employed as a building contractor and Vice President of Frank
Angelilli Construction Company.
Eben T. Walker. Mr. Walker is President of Graphite Metallizing
Corporation, a manufacturing company located in Yonkers, New York. Mr. Walker
has been employed by this company since 1979 and was promoted to his present
position in 1985.
Richard F. Komosinski. Mr. Komosinski is President and Chief Executive
Officer of the Association and the Company, positions he has held since 1977 and
1995, respectively. Mr. Komosinski has been employed by the
3
<PAGE>
Association since 1960 and has held a variety of positions. As the Association's
Chief Executive Officer, Mr. Komosinski is responsible for all aspects of the
Association's operations.
Michael J. Martin. Mr. Martin is Vice President of Herbert G. Martin,
Inc., an electrical contracting company located in Yonkers, New York. He has
been employed by this company for 12 years and was promoted to his present
position in 1986.
Board of Directors' Meetings and Committees
Board and Committee Meetings of the Company. Meetings of the Company's
Board of Directors are generally held on a quarterly basis. The Board of
Directors of the Company held six meetings during fiscal 1997. No incumbent
director attended fewer than 75% of the total number of meetings held by the
Board of Directors and by all committees of the Board of Directors on which he
served during the fiscal year.
The Board of Directors of the Company has standing executive, audit,
compensation and nominating committees.
The Executive Committee generally acts in lieu of the full Board of
Directors between Board meetings. The members of this Committee are Directors
Komosinski (Chairman), Angelilli, Bachop, Lohrfink and Sarubbi. This Committee
did not meet during fiscal 1997.
The Audit Committee reviews audit reports and related matters to ensure
effective compliance with regulations and internal policies and procedures. This
committee also acts as a liaison between the Company's internal and external
auditors and the Board. Directors Angelilli (Chairman), Lohrfink, Sarubbi,
Martin and Walker currently comprise this committee. The committee did not meet
during fiscal 1997.
The Company has established a Compensation Committee to review and
approve all executive officers' compensation plans. The current members of this
Committee are Directors Bachop (Chairman), Lohrfink, Sarubbi and Martin. The
committee met four times during fiscal 1997.
The Nominating Committee meets annually in order to nominate candidates
for membership on the Board of Directors. This committee is comprised of
Directors Komosinski (Chairman), Martin and Walker. While the Board of Directors
will consider nominees recommended by stockholders, the Committee has not
actively solicited such nominations. Pursuant to the Company's Bylaws,
nominations by stockholders must be delivered in writing to the Secretary of the
Company at least 30 days before the date of the Meeting.
Board and Committee Meetings of the Association. The Association's
Board of Directors meets monthly and may have additional special meetings upon
the request of the Chairman or at least three Directors. The Board of Directors
met 13 times during the fiscal year ended September 30, 1997. During the fiscal
year, no director of the Association attended fewer than 75% of the aggregate of
the total number of Board meetings and the total number of meetings held by the
committees of the Board of Directors on which he served.
The Association has standing Executive, Business Development and
Building, Examining, New Directors and Compensation Committees.
The Executive Committee is comprised of Directors Komosinski
(Chairman), Angelilli, Bachop, Sarubbi and Lohrfink. The Executive Committee
meets on an as-needed basis between Board meetings and generally has the
authority of the full Board. The Executive Committee met 19 times during fiscal
1997.
The Business Development and Building Committee meets as needed to
review the Association's business strategies and strategic planning alternatives
and makes recommendations to the full Board. Members of this committee include
Directors Lohrfink (Chairman), Angelilli, Martin, Sarubbi and Komosinski. The
committee met four times during fiscal 1997.
4
<PAGE>
The Examining Committee, comprised of Directors Angelilli (Chairman),
Lohrfink, Martin, Sarubbi and Walker, meets quarterly with the Association's
internal auditor to oversee and monitor the Association's internal auditing
function. This committee also meets periodically with the Association's external
auditors. This committee met five times during fiscal 1997.
The New Directors Committee meets on an as-needed basis to select
candidates to fill vacancies on the Association's Board of Directors. During
fiscal 1997, the New Directors Committee was comprised of Directors Bachop
(Chairman), Angelilli, Walker, Komosinski, Lohrfink and Martin. This committee
did not meet during fiscal 1997.
