<PAGE>
RICHMOND COUNTY FINANCIAL CORP.
1214 CASTLETON AVENUE
STATEN ISLAND, NEW YORK 10310
(718) 448-2800
August 24, 1998
Fellow Shareholders:
You are cordially invited to attend the 1998 annual meeting of shareholders
(the "Annual Meeting") of Richmond County Financial Corp. (the "Company"), the
holding company for Richmond County Savings Bank (the "Bank"), Staten Island,
New York, which will be held on September 29, 1998 at 10:00 a.m., Eastern Time,
at the Columbian Lyceum, 386 Clove Road, Staten Island, New York 10310.
The attached Notice of the Annual Meeting and the Proxy Statement describe
the business to be transacted at the Annual Meeting. Directors and officers of
the Company as well as a representative of Ernst & Young LLP, the Company's
independent auditors, will be present at the Annual Meeting to respond to any
questions that our shareholders may have regarding the business to be
transacted.
The Board of Directors of the Company has determined that matters to be
considered at the Annual Meeting are in the best interests of the Company and
its shareholders. FOR THE REASONS SET FORTH IN THE PROXY STATEMENT, THE BOARD
OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" EACH OF THE NOMINEES AS
DIRECTORS SPECIFIED UNDER PROPOSAL 1, THAT YOU VOTE "FOR" APPROVAL OF THE
RICHMOND COUNTY FINANCIAL CORP. 1998 STOCK-BASED INCENTIVE PLAN (THE "INCENTIVE
PLAN") AS SPECIFIED UNDER PROPOSAL 2 AND THAT YOU VOTE "FOR" PROPOSAL 3, THE
RATIFICATION OF INDEPENDENT AUDITORS.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR COOPERATION
IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE REPRESENTED, EITHER
IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE CONDUCT OF BUSINESS AT THE
ANNUAL MEETING.
On behalf of the Board of Directors and all of the employees of the Company
and the Bank, I thank you for your continued interest and support.
Sincerely yours,
/s/ Michael F. Manzulli
Michael F. Manzulli
Chairman of the Board
and Chief Executive Officer
<PAGE>
RICHMOND COUNTY FINANCIAL CORP.
1214 CASTLETON AVENUE
STATEN ISLAND, NEW YORK 10310
__________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 29, 1998
__________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders (the "Annual
Meeting") of Richmond County Financial Corp. (the "Company"), the holding
company for Richmond County Savings Bank (the "Bank"), will be held on September
29, 1998 at 10:00 a.m., Eastern Time, at the Columbian Lyceum, 386 Clove Road,
Staten Island, New York 10310.
The purpose of the Annual Meeting is to consider and vote upon the
following matters:
1. The election of three directors to a three-year term of office;
2. The approval of the Richmond County Financial Corp. 1998 Stock-Based
Incentive Plan;
3. The ratification of the appointment of Ernst & Young LLP as independent
auditors of the Company for the fiscal year ending June 30, 1999; and
4. Such other matters as may properly come before the meeting and at any
adjournments thereof, including whether or not to adjourn the meeting.
The Board of Directors has established August 20, 1998, as the record date
for the determination of shareholders entitled to receive notice of and to vote
at the Annual Meeting and at any adjournments thereof. Only record holders of
the common stock of the Company as of the close of business on such record date
will be entitled to vote at the Annual Meeting or any adjournments thereof. In
the event there are not sufficient votes for a quorum or to approve the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of shareholders entitled to vote at the Annual Meeting will be available at
Richmond County Financial Corp., 1214 Castleton Avenue, Staten Island, New York
10310, for a period of ten days prior to the Annual Meeting and will also be
available at the Annual Meeting itself.
By Order of the Board of Directors
/s/ Thomas R. Cangemi
Thomas R. Cangemi
Senior Vice President and
Corporate Secretary
Staten Island, New York
August 24, 1998
<PAGE>
RICHMOND COUNTY FINANCIAL CORP.
_______________________
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 29, 1998
_______________________
SOLICITATION AND VOTING OF PROXIES
This Proxy Statement is being furnished to shareholders of Richmond County
Financial Corp. (the "Company") in connection with the solicitation by the Board
of Directors ("Board of Directors" or "Board") of proxies to be used at the
annual meeting of shareholders (the "Annual Meeting"), to be held on September
29, 1998, at 10:00 a.m., Eastern Time, at the Columbian Lyceum, 386 Clove Road,
Staten Island, New York 10310, and at any adjournments thereof. The 1998 Annual
Report to Stockholders, including the consolidated financial statements of the
Company for the fiscal year ended June 30, 1998, accompanies this Proxy
Statement which is first being mailed to record holders on or about August 24,
1998.
Regardless of the number of shares of common stock owned, it is important
that record holders of a majority of the shares be represented by proxy or in
person at the Annual Meeting. Shareholders are requested to vote by completing
the enclosed proxy card and returning it signed and dated in the enclosed
postage-paid envelope. Shareholders are urged to indicate their vote in the
spaces provided on the proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY WILL BE VOTED BY THE BOARD OF DIRECTORS IN ACCORDANCE WITH THE
DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE INDICATED, SIGNED PROXY
CARDS WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR NAMED IN
THIS PROXY STATEMENT, "FOR" THE APPROVAL OF THE RICHMOND COUNTY FINANCIAL CORP.
1998 STOCK-BASED INCENTIVE PLAN AND "FOR" THE RATIFICATION OF ERNST & YOUNG LLP
AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30, 1999.
Other than the matters listed on the attached Notice of Annual Meeting of
Shareholders, the Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. EXECUTION OF A PROXY,
HOWEVER, CONFERS ON THE DESIGNATED PROXY HOLDERS DISCRETIONARY AUTHORITY TO VOTE
THE SHARES IN ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH OTHER BUSINESS, IF
ANY, THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND AT ANY ADJOURNMENTS
THEREOF, INCLUDING WHETHER OR NOT TO ADJOURN THE ANNUAL MEETING.
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Corporate Secretary of the Company, by
delivering to the Company a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. HOWEVER, IF YOU ARE A
SHAREHOLDER WHOSE SHARES ARE NOT REGISTERED IN YOUR OWN NAME, YOU WILL NEED
APPROPRIATE DOCUMENTATION FROM YOUR RECORD HOLDER TO ATTEND THE ANNUAL MEETING
AND VOTE PERSONALLY AT THE ANNUAL MEETING.
The cost of solicitation of proxies on behalf of management will be borne
by the Company. In addition to the solicitation of proxies by mail, Kissel-Blake
Inc., a proxy solicitation firm, will assist the Company in soliciting proxies
for the Annual Meeting and will be paid a fee of $8,000, plus out-of-pocket
expenses. Proxies may also be solicited personally or by telephone by directors,
officers and other employees of the Company and its subsidiary, Richmond County
Savings Bank (the "Bank"), without additional compensation therefor. The Company
will also request persons, firms and corporations holding shares in their names,
or in the name of their nominees, which are beneficially owned by others, to
send proxy material to, and obtain proxies from, such beneficial owners, and
will reimburse such holders for their reasonable expenses in doing so.
<PAGE>
VOTING SECURITIES AND REQUIRED VOTES
The securities which may be voted at the Annual Meeting consist of shares
of common stock of the Company ("Common Stock"), with each share entitling its
owner to one vote on all matters to be voted on at the Annual Meeting, except as
described below.
The close of business on August 20, 1998, has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
shareholders of record entitled to notice of and to vote at the Annual Meeting
and at any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was 26,423,550 shares.
As provided in the Company's Certificate of Incorporation, for voting
purposes, holders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote in
respect of the shares held in excess of the Limit and are not treated as
outstanding for voting purposes. A person or entity is deemed to beneficially
own shares owned by an affiliate of, as well as, by persons acting in concert
with, such person or entity. The Company's Certificate of Incorporation
authorizes the Board of Directors (i) to make all determinations necessary to
implement and apply the Limit, including determining whether persons or entities
are acting in concert, and (ii) to demand that any person who is reasonably
believed to beneficially own stock in excess of the Limit to supply information
to the Company to enable the Board of Directors to implement and apply the
Limit.
