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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted
[X] Definitive Proxy Statement by Rule 14a-6(e)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
RICHMOND COUNTY FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
RICHMOND COUNTY FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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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Notes:
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RICHMOND COUNTY FINANCIAL CORP.
1214 CASTLETON AVENUE
STATEN ISLAND, NEW YORK 10310
(718) 448-2800
September 23, 1999
Fellow Shareholders:
You are cordially invited to attend the 1999 annual meeting of shareholders
of Richmond County Financial Corp., the holding company for Richmond County
Savings Bank, Staten Island, New York, which will be held on October 28, 1999 at
10:00 a.m., local time, at The Staaten, 697 Forest Avenue, 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
Richmond County 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 Richmond County has determined that matters to be
considered at the annual meeting are in the best interests of Richmond County
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" the
approval of the Richmond County Financial Corp. Stock Compensation Plan
(formerly referred to as the "Bayonne Bancshares, Inc. 1998 Stock-Based
Incentive Plan"), as amended and restated, 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, I thank you
for your continued interest and support.
Sincerely yours,
/s/ Michael F. Manzuilli
Michael F. Manzuilli
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 October 28, 1999
__________________________________
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of Richmond
County Financial Corp., the holding company for Richmond County Savings Bank,
will be held on October 28, 1999 at 10:00 a.m., local time, at The Staaten, 697
Forest Avenue, 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. Stock Compensation
Plan (formerly referred to as the "Bayonne Bancshares, Inc. 1998
Stock-Based Incentive Plan"), as amended and restated;
3. the ratification of the appointment of Ernst & Young LLP as
independent auditors of the company for the fiscal year ending June
30, 2000; 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 September 8, 1999 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 Richmond County 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 Richmond
County. 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 10 days prior to the annual meeting and
will also be available at the annual meeting itself.
By Order of the Board of Directors
/s/ Diane L. DeLillo
Diane L. DeLillo, Esq.
Corporate Secretary
Staten Island, New York
September 23, 1999
<PAGE>
RICHMOND COUNTY FINANCIAL CORP.
_______________________
Proxy Statement
Annual Meeting of Shareholders
October 28, 1999
_______________________
Solicitation and Voting of Proxies
This proxy statement is being furnished to shareholders of Richmond County
Financial Corp. in connection with the solicitation by the board of directors of
proxies to be used at the annual meeting of shareholders, to be held on October
28, 1999 at 10:00 a.m., local time, at The Staaten, 697 Forest Avenue, Staten
Island, New York 10310, and at any adjournments thereof. The 1999 Annual Report
to Shareholders, including the consolidated financial statements of the company
for the fiscal year ended June 30, 1999, accompanies this proxy statement which
is first being mailed to record holders on or about September 23, 1999.
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 or by voting via the Internet or by telephone.
Shareholders are urged to indicate their vote in the spaces provided on the
proxy card. Instead of returning signed proxy cards, shareholders of record can
vote their shares over the Internet, or by calling a specially designated
telephone number. These new Internet and telephone voting procedures are
designed to authenticate shareholders' identities, to allow shareholders to
provide their voting instructions, and to confirm that their instructions have
been recorded properly. Specific instructions for shareholders of record who
wish to use the Internet or telephone voting procedures are set forth on the
enclosed proxy card. Proxies solicited by the board of directors of Richmond
County 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. Stock
Compensation Plan (formerly referred to as the "Bayonne Bancshares, Inc. 1998
Stock-Based Incentive Plan"), as amended and restated, and "FOR" the
ratification of Ernst & Young LLP as independent auditors of Richmond County for
the fiscal year ending June 30, 2000.
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, including
a proxy voted via the Internet or by telephone, 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.
<PAGE>
The cost of solicitation of proxies on behalf of management will be borne
by Richmond County. 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, 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 persons for their reasonable expenses in doing
so.
Voting Securities and Required Votes
The securities which may be voted at the annual meeting consist of shares
of common stock of the company, 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 September 8, 1999 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 and entitled to vote on the Record Date was 31,039,812 shares.
As provided in Richmond County'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 (1) to make all determinations necessary to
implement and apply the limit, including determining whether persons or entities
are acting in concert, and (2) 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 under 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:
. broker non-votes, or
. proxies as to which authority to vote for one or more of the nominees
being proposed is withheld.
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As to the Richmond County Financial Corp. Stock Compensation Plan, as
amended and restated (Proposal 2) submitted for shareholder approval, the proxy
card being provided by the board of directors enables a shareholder to check the
appropriate box on the proxy card to:
. vote "FOR" the item;
. vote "AGAINST" the item; or
. "ABSTAIN" with respect to the item.
The approval of the Richmond County Financial Corp. Stock Compensation
Plan, as amended and restated, will require a majority of the votes cast by
Richmond County shareholders. Shares as to which the "ABSTAIN" box has been
selected on the proxy card will be counted as present and entitled to vote and
have the effect of a vote against the matter. In contrast, shares underlying
broker non-votes or in excess of the limit will have no effect on the vote on
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:
. vote "FOR" the item;
. vote "AGAINST" the item; or
. "ABSTAIN" from voting on such item.
Under Richmond County's bylaws, the affirmative vote of a majority of the
votes cast at the annual meeting is required to constitute shareholder
ratification of this proposal and all other matters that may properly come
before the annual meeting. Accordingly, shares as to which the "ABSTAIN" box has
been selected on the proxy card will not be counted as votes cast for purposes
of Delaware law and the company's bylaws. Shares underlying broker non-votes or
in excess of the limit will not be counted as votes cast and will have no effect
on the vote on the item.
If you are a participant in the Richmond County Savings Bank Employee Stock
Ownership Plan, the Richmond County 401(k) Plan, or the Bayonne Bancshares, Inc.
401(k) Plan, or if you have grants of restricted stock under the Richmond County
Financial Corp. 1998 Stock-Based Incentive Plan (the "Richmond County Incentive
Plan") or the Richmond County Financial Corp. Stock Compensation Plan (formerly
referred to as the "Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan"),
you will receive separate proxy cards for the shares of common stock you own
through each of these plans. Each such proxy card you receive will serve as a
voting instruction card for the trustees or administrators of these plans in
which you have shares of common stock credited to your account. If you own
shares through any of these plans and do not vote, the respective plan trustees
will vote the shares in accordance with the terms of the respective plans.
Proxies solicited hereby are to be returned to the company's transfer
agent, Registrar and Transfer Company. The board of directors has designated
Registrar and Transfer to act as the inspector of election and tabulate the
votes at the annual meeting. Registrar and Transfer 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.
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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 (the "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 Richmond County'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 2,113,884/(1)/ 6.81%
Ownership Plan (the "ESOP")
1214 Castleton Avenue
Staten Island, New York 10310
Common Stock Richmond County Savings Charitable Foundation 1,866,300/(2)/ 6.01%
1214 Castleton Avenue
Staten Island, New York 10310
Common Stock Thomson, Horstmann & Bryant, Inc. 1,673,650/(3)/ 5.39%
Park 80 West, Plaza One
Saddle Brook, New Jersey 07663
</TABLE>
____________________________
(1) Shares of common stock were acquired by the ESOP in Richmond County Savings'
conversion. The ESOP Committee administers the ESOP. HSBC Bank USA has been
appointed as the corporate trustee for the ESOP ("ESOP Trustee"). Under the
terms of the ESOP and related trust, the ESOP trustee votes shares allocated
to participants accounts in accordance with the instructions of the
participants and, subject to its fiduciary duties, votes unallocated shares
and allocated shares for which timely voting instructions are not given in a
manner calculated to most accurately reflect the instructions received from
participants regarding the allocated stock. As of December 31, 1998, 105,694
shares have been allocated to participants under the ESOP.
(2) The Richmond County Savings Charitable Foundation was established and funded
by Richmond County in connection with Richmond County Savings' conversion
with an amount of Richmond County's common stock equal to 8.0% of the total
amount of common stock sold in the conversion. The Richmond County Savings
Charitable Foundation is a Delaware non-stock corporation and is dedicated
to the promotion of charitable purposes within the communities in which
Richmond County Savings operates. The Richmond County Savings Charitable
Foundation is governed by a board of directors with 13 members, including
all of directors of Richmond County and Richmond County Savings. Pursuant to
the terms of the contribution of common stock, as mandated by the Office of
Thrift Supervision ("OTS"), all shares of common stock held by the Richmond
County Savings Charitable Foundation must be voted in the same ratio as all
other voted shares of Richmond County's common stock on all proposals
considered by shareholders of Richmond County.
(3) According to information disclosed on Schedule 13G, filed with the SEC on
January 25, 1999. 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
Richmond County is presenting the Richmond County Financial Corp. Stock
Compensation Plan (formerly referred to as the "Bayonne Bancshares, Inc. 1998
Stock-Based Incentive Plan"), as amended and restated, to shareholders for
approval. All directors, officers and employees are eligible to receive
restricted
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stock awards and stock option awards under this plan. See Proposal 2 for a
summary of the material terms of the plan and the amendments being made thereto.
Proposals To Be Voted On At The Annual Meeting
Proposal 1. Election of Directors
The board of directors of Richmond County consists of nine directors and is
divided into three classes. Each of the nine members of the board also presently
serves as a director of Richmond County Savings. 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 William
C. Frederick, Maurice K. Shaw and Patrick F.X. Nilan.
Mr. Nilan is a former director of Bayonne Bancshares, Inc. who was elected
to the board in March 1999 in accordance with the terms of the company's
agreement to acquire Bayonne. Under that agreement, the company agreed to
increase the size of its board by one member and appoint Mr. Nilan as the
nominee to fill this newly created vacancy until the year 2000. Accordingly, as
of March 22, 1999, the board of directors was increased from eight to nine
members and Mr. Nilan was elected as its ninth member.
In accordance with the company's bylaws, Mr. Nilan was placed within the
existing classes of directors. Under Delaware law, the company is required to
make these classes as even in number as possible. Because there were already
three members in the class of directors whose term expires in 2000 and 2001, Mr.
Nilan was placed in the class of directors whose term expires in 1999. To comply
with the terms of the merger agreement, the company has nominated Mr. Nilan for
election to the class of directors whose term expires in 2002. However, as
required by the merger agreement, Mr. Nilan has agreed to terminate his board
membership as of the company's year 2000 annual meeting of shareholders. Except
as described above, 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 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 Richmond County Savings and the year in which their terms (or, in
the case of nominees, their
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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 officers as a group
as of the Record Date.