The Compensation Committee is responsible for reviewing and making
recommendations to the Board regarding all benefits, personnel policies and
compensation issues. The current members of the Compensation Committee are
Directors Bachop (Chairman), Lohrfink, Martin, Sarubbi and Komosinski. This
committee met six times during fiscal 1997.
Director Compensation
In fiscal 1997, each of the directors, other than the Chairman and the
Vice Chairman, received a fee of $750 per meeting attended as compensation for
service on the Board of the Association. The Chairman and Vice Chairman of the
Board of the Association received $800 and $775, respectively, for Board
meetings attended. Also, all non-employee members of the Board received an
additional $275 for each committee meeting attended and committee Chairmen
received $300 per committee meeting attended.
Executive Compensation
The Company has not paid any compensation to its executive officers
since its formation. The Company does not presently anticipate paying any
compensation to such persons until it becomes actively involved in the operation
or acquisition of businesses other than the Association.
The following table sets forth information concerning the compensation
for services in all capacities to the Company for the fiscal year ended
September 30, 1997 to Richard F. Komosinski, the Company's Chief Executive
Officer, the Company's only executive officer whose aggregate compensation
exceeded $100,000 during any reported fiscal period.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
--------------------------------------
Annual Compensation Awards
----------------------------- --------------------------------------
Restricted Securities
Other Annual Stock Underlying All Other
Salary Bonus Compensation Award(s) Options/ Compensation
Name and Principal Position Year ($) ($) ($) ($) SARs(#) ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard F. Komosinski, President, Chief 1997 $156,954(1) $16,360 (4) $ -- --- $1,539(7)
Executive Officer and Director 1996 $147,051(2) $18,083 (4) $459,728(5) 85,698(6) $3,571(8)
1995 $128,441(3) $ 8,085 (4) $ -- --- $3,382(9)
</TABLE>
(1) Includes directors fees of $13,500 paid to Mr. Komosinski.
(2) Includes directors fees of $11,600 paid to Mr. Komosinski.
(3) Includes directors fees of $9,300 paid to Mr. Komosinski.
(4) Pursuant to SEC rules, the table above excludes perquisites and other
personal benefits which do not exceed the lesser of $50,000 or 10% of
salary and bonus.
(5) Pursuant to the MRP, on October 30, 1996 the Company granted to Mr.
Komosinski an award of 35,707 shares of restricted common stock with a
market price on the date of grant of $12.875 per share. As of December 22,
1997, the 28,566 unvested restricted shares of common stock awarded Mr.
Komosinski under the MRP had an aggregate value of $542,754 based on the
closing price of $19.00 per share as reported on the Nasdaq National Market
on such date. The unvested restricted stock vest in four equal installments
beginning on October 30, 1998.
(6) Pursuant to the Stock Option Plan, on October 30, 1996 the Company granted
to Mr. Komosinski options to purchase 85,698 shares of common stock at an
exercise price equal to the market value per share of the Common Stock on
the date of grant. Twenty percent of these stock options vested on October
30, 1997, the remaining 80% vest in four equal installments beginning on
October 30, 1998.
5
<PAGE>
(7) Includes the Association's contribution of $1,035 to the 401(k) Plan and
life insurance premiums paid by the Association of $504 on behalf of Mr.
Komosinski.
(8) Includes the Association's contribution of $3,067 to the 401(k) Plan and
life insurance premiums paid by the Association of $504 on behalf of Mr.
Komosinski.
(9) Includes the Association's contribution of $2,518 to the 401(k) Plan and
life insurance premiums paid by the Association of $864 on behalf of Mr.
Komosinski.
The following table provides information regarding stock options. No
stock appreciation rights were granted during fiscal 1997.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
====================================================================================================================================
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
- ------------------------------------------------------------------------------------------------------------------------------------
% of Total
Options Exercise
Options Granted to or Base
Granted Employees Price Expiration
Name (#) in Fiscal Year ($/Sh) Date 5% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Komosinski ............... 85,698 34.3% $ 12,875 10/30/07 $ 693,898 $1,758,474
====================================================================================================================================
</TABLE>
The following table provides information as to the value of the options
held by the Company's Chief Executive Officer during fiscal 1997, none of which
have been exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AT SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
====================================================================================================================================
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#)(1) FY-End ($)(2)
----------------------------------------------------------
Shares
Acquired on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Name (#) ($) (#) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard F. Komosinski ............... -- $ -- -- 85,698 $ -- $ 524,900
====================================================================================================================================
</TABLE>
- ----------
(1) Represents an option to purchase Common Stock awarded to the Company's
Chief Executive Officer. The option vests in five equal annual
installments. The first installment vested on October 30, 1997, and the
remaining installments to vest equally on October 30, 1998, 1999, 2000 and
2001.