The presence, in person or by proxy, of the holders of at least a majority
of the total number of shares of Common Stock entitled to vote (after
subtracting any shares in excess of the Limit pursuant to the Company's
Certificate of Incorporation) is necessary to constitute a quorum at the Annual
Meeting. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
As to the election of directors (Proposal 1), the proxy card being provided
by the Board of Directors enables a shareholder to vote "FOR" the election of
the nominees proposed by the Board, or to "WITHHOLD" authority to vote for one
or more of the nominees being proposed. Under Delaware law and the Company's
Bylaws, directors are elected by a plurality of votes cast, without regard to
either: (i) broker non-votes; or (ii) proxies as to which authority to vote for
one or more of the nominees being proposed is withheld.
As to the proposed approval of the Incentive Plan (Proposal 2) submitted
for shareholder action, the proxy card being provided by the Board of Directors
enables a shareholder to check the appropriate box on the proxy card to: (i)
vote "FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" with
respect to the item.
As to the ratification of Ernst & Young LLP as independent auditors of the
Company (Proposal 3) and all other matters that may properly come before the
Annual Meeting, by checking the appropriate box, a shareholder may: (i) vote
"FOR" the item; (ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on
such item.
Under the Company's Bylaws and Delaware law, an affirmative vote of the
holders of a majority of the votes cast at the Annual Meeting on Proposals 1 and
3 is required to constitute shareholder approval of each such Proposal. Shares
underlying broker non-votes or in excess of the limit will not be counted as
present and entitled to vote or as votes cast and will have no effect on the
vote. For further information on the vote required to implement Proposal 2
during the first year following the conversion from mutual to stock form of the
Company's subsidiary, the Bank, which was completed on February 18, 1998 (the
"Conversion"),
2
<PAGE>
see the discussion under Proposal 2 herein. For purposes of the
rules and regulations of the Securities and Exchange Commission (the "SEC"),
shares as to which the "ABSTAIN" box has been selected on the proxy card with
respect to Proposal 2 have the effect of a vote against Proposal 2 and shares
underlying broker non-votes or in excess of the limit are not counted as
entitled to vote on Proposal 2 and have no effect on the vote on the proposal.
Proxies solicited hereby are to be returned to the Company's transfer
agent, Registrar and Transfer Company ("RTC"). The Board of Directors has
designated RTC to act as the inspector of election and tabulate the votes at the
Annual Meeting. RTC is not otherwise employed by, or a director of, the Company
or any of its affiliates. After the final adjournment of the Annual Meeting,
the proxies will be returned to the Company.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to those persons believed by
management to be beneficial owners of more than 5% of the Company's outstanding
shares of Common Stock on the Record Date or as disclosed in certain reports
received to date regarding such ownership filed by such persons with the Company
and with the SEC, in accordance with Sections 13(d) and 13(g) of the Securities
Exchange Act of 1934, as amended ("Exchange Act"). Other than those persons
listed below, the Company is not aware of any person, as such term is defined in
the Exchange Act, that owns more than 5% of the Company's Common Stock as of the
Record Date.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ----------------- ----------------------------------------------------- ------------------ -------------
<S> <C> <C> <C>
Common Stock Richmond County Savings Bank Employee Stock Ownership 2,113,880(1) 8.0%
Plan (the "ESOP")
1214 Castleton Avenue
Staten Island, New York 10310
Common Stock Richmond County Savings Charitable Foundation (the 1,957,300(2) 7.4%
"Foundation")
1214 Castleton Avenue
Staten Island, New York 10310
Common Stock Thomson, Horstmann & Bryant, Inc. 1,568,850(3) 5.9%
Park 80 West, Plaza One
Saddle Brook, New Jersey 07663
</TABLE>
____________________________
(1) Shares of Common Stock were acquired by the ESOP in the Bank's conversion.
The ESOP Committee administers the ESOP. Marine Midland Bank has been
appointed as the corporate trustee for the ESOP ("ESOP Trustee"). The ESOP
Trustee, subject to its fiduciary duty, must vote all allocated shares held
in the ESOP in accordance with the instructions of the participants. As of
August 24, 1998, no shares have been allocated under the ESOP. Under the
ESOP, unallocated shares and allocated shares as to which voting
instructions are not given by participants are to be voted by the ESOP
Trustee in a manner calculated to most accurately reflect the instructions
received from participants regarding the allocated stock so long as such
vote is in accordance with the provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
(2) The Foundation was established and funded by the Company in connection with
the Bank's Conversion with an amount of the Company's Common Stock equal to
8.0% of the total amount of Common Stock sold in the Conversion. The
Foundation is
3
<PAGE>
a Delaware non-stock corporation and is dedicated to the
promotion of charitable purposes within the communities in which the Bank
operates. The Foundation is governed by a board of directors with eight
members, all of whom are directors of the Company or the Bank. Pursuant to
the terms of the contribution of Common Stock, as mandated by federal
regulations the Office of Thrift Supervision ("OTS"), all shares of Common
Stock held by the Foundation must be voted in the same ratio as all other
shares of the Company's Common Stock on all proposals considered by
shareholders of the Company.
(3) According to information disclosed on Schedule 13F, filed with the SEC on
July 27, 1998. Thomson, Horstmann & Bryant, Inc. is an investment adviser
under Section 203 of the Investment Advisers Act of 1940.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The Company is presenting the Incentive Plan to shareholders for approval
under which all directors, officers and employees of the Bank and the Company
are eligible to receive awards. See Proposal 2 for a summary of the material
terms of the Incentive Plan.
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of eight (8) directors and
is divided into three classes. Each of the eight members of the Board of
Directors also presently serves as a director of the Bank. Directors are
elected for staggered terms of three years each, with the term of office of only
one of the three classes of directors expiring each year. Directors serve until
their successors are elected and qualified.
The three nominees proposed for election at the Annual Meeting are James L.
Kelley, T. Ronald Quinlan, Jr. and Anthony E. Burke. No person being nominated
as a director is being proposed for election pursuant to any agreement or
understanding between any such person and the Company.
In the event that any such nominee is unable to serve or declines to serve
for any reason, it is intended that proxies will be voted for the election of
the balance of those nominees named and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE DIRECTORS IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD WILL BE VOTED "FOR" THE
ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO NOMINEES, CONTINUING DIRECTORS AND CERTAIN EXECUTIVE
OFFICERS
The following table sets forth, as of the Record Date, the names of
nominees and continuing directors and the Named Executive Officers (as defined
below), their ages, a brief description of their recent business experience,
including present occupations and employment, the year in which each became a
director of the Bank and the year in which their terms (or, in the case of
nominees, their proposed terms) as director of the Company expire. This table
also sets forth the amount of Common Stock and the percent thereof beneficially
owned by each director, each Named Executive Officer and all directors and
executive officers as a group as of the Record Date.
4
<PAGE>
<TABLE>
<CAPTION>
Amount and
Nature of
Expiration of Beneficial Ownership
Name and Principal Occupation at Director Term as Ownership as a Percent
Present and for Past Five Years Age Since(1) Director (2)(3) of Class(4)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NOMINEES
James L. Kelley 56 1997 2001 13,640 *
Partner of the law firm of Lahr,
Dillon, Manzulli, Kelley &
Penett, P.C.
T. Ronald Quinlan, Jr. 71 1978 2001 1,000 *
Retired President of Quinlan Fuel
Service.
Anthony E. Burke 51 1997 2001 14,425 *
President and Chief Operating
Officer of the Company;
President, Chief Operating
Officer and Director of the
Bank; formerly a Partner with
the financial services industry
group of Ernst & Young LLP.