<TABLE>
<CAPTION>
Amount and
Nature of
Expiration of Beneficial Ownership
Name and Principal Occupation at Present and for Director Term as Ownership as a Percent
Past Five Years Age Since(1) Director (2)(3)(4)(5)(6)(7) of Class(8)
- -------------------------------------------------- --- -------- ------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
NOMINEES
William C. Frederick, M.D. 71 1980 2002 82,424 *
Surgeon in Staten Island, New York.
Maurice K. Shaw 60 1979 2002 82,750 *
Retired Senior Vice President of Brooklyn Union
Gas Co.
Patrick F. X. Nilan 69 1999 2002 327,349 1.04%
Mr. Nilan served as Chairman of the Board of
Bayonne Bancshares, Inc. and First Savings Bank
of New Jersey, SLA from 1997 until Bayonne
was acquired by Richmond County in March
1999. Prior to that time, Mr. Nilan had served as
President and Chief Executive Officer of First
Savings Bank of New Jersey, SLA from 1994
until his retirement in 1997.
CONTINUING DIRECTORS
Michael F. Manzulli 58 1990 2000 426,657 1.36%
Chairman of the Board and Chief Executive
Officer of Richmond County and Richmond
County Savings. Mr. Manzulli is also a member
of the board of directors of Peter B. Cannell &
Co., Inc., an investment management firm
located in New York City, and is a partner at the
law firm of Lahr, Dillon, Manzulli, Kelley &
Pennet, P.C.
Godfrey H. Carstens, Jr. 71 1973 2000 83,309 *
Owner and President of Carstens Electrical
Supply Co.
Robert S. Farrell 73 1973 2000 96,369 *
President of H.S. Farrell, Inc., a building supply
company.
James L. Kelley 57 1997 2001 90,063 *
Partner of the law firm of Lahr, Dillon, Manzulli,
Kelley & Penett, P.C.
T. Ronald Quinlan, Jr. 72 1978 2001 82,424 *
Retired President of Quinlan Fuel Service.
</TABLE>
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<TABLE>
<CAPTION>
Amount and
Nature of
Expiration of Beneficial Ownership
Name and Principal Occupation at Present and for Director Term as Ownership as a Percent
Past Five Years Age Since(1) Director (2)(3)(4)(5)(6)(7) of Class(8)
- -------------------------------------------------- --- -------- ------------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
Anthony E. Burke 52 1997 2001 255,709 *
President and Chief Operating Officer of
Richmond County and Richmond County
Savings. Mr. Burke is also a member of the
board of directors of Peter B. Cannell & Co.,
Inc., an investment management firm located in
New York City. Mr. Burke was formerly a
partner with the financial services industry group
of Ernst & Young LLP.
NAMED EXECUTIVE OFFICERS
(who are not also directors)
Thomas R. Cangemi 31 -- -- 189,977 *
Senior Vice President, Chief Financial Officer
and Treasurer. Mr. Cangemi is also a member of
the board of directors of Peter B. Cannell & Co.,
Inc., an investment management firm located in
New York City. Mr. Cangemi formerly held a
variety of executive positions at publicly-traded
companies, including financial institutions.
All directors and officers as a group (28 persons) -- -- -- 2,257,627 6.78%
</TABLE>
__________________________
* Does not exceed 1.0% of the company's voting securities.
(1) Includes years of service as a trustee of Richmond County.
(2) Each person effectively exercises sole (or shares with spouse or other
immediate family members) voting or dispositive power as to shares reported.
(3) The figures shown include unvested shares of restricted stock awarded under
the Richmond County Financial Corp. 1998 Stock-Based Incentive Plan (the
"Richmond County Incentive Plan"), as follows: Mr. Frederick, 50,000
shares; Mr. Shaw, 50,000 shares; Mr. Nilan, 26,952 shares; Mr. Manzulli,
264,236 shares; Mr. Carstens, 50,000 shares; Mr. Farrell, 50,000 shares; Mr.
Kelley, 50,000 shares; Mr. Quinlan, 50,000 shares; Mr. Burke, 158,541
shares; and Mr. Cangemi, 105,694 shares. For Mr. Nilan, the figure includes
unvested shares of restricted stock awarded under the Richmond County
Financial Corp. Stock Compensation Plan (formerly the "Bayonne Bancshares,
Inc. 1998 Stock-Based Incentive Plan").
(4) All shares of restricted stock awarded under the Richmond County Incentive
Plan as of the Record Date will vest annually on October 20/th/ in five
equal installments. The first installment will vest on October 20, 1999,
and all such shares will become fully vested on October 20, 2003. The
shares of restricted stock granted to Mr. Nilan under the Richmond County
Financial Corp. Stock Compensation Plan began vesting on April 27, 1999, and
will continue to vest on each April 27/th/ until the shares become fully
vested on April 27, 2003. Notwithstanding the foregoing the vesting of all
such awards may accelerate under certain circumstances. Each participant
has voting, but not dispositive, power as to these shares.
(5) The figures shown include shares held in trust pursuant to the ESOP (and in
the case of Mr. Nilan, the First Savings Bank of New Jersey, SLA Employee
Stock Ownership Plan formerly sponsored by Bayonne) that have been
allocated, as of June 30, 1999, to individual accounts as follows: Mr.
Manzulli, 2,169 shares, Mr. Burke, 2,169 shares; Mr. Cangemi, 2,033 shares;
and Mr. Nilan, 13,995 shares; and all officers as a group, 51,053 shares.
Such persons have sole voting power, but no investment power, except in
limited circumstances, as to such shares.
(6) The figures shown include shares held in the trust of the Richmond County
Savings 401(k) Plan (and in the case of Mr. Nilan, the 401(k) plan formerly
sponsored by First Savings Bank of New Jersey, SLA) as to which each person
identified has shared voting and investment power as follows: Mr. Manzulli,
12,135 shares; Mr. Burke, 1,304 shares; and Mr. Cangemi, 653 shares; and
officers, as a group, 43,977 shares.
(7) The figures shown include shares of which the individuals have a right to
acquire beneficial ownership by the exercise of stock options within 60 days
of September 8, 1999 pursuant to the Richmond County 1998 Stock-Based
Incentive Plan (and in the case of Mr. Nilan, the Bayonne Bancshares, Inc.
1998 Stock-Based Incentive Plan) as follows: Mr. Frederick, 26,424 shares;
Mr. Shaw, 26,424 shares; Mr. Nilan, 8,740 shares; Mr. Manzulli, 132,118
shares; Mr. Carstens, 26,424 shares; Mr. Farrell, 26,424 shares; Mr. Kelley,
26,424 shares; Mr. Quinlan, 26,424 shares; Mr. Burke, 79,273 shares; and Mr.
Cangemi, 52,848 shares.
(8) Percentages with respect to each person or group of persons have been
calculated on the basis of 31,039,812 shares of Richmond County's common
stock, the number of shares of the company's common stock outstanding and
entitled to vote as of September 8, 1999, plus the number of shares of the
company's common stock which such person or group of persons has the right
to acquire within 60 days after the Record Date by the exercise of stock
options.
7
<PAGE>
Meetings of the Board of Directors and Committees of the Board of Directors
The board of directors of Richmond County and Richmond County Savings
conduct business through meetings of the board of directors and through the
activities of their committees. The boards of directors of the company and the
bank generally meet on a monthly basis and both may have additional meetings as
needed. During the fiscal year ended June 30, 1999, the board of directors of
the company held 16 meetings. The board of trustees of the bank held 13 meetings
during fiscal 1999. All of the directors of the company 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, 1999. 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, Nilan, Quinlan and Shaw, who are outside directors. The
Audit and Examining Committee of the bank also consists of Messrs. Farrell,
Frederick, Nilan, Quinlan and Shaw. 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 four times in fiscal 1999.
Nominating Committee. Richmond County's Nominating Committee for the 1999
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 Corporate 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 two times in fiscal 1999.
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 four times in
fiscal 1999.
Directors' Compensation
Directors' Fees. For fiscal year 1999, outside directors of the company
received an annual retainer of $15,000. No additional fees are 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.
Stock-Based Incentive Plan. On October 20,1998, each outside director
(other than Mr. Nilan) was granted 50,000 shares of restricted stock ("stock
awards") and non-statutory stock options, to purchase 132,118 shares of common
stock, (collectively, the "directors' awards") under the Richmond County
Incentive Plan. The directors' awards begin vesting in five equal annual
installments on October 20,1999. The non-statutory stock option awards have
exercise prices of $14.25. All options granted under the Richmond County
Incentive Plan expire 10 years from the date of grant. In the event an outside
director ceases service due to death or disability, all awards granted to the
director under the plan will immediately vest or become exercisable and remain
exercisable for a period of three years. The committee responsible for
administering the Richmond County Incentive Plan may also accelerate the vesting
of a director's awards
8
<PAGE>
in the event of retirement. Also, all directors' awards automatically become
fully vested in the event of a change in control of the bank or the company. The
awards held by Mr. Nilan were granted to him under the former Bayonne
Bancshares, Inc. 1998 Stock-Based Incentive Plan (now in its amended form, the
"Richmond County Financial Corp. Stock Compensation Plan") while he was serving
on the board of directors of Bayonne Bancshares, Inc.
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 Richmond County 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, Richmond County 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, 1999. The following discussion addresses
compensation information relating to the Chief Executive Officer and executive
officers of the company and the bank for fiscal 1999 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.
For fiscal 1999, the Compensation Committee operated under a policy to
structure executive compensation in a manner intended to limit the likelihood
that current compensation would exceed the limits for deductibility prescribed
by Section 162(m) of the Internal Revenue Code, as amended (the "Code"). This
policy will continue to be operative for fiscal 2000. However, the Compensation
Committee retains discretion to make future exceptions to this policy, and in
determining whether to do so, the Compensation Committee may consider a number
of factors, including Richmond County and Richmond County Savings tax position,
the materiality of amounts likely to be involved and any potential ramifications
of the loss of flexibility to respond to unforeseeable changes in circumstances.
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 committee
utilized for fiscal 1999 stemmed from its use of the results of various
compensation surveys prepared by independent consultants which were used to form
the basis of the committee's compensation decisions for fiscal year 1998.
