<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
NORTH FORK BANCORPORATION, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NORTH FORK BANCORPORATION, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[LOGO]
March 18, 1994
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of North
Fork Bancorporation, Inc., to be held at the Radisson Hotel Islandia, 3635
Express Drive North, Hauppauge, New York at 9:00 a.m. on Tuesday, April 26,
1994.
There are two scheduled matters to be acted upon at the meeting:
- The election of three directors to Class 1 of the Board of Directors, and
- The approval of the 1994 Key Employee Stock Plan.
The Board of Directors believes that the election of the nominees listed in the
attached proxy statement and the approval of the Key Employee Stock Plan are in
the best interest of the Company and its stockholders and unanimously recommends
a vote "FOR" the nominees and the Stock Plan.
Whether or not you plan to attend in person, it is important that your shares
are represented at the meeting. Accordingly, you are requested to promptly sign,
date and mail the enclosed proxy in the postage prepaid envelope provided.
Please be sure to mark the appropriate box if you do plan to attend.
Thank you for your consideration and continued support.
Sincerely,
John Adam Kanas
John Adam Kanas
Chairman of the Board and President
9025 ROUTE 25, MATTITUCK, NEW YORK 11952 (516) 298-5000
<PAGE> 3
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 26, 1994
To the Stockholders of
North Fork Bancorporation, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of North
Fork Bancorporation, Inc., a Delaware corporation (the "Company"), will be held
at the Radisson Hotel Islandia, 3635 Express Drive North, Hauppauge, New York
11788, on Tuesday, April 26, 1994, at 9:00 a.m. for the purpose of considering
and voting upon the following matters:
1. The election of three directors to Class 1 of the Company's Board
of Directors, each to hold office for a term of three years, and until
their successors have been duly elected and qualified;
2. The approval of the 1994 Key Employee Stock Plan; and
3. Any other business which may properly be brought before the meeting
or any adjournment thereof.
In accordance with Delaware law and the Bylaws of the Company, a list of
the holders of Company Common Stock entitled to vote at the 1994 annual meeting
will be available for examination by any stockholder for any purpose germane to
the meeting at the branch of North Fork Bank located at 1455 Veteran's Memorial
Highway, Hauppauge, New York, for ten days prior to the meeting, between the
hours of 9:00 a.m. and 3:00 p.m., and at the annual meeting during the entire
time thereof.
By Order of the Board of Directors
March 18, 1994 ANTHONY J. ABATE
----------------------------
ANTHONY J. ABATE
Vice President and Secretary
YOU ARE REQUESTED TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE,
WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON OR NOT. YOU MAY REVOKE YOUR
PROXY AT ANY TIME PRIOR TO THE MEETING, OR IF YOU DO ATTEND THE MEETING YOU MAY
REVOKE YOUR PROXY AT THAT TIME, IF YOU WISH.
<PAGE> 4
NORTH FORK BANCORPORATION, INC.
9025 ROUTE 25
MATTITUCK, NEW YORK 11952
------------------------------------------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 26, 1994
------------------------------------------------------------
This proxy statement is being furnished in connection with the solicitation
by the Board of Directors of North Fork Bancorporation, Inc. (the "Company") of
proxies to be voted at the Annual Meeting of Stockholders (the "Meeting") to be
held at 9:00 a.m. on Tuesday, April 26, 1994, at the Radisson Hotel Islandia,
3635 Express Drive North, Hauppauge, New York 11788, and at any adjournment
thereof. This proxy statement and the enclosed form of proxy are first being
sent to stockholders on or about March 18, 1994.
PROXIES
Any stockholder executing a proxy which is solicited hereby has the power
to revoke it prior to exercise of the authority conferred thereby. Revocation
may be made effective by attending the Meeting and voting the shares of stock in
person, or by delivering to the Secretary of the Company at the principal office
of the Company prior to the Meeting a written notice of revocation or a later-
dated, properly-executed proxy.
Proxies will be solicited by mail. They also may be solicited by directors,
officers and other employees of the Company or its subsidiary bank, North Fork
Bank, personally or by telephone or telegraph, but such persons will receive no
additional compensation for their services. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to send this
proxy statement and form of proxy to their principals, and the Company will
reimburse such persons for out-of-pocket expenses incurred in forwarding the
materials. The Company also has retained D.F. King & Co., Inc. to aid in the
solicitation of proxies, at an estimated cost of $5,500, plus reimbursement of
reasonable out-of-pocket expenses. All expenses of solicitation will be paid by
the Company.