CONTINUING DIRECTORS
Michael F. Manzulli 57 1990 2000 27,225 *
Chairman of the Board and Chief
Executive Officer of the Company
and the Bank.
Godfrey H. Carstens, Jr. 70 1973 2000 17,032 *
Owner and President of Carstens
Electrical Supply Co.
Robert S. Farrell 72 1973 2000 19,945 *
President of H.S. Farrell, Inc.,
a building supply company.
William C. Frederick, M.D. 70 1980 1999 6,000 *
Surgeon in Staten Island, New
York.
Maurice K. Shaw 59 1979 1999 6,326 *
Senior Vice President in charge
of corporate affairs of Brooklyn
Union Gas Co.
NAMED EXECUTIVE OFFICERS
(WHO ARE NOT ALSO DIRECTORS)
Thomas R. Cangemi 30 -- -- 27,175 *
Senior Vice President, Chief
Financial Officer and Secretary
of the Company; formerly held a
variety of executive positions
at publicly-traded companies,
including financial institutions.
John M. McKenna 62 -- -- 1,063 *
Executive Vice President of the
Bank.
All directors and executive -- -- -- 249,084 *
officers as a group (23 persons)...
</TABLE>
__________________________
* Does not exceed 1.0% of the Company's voting securities.
(1) Includes years of service as a trustee of the Bank.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family members) voting or dispositive power as to shares
reported.
(3) Does not include options and awards intended to be granted under the
Incentive Plan which is subject to shareholder approval. For a discussion
of the options and awards that are intended to be granted under the
Incentive Plan, see Proposal 2.
(4) As of the Record Date, there were 26,423,550 shares of Common Stock
outstanding.
5
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company and the Board of Directors of the
Bank conduct business through meetings of the Board of Directors and through the
activities of their committees. The Board of Directors of the Company and the
Bank's Board of Directors generally meet on a monthly basis and both may have
additional meetings as needed. During the fiscal year ended June 30, 1998, the
Board of Directors of the Company held 13 meetings. The Board of Trustees of
the Bank held 15 meetings during fiscal 1998. All of the directors of the
Company and Bank attended at least 75% of the total number of the Company's
Board meetings held and committee meetings on which such directors served during
the fiscal year ended June 30, 1998. The Board of Directors of the Company and
Bank maintain committees, the nature and composition of which are described
below:
AUDIT COMMITTEE. The Audit Committee of the Company consists of Messrs.
Farrell, Frederick, Quinlan and Shaw, who are outside Directors. The Audit and
Examining Committee of the Bank consists of Messrs. Farrell, Frederick, Quinlan,
Shaw and DeForest (Emeritus). These committees are responsible for the review of
audit reports and management's actions regarding the implementation of audit
findings and to review compliance with all relevant laws and regulations. The
Committees met 4 times in fiscal 1998.
NOMINATING COMMITTEE. The Company's Nominating Committee for the 1998
Annual Meeting consists of all of the Directors of the Company. The committee
considers and recommends the nominees for director to stand for election at the
Company's annual meeting of shareholders. The Company's Certificate of
Incorporation and Bylaws provide for shareholder nominations of directors.
These provisions require such nominations to be made pursuant to timely notice
in writing to the Secretary of the Company. The shareholder's notice of
nomination must contain all information relating to the nominee which is
required to be disclosed by the Company's Bylaws and by the Exchange Act. See
"Additional Information - Notice of Business to be Conducted at a Special or
Annual Meeting." The Nominating Committee met on June 18, 1998.
COMPENSATION COMMITTEE. The Compensation Committee of the Company consists
of Messrs. Carstens, Farrell, Frederick and Shaw. This Committee is responsible
for all matters regarding compensation and fringe benefits for officers and
employees of the Company and the Bank and meet on an as needed basis. See
"Executive Compensation - Compensation Committee Report on Executive
Compensation." The Compensation Committee of the Company met 3 times in fiscal
1998.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. Outside directors of the Company receive an annual
retainer of $15,000. No additional fees will be paid for Board or committee
meetings attended. Outside Directors of the Bank are currently paid $1,400 per
Board meeting attended and $850 per Committee meeting attended.
INCENTIVE PLAN. The Company is presenting the Incentive Plan to
shareholders for approval, under which all directors of the Company and the Bank
are eligible to receive awards. See Proposal 2 for a discussion of the material
terms of the Incentive Plan.
6
<PAGE>
EXECUTIVE COMPENSATION
The report of the Compensation Committee and the stock performance graph
shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
except as to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
Chief Executive Officer and certain other executive officers of the Company for
the fiscal year ended June 30, 1998. Because the Company had no significant
assets, liabilities or operations until February 18, 1998, the following
discussion addresses compensation information relating to the Chief Executive
Officer and executive officers of the Bank for fiscal 1998 and sets forth the
joint report of the Compensation Committees of the Company and the Bank
(collectively the "Compensation Committee"). The disclosure requirements for
the Chief Executive Officer and other executive officers include the use of
tables and a report explaining the rationale and considerations that led to
fundamental compensation decisions affecting those individuals. In fulfillment
of this requirement, the Compensation Committee, at the direction of the Board
of Directors, has prepared the following report for inclusion in this proxy
statement.
GENERAL POLICY. The Compensation Committee has the responsibility to
recommend to the Board of Directors the amount and composition of compensation
paid to the executive officers. The Board of Directors has the responsibility
to review the report of the Compensation Committee and act on its
recommendations. It is the policy of the Compensation Committee to review
executive compensation not less than annually and more often if it deems
appropriate. During fiscal 1998, the Bank and the Company undertook a process
to revise executive compensation to assure competitiveness in the marketplace,
especially in light of the Bank's conversion to a stock institution and the
formation of the Company as a public company.
The Compensation Committee's goal is to utilize whatever means it considers
necessary to obtain adequate and up-to-date information upon which to base its
recommendations to the Board of Directors. The process which the Compensation
Committee utilized for fiscal 1998, included reviewing the results of various
compensation surveys prepared by independent consultants, as well as assessing
the performance of the Chief Executive Officer and other executive officers of
the Bank.
In preparing its analysis with respect to comparative compensation data,
the Compensation Committee considers characteristics of peer institutions such
as asset size, off-balance sheet assets, earnings, type of business operations,
corporate structure and geographic location. With respect to analyzing
comparative data for individual executive officers at peer institutions, the
Compensation Committee considers the scope and similarity of officer positions,
experience and the complexity of individual officer responsibilities.
In making its compensation determinations, the Compensation Committee also
considers the performance of executive officers. The Chief Executive Officer
evaluates the performance of all other executive officers and reports to the
Compensation Committee. The Compensation Committee evaluates the performance of
the Chief Executive Officer. The
7
<PAGE>
Compensation Committee then reports to the Board of Directors regarding the
performance of the Chief Executive Officer and other executive officers. The
Compensation Committee also recommends to the Board of Directors the
compensation of each of the executive officers, including the Chief Executive
Officer. Upon review of the Compensation Committee's recommendations, the Board
of Directors sets all executive compensation. The Chief Executive Officer, a
member of the Board of Directors, abstains from voting on matters related to his
compensation.
COMPENSATION COMMITTEE CONSIDERATIONS FOR FISCAL 1998. Compensation for
executive officers is generally composed of salary, bonus, participation in
various employee benefit plans, such as the employee stock ownership plan, the
401(k) plan, and the pension plan sponsored by the Bank. Executive officers may
also participate in the non-qualified deferred compensation plan sponsored by
the Bank upon designation by the Board of Directors. The benefits provided
under the employee stock ownership plan, 401(k) plan, pension plan, and non-
qualified deferred compensation plan are determined based on the executive's
compensation and/or years of service with the Bank.