9
<PAGE>
Additionally, consistent with past practice, assessing the performance of
the Chief Executive Officer and other executive officers of Richmond County and
Richmond County Savings is an integral part of the committee's compensation
determinations. 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 Compensation Committee then reports to the board of directors regarding the
performance of the Chief Executive Officer and other executive officers. The
committee also recommends to the board 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.
In 1999, the Compensation Committee made particular note of the executive
officers' performance with regard to the company's acquisition of Bayonne and
Ironbound Bankcorp, NJ. These acquisitions, which were completed in March 1999,
were immediately accretive to earnings, fulfilled the company's goal of entering
the New Jersey banking market, and increased the company's asset size from
approximately $1.7 billion to approximately $2.5 billion.
Further, 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.
COMPENSATION COMMITTEE CONSIDERATIONS FOR FISCAL 1999. 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 Richmond County Savings.
Executive officers may also participate in the non-qualified deferred
compensation plan sponsored by Richmond County 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 Richmond
County Savings.
In the past, Richmond County Savings participated in a number of
compensation surveys with peer institutions. However, as discussed above, in an
effort to ensure its competitiveness in the marketplace and in consideration of
Richmond County Savings' conversion to a stock institution and the formation of
Richmond County as a public company, the board of directors engaged the services
of two outside consultants, Hay Group and William M. Mercer, Incorporated for
various projects related to executive compensation for fiscal year 1998. The
Compensation Committee utilized the findings and reports of both Hay and Mercer
in determining executive compensation for fiscal 1998. These compensation levels
served as the foundation for the compensation levels established for fiscal year
1999.
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.
10
<PAGE>
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 Richmond County Savings' conversion, also included an opinion as
to the reasonable range of compensation for each position reviewed, including
the position of Chief Executive Officer.
In 1998, after considering information in both reports, including
recommendations made by Hay, together with the performance of Richmond County
Savings 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.
The fiscal 1998 compensation levels continued until the beginning of
Richmond County's third fiscal quarter in 1999. In February 1999, the committee
solicited and received a compilation of its peers' executive compensation from
the "SNL Executive Compensation Review 1998 for Thrift Institutions" and from
reports these institutions filed with the SEC. Based on this peer analysis, in
conjunction with the other factors described in this section, the executive
officers' salaries were modified so that they better reflected the salaries
commanded in the company's market.
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
Richmond County during fiscal 1999 (including his efforts related to Richmond
County's acquisition of Bayonne and Ironbound) 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 in 1998 as
modified to reflect the levels of executive compensation of Richmond County's
peers as reported in the SNL Review for 1998 and as reported in those companies'
SEC filings. The compensation of the Chief Executive Officer for fiscal 1999 was
not determined using any specific formula nor did his compensation relate to
specific performance criteria. The board approved the recommendations made by
the Compensation Committee regarding the Chief Executive Officer's compensation.
The Compensation Committee of the Board of Directors
of Richmond County
Godfrey H. Carstens, Jr. Robert S. Farrell
William C. Frederick, M.D. Maurice K. Shaw
11
<PAGE>
Stock Performance Graph. The following graph shows a comparison of total
shareholder return on Richmond County'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, 1999. The graph was derived from a limited period of time and, as a
result, may not be indicative of possible future performance of Richmond
County's common stock. The data were supplied by Media General Financial
Services.
Comparative Total Returns
Richmond County Financial Corp., The Nasdaq Market Index and
the MG Index For Savings and Loans
[GRAPH APPEARS HERE]
Summary
<TABLE>
- ------------------------------------------------------------------------------------------------------------
02/18/98 03/31/98 06/30/98 09/30/98 12/31/98 03/31/99 06/30/99
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Richmond Country Financial Corp. 100.00 117.62 114.86 92.52 99.53 92.26 120.53
Nasdaq Market Index 100.00 102.90 105.55 95.13 123.67 138.17 150.34
MG Index For Savings and Loans 100.00 105.68 101.70 79.68 87.11 88.12 86.77
Notes:
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 February 18 1998,
the first day of trading for Richmond County Financial Corp. common
stock.
- ------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
Summary Compensation Table. The following table shows, for the years ended
June 30, 1999, 1998 and 1997, the cash compensation paid, as well as certain
other compensation paid or accrued for that year to the Chief Executive Officer
of Richmond County and Richmond County Savings and all other executive officers
employed at the end of the fiscal year by the company and the bank who earned
and/or received salary and bonus in excess of $100,000 in fiscal year 1999
("named executive officers").
<TABLE>
<CAPTION>
Long-Term
Compensation
----------------------------
Annual Compensation Awards
------------------------------------------ ----------------------------
Securities
Other Restricted Underlying
Annual Stock Options/ All Other
Name and Principal Fiscal Compensation Awards SARs Compensation
Positions Year Salary($) Bonus($) ($)(1) ($)(2) (#)(3) ($)(4)
- ------------------------------- ------- --------- --------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael F. Manzulli 1999 $456,346 $90,000 $ -- $3,765,363 660,589 $ 77,696
Chairman of the Board and Chief 1998 391,724 40,000 -- -- -- 42,729
Executive Officer of Richmond 1997 324,416 -- -- -- -- 26,980
County and Richmond County
Savings
Anthony E. Burke 1999 $319,423 $75,000 $ -- $2,259,209 396,353 $ 42,779
President and Chief Operating 1998 200,992(5) -- -- -- -- --
Officer of Richmond County and
Richmond County Savings
Thomas R. Cangemi 1999 $167,308 $70,000 $ -- $1,506,140 264,236 $ 35,881
Senior Vice President, Chief 1998 102,115(5) -- -- -- -- --
Financial Officer of Richmond
County and Richmond County
Savings
</TABLE>
___________________________________
(1) For fiscal 1999, 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.
(2) Includes stock awards of 264,236, 158,541 and 105,694 shares granted to
Messrs. Manzulli, Burke and Cangemi, respectively, under the Richmond
County Incentive Plan. The awards will vest in five equal annual
installments commencing on October 20, 1999, the first anniversary of the
effective date of the awards. When shares become vested and are
distributed, the recipients will also receive an amount equal to
accumulated cash and stock dividends (if any) with respect thereto, plus
earnings thereon. All awards vest immediately upon termination of
employment due to death, disability, or following change in control. The
vesting of awards may also be accelerated upon retirement. As of June 30,
1999, the market value of the shares held by Messrs. Manzulli, Burke and
Cangemi was $5,086,543, $3,051,915 and $2,034,610, respectively. The dollar
amounts set forth in the table represent the market value of the shares
awarded on the date of grant.
(3) Includes stock options granted to Messrs. Manzulli, Burke, and Cangemi,
respectively, pursuant to the Richmond County Incentive Plan during fiscal
1999. See "Option Grants in Last Fiscal Year" table for discussion of
options granted under the Richmond County Incentive Plan.
(4) Other compensation includes matching contributions of $4,361, $6,352 and
$3,231 to the bank's 401(k) plan for Messrs. Manzulli, Burke and Cangemi,
respectively, for fiscal 1999, and $4,314 for Mr. Manzulli for fiscal 1998.
Other compensation also includes $34,827, $34,827 and $32,650 representing
the value of shares allocated to the accounts of Messrs. Manzulli, Burke
and Cangemi, respectively, under the ESOP, respectively, as of December 31,
1998. Other compensation also includes employer contributions of $37,500
and $37,480 credited under the bank's supplemental executive retirement
plan for Mr. Manzulli for fiscal 1999 and 1998 respectively, and an
automobile allowance for Messrs. Manzulli and Burke of $1,008 and $1,600,
respectively, for fiscal 1999.
(5) Mr. Burke and Mr. Cangemi were both hired in October 1997 at an annual
salary of $290,000 and $150,000, respectively.
13
<PAGE>
Compensation Arrangements
Employment Agreements. Effective February 18, 1998, and as amended on
September 21, 1999, Richmond County 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 a five-year term. The terms of the
employment agreements will 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,
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. If 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:
. failure to re-elect or re-appoint the executive to his current
offices, unless consented to by the executive;
. a material change in the executive's functions, duties or
responsibilities, unless consented to by the executive;
. relocation of the executive's principal place of employment by more
than 25 miles from its location as of the date of the employment
agreement, unless consented to by the executive;
. a reduction in the benefits and perquisites being provided to the
executive under the employment agreement, unless consented to by the
executive;
. liquidation or dissolution of the bank or the company; or
. a breach of the employment agreement by the bank or the company
(collectively referred to as an "event of termination"),
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, medical, health, dental and disability coverage for the
remaining term of the employment agreement. Upon termination of the executive's
employment due to an event of termination, the executive is subject to a
covenant not to compete with the company or the bank for one year.
Under the employment agreements, if a change in control of the bank or the
company occurs (as defined in the employment agreements), upon executive's
subsequent termination of employment due to dismissal, voluntary resignation for
any reason within 60 days of a change in control or resignation following any
demotion, loss or title, office or significant authority or responsibility,
reduction in annual compensation
14
<PAGE>
or benefits or relocation of principal place of business more than 25 miles from
his location prior to a change in control, 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: (1) the payments due for the remaining terms of the
employment agreement; or (2) five times the executive's annual compensation for
the most recently completed year. The company would also continue the
executive's life, health, and disability coverage for 60 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 under the agreements or otherwise,
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 will
indemnify the executive to the fullest extent allowable under Delaware law.
The bank has also entered into employment agreements with Messrs. Manzulli,
Burke and Cangemi (the "bank employment agreements"). The bank employment
agreements are substantially similar in terms to the agreement each has with
Richmond County. Notwithstanding that both agreements may provide for similar
payments and benefits, no executive is entitled to receive duplicative payments
and benefits.
In the event of a change in control of the bank or the company, the total
amount of payments due under the employment agreements for Messrs Manzulli,
Burke and Cangemi, 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 $6.5 million.