(2) Represents the aggregate market value (market price of the Common Stock
less the exercise price) of the option granted based upon the closing price
of $19.00 per share of the Common Stock as reported on the Nasdaq National
Market on December 22, 1997.
<PAGE>
Employment Agreement
The Association entered into an employment agreement with Mr.
Komosinski effective April 18, 1996. The employment agreement is designed to
assist the Association in maintaining a stable and competent management team.
The continued success of the Association depends to a significant degree on the
skills and competence of its President and Chief Executive Officer. The
employment agreement provides for an annual base salary in an amount not less
than such individual's current salary and an initial term of three years. The
agreement provides that, on each anniversary of the effective date of the
agreement, the term of employment under the agreement shall be extended for a
period of one year in addition to the then-remaining term of employment,
provided that such extension is formally reviewed and approved by the Board of
Directors of the Association and provided that the Association has not given a
90-day notice that it will not extend the agreement. The agreement provides for
termination upon the employee's death, for cause or in certain events specified
by OTS regulations. The employment agreement is also terminable by the employee
upon 90 days' notice to the Association.
In the event Mr. Komosinski is involuntarily terminated within 12
months of a change in control, the employment agreement provides for payment to
Mr. Komosinski of a lump sum payment equal to 299% of his base compensation,
plus the maintenance of his health insurance for the remaining term of the
contract, in lieu of the payment of his salary. Such payment could have the
effect of deterring an attempt to acquire control of the Company by increasing
the acquiror's expenses if any acquisition occurs. The termination payment is
subject to reduction by the amount of all other compensation to Mr. Komosinski
deemed for purposes of the Internal Revenue Code of 1986, as amended (the
"Code") to be contingent on a "change in control," and may not exceed three
times the employee's average annual compensation over the most recent five-year
period or be non-deductible by the Association for federal income tax purposes.
For the purposes of the employment agreement, a "change in control" is defined
as any event which would require the filing of an application for acquisition of
control or notice of change in control pursuant to 12 C.F.R. ss. 574.3 or 574.4.
Such filings or notices are generally required prior to the acquisition of
control of 10% of the Company's Common Stock.
Based on his salary at September 30, 1997, if Mr. Komosinski had been
terminated as of such date, under circumstances entitling him to severance pay
as described above, he would have been entitled to receive a lump sum cash
payment of approximately $405,976.
Change in Control Severance Agreements
The Association entered into change in control severance agreements
with Vice Presidents Joseph L. Macchia, Joseph D. Roberto and Phillip A.
Guarnieri. Messrs. Machia's and Roberto's agreements became effective on April
18, 1996 and provides for an initial term of two years. Mr. Guarnieri's
agreement became effective on July 16, 1996 and provides for an initial term of
two years. Each agreement provides for extensions of one year, in addition to
the then-remaining term under the agreement, on each anniversary of the
effective date of the agreement, subject to the annual review and approval of
such extension by the Board of Directors of the Association. Each agreement
provides for termination for cause or upon the occurrence of certain events
specified by OTS regulations.
Each agreement provides for payment to the employee of 200% of the
employee's base compensation and the continued payment of health insurance
coverage in the event employment terminates involuntarily in connection with a
change in control of the Association. This termination payment is subject to
reduction by the amount of all other compensation to the employee deemed for
purposes of the Code to be contingent on a "change in control," and may not
exceed three times the employee's average annual compensation over the most
recent five-year period or be non-deductible by the Association for federal
income tax purposes. For the purposes of the agreements, a "change in control"
is defined to include any event which would require the filing of an application
for acquisition of control or
6
<PAGE>
notice of change in control pursuant to 12 C.F.R. ss. 574.3 or 574.4 any
successor regulation. Such events are generally triggered prior to the
acquisition of control of 10% of the Company's Common Stock.