In the past, the Bank participated in a number of compensation surveys with
peer institutions. However, as mentioned above, in an effort to ensure its
competitiveness in the marketplace and in consideration of the Bank's conversion
to a stock institution and the formation of the Company as a public company, the
Board of Directors engaged the services of two outside consultants, Hay Group
("Hay") and William M. Mercer, Incorporated ("Mercer") for various projects
related to executive compensation. The Compensation Committee utilized the
findings and reports of both Hay and Mercer in determining executive
compensation for fiscal 1998.
Hay's report included an assessment of internal equity among certain
officer positions and compared the compensation components related to these
positions with the compensation practices of peer institutions selected by Hay.
The report set forth the methodology utilized for the selection of the peer
group, a recommended philosophy of compensation and recommended compensation
ranges and adjustments for executive officer positions.
Mercer's report also included an analysis of the compensation of certain
executive officers in relation to the compensation practices of peer
institutions selected by Mercer. Mercer's report, which was prepared in
connection with the Bank's conversion, also included an opinion as to the
reasonable range of compensation for each position reviewed, including the
position of Chief Executive Officer.
After considering information in both reports, including recommendations
made by Hay, together with the performance of the Bank and the executive
officers, the Compensation Committee recommended to the Board of Directors
compensation levels for executive officers, including salary and bonus, within
the range found reasonable by Mercer. The Board of Directors approved the
recommendation of the Compensation Committee.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. After taking into
consideration the factors discussed above, including compensation surveys and
the overall qualitative performance of the Chief Executive Officer in managing
the Company and the Bank during fiscal 1998 (including his efforts related to
the Bank's conversion), the Compensation Committee also recommended to the Board
of Directors a level of salary and bonus for the Chief Executive Officer within
the range found reasonable by Mercer. The compensation of the Chief Executive
Officer was not determined for fiscal 1998 using any specific formula nor did
his compensation relate specifically to corporate performance. The Board of
Directors approved the recommendations made by the Compensation Committee
regarding the Chief Executive Officer's compensation.
8
<PAGE>
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF THE COMPANY
Godfrey H. Carstens, Jr. Robert S. Farrell
William C. Frederick, M.D. Maurice K. Shaw
9
<PAGE>
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of total
shareholder return on the Company's Common Stock, based on the market price of
the Common Stock with the cumulative total return of companies on the Nasdaq
National Market and the Nasdaq Market Bank Stock Index for the period beginning
on February 18, 1998, the day the Company's Common Stock began trading, through
June 30, 1998. The graph was derived from a limited period of time and, as a
result, may not be indicative of possible future performance of the Company's
Common Stock. The data were supplied by Media General Financial Services.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
SUMMARY
02/18/98 02/27/98 03/31/98 04/30/98 05/29/98 06/30/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
RICHMOND COUNTY FINANCIAL CORP. 100.00 102.11 117.62 120.62 116.78 114.86
NASDAQ MARKET INDEX 100.00 100.00 102.90 105.17 99.76 106.46
NASDAQ MARKET BANK STOCK INDEX 100.00 100.00 105.68 107.35 105.67 101.59
</TABLE>
A. THE LINES REPRESENT MONTHLY INDEX LEVELS DERIVED FROM COMPOUNDED DAILY
RETURNS THAT INCLUDE ALL DIVIDENDS.
B. THE INDEXES ARE REWEIGHTED DAILY, USING THE MARKET CAPITALIZATION ON THE
PREVIOUS TRADING DAY .
C. IF THE MONTHLY INTERVAL, BASED ON THE FISCAL YEAR-END, IS NOT A TRADING DAY,
THE PRECEDING TRADING DAY IS USED .
D. THE INDEX LEVEL FOR ALL SERIES WAS SET TO $100.00 ON 02/18/98.
10
<PAGE>
SUMMARY COMPENSATION TABLE. The following table shows, for the years
ended June 30, 1998, 1997 and 1996, the cash compensation paid, as well as
certain other compensation paid or accrued for that year to the Chief Executive
Officer of the Company and the Bank and all other executive officers of the
Company and the Bank who earned and/or received salary and bonus in excess of
$100,000 in fiscal year 1998 ("Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation(1)
---------------------------------
Other Annual
Name and Principal Fiscal Compensation
Positions Year Salary($) Bonus($) ($)(2)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael F. Manzulli 1998 $391,724 $40,000 (4) $ -
Chairman of the Board and Chief 1997 324,416 - -
Executive Officer of the Company and
Bank
Anthony E. Burke(5) 1998 $ 200,992 - -
President and Chief Operating Officer of
the Company and Bank
Thomas R. Cangemi(5) 1998 $102,115 - -
Senior Vice President, Chief Financial
Officer and Secretary
of the Company and Bank
John M. McKenna 1998 $135,174 $ 6,500 -
Executive Vice President 1997 121,808 6,500 -
of the Bank
<CAPTION>
Long-Term Compensation
----------------------------------
Awards Payouts
----------------------------------
Securities
Restricted Underlying
Stock Options/ LTIP All Other
Name and Principal Awards SAR's Payouts Compensation
Positions ($) ($) ($) ($)(3)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael F. Manzulli - - - $42,729
Chairman of the Board and Chief - - - 26,980
Executive Officer of the Company
and Bank
Anthony E. Burke(5) - - - -
President and Chief Operating
Officer of the Company and Bank
Thomas R. Cangemi(5) - - - -
Senior Vice President, Chief
Financial Officer and Secretary
of the Company and Bank
John M. McKenna - - - $3,481
Executive Vice President - - - 3,102
of the Bank
</TABLE>
- ----------------------------------------
(1) Under Annual Compensation, the column titled "Salary" includes any
directors' fees.
(2) For fiscal year 1998, there were no (a) perquisites over the lesser of
$50,000 or 10% of the individual's total salary and bonus for the year; (b)
payments of above-market preferential earnings on deferred compensation; (c)
payments of earnings with respect to long-term incentive plans prior to
settlement or maturation; (d) tax payment reimbursements; or (e)
preferential discounts on stock.
(3) Other compensation includes matching contributions of $4,313 and $3,481 to
the Bank's Retirement Plans for Messrs. Manzulli and McKenna, respectively,
for fiscal year 1998. Also includes employer contributions of $37,480
contributed to Mr. Manzulli pursuant to the Bank's Supplemental Retirement
Plan for fiscal year 1998, and an automobile allowance of $936.
(4) Represents performance bonus related to the successful consummation of the
Bank's conversion to stock form.
(5) Mr. Burke and Mr. Cangemi were both hired in October 1997, at an annual base
salary of $290,000 and $150,000, respectively.
COMPENSATION ARRANGEMENTS
EMPLOYMENT AGREEMENTS. The Company has entered into employment agreements
(collectively, the "Employment Agreement(s)") with Messrs. Manzulli, Burke and
Cangemi (individually, the "Executive"). The Employment Agreements are intended
to ensure that the Company will be able to maintain a stable and competent
management base. The continued success of the Company depends to a significant
degree on the skills and competence of Messrs. Manzulli, Burke and Cangemi.
The Employment Agreements provide for three-year terms. The terms of the
Employment Agreements shall be extended on a daily basis unless written notice
of non-renewal is given by the Board of Directors. The Employment Agreements
provide that the Executive's base salary will be reviewed annually. In addition
to the base salary, the Employment Agreements provide for, among other things,
11
<PAGE>
participation in stock benefits plans and other fringe benefits applicable to
similarly situated executive personnel.
