SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No._________________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
Preliminary Proxy Statement [X]
Confidential, for Use
of the Commission Only (as permitted by Rule 14a-6(e)(2)) [ ]
Definitive Proxy Statement [ ]
Definitive Additional Materials [ ]
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
STEWARDSHIP FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee require
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] Fee computed on table below per Exchange Act Rules 14(a)-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee Paid:
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
STEWARDSHIP FINANCIAL CORPORATION
630 Godwin Avenue
Midland Park, NJ 07432
April 18, 1997
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Stewardship Financial Corporation (the "Company"), the
holding company for Atlantic Stewardship Bank, to be held on May 12, 1997, at
7:00 P.M. at the main office of the Company, 630 Godwin Avenue, Midland Park, NJ
07432.
At the Annual Meeting stockholders will be asked to consider and vote upon
(1) the election of 11 directors; and (2) certain amendments to the Company's
Certificate of Incorporation to (a) classify the Board of Directors into three
classes; (b) prevent removal of directors by stockholders without cause; and (c)
require the affirmative vote of 80% of the outstanding common stock of the
Company (the "Common Stock") for approval of a merger, consolidation or
disposition of substantially all of the assets of the Company unless approved by
a majority of the directors and to further require the vote of 80% of the
outstanding Common Stock to amend this super-majority voting provision.
The Board of Directors of the Company believes that the matters to be
considered at the Annual Meeting are in the best interests of the Company and
its stockholders. For the reasons set forth in the Proxy Statement, the Board
unanimously recommends that you vote "FOR" each matter to be considered.
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. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE POSTAGE-PAID ENVELOPE PROVIDED,
SO THAT YOUR SHARES WILL BE REPRESENTED.
Very truly yours,
Edward Fylstra,
Secretary
<PAGE>
STEWARDSHIP FINANCIAL CORPORATION
630 Godwin Avenue
Midland Park, NJ 07432
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1997
----------
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Stewardship Financial Corporation (the "Company") will be held at
the main office of the Company, 630 Godwin Avenue, Midland Park, NJ 07432, on
May 12, 1997, at 7:00 P.M. for the purpose of considering and voting upon the
following matters:
1. The election of eleven (11) persons named in the accompanying Proxy
Statement to serve as directors of the Company.
2. Amendments to the Company's Certificate of Incorporation to:
(a) classify the Board of Directors into three classes;
(b) prevent removal of directors by stockholders without cause; and
(c) require the affirmative vote of 80% of the outstanding common
stock of the Company for approval of a merger, consolidation or
disposition of substantially all of the assets of the Company
unless approved by a majority of the directors and to further
require an affirmative vote of 80% of the outstanding common
stock to amend this super-majority voting provision.
3. Such other business as shall properly come before the Annual Meeting.
Stockholders of record at the close of business on March 31, 1997, are
entitled to notice of and to vote at the Annual Meeting. Whether or not you
contemplate attending the Annual Meeting, it is suggested that the enclosed
proxy be executed and returned to the Company. You may revoke your proxy at any
time prior to the exercise of the proxy by delivering to the Company a later
proxy or by delivering a written notice of revocation to the Company.
By Order of the Board of Directors
Edward Fylstra,
Secretary
April 18, 1997
IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY
<PAGE>
STEWARDSHIP FINANCIAL CORPORATION
630 Godwin Avenue
Midland Park, New Jersey 07432
----------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 12, 1997
----------
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to stockholders of Stewardship
Financial Corporation (the "Company") in connection with the solicitation by the
Board of Directors of proxies to be used at the annual meeting of stockholders
(the "Annual Meeting"), to be held on May 12, 1997, at 7:00 p.m., at the main
office of the Company, 630 Godwin Avenue, Midland Park, New Jersey 07432 and at
any adjournments thereof. The 1996 Annual Report to Stockholders, including
consolidated financial statements for the fiscal year ended December 31, 1996,
and a proxy card accompany this Proxy Statement, which is first being mailed to
record holders on or about April 18, 1997.
Regardless of the number of shares of common stock owned, it is important
that you vote by completing the enclosed proxy card and returning it signed and
dated in the enclosed postage-paid envelope. Stockholders 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 EACH OF THE NOMINEES FOR DIRECTOR
NAMED IN THIS PROXY STATEMENT AND "FOR" THE RATIFICATION OF EACH OF THE OTHER
SPECIFIC PROPOSALS PRESENTED IN THIS PROXY STATEMENT.
Other than the matters set forth on the attached Notice of Annual Meeting
of Stockholders, the Board of Directors knows of no additional matters that may
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 sending a
written notice of revocation to the Company, 630 Godwin Avenue, Midland Park,
New Jersey 07432, Attn: Ms. Ellie King. A proxy filed prior to the Annual
Meeting may be revoked by delivering to the Company a duly executed proxy
bearing a later date, or by attending the Annual Meeting and
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<PAGE>
voting in person. However, if you are a stockholder 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 the Board of Directors
will be borne by the Company. Proxies may also be solicited personally or by
mail or telephone by directors, officers and other employees of the Company and
Atlantic Stewardship Bank (the "Bank"), its wholly-owned subsidiary, 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, no par value, 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. There is no cumulative voting for the
election of directors.
The close of business on March 31, 1997, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders 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 463,055 shares.