Benefit Plans
General. Yonkers Savings currently provides health care benefits to its
employees, including hospitalization, major medical, life and disability
insurance, subject to certain deductibles and copayments by employees. The
Association also offers a cafeteria plan to its employees which enables
participating employees to defer up to $5,000 of each employee's annual salary
to cover, among other things, dental care, eye care expense, dependent care and
medical insurance premiums.
Defined Benefit Pension Plan. The Association sponsors a defined
benefit pension plan for its employees (the "Pension Plan"). Full-time salaried
employees are eligible to participate in the Pension Plan following the
completion of one year of service (1,000 hours worked during a continuous
12-month period) and attainment of 21 years of age. A participant must reach
five years of service before attaining a vested interest in his or her
retirement benefits, after which such participant is 100% vested. The Pension
Plan is funded solely through contributions made by Yonkers Savings. There was
no Pension Plan contribution for the 1997 plan year due to benefit adjustments
to the plan.
The benefit provided to a participant at normal retirement age
(generally age 65) is based on the average of the participant's basic annual
compensation during the five consecutive calendar years of service within which
yields the highest average compensation ("average annual compensation").
Compensation for this purpose is the participant's basic annual salary,
including any contributions through a salary reduction arrangement to a cash or
deferred plan under Section 401(k) of the Code and bonus. Effective January 1,
1997, the annual benefit provided to a participant who retires at age 65 is
equal to 1.25% of average annual compensation for each year of service subject
to offset of the participant's anticipated Social Security benefits. An
individual's annual benefit is limited to the lesser of 100% of his or her
annual average compensation or $125,000. The Pension Plan also provides for
death benefits.
The following table sets forth, as of September 30, 1997, estimated
annual pension benefits for individuals at age 65 payable in the form of a life
annuity under the most advantageous plan provisions for various levels of
compensation and years of service. The figures in this table are based upon the
assumption that the Pension Plan continues in its present form and reflects
offsets for social security and other retirement benefits and does not reflect
benefits payable under the ESOP. At September 30, 1997, the estimated years of
credited service of Mr. Komosinski was 34 years.
PENSION PLAN TABLE
Remuneration Years of Service
----------------------------------------------------------------
15 20 25 30 35
- --------------------------------------------------------------------------------
$100,000 $24,345 $32,460 $40,575 $48,690 $56,805
125,000 30,907 41,210 51,512 61,815 72,117
150,000 37,470 49,960 62,450 74,940 87,430
175,000 37,470 49,960 62,450 74,940 87,430
200,000 37,470 49,960 62,450 74,940 83,430
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Supplemental Executive Retirement Agreement. The Association has
entered into a non-qualified Supplemental Executive Retirement Agreement
("SERA") with President Komosinski which provides him with a supplemental
retirement benefit equal to what would have been provided to him under the
Pension Plan but for the limitations contained in Sections 401, 414 and 415 of
the Code. Such benefit shall be payable upon retirement in form of a lump sum
distribution. The SERA is presently unfunded and all obligations arising
thereunder are payable from the general assets of the Association.
The Association may establish an irrevocable grantor trust in
connection with the SERA. This trust would be funded with contributions from the
Association for the purpose of providing the benefits promised under the terms
of the SERA. Under such circumstances, the SERA participant would have only the
rights of an unsecured creditor with respect to the trust's assets, and would
not recognize income with respect to benefits provided by the SERA until such
benefits are received by the participant. The assets of the grantor trust would
be considered part of the general assets of the Association and would be subject
to the claims of the Association's creditors in the event of the Association's
insolvency. Earnings on the trust's assets would be taxable to the Association.
The trustee of the trust may invest the trust's assets in the Company's Common
Stock.
401(k) Savings Plan. The Association has a qualified, tax-exempt
savings plan with a cash or deferred feature qualifying under Section 401(k)
(the "401(k) Plan") of the Code. All full-time salaried employees who have
attained age 21 and completed one year of employment, during which they worked
at least 250 hours, are eligible to participate.