15
<PAGE>
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value At Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Options(1)
- --------------------------------------------------------------------------------- --------------------
Number of
Securities % Of Total
Underlying Options/SaRs Exercise or
Options/ Granted To Base Price
Sars Granted Employees In Per Expiration
Name (#)(2)(3)(4) Fiscal Year(5) Share Date(6) 5% 10%
- ------------------- -------------- -------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Manzulli 660,589 25% $14.25 10/20/08 $470,670 $941,340
Anthony E. Burke 396,353 15% $14.25 10/20/08 $282,402 $564,803
Thomas R. Cangemi 264,236 10% $14.25 10/20/08 $188,269 $376,536
</TABLE>
________________________________
(1) The amounts represent certain assumed rates of appreciation. Actual gains,
if any, on stock option exercises and common stock holdings are dependent
on the future performance of the common stock and overall stock market
conditions. There can be no assurance that the amounts reflected in this
table will be realized.
(2) Options granted pursuant to the Richmond County Incentive Plan are
exercisable in five equal annual installments commencing on October 20,
1999, provided, however, options will be immediately exercisable upon a
change in control and in the event the optionee terminates employment due
to death or disability. Options may also become immediately exercisable
upon retirement, at the Compensation Committee's discretion.
(3) The purchase price may be made in whole or in part in cash or common stock.
(4) Options are intended to be incentive stock options to the extent
permissible under Section 422 of the Code.
(5) Includes options granted to officers, directors and employees.
(6) The option term is 10 years from the date of grant.
16
<PAGE>
The following table provides certain information with respect to the number
of shares of common stock represented by outstanding options held by the named
executive officers as of June 30, 1999. Also reported are the values for "in-
the-money" options which represent the positive spread between the exercise
price of any such existing stock options and the year end price of the common
stock.
Fiscal Year-End Option/SAR Value
<TABLE>
<CAPTION>
Value of
Number Unexercised
of Securities in-the-money
Underlying Unexercised Options/SARs
Options/SARs at Fiscal Year-
Name At Fiscal Year-End(#)(1) End($)(2)(3)
- ------------------- -------------------------- --------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Michael F. Manzulli 132,118 528,471 $660,590 $2,642,355
Anthony E. Burke 79,271 317,082 $396,355 $1,585,410
Thomas R. Cangemi 52,847 211,389 $264,235 $1,056,945
</TABLE>
____________________________________
(1) The options in this table have an exercise price of $14.25.
(2) The price of Richmond County's common stock on June 30, 1999 was $19.25.
(3) Based on the market value of the underlying common stock at fiscal year end,
minus the exercise price.
17
<PAGE>
Retirement Plan. Richmond County Savings sponsors the Retirement Plan of
Richmond County Savings Bank in RSI Retirement Trust to provide retirement
benefits for eligible employees. However, the accrual of benefits under the
retirement plan have been frozen as of April 1, 1999. 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, 1999, Messrs. Manzulli, Burke and Cangemi had
credited years of service of 6, 1 and 1 years, respectively.
<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 Code, is $160,000 for
plan years beginning on or after January 1, 1998.
Supplemental Executive Retirement Plan.
The company sponsors the Richmond County Financial Corp. Supplemental
Executive Retirement Plan (the "SERP"), a non-qualified deferred compensation
plan that benefits certain individuals designated by the board of directors from
time to time. The SERP combines the form of the two non-qualified deferred
compensation plans previously maintained by Richmond County Savings and provides
eligible individuals with benefits that Richmond County and Richmond County
Savings would have provided to the individual under the tax-qualified Retirement
Plan, ESOP, and 401(k) Plan sponsored by Richmond County and Richmond County
Savings, but that it cannot provide under such plans as a result of certain
limitations imposed by the Code. Currently, Messrs. Manzulli and Burke
participate in the SERP. However, Mr. Burke does not participate in the SERP
with respect to benefits provided in connection with the Retirement Plan.
In addition to providing for benefits lost under the Retirement Plan, ESOP,
and 401(k) Plan as a result of these limitations, the SERP also provides
benefits to designated individuals who retire, who terminate employment in
connection with a change in control, or whose participation in the ESOP ends due
to termination of the ESOP in connection with a change in control before the
complete scheduled repayment of the ESOP loan. Generally, upon such an event,
the SERP provides the individual with a benefit equal to what
18
<PAGE>
the individual would have received under the ESOP had he remained employed
throughout the scheduled term of the ESOP loan less the benefits actually
provided on his behalf under the ESOP.
In addition, as a result of the freezing of the Retirement Plan, the SERP
provides a benefit equal to the actuarial equivalent of the benefit the
participant would have accrued under the Retirement Plan from the date the plan
was frozen through his normal retirement date had the plan not been frozen.
However, this "Pension Restoration Benefit" has been determined as a fixed
amount and will accrue earnings in accordance with the "investment" alternatives
available under the plan.
SERP benefits, other than the Pension Restoration Benefit, generally become
payable at the same time and in the same form as the benefits under the
corresponding tax-qualified plan. The Pension Restoration Benefit becomes
payable at the same time as the SERP benefit related to the 401(k) Plan and will
be paid in a lump sum or installments, as elected by the participant.
Transactions With Certain Related Persons
Richmond County Savings' policies do not permit it to make loans to any of
its or Richmond County's 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 Richmond County'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.
Richmond County Savings 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 Richmond County 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.
Richmond County 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.
During fiscal year 1999, Michael F. Manzulli, Chairman of the Board and
Chief Executive Officer of Richmond County and Richmond County Savings, and
James L. Kelley, one of the directors of Richmond County and Richmond County
Savings, were partners of the law firm of Lahr, Dillon, Manzulli, Kelley &
Pennet, P.C. During that time, Lahr, Dillon, Manzulli, Kelley & Pennet, P.C.
furnished Richmond County Savings with certain legal services.
19
<PAGE>
Proposal 2. Approval of The Richmond County Financial Corp.
Stock Compensation Plan
(formerly referred to as the "Bayonne Bancshares, Inc. 1998 Stock-Based
Incentive Plan")
The board of directors of Richmond County is presenting for shareholder
approval the Richmond County Financial Corp. Stock Compensation Plan (formerly
referred to as the "Bayonne Bancshares 1998 Stock-Based Incentive Plan"), as
amended and restated. The plan was originally approved by shareholders of
Bayonne Bancshares, Inc. in 1998. Richmond County assumed the former Bayonne
plan in connection with its acquisition of Bayonne in March 1999. Last year,
Richmond County's shareholders approved a similar plan, the Richmond County
Financial Corp. 1998 Stock-Based Incentive Plan. We are asking you to approve
the plan, as amended, so that its terms and conditions are substantially similar
to the Richmond County Plan you approved last year. This will allow us to treat
all of our directors, officers and employees equally, including those who came
to us through our two acquisitions. In addition, we want to be able to use the
available stock under the former Bayonne plan for all of our directors, officers
and employees.
Both plans provide for the award of restricted stock and stock options to
directors, officers and employees. At the time Richmond County assumed the
Bayonne plan there remained 127,816 shares reserved for restricted stock awards
and 324,787 shares for the granting of stock option awards under the plan. The
shares subject to outstanding awards as of the date of the acquisition remain
available for issuance in connection with the corresponding prior grants. The
purpose of the plan is to attract and retain qualified personnel in key
positions, provide officers, employees and non-employee directors of Richmond
County and Richmond County Savings with a proprietary interest in the company as
an incentive to contribute to its success, promote the attention of management
to other shareholders' concerns and reward employees for outstanding
performance. To these ends, the company is seeking to ensure the availability of
stock-based compensation afforded by this plan. Accordingly, the board of
directors believes it is in the company's and your best interest that the board
be authorized to use the stock and stock option awards available under the
former Bayonne plan for Richmond County's and Richmond County Savings'
directors, officers and employees. Approval of the Richmond County Financial
Corp. Stock Compensation Plan that amends the former Bayonne plan will provide
the Richmond County board with this authority.
Additionally, there exists certain differences between the provisions of
the former Bayonne plan and the plan that Richmond County's shareholders adopted
last year. The board amended the former Bayonne plan on July 12, 1999, so that
its terms correspond with those of the plan you approved last year. These
amendments:
. provide for the acceleration of vesting of restricted stock awards and
stock option awards in the event of a change in control of Richmond
County or Richmond County Savings;
. provide the committee administering the plan with the discretion to
accelerate the vesting of restricted stock awards and stock option
awards upon a recipient's retirement;
. remove certain vesting limitations that applied to Bayonne but do not
apply to Richmond County; and
. change the name of the plan to the Richmond County Financial Corp. Stock
Compensation Plan in order to reflect the assumption of the plan by
Richmond County pursuant to its acquisition of Bayonne in March.
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We are asking you to approve these amendments. A copy of this plan
accompanies this document as Annex A. Descriptions or summaries of the terms of
the plan are qualified in their entirety by the complete provisions found in
Annex A.
General
The Richmond County Financial Corp. Stock Compensation Plan (formerly
referred to as the "Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan")
authorizes the granting of options to purchase common stock, awards of common
stock and limited rights (collectively, "awards"). Subject to certain
adjustments to the awards, as specified in section 15 of the plan, to prevent
dilution, diminution or enlargement of the rights of the participant, the
maximum number of shares available for awards under the plan is 715,771 shares.
The maximum number of shares authorized for purchase pursuant to the exercise of
stock options which may be granted under the plan is 511,264 shares. The maximum
number of shares authorized for the award of restricted stock is 204,506 shares.
At June 30, 1999, stock options had been granted to purchase 211,477 shares of
stock to participants, and restricted stock awards totaling 76,689 shares of
common stock had been awarded to participants under the plan. All officers,
other employees and non-employee directors of the company and its affiliates are
eligible to receive awards under the plan. The plan is administered by a
committee. Authorized but unissued shares or shares previously issued and
reacquired by the company may be used to satisfy awards under the plan.
The plan authorizes the grant of awards in the form of:
. options to purchase the company's common stock 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
certain conditions and which do not result in tax deductions to the
company), referred to as "incentive stock options" or "ISOs";
. options that do not so qualify (options which do not afford certain
income tax benefits to recipients, but which may provide tax deductions
to the company), referred to as "non-statutory stock options" or "NSOs";
. stock awards, which provide a grant of common stock that may vest over
time; and
. limited rights which are exercisable only in the event of a change in
control.
Stock Options
The administering committee has the discretion to award incentive stock
options or non-statutory stock options to employees, while only non-statutory
stock options may be awarded to non-employee directors. Under the plan, the
committee has the authority to determine the date or dates on which each stock
option will become exercisable. In order to qualify as incentive stock options
under Section 422 of the Code, the exercise price must not be less than 100% of
the fair market value on the date of the grant. Incentive stock options granted
to any person who is the beneficial owner of more than 10% of the outstanding
voting stock 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 the grant. The exercise
price may be paid in cash or in common stock at the discretion of the committee.