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 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 matter being
presented 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 stockholder to vote "FOR" the election of the nominees
proposed by the Board of Directors, or to "WITHHOLD AUTHORITY" to vote for one
or more of the nominees being proposed. Under New Jersey law and the Company's
bylaws, directors are elected by a plurality of votes cast, without regard to
either broker non-votes, or proxies as to which authority to vote for one or
more of the nominees being proposed is withheld.
As to the matters being proposed for stockholder action set forth in
Proposal 2, the proxy card being provided by the Board of Directors enables a
stockholder to check the appropriate box on the proxy card to (i) vote "FOR" the
item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" from voting on such item.
Under New Jersey law, the affirmative vote of a majority of the votes cast at
the Annual Meeting, in person or by proxy, is required to approve
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<PAGE>
Proposal 2. Abstentions and broker non-votes do not count as votes cast under
New Jersey law, and so will have no effect.
PROPOSALS TO BE VOTED ON AT THE MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and its bylaws authorize a
minimum of five (5) and a maximum of twenty-five (25) directors but leave the
exact number to be fixed by resolution of the Board of Directors. The Board has
fixed the number of directors at eleven (11).
Directors will be elected to serve for a term of one year and until their
successors are duly elected and qualified; provided, however, that in the event
Proposal 2 is approved by the shareholders of the company, the term for each
director shall become the term set forth under Proposal 2 and until their
successors are then duly elected and qualified.
If, for any reason, any of the nominees become unavailable for election,
the proxy solicited by the Board of Directors will be voted for a substitute
nominee selected by the Board of Directors. The Board has no reason to believe
that any of the named nominees is not available or will not serve if elected.
UNLESS AUTHORITY TO VOTE FOR THE NOMINEE IS WITHHELD, IT IS INTENDED THAT THE
SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND RETURNED, WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES.
The following table sets forth the names of the nominees for election,
their ages, a brief description of their recent business experience, including
present occupations, and the year in which each became a director of the Company
or the Bank. No nominee is a director of another company registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
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<PAGE>
================================================================================
NAME, AGE AND PRINCIPAL OCCUPATION DIRECTOR
POSITION WITH COMPANY DURING PAST FIVE YEARS SINCE(1)
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William M. Almroth, 66, Retired; formerly Senior Vice 1993
Director President, Sony Music
Corporation
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Herman deWaal Malefyt, 63, President, Skyline 1986
Director Greenhouses, Inc.
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Harold Dyer, 69, Director Retired; formerly President, 1985
White Laundry, Inc.
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Edward Fylstra, CPA, 77, Managing Partner, Fylstra, 1985
Director and Secretary Wright & Co. (accountants)
- --------------------------------------------------------------------------------
William C. Hanse, Esq., 62, Partner, Hanse and Hanse, 1985
Director Attorneys at Law
- --------------------------------------------------------------------------------
Margo Lane, 46, Director Corporate Communications 1994
Manager, Garden State Paper,
and Corporate Secretary, Lane
Electric, Inc.
- --------------------------------------------------------------------------------
Arie Leegwater, 63, Director Owner, Arie Leegwater 1985
and Chairman of the Board Associates (contractor)
- --------------------------------------------------------------------------------
John L. Steen, 59, Director and President, Steen Sales, Inc. 1985
Vice Chairman of the Board (textiles); also, President,
Dutch Valley Throwing Co.,
Inc. (textiles)
- --------------------------------------------------------------------------------
Robert J. Turner, 56, Director President, The Turner Group 1985
(insurance)
- --------------------------------------------------------------------------------
William J. Vander Eems, 47, President, William Vander 1991
Director Eems, Inc. (contractor)
- --------------------------------------------------------------------------------
Paul Van Ostenbridge, 44, President and Chief Executive 1985
Director, President, and Chief Officer of the Bank
Executive Officer
================================================================================
- --------
(1) Includes prior service on the Board of Directors of the Bank.
-5-
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information concerning the beneficial
ownership of the Common Stock, no par value, as of February 28, 1997, by (i)
each person who is known by the Company to own beneficially more than five
percent (5%) of the issued and outstanding Common Stock, (ii) each director and
nominee for director of the Company, (iii) each executive officer of the Company
as described in this Proxy Statement under the caption "Executive Compensation"
and (iv) all directors and executive officers of the Company as a group. Other
than as set forth in this table, the Company is not aware of any individual or
group which holds in excess of 5% of the outstanding Common Stock. As a matter
of general policy, the Company will not sell additional shares to persons or
entities who own more than 5% of the Common Stock. This policy is not contained
in the Company's Certificate of Incorporation.
================================================================================
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) OF CLASS
- --------------------------------------------------------------------------------
William M. Almroth 22,179 (2) 4.82%
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Herman deWaal Malefyt 4,597 (3) 1.00%
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Harold Dyer 10,200 2.22%
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Edward Fylstra 3,168 (4) 0.69%
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William C. Hanse 10,368 (5) 2.25%
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Margo Lane 1,731 (6) 0.38%
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Arie Leegwater 3,734 (7) 0.81%
- --------------------------------------------------------------------------------
John L. Steen 9,362 2.03%
- --------------------------------------------------------------------------------
Robert J. Turner 8,977 (8) 1.95%
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William J. Vander Eems 11,245 (9) 2.44%
- --------------------------------------------------------------------------------
Paul Van Ostenbridge 1,868 0.41%
- --------------------------------------------------------------------------------
Principal Officer (1 person) 573 0.12%
------ ----
- --------------------------------------------------------------------------------
Directors and Principal Officer of 88,002 19.12%
the Bank as a group (12 persons)
================================================================================
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<PAGE>
- ----------
(1) Beneficially owned shares include shares over which the named person
exercises either sole or shared voting power or sole or shared investment
power. It also includes shares owned (i) by a spouse, minor children or by
relatives sharing the same home, (ii) by entities owned or controlled by
the named person, and (iii) by other persons if the named person has the
right to acquire such shares within 60 days by the exercise of any right or
option. Unless otherwise noted, all shares are owned of record and
beneficially by the named person, either directly or through the dividend
reinvestment plan.