Participants are permitted to make salary reduction contributions to
the 401(k) Plan of up to 15.0% of the participant's annual salary up to a
maximum of $9,500 for calendar year 1997. During the first quarter of fiscal
1997, each participant's salary reduction contribution was matched by the
Association in an amount equal to up to 2% of the participant's compensation for
the plan year. There were no matching contributions for the remainder of 1997.
All participant contributions and earnings are fully and immediately vested. All
matching contributions are vested at a rate of 20% per year over a five-year
period beginning upon the completion of the second year of service. However, in
the event of normal retirement, permanent disability or death, a participant
will automatically become 100% vested in the value of all matching contributions
and earnings thereon.
The funds included in the 401(k) Plan are invested at the direction of
the participant into one of the investment options available under the 401(k)
Plan, which includes the Company's Common Stock. Changes in investment
directions among the funds are currently permitted on a quarterly basis pursuant
to procedures established by the Plan Administrator. Each participant receives a
quarterly statement which provides information regarding, among other things,
the market value of his investments and contributions made to the 401(k) Plan on
his behalf. Participants are permitted to borrow against their account balance
in the 401(k) Plan. The Association's contribution to the 401(k) Plan on behalf
of Mr. Komosinski, for the fiscal year ended September 30, 1997, was included in
the Summary Compensation Table.
Employee Stock Ownership Plan. The Boards of Directors of Yonkers
Savings and the Company approved the adoption of an ESOP for the benefit of
full-time employees of Yonkers Savings. The ESOP is designed to meet the
requirements of an employee stock ownership plan as described at Section
4975(e)(7) of the Code and Section 407(d)(6) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and, as such, the ESOP is empowered
to borrow in order to finance purchases of the Company's Common Stock.
The ESOP was funded with a loan from the Company. The proceeds from
this loan were used by the ESOP to purchase 8% of the Common Stock issued in the
Conversion. The interest rate paid on this loan is the Internal Revenue Service
("IRS") prescribed applicable federal rate at the time of origination. The ESOP
will repay the loan using periodic tax-deductible contributions from the
Association over a 10-year period. As a qualified employee pension plan under
Section 401(a) of the Code, the ESOP is in the form of a stock bonus plan and
provides for contributions, predominantly in the form of either the Company's
Common Stock or cash, which will be used within a reasonable period after the
date of contributions primarily to purchase the Company Common Stock. The
maximum tax-deductible contribution by the Association in any year is an amount
equal to the maximum amount that may be deducted by the Association under
Section 404 of the Code, subject to reduction based on contributions to other
tax-qualified employee plans. The Association receives a tax deduction equal to
the amount it contributes to the ESOP.
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<PAGE>
The Association will not make contributions if such contributions would cause
the Association to violate its regulatory capital requirements. The assets of
the ESOP are invested primarily in the Company's Common Stock.
From time to time, the ESOP may purchase additional shares of Common
Stock for the benefit of plan participants through purchases of outstanding
shares in the market, upon the original issuance of additional shares by the
Company or upon the sale of shares held in treasury by the Company. Such
purchases, which are not currently contemplated, would be subject to
then-applicable laws, regulations and market conditions.
All full-time salaried employees of the Association are eligible to
participate in the ESOP after they attain age 21 and complete one year of
service during which they work at least 1,000 hours. Employees are credited for
years of service to the Association prior to the adoption of the ESOP for
participation and vesting purposes. The Association's contribution to the ESOP
is allocated among participants on the basis of compensation. Each participant's
account is credited with cash and shares of Company Common Stock based upon
compensation earned during the year with respect to which the contribution is
made. A participant will become fully vested in his or her ESOP account after
completing five years of service. ESOP participants are entitled to receive
distributions from their ESOP accounts only upon termination of service.
Distribution will be made in cash and in whole shares of the Company's Common
Stock. Fractional shares will be paid in cash. Participants will not incur a tax
liability until a distribution is made.
Participating employees are entitled to instruct the trustee of the
ESOP as to how to vote the shares of Company Common Stock held in their account.
The trustee, who has dispositive power over the unallocated shares in the ESOP
trust fund, is not affiliated with the Company or Yonkers Savings. The ESOP may
be amended by the Board of Directors of the Company, except that no amendment
may be made which would reduce the interest of any participant in the ESOP trust
fund or divert any of the assets of the ESOP trust fund for purposes other than
the benefit of participants or their beneficiaries.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
The Company's Compensation Committee has responsibility for reviewing
the compensation policies and plans for the Association and its affiliates. The
policies and plans established are designed to enhance both short-term and
long-term operational performance of the Association and to build stockholder
value through appreciation in the Company's Common Stock price.