The Employment Agreements provide for termination for cause as defined in
the Agreements at any time. In the event the Bank or the Company chooses to
terminate the Executive's employment for reasons other than for cause, or in the
event of the Executive's resignation from the Bank and the Company upon: (i)
failure to re-elect the Executive to his current offices; (ii) a material change
in the Executive's functions, duties or responsibilities; (iii) a reduction in
the benefits and perquisites being provided to the Executive under the
Employment Agreement; (iv) liquidation or dissolution of the Bank or the
Company; or (v) a breach of the Employment Agreement by the Bank or the Company,
the Executive or, in the event of death, his beneficiary would be entitled to
receive an amount equal to the remaining base salary payments due to the
Executive for the remaining term of the Employment Agreement and the
contributions that would have been made on the Executive's behalf to any
employee benefit plan of the Bank or the Company during the remaining term of
the Employment Agreement. The Company would also continue and pay for the
Executive's life, health, dental and disability coverage for the remaining term
of the Employment Agreement. Upon any termination of the Executive, the
Executive is subject to a covenant not to compete with the Company or the Bank
for one year.
Under the Employment Agreements, if voluntary or involuntary termination
follows a change in control of the Bank or the Company (as defined in the
Employment Agreements), the Executive or, in the event of the Executive's death,
his beneficiary, would be entitled to a severance payment equal to the greater
of: (i) the payments due for the remaining terms of the Employment Agreement;
or (ii) three times the Executive's average annual compensation for the five
preceding tax years. The Company would also continue the Executive's life,
health, and disability coverage for thirty-six months.
The Employment Agreements also provide that the Company will compensate the
Executive for excise taxes imposed on any "excess parachute payments," as
defined under section 280G of the Code, made thereunder, and any additional
income and excise taxes imposed as a result of such compensation. All
reasonable costs and legal fees paid or incurred by the Executive pursuant to
any dispute or question of interpretation relating to the Employment Agreements
shall be paid by the Company if the Executive is successful on the merits
pursuant to a legal judgment, arbitration or settlement. The Employment
Agreements also provide that the Company shall indemnify the Executive to the
fullest extent allowable under Delaware law. In the event of a change in
control of the Bank or the Company, the total amount of payments due under the
Agreements, based solely on cash compensation paid to the officers who will
receive Employment Agreements over the past five fiscal years and excluding any
benefits under any employee benefit plan which may be payable, would be
approximately $3.0 million.
The Bank has also entered into an employment agreement with Mr. Manzulli
which is substantially similar in terms to the Company Employment Agreement.
Notwithstanding that both agreements may provide for similar payments and
benefits, Mr. Manzulli is not entitled to receive duplicative payments and
benefits. The Bank intends to enter into similar agreements with Messrs. Burke
and Cangemi.
CHANGE IN CONTROL AGREEMENTS. The Bank entered into Change in Control
Agreements (the "CIC Agreements") with Mr. McKenna and four (4) other executive
officers of the Bank (individually, the "Executive"). Each CIC agreement
provides for a two-year term. Commencing on the first anniversary date and
continuing on each anniversary thereafter, the CIC Agreements may be renewed by
the Board of the Bank for an additional year. The CIC Agreements provide that
in the event voluntary or involuntary termination following a change in control
of the Bank or the Company (as defined in the agreement), the
12
<PAGE>
Executive would be entitled to receive a severance payment equal to two times
the Executive's average compensation for the five most recent tax years. The
Bank would also continue and pay for the Executive's life, health and disability
coverage for twenty-four (24) months following termination. If a change in
control occurs, based upon two times fiscal 1998 base salary and incentive bonus
and pursuant to the CIC Agreements, the Executives would receive, in the
aggregate, $800,000, in addition to other cash and noncash benefits.
INCENTIVE PLAN. The Company is presenting the Incentive Plan to
shareholders for approval, under which all employees of the Company and the Bank
are eligible to receive awards. See Proposal 2 for a summary of the material
terms of the Incentive Plan.
RETIREMENT PLAN. The Bank participates in The Retirement Plan of Richmond
County Savings Bank in RSI Retirement Trust (the "Retirement Plan") to provide
retirement benefits for eligible employees. The table below reflects the
pension benefit payable, and any payment due under the Supplemental Executive
Retirement Plan, discussed below, to a participant assuming various levels of
earnings and years of service. The amounts of benefits paid under the
Retirement Plan are not reduced for any social security benefit payable to
participants. As of June 30, 1998, Messrs. Manzulli and McKenna had credited
years of service of 5 and 5 years, respectively. Messrs. Burke and Cangemi are
not yet eligible to participate in the plan.
<TABLE>
<CAPTION>
Years of Benefit Service
FINAL AVERAGE -----------------------------------------------------------------------------------
Compensation 15 20 25 30 35
-------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$50,000 $12,525 $16,700 $20,875 $25,050 $29,225
$100,000 26,775 35,700 44,625 53,550 62,475
$150,000 41,025 54,700 68,375 82,050 95,725
$200,000 43,875 58,500 73,125 87,750 102,375
$250,000 43,875 58,500 73,125 87,750 102,375
$300,000 43,875 58,500 73,125 87,750 102,375
$350,000 43,875 58,500 73,125 87,750 102,375
$400,000 43,875 58,500 73,125 87,750 102,375
$450,000 43,875 58,500 73,125 87,750 102,375
$500,000 43,875 58,500 73,125 87,750 102,375
$550,000 43,875 58,500 73,125 87,750 102,375
</TABLE>
_________________________
(1) The compensation utilized for formula purposes includes the salary reported
in the "Summary Compensation Table."
(2) The maximum amount of annual compensation which can be considered in
computing benefits under Section 401(a)(17) of the Internal Revenue Code of
1986, as amended (the "Code"), is $160,000 for plan years beginning on or
after January 1, 1998.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank currently maintains a
Supplemental Executive Retirement Plan ("SERP") under which it credits a
specified amount of money to the account of plan participants. The SERP provides
certain employees with supplemental retirement income from the Bank
13
<PAGE>
when such amounts cannot be paid from the tax-qualified Retirement Plan or
401(k) Plan. Participants in the SERP receive a benefit equal to the amount they
would have received under the Retirement Plan and 401(k) Plan, but for certain
limitations imposed by the Code. As of June 30, 1998, only Mr. Manzulli is
eligible to participate in the SERP.
MANAGEMENT SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank maintains a
non-tax qualified Management Supplemental Executive Retirement Plan ("MSERP") to
provide certain officers and highly compensated employees with additional
retirement benefits. The MSERP benefit is intended to make up benefits lost
under the ESOP allocation procedures to participants who retire prior to the
complete repayment of the ESOP loan. At the retirement of a participant, the
benefits under the MSERP are determined by first: (i) projecting the number of
shares that would have been allocated to the participant under the ESOP if they
had been employed throughout the period of the ESOP loan (measured from the
participant's first date of ESOP participation); and (ii) reducing the number
determined by (i) above by the number of shares actually allocated to the
Participant's account under the ESOP; and second, by multiplying the number of
shares that represent the difference between such figures by the average fair
market value of the Common Stock over the preceding five years. Benefits under
the MSERP vest in 20% annual increments over a five year period commencing as of
the date of a Participant's participation in the MSERP. The vested portion of
the MSERP Participant's benefits are payable upon the retirement of the
Participant upon or after the attainment of age 65 or in accordance with the
requirements of early retirement under the Retirement Plan. A separate trust may
be established to hold assets of the Bank for the purpose of paying benefits
under the MSERP or the Bank may hold assets for MSERP payments through a common
trust established for the Retirement Benefit Equalization Plan discussed below.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
The Bank's policies do not permit the Bank to make loans to any of its
Directors, with the exception of first mortgages on primary residences. Federal
regulations require that all loans or extensions of credit to executive officers
and directors must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with the general public and must not involve more than the normal
risk of repayment or present other unfavorable features. In addition, loans made
to a director or executive officer in excess of the greater of $25,000 or 5% of
the Bank's capital and surplus (up to a maximum of $500,000) must be approved in
advance by a majority of the disinterested members of the Board of Directors.
The Bank currently makes loans to its executive officers on the same terms
and conditions offered to the general public. The Bank's policy provides that
all loans made by the Bank to its executive officers be made in the ordinary
course of business, on substantially the same terms, including collateral, as
those prevailing at the time for comparable transactions with other persons and
may not involve more than the normal risk of collectibility or present other
unfavorable features.