See "Payment Alternatives" and "Method of Option Exercise."
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Unless otherwise determined by the committee, upon termination of a
participant's service for any reason other than death, disability, retirement or
termination for cause, the vested incentive stock options and non-statutory
stock options shall be exercisable for a period of three months following
termination. The committee, in its discretion, may determine the time frame in
which options may be exercised and may redesignate incentive stock options as
non-statutory stock options. In the event of termination for cause, all rights
to any stock options granted under the plan shall expire immediately upon
termination. If a participant's service is terminated for death or disability
all stock options held by the participant vest and shall be exercisable for up
to one year from the date of such termination of service. As a result of the
amendments to the plan, the committee has the discretion to permit the
acceleration of the vesting of stock options following the retirement of a
participant as well. Following retirement, a participant, has one year to
exercise his stock options; provided that incentive stock options not exercised
within three months from the participant's retirement date shall be redesignated
as non-statutory stock options. The plan now provides that in the event of a
change in control of Richmond County or Richmond County Savings', stock options
will become fully vested and shall be exercisable for the term of the stock
option; provided that incentive stock options not exercised within three months
of an individual's termination of employment shall be redesignated as non-
statutory stock options.
Stock Awards
The plan also authorizes the granting of stock awards to employees and
directors. The committee has the authority to determine the dates on which stock
awards granted will vest. The plan now provides that all stock award grants
immediately vest in the event of a change in control or following termination of
service due to death or disability. In addition, the committee has the
discretion to permit stock awards to vest immediately following the termination
of service of a participant due to retirement. Under the plan, the vesting of
stock awards may also be made contingent upon the attainment of certain
performance goals by the company, bank or grantee, which performance goals, if
any, would be established by the committee.
Stock awards are generally nontransferable and nonassignable as provided in
the plan. The committee has the power, under the plan, to permit transfers. When
stock awards are distributed in accordance with the plan, the recipients will
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 trust. Shares of common
stock held by the 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 stock awards.
Limited Rights
Limited rights are related to specific options granted and become
exercisable in the event of a change in control of Richmond County or Richmond
County Savings. Upon exercise, the optionee will be entitled to receive in lieu
of purchasing the stock underlying the option, 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.
Tax Treatment
Stock Options. An optionee will generally not recognize taxable income upon
grant or exercise of any incentive stock option, provided that shares
transferred in connection with the exercise are not disposed of
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by the optionee for at least one year after the date the shares are transferred
in connection with the exercise of the stock option and two years after the date
of grant of the stock option. If the holding periods are satisfied, upon
disposal of the shares, the aggregate difference between the per share stock
option exercise price and the fair market value of the common stock is
recognized as income taxable at long-term 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 those holding periods are met. In the case of
the exercise of a non-statutory stock option, an optionee will recognize
ordinary income in an amount equal to the aggregate amount by which the per
share exercise price is exceeded by the fair market value of the common stock.
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 optionee will recognize ordinary income equal
to the lesser of (1) the difference between the fair market value of the stock
upon exercise and the exercise price or (2) the excess of the amount realized
upon the disposition and the exercise price. If a non-statutory stock option is
exercised during a period that would subject the optionee to liability under
Section 16(b) of the Exchange Act (i.e., within six months of the date of
grant), the optionee will not be deemed to have recognized income until such
period of liability has expired, unless the optionee makes an election under
Section 83(b) of the Code. 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 tax
purposes.
Stock Awards. When shares of common stock, as stock awards, are
distributed, the recipient will recognize ordinary income equal to the fair
market value of such shares as of the date of distribution plus any dividends
and earnings on such dividends and the company is permitted a commensurate
compensation expense deduction for income tax purposes.
Payment Alternatives
The committee has the sole discretion to determine what form of payment it
shall use in distributing payments for all awards. If the committee requests any
or all participants to make an election as to form of payment, it shall not be
considered bound by the election. Any shares of common stock tendered in payment
of an obligation arising under the plan or applied to any tax withholding
amounts shall be valued at the fair market value of the common stock. The
committee may use treasury stock, authorized but unissued stock or may direct
the market purchase of shares of common stock to satisfy its obligations under
the plan.
Method of Option Exercise
The committee has the sole discretion to determine the form of payment for
the exercise of a stock option. The committee may indicate acceptable forms in
each optionee's award agreement covering such options or may reserve its
decision to the time of exercise. No stock option is to be considered exercised
until payment in full is accepted by the committee.
Amendment
The board of directors may generally amend the plan in any respect, at any
time, subject to certain prohibitions established by law or the terms of the
plan itself.
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Non-transferability
An award of stock options or stock awards under the plan shall not be
transferable by a participant other than by will or the laws of intestate
succession or pursuant to a domestic relations order. With consent of the
committee, a participant may permit transferability or assignment of a non-
statutory stock option or stock award for valid estate planning purposes 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, beneficiary of any stock option or
stock award which the participant would then be entitled, in the event of the
death of the employee.
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 a
capital distribution is made, the company may make such adjustments to
previously granted awards, to prevent dilution, diminution or enlargement of the
rights of the award holder. All awards under this plan shall be binding upon any
successors or assigns of the company.
New Plan Benefits
As of the date of this proxy statement, no determination had been made
regarding the granting of awards under the Richmond County Financial Corp. Stock
Compensation Plan.
Shareholder Vote
Shareholders are being requested to approve the plan as amended and
restated. The affirmative vote of a majority of the votes cast by Richmond
County shareholders at the annual meeting on this proposal is required to
approve the plan, as amended.
The board of directors has determined it to be in the best interest of the
company, its shareholders and its employees that the Richmond County Financial
Corp. Stock Compensation Plan be approved as amended and restated and that the
board have the authority to grant restricted stock awards and stock option
awards in accordance with the terms of the 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. Stock-Based Incentive Plan.
The board of directors recommends that you vote "FOR" the approval of the
Richmond County Financial Corp. Stock Compensation Plan.
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Proposal 3. Ratification of Appointment
of Independent Auditors
Richmond County's independent auditors for the fiscal year ended June 30,
1999, 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, 2000, 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 Richmond County.
The board of directors recommends that you vote "FOR" ratification of the
appointment of Ernst & Young LLP as the independent auditors of Richmond County.
Additional Information
Shareholder Proposals
To be considered for inclusion in the company's proxy statement and form of
proxy relating to the 2000 annual meeting of shareholders, presently anticipated
to be held on November 2, 2000, 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 26, 2000. 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
Richmond County's bylaws 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 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 90 days before the date originally fixed for such meeting;
provided, however, that in the event that less than 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
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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.
A copy of the Form 10-K (without exhibits) for the fiscal year ended June
30, 1999, as filed with the SEC, will be furnished without charge to
shareholders of record upon written request to Diane L. DeLillo, Richmond County
Financial Corp., 1214 Castleton Avenue, Staten Island, New York 10310.
By Order of the Board of Directors
/s/ Diane L. DeLillo
Diane L. DeLillo, Esq.
Corporate Secretary
Staten Island, New York
September 23, 1999
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.
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ANNEX A
RICHMOND COUNTY FINANCIAL CORP.
STOCK COMPENSATION PLAN
1. INTRODUCTION.
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On March 27, 1998, the shareholders of Bayonne Bancshares, Inc. approved
the Bayonne Bancshares, Inc. 1998 Stock-Based Incentive Plan and the plan became
effective as of that date. On March 22,1999, Richmond County Financial Corp. and
its subsidiaries acquired Bayonne Bancshares, Inc. and its subsidiaries. In
connection with the acquisition and pursuant to the terms of the Amended and
Restated Merger Agreement by and between Richmond County Financial Corp. and
Bayonne Bancshares, Inc. (the "Merger Agreement"), Richmond County Financial
Corp. assumed sponsorship of the Bayonne Bancshares, Inc. 1998 Stock-Based
Incentive Plan and agreed to honor outstanding grants previously made under the
plan. On July 12, 1999, the Board of Directors of Richmond County Financial
Corp. amended and restated the plan as the Richmond County Financial Corp. Stock
Compensation Plan (the "Plan"). At a meeting of shareholders on October 28,
1999, Richmond County Financial Corp. asked its shareholders to approve the
Plan, as amended and restated, so that the stock awards and stock option awards
available under the Plan may be allocated to the Richmond County Financial Corp.
and Richmond County Savings Bank directors, officers and employees, and so that
the Plan's terms correspond with the terms of a similar Richmond County
Financial Corp. plan approved by Richmond County's shareholders in 1998.
2. DEFINITIONS.
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(a) "Affiliate" means any "subsidiary corporation" of the Holding Company,
as such term is defined in Section 424(f) of the Code.
(b) "Award" means, individually or collectively, a grant under the Plan of
Non-Statutory Stock Options, Incentive Stock Options, Limited Rights and Stock
Awards.
(c) "Award Agreement" means an agreement evidencing and setting forth the
terms of an Award.
(d) "Bank" means Richmond County Savings Bank, successor to First Savings
Bank of New Jersey, SLA.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" of the Holding Company or the Bank means an event
of a nature that: (i) would be required to be reported in response to Item 1(a)
of the current report on Form 8-K, as in effect on the date hereof, pursuant to
Section 12 or 15(d) of the Exchange Act; or (ii) results in a "change in
control" of the Bank or the Holding Company within the meaning of the Change in
Bank Control Act and the Rules and Regulations promulgated by the Federal
Deposit Insurance Corporation ("FDIC") at 12 C.F.R. Section 303.4(a), with
respect to the Bank, and the Rules and Regulations promulgated by the Office of
Thrift Supervision ("OTS") (or its predecessor agency), with respect to the
Holding Company; or (iii) without limitation such a Change in Control shall be
deemed to have occurred at such time as (A) any "person" (as the term is used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of voting securities of the Bank or the Holding Company representing
20% or more of the Bank's or the Holding Company's outstanding voting securities
or right to acquire such securities except for any voting securities of the bank
purchased by the Holding Company and any voting securities purchased by any
employee benefit plan of the Holding Company or its Affiliates, or (B)
individuals who constitute the Board of Directors on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a majority
thereof, provided that any person becoming a director subsequent to the date
hereof whose election was approved by a vote of at least three-quarters of the
directors comprising the
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Incumbent Board, or whose nomination for election by the Holding Company's
stockholders was approved by a Nominating Committee solely composed of members
which are Incumbent Board members, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board, or (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Holding Company or similar transaction occurs or is
effectuated in which the Bank or Holding Company is not the resulting entity, or
(D) a proxy statement has been distributed soliciting proxies from stockholders
of the Holding Company, by someone other than the current management of the
Holding Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Holding Company or Bank with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Holding Company shall be distributed, or (E) a tender offer is made for 20% or
more of the voting securities of the Bank or Holding Company then outstanding.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of Directors,
pursuant to Section 3 of the Plan, to administer the Plan.