One of the Committee's primary objectives in the compensation area is
to develop and maintain compensation plans which provide the Association with
the means of attracting and retaining quality executives at competitive
compensation levels and to implement compensation plans which seek to motivate
executives to perform to the full extent of their abilities and which seek to
enhance stockholder value by aligning closely the financial interests of the
Company's executives with those of its stockholders. In determining compensation
levels, plans and adjustments, the Committee takes into account, among other
things, compensation reviews made by third parties each year. These studies are
used to compare the compensation levels of Association personnel to those of
personnel at other local financial institutions.
With respect to Mr. Komosinski's base salary in the fiscal year ended
September 30, 1997, the Committee took into account a comparison of salaries of
chief executive officers of local financial institutions. Likewise, each
executive officer's base salary was determined utilizing financial institution
compensation surveys. Mr. Komosinski's base salary for fiscal year 1997 was
increased from the level set by the Committee for fiscal year 1996 because it
was the judgment of the Committee that the competitive salary data indicated
that Mr. Komosinski's base salary was lower than appropriate. The Committee also
determined, based on the Association's success in strengthening its capital
ratios as well as continued progress in executing the Association's business
plan, the implementation of cost control measures and recognition of the
improvement in performance by the Association, to award Mr. Komosinski a cash
bonus of $16,360.
9
<PAGE>
In connection with the mutual to stock conversion, the Association and
the Company have added stock option and restricted stock awards as elements of
the overall compensation package. Equity-based compensation provides a long-term
alignment of interests and results achieved for stockholders with the
compensation rewards provided to executive officers by providing those
executives and others on whom the continued success of the Company most depends
with a proprietary interest in the Company. In 1996, a Stock Option and
Incentive Plan and a Management Recognition Plan were adopted providing for the
grant of several types of equity-based awards including stock option and
restricted stock awards. These plans were ratified by the Company's stockholders
on October 30, 1996.
Upon ratification on October 30, 1996, the Association's executive
officers were granted restricted stock and stock option awards, vesting over a
five-year schedule. In fiscal 1997, 5,000 shares of restricted stock were
awarded to Mr. Philip A. Guarnieri. There were no awards of additional stock
options to executive officers in fiscal 1997. Based upon the awards of
restricted stock and stock options and their respective vesting schedules, 7,141
shares of restricted stock and 17,139 stock options have become vested for Mr.
Komosinski on October 30, 1997.
Through the compensation programs described above, a significant
portion of the Association's executive compensation is linked directly to
individual and corporate performance. The Committee will continue to review all
elements of compensation to assure that the compensation objectives and plans
meet the Company's business objectives and philosophy of linking executive
compensation to stockholder interests of corporate performance as discussed
above.
In 1993, Congress amended the Internal Revenue Code to add Section
162(m) to limit the corporate deduction for compensation paid to a corporation's
five most highly compensated officers to $1.0 million per executive per year,
with certain exemptions. The Committee carefully reviewed the impact of this
legislation on the cost of the Association's current executive compensation
plans. Under the legislation and regulations adopted thereunder, it is not
expected that any portion of the Company's (or Association's) deduction for
employee remuneration will be non-deductible in fiscal 1997 or in future years
by reason of compensation awards granted. The Committee intends to review the
Company's (and Association's) executive compensation policies on an ongoing
basis, and propose appropriate modifications, if the Committee deems them
necessary, with a view toward avoiding or minimizing any disallowance of tax
deductions under Section 162(m).
The foregoing report is furnished by the Compensation Committee of the
Board of Directors:
William G. Bachop P. Anthony Sarubbi
Charles D. Lohrfink Michael J. Martin
Stockholder Return Performance Presentation
The following graph compares the cumulative total stockholder return on
the Company's Common Stock to the Nasdaq U.S. Stock Index (which includes all
Nasdaq traded stocks of U.S. companies) and a savings and loan industry index
for the period from April 18, 1996, the date the Company's Common Stock
commenced trading on the Nasdaq National Market, through September 30, 1997. The
graph assumes that $100 was invested on April 18, 1996 and that all dividends
were reinvested. On September 30, 1997, the closing sale price for the Company's
Common Stock on the Nasdaq National Market was $19.875 per share.