The Company intends that all transactions between the Company and its
executive officers, directors, holders of 10% or more of the shares of any class
of its Common Stock and affiliates thereof, will contain terms no less favorable
to the Company than could have been obtained by it in arms-length negotiations
with unaffiliated persons and will be approved by a majority of independent
outside directors of the Company not having any interest in the transaction.
14
<PAGE>
PROPOSAL 2. APPROVAL OF THE RICHMOND COUNTY FINANCIAL CORP.
1998 STOCK-BASED INCENTIVE PLAN
The Board of Directors of the Company is presenting for shareholder
approval the Richmond County Financial Corp. 1998 Stock-Based Incentive Plan
(the "Incentive Plan"), in the form attached hereto as Appendix A. The purpose
of the Incentive Plan is to attract and retain qualified personnel in key
positions, provide officers, employees and non-employee directors ("Outside
Directors") of the Company and any of its affiliates, including the Bank, with a
proprietary interest in the Company as an incentive to contribute to the success
of the Company, promote the attention of management to other shareholder's
concerns, and reward employees for outstanding performance. The following is a
summary of the material terms of the Incentive Plan which is qualified in its
entirety by the complete provisions of the Incentive Plan attached hereto as
Appendix A.
GENERAL
The Incentive Plan authorizes the granting of options to purchase Common
Stock of the Company ("Options"), awards of shares of Common Stock ("Stock
Awards") and certain related rights (collectively referred to as "Awards").
Subject to certain adjustments to prevent dilution of Awards to participants,
the maximum number of shares of Common Stock reserved for Awards under the
Incentive Plan is 3,699,297 shares, consisting of 2,642,355 shares reserved for
Options and 1,056,942 shares reserved for Stock Awards. All employees and
Outside Directors of the Company and its affiliates, including the Bank, are
eligible to receive Awards under the Incentive Plan. The Incentive Plan will be
administered by a committee (the "Committee") consisting of members of the
Company who are not employees of the Company or its affiliates. Authorized but
unissued shares or shares previously issued and reacquired by the Company may be
used to satisfy Awards under the Incentive Plan. If authorized but unissued
shares are used to satisfy Stock Awards and the exercise of Options granted
under the Incentive Plan, it will result in an increase in the number of shares
outstanding and will have a dilutive effect on the holdings of existing
shareholders. The Company currently anticipates that it will establish a trust
(the "Incentive Plan Trust"), under which the trustee will purchase, with
contributions from the Company or the Bank, previously issued shares to fund the
Company's obligation for Stock Awards. As of the date of this Proxy Statement,
no Awards have been granted to under the Incentive Plan.
TYPES OF AWARDS
GENERAL. The Incentive Plan authorizes the grant of Awards in the form of:
(i) Options intended to qualify as incentive stock options under Section 422 of
the Code (Options which afford certain tax benefits to the recipients upon
compliance with applicable requirements, but which do not result in tax
deductions to the Company), referred to as "Incentive Stock Options"; (ii)
Options that do not so qualify (Options which do not afford the same income tax
benefits to recipients, but which may provide tax deductions to the Company),
referred to as "Non-Statutory Stock Options"; (iii) grants of restricted shares
of stock ("Stock Awards"); and (iv) related rights which become exercisable only
upon a "change in control" (as defined in the Incentive Plan) of the Company or
Bank ("Limited Option Rights" and "Limited Stock Rights"). Each type of Award
may be subject to certain vesting or service requirements or other conditions
imposed by the Committee.
OPTIONS. Subject to the terms of the Incentive Plan and applicable
regulation, the Committee has the authority to determine the amount of Options
granted to any individual and the date or dates on which each Option shall
become exercisable and any other conditions applicable to an Option. The
exercise price
15
<PAGE>
of all Options shall be determined by the Committee but shall be at least 100%
of the fair market value of the underlying Common Stock at the time of grant.
The exercise price of any Option may be paid in cash, Common Stock, or any other
form permitted by the Committee at its discretion. See "Alternate Option
Payments." The term of Options shall be determined by the Committee, but in no
event shall an Option be exercisable more than ten years from the date of grant
(or five years from date of grant for a 10% owner with respect to Incentive
Stock Options).
All Options granted under the Incentive Plan to officers and employees may,
at the discretion of the Committee, qualify as Incentive Stock Options to the
extent permitted under Section 422 of the Code. Under certain circumstances,
Incentive Stock Options, may be converted into Non-Statutory Stock Options. In
order to qualify as Incentive Stock Options under Section 422 of the Code, the
Option must generally be granted only to an employee, must not be transferable
(other than by will or the laws of descent and distribution), the exercise price
must not be less than 100% of the fair market value of the Common Stock on the
date of grant, the term of the Option may not exceed ten years from the date of
grant, and no more than $100,000 of options may become exercisable for the first
time in any calendar year. Notwithstanding the foregoing requirements,
Incentive Stock Options granted to any person who is the beneficial owner of
more than 10% of the outstanding voting stock of the Company may be exercised
only for a period of five years from the date of grant and the exercise price
must be at least equal to 110% of the fair market value of the underlying Common
Stock on the date of grant. Each Outside Director of the Company or its
affiliates, as well as employees, will be eligible to receive Non-Statutory
Stock Options.
Unless otherwise determined by the Committee, upon termination of an
optionee's services for any reason other than death, disability, retirement,
change in control or termination for cause, all then exercisable Options shall
remain exercisable for a period of time (three months in the case of termination
from service in general, one year in the cases of retirement or termination
following a Change in Control) following termination and all unexercisable
Options shall be canceled. In the event of the death or disability of an
optionee, all unexercisable Options held by such optionee will become fully
exercisable and remain exercisable for up to one year thereafter. In the event
of termination for cause, all exercisable and unexercisable Options held by the
optionee shall be canceled. In the event of the retirement of an optionee, the
Committee shall, subject to applicable regulation, have the discretion to allow
unexercisable Options to continue to vest or become exercisable in accordance
with their original terms. In the event of termination subsequent to a change in
control, an optionee's unexercisable options shall continue to become
exercisable in accordance with their original terms regardless of the optionee's
service with the Company, or any successor entity shall provide the optionee
with options or consideration at least equivalent in value and subject to
similar conditions as such unexercisable options.
LIMITED OPTION RIGHTS. The Incentive Plan also provides the Committee with
the ability to grant a Limited Option Right simultaneously with the grant of any
Option. Limited Option Rights become automatically exercisable by the Company
on the individual's behalf only upon a change in control of the Company or the
Bank subject to applicable regulations and certain conditions. Upon exercise,
the holder will receive a lump sum cash payment equal to the difference between
the exercise price of the related Option and the fair market value of the shares
of Common Stock subject to the Option on the date of exercise of the right less
any applicable tax withholding.
STOCK AWARDS. Subject to the terms of the Incentive Plan and applicable
regulation, the Committee has the authority to determine the amounts of Stock
Awards granted to any individual and the dates on which Stock Awards granted
will vest or any other conditions which must be satisfied prior to vesting.
16
<PAGE>
Stock Award recipients any also receive amounts equal to accumulated cash
and stock dividends (if any) with respect thereto plus earnings thereon minus
any required tax withholding amounts. Prior to vesting, recipients of Stock
Awards may direct the voting of shares of Common Stock granted to them and held
in the Incentive Plan Trust. Shares of Common Stock held by the Incentive Plan
trust which have not been allocated or for which voting has not been directed
are voted by the trustee in the same proportion as the awarded shares are voted
in accordance with the directions given by all recipients of Awards.