(i) "Common Stock" means the Common Stock of the Holding Company, par
value, $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "Disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevents the Participant from fulfilling his duties or
responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means March 27, 1998, subject to Section 20 of the
Plan.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(o) "Exercise Price" means the price at which a Participant may purchase a
share of Common Stock pursuant to an Option.
(p) "Fair Market Value" means the market price of Common Stock, determined
by the Committee as follows:
(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market then the Fair Market Value shall be equal to
the closing price reported for such date;
(ii) If the Common Stock was traded on a stock exchange on the date in
question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite transactions
report for such date; and
(iii) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate.
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Whenever possible, the determination of Fair Market Value by the Committee
shall be based on the prices reported in The Wall Street Journal. The
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Committee's determination of Fair Market Value shall be conclusive and binding
on all persons.
(q) "Holding Company" means Richmond County Financial Corp., successor to
Bayonne Bancshares, Inc.
(r) "Incentive Stock Option" means a stock option granted to a
Participant, pursuant to Section 8 of the Plan, that is intended to meet the
requirements of Section 422 of the Code.
(s) "Limited Right" means an Award granted to a Participant pursuant to
Section 9 of the Plan.
(t) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
(u) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
(v) "Outside Director" means a member of the Boards of Directors of the
Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate. The term "Outside Director" shall also include any
member of a divisional board of directors.
(w) "Participant" means any person who holds an outstanding Award.
(x) "Performance Award" means an Award granted to a Participant pursuant
to Section 11 of the Plan.
(y) "Plan" means Richmond County Financial Corp. Stock Compensation Plan
(formerly known as the "Bayonne Bancshares, Inc. 1998 Stock-Based Incentive
Plan").
(z) "Retirement" means retirement from employment with the Holding Company
or an Affiliate in accordance with the retirement policies of the Holding
Company or Affiliate, as applicable, then in effect. "Retirement" with respect
to an Outside Director means the termination of service from the Board of
Directors of the Holding Company and any Affiliate following written notice to
the Board of Directors of such Outside Director's intention to retire.
(aa) "Stock Award" means an Award granted to a Participant pursuant to
Section 10 of the Plan.
(bb) "Termination for Cause" shall mean, in the case of an Outside
Director, removal from the Board of Directors (or divisional board of directors)
or, in the case of an Employee, unless defined differently under any employment
agreement with the Holding Company or an Affiliate, termination of employment,
because of a material loss to the Holding Company or an Affiliate, as determined
by and in the sole discretion of the Board of Directors or its designee(s).
(cc) "Trust" means a trust established in connection with this Plan to hold
Plan assets for the purposes set forth herein.
(dd) "Trustee" means any person or entity approved by the Board of
Directors to hold any of the Trust assets.
A-3
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3. ADMINISTRATION.
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(b) The Committee shall administer the Plan. The Committee shall consist of
two or more disinterested directors of the Holding Company, who shall be
appointed by the Board of Directors. A member of the Board of Directors shall be
deemed to be "disinterested" only if he satisfies (i) such requirements as the
Securities and Exchange Commission may establish for non-employee directors
administering plans intended to qualify for exemption under Rule 16b-3 (or its
successor) under the Exchange Act and (ii) such requirements as the Internal
Revenue Service may establish for outside directors acting under plans intended
to qualify for exemption under Section 162(m)(4)(C) of the Code. The Board of
Directors may also appoint one or more separate committees of the Board of
Directors, each composed of one or more directors of the Holding Company or an
Affiliate who need not be disinterested and who may grant Awards and administer
the Plan with respect to Employees and Outside Directors who are not considered
officers or directors of the Holding Company under Section 16 of the Exchange
Act or for whom Awards are not intended to satisfy the provisions of Section
162(m) of the Code.
(c) The Committee shall (i) select the Employees and Outside Directors who
are to receive Awards under the Plan, (ii) determine the type, number, vesting
requirements and other features and conditions of such Awards, (iii) interpret
the Plan and (iv) make all other decisions relating to the operation of the
Plan. The Committee may adopt such rules or guidelines as it deems appropriate
to implement the Plan. The Committee's determinations under the Plan shall be
final and binding on all persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be approved by the Committee. Each
Award Agreement shall constitute a binding contract between the Holding Company
or an Affiliate and the Participant, and every Participant, upon acceptance of
the Award Agreement, shall be bound by the terms and restrictions of the Plan
and the Award Agreement. The terms of each Award Agreement shall be in
accordance with the Plan, but each Award Agreement may include such additional
provisions and restrictions determined by the Committee, in its discretion,
provided that such additional provisions and restrictions are not inconsistent
with the terms of the Plan. In particular and at a minimum, the Committee shall
set forth in each Award Agreement (i) the type of Award granted (ii) the
Exercise Price of any Option, (iii) the number of shares subject to the Award;
(iv) the expiration date of the Award, (v) the manner, time, and rate
(cumulative or otherwise) of exercise or vesting of such Award, and (vi) the
restrictions, if any, placed upon such Award, or upon shares which may be issued
upon exercise of such Award. The Chairman of the Committee and such other
directors and officers as shall be designated by the Committee is hereby
authorized to execute Award Agreements on behalf of the Company or an Affiliate
and to cause them to be delivered to the recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination of
forms of payment to be made by or received by the Plan and (ii) the execution of
any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the satisfaction of any conditions of a Performance Award.
However, only the Committee or a portion of the Committee may certify the
attainment of any conditions of a Performance Award intended to satisfy the
requirements of Section 162(m) of the Code.
4. TYPES OF AWARDS AND RELATED RIGHTS.
----------------------------------
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(c) Limited Rights.
(d) Stock Awards.
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<PAGE>
5. STOCK SUBJECT TO THE PLAN.
-------------------------
Subject to adjustment as provided in Section 16 of the Plan, the maximum
number of shares reserved for Awards under the Plan is 715,771. Subject to
adjustment as provided in Section 16 of the Plan, the maximum number of shares
reserved hereby for purchase pursuant to the exercise of Options and Option-
related Awards granted under the Plan is 511,264. The maximum number of the
shares reserved for Stock Awards is 204,506. The shares of Common Stock issued
under the Plan may be either authorized but unissued shares or authorized shares
previously issued and acquired or reacquired by the Trust or the Bank,
respectively. To the extent that Options and Stock Awards are granted under the
Plan, the shares underlying such Awards will be unavailable for any other use
including future grants under the Plan except that, to the extent that Stock
Awards or Options terminate, expire, or are forfeited without having vested or
without having been exercised (in the case of Limited Rights, exercised for
cash), new Awards may be made with respect to these shares.
6. ELIGIBILITY.
-----------
Subject to the terms of the Plan, all Employees and Outside Directors shall
be eligible to receive Awards under the Plan. In addition, the Committee may
grant eligibility to consultants and advisors of the Holding Company or an
Affiliate.
7. NON-STATUTORY STOCK OPTIONS.
---------------------------
The Committee may, subject to the limitations of this Plan and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
--------------
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Terms of Non-statutory Stock Options. The Committee shall determine
------------------------------------
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The
Committee shall also determine the date on which each Non-Statutory Stock
Option, or any part thereof, first becomes exercisable and any terms or
conditions a Participant must satisfy in order to exercise each Non-Statutory
Stock Option. The shares of Common Stock underlying each Non-Statutory Stock
Option may be purchased in whole or in part by the Participant at any time
during the term of such Non-Statutory Stock Option, or any portion thereof,
becomes exercisable.
(c) Non-Transferability. Unless otherwise determined by the Committee in
-------------------
accordance with this Section 7(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 7(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no consideration
to: (i) any member of the Participant's Immediate Family, (ii) any trust solely
for the benefit of members of the Participant's Immediate Family, (iii) any
partnership whose only partners are members of the Participant's Immediate
Family, and (iv) any limited liability corporation or corporate entity whose
only members or equity owners are members of the Participant's Immediate Family
or (c) a transfer to the Richmond County Savings Foundation. For purposes of
this Section 7(c), "Immediate Family" includes, but is not necessarily limited
to, a Participant's parents, grandparents, spouse, children, grandchildren,
siblings (including half bothers and sisters), and individuals who are family
members by adoption. Nothing contained in this Section 7(c)
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<PAGE>
shall be construed to require the Committee to give its approval to any transfer
or assignment of any Non-Statutory Stock Option or portion thereof, and approval
to transfer or assign any Non-Statutory Stock Option or portion thereof does not
mean that such approval will be given with respect to any other Non-Statutory
Stock Option or portion thereof. The transferee or assignee of any Non-Statutory
Stock Option shall be subject to all of the terms and conditions applicable to
such Non-Statutory Stock Option immediately prior to the transfer or assignment
and shall be subject to any other conditions proscribed by the Committee with
respect to such Non-Statutory Stock Option.
(d) Termination of Employment or Service (General). Unless otherwise
----------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability or death, or
Termination for Cause, the Participant may exercise only those Non-Statutory
Stock Options that were immediately exercisable by the Participant at the date
of such termination and only for a period of three (3) months following the date
of such termination.
(e) Termination of Employment or Service (Retirement). Unless otherwise
-------------------------------------------------
determined by the Committee, in the event of a Participant's Retirement, the
Participant may exercise only those Non-Statutory Stock Options that were
immediately exercisable by the Participant at the date of Retirement and only
for a period of one (1) year from the date of Retirement.
(f) Termination of Employment or Service (Disability or death). Unless
----------------------------------------------------------
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all Non-
Statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period one (1) year following the date
of such termination.
(g) Termination of Employment or Service (Termination for Cause). Unless
------------------------------------------------------------
otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's Non-
Statutory Stock Options shall expire immediately upon the effective date of such
Termination for Cause.