10
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[PERFORMANCE GRAPH OMITTED]
Transactions with Management and Indebtedness of Management
The Association has followed a policy of granting consumer loans and
loans secured by the borrower's personal residence to officers, directors and
employees. Loans to executive officers and directors are made in the ordinary
course of business, on substantially the same terms including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons, and do not involve more than the normal risk of collectibility or
present other unfavorable features. Loans to full-time employees secured by
their residence are made at discounted rates of 200 to 275 basis points above
the specified index utilized by the Association depending upon the employee's
length of service and position. Loans to directors must be approved by a
majority of the disinterested directors. Loans to an executive officer must be
approved by a majority of the Board of Directors. All loans made by the
Association to its directors and executive officers are subject to OTS
regulations restricting loan and other transactions with affiliated persons of
the Association. Federal law currently requires that all loans to directors and
executive officers, not made pursuant to a benefit or compensation program that
is widely available on a non-discriminatory basis to institution employees, be
made on terms and conditions comparable to those for similar transactions with
non-affiliates. Loans outstanding to all directors and executive officers and
their associates totaled $422,815 at September 30, 1997, which was 1.0% of the
Company's stockholders' equity. As of September 30, 1997, all such loans are
performing in accordance with their repayment terms.
Set forth below is certain information as to loans made by the
Association (prior to changes in federal law) to each of its directors and
executive officers at a preferential interest rate (generally 100 to 225 basis
points over the Association's cost of funds as adjusted on a quarterly basis)
pursuant to the Association's loan policy at the time such loans were made. Each
of the loans was made in the ordinary course of business and did not involve
more than the normal risk of collectibility. All of these loans are first
mortgage loans secured by the borrower's principal place of residence.
11
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<TABLE>
<CAPTION>
Largest
Amount
Date of Original Outstanding Balance at
Name and Position Loan Type of Loan Amount Since 10/1/96 09/30/97
- ----------------------------------------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
John S. Kulacz, Director Emeritus 12/82 Residence $ 60,000 $39,984 $37,537
Richard F. Komosinski, President, Chief Executive 09/85 Residence 60,000 43,316 42,266
Officer and Director
Joseph D. Roberto, Vice President, Treasurer and 05/86 Residence 55,000 46,004 44,727
Chief Financial Officer
Joseph L. Macchia, Vice President and Secretary 10/85 Residence 90,000 74,246 72,104
</TABLE>
In addition to the loans listed in the table above, the Association has
in the ordinary course of business made loans to its directors, executive
officers and members of their immediate families or affiliates thereof on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with unrelated parties. Such
loans did not involve more than the normal risk of collectibility or present
other unfavorable features, and had total outstanding balances of approximately
$226,181 at September 30, 1997, or .5% of the Company's stockholders' equity.
PROPOSAL II - RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed KPMG Peat Marwick
LLP, independent accountants, to be the Company's auditors for the fiscal year
ending September 30, 1998. Representatives of KPMG Peat Marwick LLP are expected
to attend the Meeting to respond to appropriate questions and to make a
statement if they so desire.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1998.
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next annual meeting of stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's executive office
located at 6 Executive Plaza, Yonkers, New York 10701, no later than September
1, 1998. Any such proposal shall be subject to the requirements of the proxy
rules adopted under the Securities Exchange Act of 1934 (the "Exchange Act").
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers, certain directors emeritus, and persons who own more than
10% of a registered class of the Company's equity securities, to file with the
SEC reports of ownership and reports of changes in ownership of common stock and
other equity securities of the Company. Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended September 30, 1997, all
12
<PAGE>
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10 percent beneficial owners were met, with the exception of
certain transactions in a nominal amount of the Company's stock made by a
partnership in which director emeritus John S. Kulacz had a beneficial ownership
interest. Mr. Kulacz has recently filed a Form 4 to reflect these transactions.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Association
may solicit proxies personally or by telegraph or telephone without additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
William G. Bachop
Chairman of the Board
Yonkers, New York
January 8, 1998
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