(2) Includes 14,786 shares held by Mr. Almroth's spouse in her own name. Mr.
Almroth disclaims beneficial ownership of the shares held by his spouse.
(3) Includes 4,304 shares held by Mr. deWaal Malefyt's spouse in her own name.
Mr. deWaal Malefyt disclaims beneficial ownership of the shares held by his
spouse.
(4) Includes 1,056 shares held by Mr. Fylstra's spouse in her own name. Mr.
Fylstra disclaims beneficial ownership of the shares held by his spouse.
(5) Includes 6,324 shares held jointly by Mr. Hanse and his spouse and 1,036
shares held by Mr. Hanse's spouse in her own name. Mr. Hanse disclaims
beneficial ownership of the shares held by his spouse.
(6) Includes 1,056 shares held jointly by Mrs. Lane and her spouse. Mrs. Lane
disclaims beneficial ownership of shares owned by her spouse.
(7) Includes 1,555 shares held jointly by Mr. Leegwater and his spouse and
2,073 shares held by trusts of which Mr. Leegwater is the trustee. Mr.
Leegwater disclaims beneficial ownership of the shares owned by his spouse.
(8) Includes 2,112 shares held jointly by Mr. Turner and his spouse and 6,759
shares held by a company owned by Mr. Turner. Mr. Turner disclaims
beneficial ownership of shares owned by his wife.
(9) Includes 4,330 shares held by Mr. Vander Eems' spouse in her own name and
3,693 shares held by Mr. Vander Eems as custodian for his minor children.
Mr. Vander Eems disclaims beneficial ownership of his spouse's shares.
BOARD OF DIRECTORS' MEETINGS; COMMITTEES OF THE BOARD
The Board of Directors of the Company held twelve meetings during 1996. The
Board of Directors holds regularly scheduled meetings each month and special
meetings as circumstances require. All of the directors of the Company attended
at least 100% of the total number of Board meetings held and committee meetings
held during 1996.
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<PAGE>
AUDIT COMMITTEE. The Company and the Bank have a standing Audit Committee
of the Board of Directors. This committee arranges for the Bank's directors'
examinations through its independent certified public accountant, reviews and
evaluates the recommendations of the directors' examinations, receives all
reports of examination of the Company and the Bank by appropriate regulatory
agencies, analyzes such regulatory reports, and reports to the Board the results
of its analysis of the regulatory reports. This committee also receives reports
directly from the Company's internal auditor and recommends any action to be
taken in connection therewith. The Audit Committee met seven times during 1996.
The Audit Committee consisted during 1996 of Directors Dyer (Chairman), Almroth,
deWaal Malefyt, Leegwater, and Steen.
PERSONNEL COMMITTEE. The Company maintains a Personnel Committee which sets
the compensation for the executive officers of the Company. In 1996, the
Committee consisted of Directors Almroth (Chairman), Lane, Leegwater, Turner and
Van Ostenbridge and met five times.
NOMINATING COMMITTEE. The Company also maintains a Nominating Committee.
The Nominating Committee makes nominations for candidates to serve on the
Company's Board of Directors. In 1996, the Nominating Committee consisted of
Directors deWaal Malefyt (Chairman), Almroth and Vander Eems and met once.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Directors of the Company, other than full-time employees
of the Company, receive fees of $450 per Board meeting attended, with the
exception of Chairman Leegwater who receives $900 per meeting. Directors also
receive a fee of $25 per Committee meeting attended if such meeting lasts longer
than fifteen minutes.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS. The Company maintains the
Stewardship Financial Corporation 1995 Stock Option Plan for Non-Employee
Directors (the "Non-Employee Plan"). Under the Non-Employee Plan, 22,500 shares
of Common Stock have been reserved for issuance. Non-Employee Directors of the
Company, the Bank and any other subsidiaries which the Company may acquire or
incorporate will participate in the Non-Employee Plan. Each participant in the
Non-Employee Plan will automatically receive an option to purchase 2,045 shares
of Common Stock effective as of the date such participant commences his service
on the Board of Directors. No option may be exercised more than ten years after
the date of its grant. The purchase price of the shares of Common Stock subject
to options under the Non-Employee Plan will be 95% of the fair market value on
the date such option is granted.
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<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company maintains a Personnel Committee which oversees executive
compensation issues. The compensation payable to the Company's executive
officers is determined by the Board of Directors of the Company upon
recommendation of the Personnel Committee, without the participation of Mr. Van
Ostenbridge on any compensation matter related directly to him.