Unless otherwise determined by the Committee, upon termination of the
services of a holder of a Stock Award for any reason other than death,
disability, retirement or termination for cause, all such holder's rights in
unvested Stock Awards shall be canceled. In the event of the death or
disability of the holder of the Stock Award, all unvested Stock Awards held by
such individual will become fully vested. In the event of termination for cause
of a holder of a Stock Award, all unvested Stock Awards held by such individual
shall be canceled. In the event of retirement of the holder of a Stock Award,
the Committee shall, to applicable regulation, have the discretion to determine
that all unvested Stock Awards shall continue to vest in accordance with their
original terms. In the event of termination subsequent to a change in control,
a recipient's unvested Stock Awards shall continue to vest in accordance with
their original terms regardless of recipient's service to the Company, or any
successor entity shall provide the recipient with stock or consideration at
least equivalent in value and subject to similar conditions as such unvested
Stock Awards.
LIMITED STOCK RIGHTS. The Incentive Plan also provides the Committee with
the ability to grant a Limited Stock Right simultaneously with the grant of any
Stock Award. Limited Stock Rights are related to specific Awards granted and
become automatically exercisable by the Company on the individual's behalf only
upon a change in control of the Company or the Bank, subject to applicable
regulations and certain conditions. Upon exercise, the holder will receive a
lump sum cash payment equal to the fair market value of the shares of Common
Stock, multiplied by the number of Limited Stock Rights exercised on the date of
such change in control less any applicable tax withholding.
TAX TREATMENT
OPTIONS. An optionee will generally not be deemed to have recognized
taxable income upon grant or exercise of any Incentive Stock Option, provided
that shares transferred in connection with the exercise are not disposed of by
the optionee for at least one year after the date the shares are transferred in
connection with the exercise of the Option and two years after the date of grant
of the Option. If these holding periods are satisfied, upon disposal of the
shares, the aggregate difference between the per share Option exercise price and
the fair market value of the Common Stock is recognized as income taxable at
capital gains rates. No compensation deduction may be taken by the Company as a
result of the grant or exercise of Incentive Stock Options, assuming these
holding periods are met.
In the case of the exercise of a Non-Statutory Stock Option, an optionee
will be deemed to have received ordinary income upon exercise of the Option in
an amount equal to the aggregate amount by which the fair market value of the
Common Stock exceeds the exercise price of the Option. In the event shares
received through the exercise of an Incentive Stock Option are disposed of prior
to the satisfaction of the holding periods (a "disqualifying disposition"), the
exercise of the Option will essentially be treated as the exercise of a Non-
Statutory Stock Option, except that the optionee will recognize the ordinary
income for the year in which the disqualifying disposition occurs. The amount
of any ordinary income recognized by an optionee upon the exercise of a Non-
Statutory Stock Option or due to a disqualifying disposition will be a
deductible expense of the Company for federal income tax purposes, subject to
the limitations imposed by Code Section 162(m) (discussed below).
17
<PAGE>
STOCK AWARDS. When shares of Common Stock, as Stock Awards, are
distributed upon vesting, the recipient recognizes ordinary income equal to the
fair market value of such shares at the date of distribution plus any dividends
and earnings on such shares (provided such date is more than six months after
the date of grant) and the Company is permitted a commensurate compensation
expense deduction for income tax purposes.
LIMITED OPTION AND STOCK RIGHTS. Upon the exercise of Limited Option
Rights and Limited Stock Rights, the holder will recognize as income the value
of the cash received in the year in which the payment is made and the Company
and the Bank would generally be entitled to a deduction for the payment.
PERFORMANCE AWARDS
GENERAL. The Incentive Plan provides the Committee with the ability to
condition or restrict the vesting or exercisability of any Award upon the
achievement of performance targets or goals as set forth under the Incentive
Plan. Any Award subject to such conditions or restrictions is considered to be
a "Performance Award." Subject to the express provisions of the Plan and as
discussed in this paragraph, the Committee has discretion to determine the terms
of any Performance Award, including the amount of the award, or a formula for
determining such, the performance criteria and level of achievement related to
these criteria which determine the amount of the award granted, issued,
retainable and/or vested, the period as to which performance shall be measured
for determining achievement of performance (a "performance period"), the timing
of delivery of any awards earned, forfeiture provisions, the effect of
termination of employment for various reasons, and such further terms and
conditions, in each case not inconsistent with the Plan, as may be determined
from time to time by the Committee. The performance criteria upon which
Performance Awards are granted, issued, retained and/or vested may be based on
financial performance and/or personal performance evaluations, except that for
any Performance Award that is intended by the Committee to satisfy the
requirements for "performance based compensation" under Code Section 162(m), the
performance criteria shall be a measure based on one or more Qualifying
Performance Criteria (as defined below). Notwithstanding satisfaction of any
performance goals, the number of Shares granted, issued, retainable and/or
vested under a Performance Award may be adjusted by the Committee on the basis
of such further considerations as the Committee in its sole discretion shall
determine. However, the Committee may not increase the amount earned upon
satisfaction of any performance goal by any Participant who is a "covered
employee" within the meaning of Section 162(m) of the Code.
QUALIFYING PERFORMANCE CRITERIA AND SECTION 162(M) LIMITS. Subject to
shareholder approval of the Plan, the Performance Criteria for any Performance
Award that is intended to satisfy the requirements for "performance based
compensation" under the Code Section 162(m) shall be based upon any one or more
of the following Performance Criteria, either individually, alternatively or in
any combination, applied to either the Company as a whole or to a business unit
or subsidiary, either individually, alternatively or in any combination, and
measured either on an absolute basis or relative to a pre-established target, to
previous years' results or to a designated comparison group, in each case as
preestablished by the Committee under the terms of the Award: net income, as
adjusted for non-recurring items; cash earnings; earnings per share; cash
earnings per share; return on equity; return on assets; assets; stock price;
total shareholder return; capital; net interest income; market share; cost
control or efficiency ratio; and asset growth.
MAXIMUM AWARDS. The aggregate amount of Options granted under the Plan
during any 60-month period to any one Participant may not exceed 25% of the
total amount of options available to be granted under the Incentive Plan. The
aggregate amount of shares of Common Stock issuable under a Stock Award
18
<PAGE>
granted under the Plan for any 60-month period to any one Participant may not
exceed 25% of the total amount of Stock Awards available to be granted under the
Incentive Plan.
ALTERNATE OPTION PAYMENTS
Subject to the terms of the Incentive Plan, the Committee has discretion to
determine the form of payment for the exercise of an Option. The Committee may
indicate acceptable forms in the Award Agreement covering such Options or may
reserve its decision to the time of exercise. No Option is to be considered
exercised until payment in full is accepted by the Committee. Any shares of
Common Stock tendered in payment of the exercise price of an Option shall be
valued at the fair market value of the Common Stock on the date prior to the
date of exercise.
AMENDMENTS
Subject to certain restrictions contained in the Incentive Plan, the Board
of Directors or Committee may amend the Incentive Plan in any respect, at any
time, provided that no amendment may affect the rights of the holder of an Award
without his or her permission and such amendment must comply with applicable law
and regulation. The Incentive Plan may be subject to certain federal
regulations. Such federal regulations provide that any stock-based benefit
plan, such as the Incentive Plan, that is adopted by a converted savings
institution within the first year after conversion may not provide for the
granting of Awards which vest or become exercisable in installments at a rate
greater than 20% per year and may not permit the acceleration of vesting or
exercisability, except in the case of death or disability. In the event such
federal regulations are deemed to be applicable to the Incentive Plan, the Board
of Directors intends to take any necessary action, including the amendment of
the the Incentive Plan, to provide for the acceleration of vesting or
exercisability of Awards upon the occurrence of a change in control of the
Company or the Bank and other circumstances. It is intended that any such
amendment would be submitted to shareholders for approval to the extent
required by applicable regulations.
ADJUSTMENTS
In the event of any change in the outstanding shares of Common Stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or in the event an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted Awards, to prevent dilution, diminution or enlargement of the rights of
the holder; provided, however, that in the case of an extraordinary dividend,
the Committee may be required to obtain OTS approval prior to any such
adjustment. All Awards under this Incentive Plan shall be binding upon any
successors or assigns of the Company.