RECORD DATE AND VOTING RIGHTS
The Board of Directors has fixed the close of business on March 1, 1994, as
the record date for determining stockholders who are entitled to notice of, and
to vote at, the Meeting. At the close of business on that date, there were
outstanding and entitled to vote 14,120,849 shares of common stock, par value
$2.50 per share, of the Company (the "Common Stock"), which is the only class of
stock of the Company outstanding. Only holders of record of Common Stock at the
close of business on the record date are entitled to notice of and to vote at
the Meeting. Each stockholder of record on that
<PAGE> 5
date is entitled to one vote for each share held with respect to each matter
submitted to a vote at the Meeting.
The required vote for the election of directors is the affirmative vote of
a plurality of the shares present in person or represented by proxy at the
Meeting and entitled to vote on the election of directors. The required vote for
approval of the 1994 Key Employee Stock Plan and all other matters submitted to
the stockholders is the affirmative vote of a majority of the shares present in
person or represented by proxy at the Meeting and entitled to vote on the matter
submitted. A majority of the outstanding shares present or represented by proxy
will constitute a quorum at the Meeting.
Consistent with applicable state law and the Company's Certificate of
Incorporation and Bylaws, the Company will treat all shares represented by
proxies or ballots presented at the Meeting as shares present or represented at
the Meeting for purposes of determining a quorum. Shares represented by proxies
or ballots marked "ABSTAIN" on any proposal will be treated as shares present or
represented at the Meeting for purposes of such proposal. Shares held in "street
name" by brokers but not voted by such brokers, for any reason, on a particular
matter (so-called "broker non-votes") will not be deemed present or represented
at the Meeting for purposes of such matter, even if such shares have been
properly voted by such broker, in person or by proxy, on one or more other
matters brought before the Meeting. Thus, on proposals, such as approval of the
1994 Key Employee Stock Plan, requiring the affirmative vote of a majority of
the shares present or represented at the Meeting and entitled to vote on the
proposal, proxies or ballots marked "ABSTAIN" will have the effect of a vote
against the proposal, but broker non-votes will not have the effect of a vote
against the proposal. On proposals, such as the election of directors, requiring
the affirmative vote of a plurality of the shares present or represented at the
Meeting and entitled to vote, neither broker non-votes nor shares voted
"WITHHOLD" or "ABSTAIN" will have the effect of a vote against such a proposal.
Votes will be counted and vote totals announced at the Meeting by the
inspectors of election.
CERTAIN BENEFICIAL OWNERSHIP
As of December 31, 1993, there was no person known by the Board of
Directors of the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock.
ITEM 1. ELECTION OF DIRECTORS AND INFORMATION WITH RESPECT TO DIRECTORS AND
OFFICERS
The first item to be acted upon at the Meeting is the election of three
directors to Class 1 of the Board of Directors, each to hold office for three
years (through the 1997 annual meeting) and until his successor shall have been
duly elected and qualified. Presently, the Board of Directors of the Company
consists of nine members divided into three classes.
All proxies that are timely received by the Secretary in proper form and
that have not been revoked will be voted "FOR" the three nominees to Class 1
listed below (unless any nominee is unable or unwilling to serve for any
reason), subject to any specific voting instructions received with any proxy,
including the withholding of authority to vote for any or all of the nominees.
2
<PAGE> 6
Each of the nominees listed below has consented to being named in this
proxy statement and to serve if elected, and the Board has no reason to believe
that any nominee will decline or be unable to serve, if elected. In the event
any nominee is unable or unwilling to serve for any reason, it is intended that
the holders of the proxies may vote for the election of such other person or
persons as may be designated by the Board of Directors.
The following information is provided with respect to each nominee for
director and each present director whose term of office extends beyond the date
of the Meeting.