This report 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, or under the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
EXECUTIVE COMPENSATION POLICY
The Company's policy is to compensate its executives fairly and adequately
for the responsibility assumed by them for the success and direction of the
Company, the effort expended in discharging that responsibility and the results
achieved directly or indirectly from each executive's performance. "Fair and
adequate compensation" is established after careful review of:
1. The Company's earnings;
2. The Company's performance as compared to other companies of similar
size and market area; and
3. Comparison of what the market demands for compensation of similarly
situated and experienced executives.
Total compensation takes into consideration a mix of base salary, bonus,
perquisites and stock options. The particular mix is established in order to
competitively attract competent professionals, retain those professionals, and
reward extraordinary achievement.
The Board of Directors also considers net income for the year and earnings
per share of the Company before finalizing officer increases for the coming
year.
Based upon its current levels of compensation, the Company is not affected
by the new provisions of the Internal Revenue Code which limits the
deductibility to a company of compensation in excess of $1,000,000 paid to any
of its top five executives. Thus, the Company has no policy as to that subject.
BASE SALARY
The Board of Directors bears the responsibility for establishing base
salary.
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<PAGE>
Salary is minimum compensation for any particular position and is not tied
to any performance formula or standard. However, that is not to say that poor
performance will not result in termination. Acceptable performance is expected
of all executive officers as a minimum standard.
To establish salary, the following criteria are used:
1. Position description.
2. Direct responsibility assumed.
3. Comparative studies of peer group compensation. Special weight is
given to local factors as opposed to national averages.
4. Earnings performance of the Company resulting in availability of funds
for payment of salary expense.
5. Competitive level of salary to be maintained to attract and retain
qualified and experienced executives.
STOCK OPTIONS
Recommendations for stock option awards are made by the Personnel Committee
to the Stock Compensation Committee, which then makes recommendations to the
entire Board of Directors for final action.
The Personnel Committee meets to evaluate meritorious performance of all
officers and employees for consideration to receive stock options.
The Personnel Committee makes awards based upon the following criteria:
1. Position of the officer or employee in the Company.
2. The benefit which the Company has derived as a result of the efforts
of the award candidate under consideration.
3. The Company's desire to encourage long term employment of the award
candidate.
Perks, such as company automobiles and their related expenses, country club
memberships, auxiliary insurance benefits and other perks which the Board may
approve from
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<PAGE>
time to time are determined and awarded pursuant to evaluation under the same
criteria used to establish base salary.
CEO COMPENSATION
Paul Van Ostenbridge is President and Chief Executive Officer of the
Company and has been President and Chief Executive Officer of the Bank since its
inception. The Company has continued to make progress toward all of its goals
during Mr. Van Ostenbridge's tenure as President and Chief Executive Officer.
The total compensation to Mr. Van Ostenbridge in 1996 is an increase of
7.7% over his total 1995 compensation. In the Board's opinion, this increase
represents an appropriate amount in view of Mr. Van Ostenbridge's level of
personal performance in 1996, the results achieved by the Company and the Bank,
and compares favorably to other executives in the banking industry.
The Board believes that the total compensation for Mr. Van Ostenbridge
represents fair compensation in view of the 1996 performance of the Company and
the Bank as well as peer group comparisons.
In 1996, the Personnel Committee consisted of Directors Almroth, Lane,
Leegwater, Turner and Van Ostenbridge.
ANNUAL MANAGEMENT COMPENSATION AND ALL OTHER COMPENSATION
The following table sets forth a summary for the last three fiscal years of
the cash and non-cash compensation awarded to, earned by, or paid to, the Chief
Executive Officer of the Company. There are no other executive officers whose
individual remuneration exceeded $100,000 for the last fiscal year.
-11-
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
CASH AND CASH EQUIVALENT FORMS OF REMUNERATION
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
===============================================================================================================================
| | | Annual Compensation | |
| | |--------------------------------------|--------------------------------------------|
| | | | | Other | | |
| | | | | Annual | Award | Payouts |
| Name and Principal Position | Year | Salary | Bonus | Compensation |--------------|-----------------------------|
| | | ($) | ($) | ($)(1) | | | |
| | | | | | Securities | LTIP | All Other |
| | | | | | Underlying | Payouts | Compensation |
| | | | | | Options/ | ($)(3) | ($) |
| | | | | | SARs | | |
| | | | | | | | |
| | | | | | (#) | | |
|--------------------------------|--------|----------|------------|--------------|--------------|------------|----------------|
| Paul Van Ostenbridge, | 1996 | 140,000 | 13,112 | 18,593 | 0 | None | 0 |
| President and CEO |--------|----------|------------|--------------|--------------|------------|----------------|
| | 1995 | 130,000 | 10,250(2) | 13,843 | 0 | None | 0 |
| |--------|----------|------------|--------------|--------------|------------|----------------|
| | 1994 | 120,000 | 5,700(2) | 13,940 | 0 | None | 0 |
===============================================================================================================================
</TABLE>
- ----------
(1) Includes the imputed value of personal use of Company automobiles, life
insurance premiums and Company matching contributions to its 401(k) Plan.
(2) Includes the value of shares of Common Stock awarded as a bonus in 1996
(350 shares at a fair market value of $33.00 and 50 shares at a fair market
value of $31.25), and 250 shares of Common Stock and 100 shares of Common
Stock awarded as a bonus in 1995 and 1994 at fair market values of $25.00
and $17.25 per share, respectively.
(3) For fiscal year 1996, 1995 and 1994, the Company had no long-term incentive
plans in existence, and therefore made no payouts for awards under such
plans.