NONTRANSFERABILITY
Unless determined otherwise by the Committee, Awards under the Incentive
Plan shall not be transferable by the recipient other than by will or the laws
of intestate succession or pursuant to a domestic relations order. With the
consent of the Committee, a recipient may permit transferability or assignment
for valid estate planning purposes of a Non-Statutory Stock Option as permitted
under the Code or Rule 16b-3 under the Exchange Act and a participant may
designate a person or his or her estate as beneficiary of any Award to which the
recipient would then be entitled, in the event of the death of the participant.
19
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STOCKHOLDER APPROVAL, EFFECTIVE DATE OF PLAN AND REGULATORY COMPLIANCE
The Incentive Plan is subject to the regulations of the New York Banking
Board ("NYBB") and the Federal Deposit Insurance Corporation ("FDIC"). Neither
the NYBB or the FDIC has endorsed or approved the Incentive Plan.
The Incentive Plan provides that it shall become effective upon the earlier
of: (i) the date that it is approved by a majority of votes eligible to be cast
by the Company's shareholders at a duly called meeting of shareholders; or (ii)
February 19, 1999. Accordingly, if the Incentive Plan is not approved by a
majority of the votes eligible to be cast by shareholders at the Annual Meeting,
the Incentive Plan and any grants thereunder shall become effective on February
19, 1999 without further shareholder approval unless it is terminated by the
Board of Directors. In the absence of the approval of the Incentive Plan by a
majority of shares cast at the Annual Meeting, the Options granted under the
Incentive Plan would not qualify as Incentive Stock Options under the Code and
the Common Stock of the Company may no longer be eligible for listing on the
Nasdaq National Market. Additionally, certain federal regulations may apply to
the Incentive Plan with regard to the vesting or exercisability of Awards. See,
"Amendments" above.
NEW PLAN BENEFITS
As of the date of this Proxy Statement, no determination had been made
regarding the granting of Awards under the Incentive Plan.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD, IF EXECUTED AND RETURNED, WILL BE VOTED "FOR" THE APPROVAL OF THE RICHMOND
COUNTY FINANCIAL CORP. 1998 STOCK-BASED INCENTIVE PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF THE
RICHMOND COUNTY FINANCIAL CORP. 1998 STOCK-BASED INCENTIVE PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended June 30, 1998,
were Ernst & Young LLP. The Company's Board of Directors has reappointed Ernst
& Young LLP to continue as independent auditors for the Bank and the Company for
the fiscal year ending June 30, 1999, subject to ratification of such
appointment by the shareholders.
Representatives of Ernst & Young LLP will be present at the Annual Meeting.
They will be given an opportunity to make a statement if they desire to do so
and will be available to respond to appropriate questions from shareholders
present at the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED PROXY
CARD WILL BE VOTED "FOR" RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS
THE INDEPENDENT AUDITORS OF THE COMPANY.
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<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
SHAREHOLDER PROPOSALS
To be considered for inclusion in the Company's proxy statement and form of
proxy relating to the 1999 Annual Meeting of Shareholders, presently anticipated
to be held on October 27, 1999, a shareholder proposal must be received by the
Secretary of the Company at the address set forth on the Notice of Annual
Meeting of Shareholders not later than May 24, 1999. Any such proposal will
be subject to 17 C.F.R. Section 240.14a-8 of the Rules and Regulations under the
Exchange Act.
NOTICE OF BUSINESS TO BE CONDUCTED AT A SPECIAL OR ANNUAL MEETING
The Bylaws of the Company set forth the procedures by which a shareholder
may properly bring business before a meeting of shareholders. Pursuant to the
Bylaws, only business brought by or at the direction of the Board of Directors
may be conducted at an annual meeting. The Bylaws of the Company provide an
advance notice procedure for a shareholder to properly bring business before an
annual meeting. The shareholder must give written advance notice to the
Secretary of the Company not less than ninety (90) days before the date
originally fixed for such meeting; provided, however, that in the event that
less than one hundred (100) days notice or prior public disclosure of the date
of the meeting is given or made to shareholders, notice by the shareholder to be
timely must be received not later than the close of business on the tenth day
following the date on which the Company's notice to shareholders of the annual
meeting date was mailed or such public disclosure was made. The advance notice
by shareholders must include the shareholder's name and address, as they appear
on the Company's record of shareholders, a brief description of the proposed
business, the reason for conducting such business at the annual meeting, the
class and number of shares of the Company's capital stock that are beneficially
owned by such shareholder and any material interest of such shareholder in the
proposed business. In the case of nominations to the Board of Directors,
certain information regarding the nominee must be provided. Nothing in this
paragraph shall be deemed to require the Company to include in its proxy
statement or the proxy relating to any Annual Meeting any shareholder proposal
which does not meet all of the requirements for inclusion established by the SEC
in effect at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Shareholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are then present at the Annual
Meeting and wish to vote your shares in person, your original proxy may be
revoked by voting at the Annual Meeting. However, if you are a shareholder
whose shares are not registered in your own name, you will need appropriate
documentation from your recordholder to vote personally at the Annual Meeting.
21
<PAGE>
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE FISCAL YEAR ENDED JUNE
30, 1998, AS FILED WITH THE SEC, WILL BE FURNISHED WITHOUT CHARGE TO
SHAREHOLDERS OF RECORD UPON WRITTEN REQUEST TO THOMAS R. CANGEMI, RICHMOND
COUNTY FINANCIAL CORP., 1214 CASTLETON AVENUE, STATEN ISLAND, NEW YORK 10310.
By Order of the Board of Directors
/s/ Thomas R. Cangemi
Thomas R. Cangemi
Senior Vice President and
Corporate Secretary
Staten Island, New York
August 24, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN
PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, YOU ARE REQUESTED TO SIGN, DATE AND PROMPTLY
RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
22
<PAGE>
REVOCABLE PROXY
RICHMOND COUNTY FINANCIAL CORP.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 29, 1998
10:00 A.M., EASTERN TIME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the
Board of Directors of Richmond County Financial Corp. (the ""Company"), each
with full power of substitution, to act as proxies for the undersigned, and to
vote all shares of Common Stock of the Company which the undersigned is entitled
to vote at the Annual Meeting of Stockholders, to be held on September 29, 1998
at 10:00 a.m., Eastern Time, at the Columbian Lyceum, 386 Clove Road, Staten
Island, New York 10310 and at any and all adjournments thereof as indicated.
1. The election as directors of all nominees listed to three-year terms (except
as marked to the contrary below):
FOR WITHHOLD FOR ALL EXCEPT
[ ] [ ] [ ]
JAMES L. KELLEY, T. RONALD QUINLAN, JR. AND ANTHONY E. BURKE
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK "FOR
ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
- --------------------------------------------------------------
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. The approval of the Companys 1998 [ ] [ ] [ ]
Stock-Based Incentive Plan.
3. The ratification of the appointment [ ] [ ] [ ]
of Ernst & Young LLP as independent
auditors of the Company for the
fiscal year ending June 30, 1999.
</TABLE>
PLEASE CHECK BOX IF YOU PLAN TO ATTEND THE MEETING. [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" EACH OF THE LISTED PROPOSALS.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS
LISTED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS
PROXY WILL BE VOTED BY THE PROXY COMMITTEE OF THE BOARD OF DIRECTORS IN THEIR
DISCRETION. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE ANNUAL MEETING.
Please be sure to sign and date this Proxy in the box below.
- ----------------------------- -------------------------------
Stockholder sign above Date
- ----------------------------- -------------------------------
Co-holder (if any) sign above Date
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
IMPORTANT: The abovesigned acknowledges receipt from the Company prior
to the execution of this proxy of a Notice of Annual Meeting of Stockholders and
of a Proxy Statement dated August 24, 1998.
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