(h) Acceleration Upon a Change in Control. In the event of a Change in
-------------------------------------
Control, all Non-Statutory Stock Options held by a Participant as of the date of
the Change in Control shall immediately become exercisable and shall remain
exercisable until the expiration of the term of the Non-Statutory Stock Options.
(i) Payment. Payment due to a Participant upon the exercise of a Non-
-------
Statutory Stock Option shall be made in the form of shares of Common Stock.
(j) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Non-Statutory Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60-month period.
8. INCENTIVE STOCK OPTIONS.
-----------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved for Options but unawarded under
this Plan, grant Incentive Stock Options to an Employee upon such terms and
conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
--------------
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Holding Company ("10% Owner"), the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant.
.
(b) Amounts of Incentive Stock Options. To the extent the aggregate Fair
----------------------------------
Market Value of shares of Common Stock with respect to which Incentive Stock
Options that are exercisable for the first time by an Employee
A-6
<PAGE>
during any calendar year under the Plan and any other stock option plan of the
Holding Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-Statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.
(c) Terms of Incentive Stock Options. The Committee shall determine the
--------------------------------
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; provided, however, that
if at the time an Incentive Stock Option is granted to an Employee who is a 10%
Owner, the Incentive Stock Option granted to such Employee shall not be
exercisable after the expiration of five (5) years from the Date of Grant. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
(d) Non-Transferability. No Incentive Stock Option shall be transferable
-------------------
except by will or the laws of descent and distribution and is exercisable,
during his lifetime, only by the Employee to whom the Committee grants the
Incentive Stock Option. The designation of a beneficiary does not constitute a
transfer of an Incentive Stock Option.
(e) Termination of Employment (General). Unless otherwise determined by
-----------------------------------
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability or death, or
Termination for Cause, the Participant may exercise only those Incentive Stock
Options that were immediately exercisable by the Participant at the date of such
termination and only for a period of three (3) months following the date of such
termination.
(f) Termination of Employment (Retirement). Unless otherwise determined by
--------------------------------------
the Committee, in the event of a Participant's Retirement, the Participant may
exercise only those Incentive Stock Options that were immediately exercisable by
the Participant at the date of Retirement and only for a period of one (1) year
from the date of Retirement. Any Option originally designated as an Incentive
Stock Option shall be treated as a Non-Statutory Stock Option to the extent the
Participant exercises such Option more than three (3) months following the Date
of the Participant's Retirement.
(g) Termination of Employment (Disability or Death). Unless otherwise
-----------------------------------------------
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to Disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period one (1) year following the date of such termination.
(h) Termination of Employment (Termination for Cause). Unless otherwise
-------------------------------------------------
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause.
(i) Acceleration Upon a Change in Control. In the event of a Change in
-------------------------------------
Control, all Incentive Stock Options held by a Participant as of the date of the
Change in Control shall immediately become exercisable and shall remain
exercisable until the expiration of the term of the Incentive Stock Options.
Any Option originally designated as an Incentive Stock Option shall be treated
as a Non-Statutory Stock Option to the extent the Option does not otherwise
qualify as an Incentive Stock Option pursuant to Section 422 of the Code.
(j) Payment. Payment due to a Participant upon the exercise of an
-------
Incentive Stock Option shall be made in the form of shares of Common Stock.
A-7
<PAGE>
(k) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Incentive Stock Options which exceeds 25% of all Options eligible to
be granted under the Plan within any 60 month period.
(l) Disqualifying Dispositions. Each Award Agreement with respect to an
--------------------------
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions), within 10 days of such
disposition. As of the Effective Date of this Plan, a disqualifying disposition
means any disposition of the shares of Common Stock within two years from the
date of the grant of the Incentive Stock Option to which such shares relate or
within one year of the date such shares are transferred to the Participant
pursuant to his exercise of the Incentive Stock Option.
9. LIMITED RIGHTS.
--------------
Simultaneously with the grant of any Option, the Committee may grant a
Limited Right with respect to all or some of the shares of Common Stock covered
by such Option, subject to the following terms and conditions:
(a) Terms of Rights. In no event shall a Limited Right be exercisable in
---------------
whole or in part before the expiration of six (6) months from the Date of Grant
of the Limited Right. A Limited Right may be exercised only in the event of a
Change in Control. The Limited Right may be exercised only when the underlying
Option is eligible to be exercised, and only when the Fair Market Value of the
underlying shares on the day of exercise is greater than the Exercise Price of
the underlying Option. Upon exercise of a Limited Right, the underlying Option
shall cease to be exercisable and shall be terminated. Upon exercise or
termination of an Option, any related Limited Rights shall terminate. The
Limited Right is transferable only when the underlying Option is transferable
and under the same conditions.
(b) Payment. Upon exercise of a Limited Right, the holder shall promptly
-------
receive from the Holding Company or an Affiliate an amount of cash equal to the
difference between the Exercise Price of the underlying Option and the Fair
Market Value of the Common Stock subject to such Option on the date the Limited
Right is exercised, multiplied by the number of shares with respect to which
such Limited Right is being exercised.
10. STOCK AWARDS.
------------
The Committee may grants of Stock Awards, which shall consist of the grant
of some number of shares of Common Stock, to a Participant upon such terms and
conditions as it may determine to the extent such terms and conditions are
consistent with the following provisions:
(a) Grants of the Stock Awards. Stock Awards may only be made in whole
---------------------------
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates on
-------------------------
which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.
(c) Termination of Employment or Service (General). Unless otherwise
----------------------------------------------
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or death, or
Termination for Cause, any Stock Awards in which the Participant has not become
vested as of the date of such termination shall be forfeited and any rights the
Participant had to such Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). Unless otherwise
-------------------------------------------------
determined by the Committee, in the event of a Participant's Retirement, any
Stock Awards in which the Participant has not become
A-8
<PAGE>
vested as of the date of Retirement shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void.
(e) Termination of Employment or Service (Disability or death). Unless
----------------------------------------------------------
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.
(f) Termination of Employment or Service (Termination for Cause). Unless
------------------------------------------------------------
otherwise determined by the Committee, or in the event of the Participant's
Termination for Cause, all Stock Awards in which the Participant had not become
vested as of the effective date of such Termination for Cause shall be forfeited
and any rights such Participant had to such unvested Stock Awards shall become
null and void.
(g) Acceleration Upon a Change in Control. In the event of a Change in
-------------------------------------
Control all unvested Stock Awards held by a Participant shall immediately vest
as of the date of the Change in Control.
(h) Maximum Individual Award. No individual Employee shall be granted an
------------------------
amount of Stock Awards which exceeds 25% of all Options eligible to be granted
under the Plan within any 60 month period.
(i) Issuance of Certificates. Unless otherwise held in Trust and
------------------------
registered in the name of the Trustee, (i) reasonably promptly after the Date of
Grant with respect to shares of Common Stock pursuant to a Stock Award, the
Holding Company shall cause to be issued a stock certificate, registered in the
name of the Participant to whom such Stock Award was granted, evidencing such
shares; provided, that the Holding Company shall not cause such a stock
certificate to be issued unless it has received a stock power duly endorsed in
blank with respect to such shares. Each such stock certificate shall bear the
following legend:
"The transferability of this certificate and the shares of stock
reprhereby are subject to the restrictions, terms and conditions
(including forfeiture provisions and restrictions against transfer)
contained in the Richmond County Financial Corp. Stock Compensation
Plan and Award Agreement entered into between the registered owner of
such shares and Richmond County Financial Corp. or its Affiliates. A
copy of the Plan and Award Agreement is on file in the office of the
Corporate Secretary of Richmond County Financial Corp. 1214 Castleton
Avenue, Staten Island, New York 10310.
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 10(h), in connection with a Stock Award, shall
be held by the Holding Company or its Affiliates, unless the Committee
determines otherwise.
(j) Non-Transferability. Except to the extent permitted by the Code, the
-------------------
rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i) The recipient of a Stock Award shall not sell, transfer, assign,
pledge, or otherwise encumber shares subject to the Stock Award
until full vesting of such shares has occurred. For purposes of
this section, the separation of beneficial ownership and legal
title through the use of any "swap" transaction is deemed to be a
prohibited encumbrance.
(ii) Unless determined otherwise by the Committee and except in the
event of the Participant's death or pursuant to a domestic
relations order, a Stock Award is not transferable and may be
earned in his lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock Award is
transferable by will or the laws of descent and distribution. The
designation of a beneficiary shall not constitute a transfer.
A-9
<PAGE>
(iii) If a recipient of a Stock Award is subject to the provisions of
Section 16 of the Exchange Act, shares of Common Stock subject to
such Stock Award may not, without the written consent of the
Committee (which consent may be given in the Award Agreement), be
sold or otherwise disposed of within six (6) months following the
date of grant of the Stock Award.
(k) Accrual of Dividends. To the extent Stock Awards are held in Trust and
--------------------
registered in the name of the Trustee, whenever shares of Common Stock
underlying a Stock Award are distributed to a Participant or beneficiary thereof
under the Plan, such Participant or beneficiary shall also be entitled to
receive, with respect to each such share distributed, a payment equal to any
cash dividends and the number of shares of Common Stock equal to any stock
dividends, declared and paid with respect to a share of the Common Stock if the
record date for determining shareholders entitled to receive such dividends
falls between the date the relevant Stock Award was granted and the date the
relevant Stock Award or installment thereof is issued. There shall also be
distributed an appropriate amount of net earnings, if any, of the Trust with
respect to any dividends paid out on the shares related to the Stock Award.
(l) Voting of Stock Awards. After a Stock Award has been granted but for
----------------------
which the shares covered by such Stock Award have not yet been vested, earned
and distributed to the Participant pursuant to the Plan, the Participant shall
be entitled to vote or to direct the Trustee to vote, as the case may be, such
shares of Common Stock which the Stock Award covers subject to the rules and
procedures adopted by the Committee for this purpose and in a manner consistent
with the Trust agreement.
(m) Payment. Payment due to a Participant upon the redemption of a Stock
-------
Award shall be made in the form of shares of Common Stock.