EMPLOYEE STOCK OPTION PLAN. The Company maintains the Stewardship Financial
Corporation 1995 Stock Option Plan (the "Employee Plan"). Under the Employee
Plan, 22,500 shares of Common Stock have been reserved for issuance. Employees
of the Company, the Bank and any subsidiaries which the Company may incorporate
or acquire are eligible to participate in the Employee Plan if such employees
have a title of at least vice president. The Personnel Committee manages the
Employee Plan and selects participants from the eligible employees. No option
granted under the Employee Plan may be exercised more than 10 years after the
date of its grant. The purchase price for shares of Common Stock subject to
options under the Plan may not be less than 100% of the fair market value on the
date such option is granted. No options were granted under the Employee Plan in
1996.
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<PAGE>
EMPLOYEE STOCK PURCHASE PLAN. The Company maintains the Stewardship
Financial Corporation 1995 Employee Stock Purchase Plan (the "Purchase Plan").
Under the Purchase Plan, 25,000 shares of Common Stock are reserved for
issuance. Shares acquired under the Purchase Plan may be obtained, at the
discretion of the Company, from the authorized but unissued shares of Common
Stock or from the open market. Employees of the Company, the Bank and any
subsidiaries which the Company may incorporate or acquire who work at least 20
hours per week are eligible to participate in the Purchase Plan. Shares are
purchased for participants through payroll deductions in a maximum amount of 10%
of a participant's total compensation per pay period. Eligible employees must
notify the Company of their participation in the Purchase Plan and the amount of
payroll deductions that will be applied to purchase shares for them. The funds
contributed by each participant are used to purchase shares of Common Stock at
95% of the fair market value.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
The Bank has made in the past and, assuming continued satisfaction of
generally applicable credit standards, expects to continue to make loans to
directors, executive officers and their associates (i.e. corporations or
organizations for which they serve as officers or directors or in which they
have beneficial ownership interests of ten percent or more). These loans have
all been made in the ordinary course of banking 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 collectability or present other unfavorable features.
The Company and the Bank retained the law firm of Hanse and Hanse as
general counsel in 1996 and expect to continue to retain Hanse and Hanse as
general counsel in 1997. Director William C. Hanse is a partner in the firm.
During 1996, the Company and the Bank paid fees of approximately $14,400 to
Hanse and Hanse.
The Bank purchases insurance through The Turner Group, an insurance
brokerage owned by Robert J. Turner, a director of the Company and the Bank. In
1996, the Bank paid insurance premiums of $77,250 to The Turner Group.
RECOMMENDATION AND VOTE REQUIRED
Nominees will be elected by a plurality of the shares voting at the Annual
Meeting. THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ITS
NOMINEES FOR THE BOARD OF DIRECTORS.
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PROPOSAL 2. APPROVAL OF AMENDMENTS TO
CERTIFICATE OF INCORPORATION ADOPTING
CERTAIN ANTI-TAKEOVER PROVISIONS
OVERVIEW OF THE AMENDMENTS.
The Board of Directors has unanimously approved and recommended that the
stockholders of the Company approve certain proposed amendments to the
Certificate of Incorporation (the "Amendments"). The Amendments are discussed in
detail below. In general, the Amendments provide for (i) a classified board of
directors; (ii) no removal of directors by stockholders without cause and (iii)
the affirmative vote of 80% of the outstanding shares of Common Stock to approve
a merger, consolidation or sale of substantially all of the Company's assets
unless such proposed transaction is approved by a majority of the Board of
Directors and that any amendment to this super-majority voting provision be
approved by 80% of the outstanding shares of Common Stock.
In forming the Bank, the members of the Board of Directors envisioned a
community-based institution which would serve the local communities surrounding
its branches, while also providing a return to its shareholders. This vision has
been reflected in the Bank's tithing policy, under which the Bank tithes 10% of
its pre-tax profits to worthy Christian and civic charities. The Board of
Directors has viewed with increasing concern the accelerating pace of
consolidation in the banking industry, especially within New Jersey, as local,
community-based institutions are purchased by multi-state bank holding
companies, frequently headquartered outside of New Jersey. The Board believes
that this consolidation and geographic dislocation have caused a reduction in
the commitment of these institutions to their local community. The Board has
also noted certain tactics employed by certain investors, including the
accumulation of substantial holdings of common stock and proxy fights designed
to force the Board of Directors to sell an institution, regardless of its long
term business plan and prospects or service to its communities. The Board
considers these tactics to be highly disruptive to a company, and considers the
aim of these tactics to require a Board of Directors to satisfy short term
investment objectives of certain investors while ignoring the long-term
prospects of the institution and the communities served by the institution. The
Amendments are being submitted for stockholder approval in response to these
activities.
A classified Board, together with the removal of directors only for cause
and super-majority voting, will, by making it more time-consuming for a
substantial stockholder or stockholders to gain control of the Board or the
Company without consent of the incumbent Board, ensure some continuity of
management of the business and affairs of the Company and provide the Board with
sufficient time to review any proposal from the substantial stockholders.
The Amendments are not being recommended in response to any specific effort
of which the Company is aware to accumulate the Common Stock or to obtain
control of the Company but rather are being recommended to assure fair treatment
of the Company's stockholders in
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takeover situations. The Board has no present intention of soliciting a
stockholder vote on any other proposals relating to a possible takeover of the
Company.
The Amendments are being presented to stockholders of the Company for their
approval as a single proposal. As more fully described below, the Board of
Directors believes that the Amendments will effectively reduce the possibility
that a third party could effect a sudden change in the majority control of the
Board of Directors without the support of the incumbent directors. However, the
Amendments may have significant effects on the ability of stockholders of the
Company to effect immediate changes in the composition of the Board of Directors
and otherwise to exercise their voting power to affect the composition of the
Board. Accordingly, stockholders are urged to read carefully the following
portions of this section of the Proxy Statement and the relevant portions of
Exhibit A hereto, which sets forth the full text of the Amendments, before
voting on the Amendments.
PURPOSE AND EFFECT OF THE AMENDMENTS.
The Amendments are designed to make it more time-consuming to change
majority control of the Board without its consent, and thus to reduce the
vulnerability of the Company to an unsolicited takeover proposal that does not
contemplate the acquisition of all of the outstanding Common Stock, or to an
unsolicited proposal for the restructuring or sale of all or part of the
Company. The Board believes that the Amendments will serve to encourage any
person intending to attempt such a takeover to negotiate with the Board, and
that the Board will therefore be better able to protect the interests of the
stockholders and other communities served by the Company.
The Board believes that if a third party acquired a significant or
controlling interest in the Common Stock, the purchaser's ability to remove the
entire Board without its consent would severely curtail the Company's ability to
negotiate effectively with the purchaser. The threat of removal would deprive
the Board of the time and information necessary to evaluate any takeover
proposal, to study alterative proposals, including whether the Company should
remain as an independent community orientated institution, and to help ensure
that the best price would be obtained in any transaction involving the Company
which might ultimately be undertaken. If the real purpose of the purchases was
to enable the purchaser to make or threaten a takeover bid to force the Company
to repurchase the purchaser's accumulated stock interest at a premium price, the
Company would face the risk that if it did not do so its business and management
would be disrupted, perhaps irreparably. Conversely, such a repurchase would
divert valuable corporate resources to the benefit of a single stockholder.
Takeovers or changes in the board of directors of a company which are
proposed and effected without prior consultation and negotiation with a company
are not necessarily detrimental to that company and its stockholders. However,
the Board feels that the benefits of seeking to protect the Company's ability to
negotiate with the proponent of an unfriendly or unsolicited proposal to effect
a partial takeover or restructure of the Company, through directors
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who have been previously elected by the stockholders as a whole and are familiar
with the Company, outweigh the disadvantages of discouraging such proposals.
The Amendments will make more difficult or discourage a proxy contest or
the assumption of control by the holder of a substantial block of the Common
Stock or the removal of the incumbent Board, and could thus increase the
likelihood that incumbent directors will retain their positions. The
classification of the Board pursuant to the Amendments will result in an
increase in the number of annual meetings necessary to effect a change in a
majority of the Board of Directors, whether or not a change in control of the
Company has occurred.
The Amendments could have the effect of discouraging a third party from
making a partial tender offer (including an offer at a substantial premium over
the then-prevailing market value of the Common Stock) or otherwise attempting to
obtain control of the Company, even though such an attempt might be beneficial
to the Company and its stockholders. In addition, since the Amendments are
designed to discourage accumulations of large blocks of the Common Stock by
purchasers whose objective is to have such Common Stock repurchased by the
Company at a premium, adoption of the Amendments could tend to reduce any
temporary fluctuations in the market price of the Common Stock which are caused
by such accumulations. Accordingly, stockholders could be deprived of certain
opportunities to sell their stock at a temporarily higher market price. The
Amendments may also discourage or make more difficult or expensive a proxy
contest or merger involving the Company or a tender offer, open market purchase
program or other purchases of Common Stock, which a majority of stockholders may
deem to be in their best interests or which may give stockholders the
opportunity to realize a premium over the prevailing market price of their
stock.
SUMMARY OF THE AMENDMENTS.
CLASSIFIED BOARD OF DIRECTORS. The Company's Bylaws currently provide that
directors are to be elected at each annual meeting. Neither the Company's Bylaws
nor its Certificate of Incorporation specify the term of service of directors.
New Jersey law provides that a corporation may provide in its certificate of
incorporation for the classification of directors based upon the time for which
each director shall hold office. The terms of classified directors may not be
shorter than one year or longer than five years under New Jersey law.
The proposed amendment to Article III of the Certificate of Incorporation
provides that directors will be classified into three classes, as nearly equal
in number as possible, with the term of office of one class expiring each year.
One class of directors, consisting of Directors Almroth, deWaal Malefyt, Dyer
and Fylstra, would hold office initially for a term expiring at the 1998 annual
meeting; a second class of directors, consisting of Directors Hanse, Lane,
Leegwater and Steen, would hold office initially for a term expiring at the 1999
annual meeting; and a third class of directors, consisting of Directors Turner,
Vander Eems and Van Ostenbridge, would hold office initially for a term expiring
at the 2000 annual meeting. At each annual meeting following this initial
classification and election, the successors to the class of
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directors whose terms expire at that meeting would be elected for a term of
office to expire at the third succeeding annual meeting after their election and
until their successors have been duly elected and qualified.