11. PERFORMANCE AWARDS.
------------------
(a) The Committee may determine to make any Award under the Plan contingent
upon the satisfaction of any conditions related to the performance of the
Holding Company, an Affiliate of the Participant. Each Performance Award shall
be evidenced in the Award Agreement, which shall set forth the applicable
conditions, the maximum amounts payable and such other terms and conditions as
are applicable to the Performance Award. Unless otherwise determined by the
Committee, each Performance Award shall be granted and administered to comply
with the requirements of Section 162(m) of the Code and subject to the following
provisions:
(b) Any Performance Award shall be made not later than 90 days after the
start of the period for which the Performance Award relates and shall be made
prior to the completion of 25% of such period. All determinations regarding the
achievement of any applicable conditions will be made by the Committee. The
Committee may not increase during a year the amount of a Performance Award that
would otherwise be payable upon satisfaction of the conditions but may reduce or
eliminate the payments as provided for in the Award Agreement.
(c) Nothing contained in the Plan will be deemed in any way to limit or
restrict the Committee from making any Award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
effect.
(d) A Participant who receives a Performance Award payable in Common Stock
shall have no rights as a shareholder until the Company Stock is issued pursuant
to the terms of the Award Agreement. The Common Stock may be issued without
cash consideration.
(e) A Participant's interest in a Performance Award may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
A-10
<PAGE>
(f) No Award or portion thereof that is subject to the satisfaction of any
condition shall be distributed or considered to be earned or vested until the
Committee certifies in writing that the conditions to which the distribution,
earning or vesting of such Award is subject have been achieved.
12. DEFERRED PAYMENTS.
-----------------
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any cash or stock payment under the Plan, or
the Committee may determine to defer receipt by some or all Participants, of all
or part of any such payment. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.
13. METHOD OF EXERCISE OF OPTIONS.
-----------------------------
Subject to any applicable Award Agreement, any Option may be exercised by
the Participant in whole or in part at such time or times, and the Participant
may make payment of the Exercise Price in such form or forms, including, without
limitation, payment by delivery of cash, Common Stock or other consideration
(including, where permitted by law and the Committee, Awards) having a Fair
Market Value on the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying broker-
dealer, as the Committee may specify in the applicable Award Agreement.
14. RIGHTS OF PARTICIPANTS.
----------------------
No Participant shall have any rights as a shareholder with respect to any
shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
15. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a person or
persons to receive, in the event of death, any Award to which the Participant
would then be entitled. Such designation will be made upon forms supplied by
and delivered to the Holding Company and may be revoked in writing. If a
Participant fails effectively to designate a beneficiary, then the Participant's
estate will be deemed to be the beneficiary.
16. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock 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 Holding Company, or in the event an
extraordinary capital distribution is made, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution, or
enlargement of the rights of the Participant, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of Common Stock
or other securities that may underlie future Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of Common Stock
or other securities underlying Awards already made under the Plan;
A-11
<PAGE>
(c) adjustments in the Exercise Price of outstanding Incentive and/or Non-
statutory Stock Options, or any Limited Rights attached to such
Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.
17. TAX WITHHOLDING.
---------------
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing provided, however,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan.
(b) If any disqualifying disposition described in Section 8(l) is made with
respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 7(c) is
made, or any election described in Section 16 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 7(c), from any shares
of Common Stock due to the Participant under this Plan.
18. NOTIFICATION UNDER SECTION 83(b).
--------------------------------
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code (i.e., an
election to include in such Participant's gross income in the year of transfer
the amounts specified in Section 83(b) of the Code), such Participant shall
notify the Committee of such election within 10 days of filing notice of the
election with the Internal Revenue Service, in addition to any filing and
notification required pursuant to regulations issued under the authority of
Section 83(b) of the Code.
19. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) Except as provided in paragraph (c) of this Section 19, the Board of
Directors may at any time, and from time to time, modify or amend the Plan in
any respect, prospectively or retroactively; provided however, that provisions
governing grants of Incentive Stock Options shall be submitted for shareholder
approval to the extent required by such law, regulation or interpretation.
Failure to ratify or approve amendments or modifications by shareholders shall
be effective only as to the specific amendment or modification requiring such
ratification. Other provisions of this Plan will remain in full force and
effect. No such termination, modification or amendment may adversely affect the
rights of a Participant under an outstanding Award without the written
permission of such Participant.
(b) Except as provided in paragraph (c) of this Section 19, the Committee
may amend any Award Agreement, prospectively or retroactively; provided,
however, that no such amendment shall adversely affect the rights of any
Participant under an outstanding Award without the written consent of such
Participant.
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<PAGE>
(c) In no event shall the Board of Directors amend the Plan or shall the
Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an exercise below the Fair
Market Value of the Common Stock on the Date of Grant.
(ii) Allowing the exercise price of any Option previously granted
under the Plan to be reduced subsequent to the Date of Award.
20. EFFECTIVE DATE OF PLAN.
----------------------
The Plan was originally approved by the Bayonne Bancshares, Inc.
shareholders on March 27, 1998. The Plan is being amended to provide for the
assumption by the Holding Company and shall become effective upon approval by
the Holding Company's shareholders. The failure to obtain shareholder approval
for such purposes will not effect the validity of any Awards made under the
Plan.
21. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the earlier
of: (i) March 27, 2008; (ii) the issuance of a number of shares of Common Stock
pursuant to the exercise of Options or (iii) the distribution of Stock Awards
is equivalent to the maximum number of shares reserved under the Plan as set
forth in Section 5 hereof. The Board of Directors has the right to suspend or
terminate the Plan at any time, provided that no such action will, without the
consent of a Participant, adversely affect a Participant's vested rights under a
previously granted Award.
22. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the State of
Delaware and applicable federal law.
A-13
<PAGE>
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF RICHMOND COUNTY FINANCIAL CORP.
RICHMOND COUNTY FINANCIAL CORP.
ANNUAL MEETING OF SHAREHOLDERS
October 28,1999
10:00 a.m. local time
The undersigned hereby appoints the Board of Directors of Richmond County
Financial Corp. (the "Company") to act as proxy for the undersigned and to vote
all shares of Common Stock of the Company that the undersigned is entitled to
vote only at the Annual Meeting of Shareholders, to be held on October 28, 1999,
at 10:00 a.m., local time at The Staaten, 697 Forest Avenue, Staten Island, New
York 10310, and any and all adjournments thereof, as indicated on the reverse
side of this proxy.
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. If any other business is presented at the Annual Meeting, including
whether or not to adjourn the meeting, this proxy will be voted by the Board of
Directors in their best judgment. At the present time, the Board of Directors
knows of no other business to be presented at the Annual Meeting.
C O M M O N
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE OR
VOTE VIA THE INTERNET OR BY TELEPHONE.
(Continued, and to be marked, dated and signed, on the other side)
\/ FOLD AND DETACH HERE \/
- --------------------------------------------------------------------------------
RICHMOND COUNTY FINANCIAL CORP. -- ANNUAL MEETING, OCTOBER 28, 1999
YOUR VOTE IS IMPORTANT!
You can vote in one of three ways:
1. Call toll free 1-888-892-6927 on a Touch Tone telephone and follow the
instructions on the reverse side. There is NO CHARGE to you for this call.
2. Via the Internet at www.proxyvoting.com/richmondcounty and follow the
instructions.
or
--
3. Mark, sign and date your proxy card and return it promptly in the enclosed
envelope.
PLEASE VOTE
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------ Please mark your
The Board of Directors recommends a vote "FOR" each of the Proposals presented. votes as indicated
- ------------------------------------------------------------------------------------ in this example [X]
1. The election as directors of all With- For All
nominees listed below, except as For hold Except For Against Abstain
marked to the contrary. [_] [_] [_] 2. The approval of the Richmond County [_] [_] [_]
Financial Corp. Stock Compensation
(01) William C. Frederick Plan (formerly referred to as the
(02) Maurice K. Shaw "Bayonne Bancshares, Inc. 1998 Stock
(03) Patrick F. X. Nilan Incentive Plan") as amended and
restated.
INSTRUCTION: To withhold authority to vote for any nominee(s),
mark "For All Except" and write that nominee(s') name(s) in For Against Abstain
the space provided below. 3. The ratification of the appointment [_] [_] [_]
of Ernst & Young, LLP as independent
- --------------------------------------------------------------- auditors of Richmond County Financial
Corp. for the fiscal year ending June
30, 2000.
C O M M O N
-----------------------
Please be sure to sign and date Date The undersigned acknowledges receipt from the Company prior
this Proxy in the box below. to the execution of this proxy of a Notice of Annual Meeting of
- --------------------------------------------------------------- Shareholders and of a Proxy Statement dated September 23, 1999
and of the Annual Report to Shareholders.
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD.
When signing as an attorney, executor, administrator, trustee or
guardian, please give full title. If shares are held jointly,
- ---Shareholder sign above-----Co-holder (if any) sign please--- each holder may sign, but only one signature is required.
----------------------------------------------------------------------------------------------------------------------
+ * * * IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET, PLEASE READ THE INSTRUCTIONS BELOW * * * +
----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL /\
--------------------------------------------------------
[LOGO] VOTE BY TELEPHONE/INTERNET [LOGO]
QUICK * * * EASY * * * IMMEDIATE
--------------------------------------------------------
Your telephone/internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and
returned your proxy card.
Please have this card handy when you call. You'll need it in front of you in order to complete the voting process.
VOTE BY PHONE: You will be asked to enter the Control Number (look below at right).
To vote as the Board of Directors recommends on ALL proposals, press 1.
- -----------
OPTION A: Your vote will be confirmed.
- -----------
If you choose to vote on each proposal separately, press 0. You will hear these instructions:
- -----------
OPTION B: Item 1: To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press 9.
- ----------- To vote FOR ALL NOMINEES EXCEPT for certain of the nominees, press 0 and listen to
the instructions.
Item 2: To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
The instructions are the same to vote for Item 3.
When asked, you must confirm your vote by pressing 1.
VOTE BY INTERNET: The web address is www.proxyvoting.com/richmondcounty
You will be asked to enter the Control Number (look below at right).
If you vote by telephone or internet, DO NOT mail back your proxy.
------
THANK YOU FOR VOTING
FOR TELEPHONE/
INTERNET VOTING:
Call * * * Toll Free * * * On a Touch Tone Telephone CONTROL NUMBER
1-888-892-6927 - ANYTIME
There is NO CHARGE to you for this call
</TABLE>