The proposed classified board amendment will significantly extend the time
required to effect a change in control of the Board of Directors and may
discourage hostile takeover bids for the Company. Currently, a change in control
of the Board of Directors can be made by stockholders holding a plurality of
votes cast at a single annual meeting. If the Company implements a classified
board of directors, it will take at least two annual meetings for a majority of
stockholders to make a change in control of the Board of Directors, because only
a minority of the directors will be elected at each meeting.
REMOVAL OF DIRECTORS FOR CAUSE. New Jersey law states that directors may be
removed without cause by an affirmative vote of a majority of stockholders
unless a corporation's certificate of incorporation provides otherwise. The
Company's Certificate of Incorporation currently does not prohibit stockholder
removal of directors without cause. The proposed amendment to Article III of the
Certificate of Incorporation would deny stockholders the right to remove a
director without cause. According to the amendment, stockholders may only vote
to remove a director for cause which is demonstrated if the director (i) is
convicted of a felony; (ii) is declared by court order to be of unsound mind and
(iii) has been shown by clear and convincing evidence to have acted in bad faith
to produce a gross abuse of trust.
One effect of the proposed amendment may be to make it more difficult for
holders of a majority of shares of Common Stock to remove directors, should they
deem it to be in their best interest to do so. In conjunction with the proposed
classified board amendment, this amendment should render more difficult, and may
discourage, an attempt to acquire control of the Company without the approval of
the Board and the Company's management. The proposed amendment will make it
impossible for someone who acquires voting control of the Company immediately to
remove the incumbent directors who may oppose such person and to replace them
with more friendly directors, and will instead require such a person to
demonstrate cause for removal of an incumbent director or replace incumbent
directors as their terms expire over a period of up to three years.
Stockholders should also recognize that this amendment will also make more
difficult the removal of a director in circumstances which do not constitute a
takeover attempt and where an ultimate change in the incumbent board might be
desired by a majority of stockholders without a showing of cause.
SUPER-MAJORITY VOTE FOR APPROVAL OF CERTAIN BUSINESS COMBINATIONS. New
Jersey law requires the affirmative vote of a majority of the shares entitled to
vote thereon for approval of a merger or consolidation. A corporation may
provide in its certificate of incorporation for greater voting requirements to
approve a merger or consolidation under New Jersey law. The proposed amendment
to Article IX of the Certificate of Incorporation requires the affirmative
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vote of 80% of the outstanding Common Stock entitled to vote thereon to approve
or authorize a merger, consolidation or disposition of all or substantially all
of the Company's assets.
The requirement for approval by 80% of the outstanding shares of Common
Stock does not apply, however, to any merger, consolidation or asset sale which
has been approved by a majority of directors prior to the vote of stockholders.
In that case, a simple majority vote would be required to approve such a
transaction.
The proposed amendment also requires the affirmative vote of 80% of the
outstanding shares of Common Stock to further amend Article IX of the
Certificate of Incorporation. The requirement of an increased stockholder vote
to repeal this amendment to Article IX will prevent a person holding or
controlling a majority, but less than 80%, of the outstanding shares of Common
Stock from avoiding the requirements of the proposed amendment by simply
repealing it.
RECOMMENDATION AND VOTE REQUIRED
In order for the Amendments to be approved, the affirmative vote of a
majority of the shares of Common Stock entitled to be cast at the Annual Meeting
is required.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" APPROVAL OF THE AUTHORIZED
STOCK AMENDMENT.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
AUTHORIZED STOCK AMENDMENT.
INDEPENDENT AUDITORS
The Audit Committee of the Board of Directors of the Company has
recommended to the Board that it retain the firm of KPMG Peat Marwick LLP
("Peat") to act as independent public accountants for the Company and the Bank
for the fiscal year ended 1997. Peat has acted as the Company's independent
public accountants for the year ended December 31, 1996.
Peat has advised the Company that one or more of its representatives will
be present at the Annual Meeting to make a statement if they so desire and to
respond to appropriate questions.
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COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than ten percent stockholders are required by
regulation of the Securities and Exchange Commission to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the fiscal year
ended December 31, 1996, all filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were met, other than
with respect to each of Messrs. Almroth, deWaal Malefyt, Dyer, Fylstra, Hanse,
Leegwater, Steen, Turner, Vander Eems and Van Ostenbridge and Mrs. Lane, each of
whom filed one notice of a change in beneficial ownership in connection with the
holding company reorganization several days late.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be included in the Company's 1998 proxy
material must be received by the Secretary of the Company no later than December
31, 1997.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the Annual Meeting. However, in the event such other matters come before
the meeting, it is the intention of the persons named in the proxy to vote on
any such matters in accordance with the recommendation of the Board of
Directors.
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EXHIBIT A
Article III of the Certificate of Incorporation of Stewardship Financial
Corporation, as amended, will read as follows:
ARTICLE III
INITIAL BOARD OF DIRECTORS AND NUMBER OF DIRECTORS
(a) The number of directors shall be governed by the By-laws of the
Corporation. The number of directors constituting the initial Board of Directors
shall be twelve (12). The names and addresses of the initial Board of Directors
are as follows:
William M. Almroth 630 Godwin Avenue
Midland Park, NJ 07432
Herman deWaal Malefyt 630 Godwin Avenue
Midland Park, NJ 07432
Harold Dyer 630 Godwin Avenue
Midland Park, NJ 07432
Edward Fylstra 630 Godwin Avenue
Midland Park, NJ 07432
William C. Hanse, Esq. 630 Godwin Avenue
Midland Park, NJ 07432
Margo Lane 630 Godwin Avenue
Midland Park, NJ 07432
Arie Leegwater 630 Godwin Avenue
Midland Park, NJ 07432
John L. Steen 630 Godwin Avenue
Midland Park, NJ 07432
Robert J. Turner 630 Godwin Avenue
Midland Park, NJ 07432
William J. Vander Eems 630 Godwin Avenue
Midland Park, NJ 07432
Paul Van Ostenbridge 630 Godwin Avenue
Midland Park, NJ 07432
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Clarence Wiegers 630 Godwin Avenue
Midland Park, NJ 07432
(b) The Board of Directors shall be divided into three (3) classes, as
nearly identical in number as the then total number of directors constituting
the entire board permits, with the term of office of one class expiring each
year. At the first annual meeting of stockholders, directors of the first class
shall be elected to hold office for a term expiring at the next succeeding
annual meeting, directors of the second class shall be elected to hold office
for a term expiring at the second succeeding annual meeting and directors of the
third class shall be elected to hold office for a term expiring at the third
succeeding annual meeting. Any vacancies in the Board of Directors for any
reason, and any directorships resulting from any increase in the number of
directors, may be filled by the Board of Directors, acting by a majority of the
directors then in office, although less than a quorum, and any directors so
chosen shall hold office until the next election of the class for which such
directors shall have been chosen and until their successors shall be elected and
qualified. At each annual meeting of stockholders the successors to the class of
directors whose term shall then expire shall be elected to hold office for a
term expiring at the third succeeding annual meeting.
(c) None of the present or future directors of the Corporation may be
removed without cause by the shareholders of the Corporation. The term "cause"
as used herein is defined to mean (i) conviction of the director of a felony,
(ii) declaration by order of a court that the director is of unsound mind; (iii)
gross abuse of trust which is proven by clear and convincing evidence to have
been committed in bad faith. The Board of Directors shall have the power to
remove directors and to suspend directors pending a final determination that
cause exists for removal.
A new Article IX of the Certificate of Incorporation of Stewardship
Financial Corporation will read as follows:
ARTICLE IX
CERTAIN REQUIRED VOTES OF SHAREHOLDERS
(a) No merger, consolidation, nor any action which would result in the
disposition of all or substantially all of the assets of the Corporation shall
be valid unless first approved by the affirmative vote, cast in person or by
proxy, of the holders of record of eighty percent (80%) of the outstanding
shares of the capital stock of the Corporation entitled to vote thereon;
provided, however, that if any such action has been approved prior to the vote
of shareholders by a majority of the Corporation's Board of Directors, the
affirmative vote of the holders of a majority of the outstanding shares of
capital stock then entitled to vote on such matters shall be required.
(b) This Article IX may not be amended except by the
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affirmative vote, cast in person or by proxy, of the holders of record of eighty
percent (80%) of the outstanding shares of the capital stock of the corporation
entitled to vote thereon.
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PROXY PROXY
SFC LOGO
STEWARDSHIP FINANCIAL CORPORATION
Annual Meeting - Monday, May 12, 1997 @ 700 P.M.
ATLANTIC STEWARDSHIP BANK
630 Godwin Avenue
Midland Park, New Jersey 07432-1405
The undersigned hereby appoint Donald De Bruin, Paul D. Heerema, and Garret
Hoogehyde and each of them, proxies with power of substitution, to vote all
shares the undersigned are entitled to vote at the above meeting or any
adjournment thereof.
Nomineees for election:
William M. Almroth; Herman deWaal Malefyt; Harold Dyer; Edward Fylstra; William
C. Hanse; Margo Lane; Arie Leegwater, John L. Steen; Robert J. Turner; William
J. Vander Eems; Paul Van Ostenbridge
- --------------------------------------------------------------------------------
(Vote and sign on the reverse side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
This Proxy, when properly executed, will be voted in the manner directed herein.
If no direction is made, this proxy will be voted
FOR Election of Directors; FOR Proposal 2
The Board of Directors recommends a vote
FOR Election of Directors and Proposal 2
1) To elect persons specified on the reverse side of this card to the Board of
Directors of the Bank to serve until the next annual meeting of shareholders or
until their successors are elected and qualified:
FOR WITHHELD
[ ] [ ]
FOR, except vote withheld from the following nominee(s):
- --------------------------------------------------------
2) To amend Stewardship Financial Corporation's Certificate of Incorporation to:
a) classify the Board of Directors into 3 classes;
b) prevent removal of Directors by stockholders without cause; and
c) require the affirmative vote of 80% of the outstanding common stock
of the Company for approval of a merger, consolidation or disposition
of substantially all of the assets of the Company unless approved by a
majority of the directors and to further require an affirmative vote of
80% of the outstanding common stock to amend this super-majority
provision.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
[ ] Please check if you will attend the meeting
The signer(s) hereby revokes all proxies heretofore given by the signer to vote
at said meeting or any adjournments thereof. Please sign exactly as name
appears hereon. Joint owners should each sign. The undersigned acknowledges
receipt of the accompanying Notice of the Annual Meeting and Proxy Statement
dated April 18, 1997, for the Annual Meeting to be held on May 12, 1997.
------------------------------------------
Date
-----------------------------------------
Signature(s) Date
Anyone signing as attorney, executor, administrator, trustee, guardian, partner
or corporate officer, should indicate office or capacity:
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