NOMINEES FOR DIRECTOR AND DIRECTORS CONTINUING IN OFFICE
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
SERVED OWNED AS OF
AS A DECEMBER 31, 1993(C)
NAME, AGE, PRINCIPAL OCCUPATION AND DIRECTOR ------------------------
OTHER POSITIONS WITH THE COMPANY(A)(B) SINCE NO. OF SHARES PERCENT
- -------------------------------------------------------------- -------- ------------- -------
<S> <C> <C> <C>
NOMINEES FOR DIRECTOR:
CLASS 1 (terms to expire in 1997):
Allan C. Dickerson, 61........................................ 1988 12,792(1) *
President, Roy H. Reeve Agency, Inc. (general insurance
company)
Lloyd A. Gerard, 62........................................... 1981 102,704(2) *
Antique Dealer and Auctioneer
John Adam Kanas, 47........................................... 1981 427,407(3) 3.03%
President and Chief Executive Officer of the Company;
Chairman of the Board (since January 1, 1990); Chairman
of the Board, President and Chief Executive Officer of
North Fork Bank
DIRECTORS CONTINUING IN OFFICE:
CLASS 2 (terms expiring in 1995):
James F. Reeve, 53............................................ 1988 49,191(4) *
President, Harold R. Reeve & Sons, Inc. (general
construction)
George H. Rowsom, 58.......................................... 1981 7,337(5) *
President, S.T. Preston & Son, Inc. (retail marine supplies
store)
Raymond W. Terry, Jr., 63..................................... 1988 35,578(6) *
Chairman of the Board of Southold Savings Bank (January 1,
1990, to September 30, 1992); President of Southold
Savings Bank (1980 to 1989); Chairman of the Board of the
Company (August 1, 1988, to December 31, 1989)
</TABLE>
3
<PAGE> 7
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
SERVED OWNED AS OF
AS A DECEMBER 31, 1993(C)
NAME, AGE, PRINCIPAL OCCUPATION AND DIRECTOR ------------------------
OTHER POSITIONS WITH THE COMPANY(A)(B) SINCE NO. OF SHARES PERCENT
- -------------------------------------------------------------- -------- ------------- -------
<S> <C> <C> <C>
CLASS 3 (terms expiring in 1996):
John Bohlsen, 51.............................................. 1986 86,416(7) *
President, The Helm Development Corp. (real estate); Vice
Chairman of the Company (since October 22, 1992); Vice
Chairman of North Fork Bank (since December 21, 1989)
Malcolm J. Delaney, 67........................................ 1991 65,968(8) *
Vice Chairman of the Board of Southold Savings Bank (June
28, 1991, to September 30, 1992); President and Chief
Executive Officer of Eastchester Financial Corporation
(1986 to 1991)
James H. Rich, Jr., 66........................................ 1988 10,036(9) *
President, Southold Lumber Co., Inc. (building supplies)
</TABLE>
SHARES BENEFICIALLY OWNED BY OTHER EXECUTIVE OFFICERS AND ALL
DIRECTORS AND OFFICERS AS A GROUP
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
OWNED AS OF
DECEMBER 31, 1993(C)
NAME, AGE, AND POSITIONS ------------------------
WITH THE COMPANY(10) NO. OF SHARES PERCENT
- ----------------------------------------------------------------------- ------------- -------
<S> <C> <C>
Daniel M. Healy, 51.................................................... 60,516(11) *
Executive Vice President and Chief Financial Officer of the Company
All 11 Director Nominees, Continuing Directors and Executive Officers
as a Group........................................................... 933,519(12) 6.61%
</TABLE>
- ---------------
NOTES:
* Less than one percent (1%).
(a) Except as otherwise noted, each of the nominees for director and continuing
directors has held the occupation or position listed for at least the past
five years.
(b) All persons listed as nominees for director or as continuing directors are
also directors of North Fork Bank.
(c) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission Rules, includes shares as to which a
person directly or indirectly has or shares voting power and/or investment
power (which includes the power to dispose) and all shares which the person
has a right to acquire within 60 days of the reporting date. Listed totals
do not include shares of restricted stock conditionally granted in December
1993 to certain of the
4
<PAGE> 8
named individuals under the proposed 1994 Key Employee Stock Plan, which
shares will not carry dividend and voting rights until stockholder approval
of the Plan (see Item 2 of this proxy statement).
(1) Includes 6,225 shares held by Mr. Dickerson's wife.
(2) Includes 1,727 shares held by Mr. Gerard in joint tenancy with his daughter
and 78,321 shares held by him in joint tenancy with his brother and sister.
(3) Includes 61,333 shares of restricted stock and options to purchase 269,900
shares previously granted to Mr. Kanas under the Company's compensatory
stock plans, 100 shares held by him in joint tenancy with his wife, 12,641
shares held by his wife, 4,700 shares held by his children, and warrants to
purchase 8,300 shares held by his wife.
(4) Includes warrants to purchase 5,000 shares held by Mr. Reeve and 15,290
shares held by his wife.
(5) Includes 1,000 shares held by Mr. Rowsom in joint tenancy with his wife,
150 shares held by his wife, and 3,000 shares held by the S. T. Preston &
Sons, Inc. Profit Sharing Trust, in which Mr. Rowsom shares voting power
with two others.
(6) Includes 29,847 shares held by Mr. Terry in joint tenancy with his wife.
(7) Includes options to purchase 21,000 shares previously granted to Mr.
Bohlsen under the Company's compensatory stock plans, 790 shares and
warrants to purchase 8,300 shares held by Mr. Bohlsen's wife, and 4,800
shares held by his children.
(8) Includes options to purchase 10,000 shares held by Mr. Delaney, and 37,504
shares held by him in joint tenancy with his wife.
(9) Includes 6,031 shares held by Mr. Rich in joint tenancy with his wife, and
150 shares held by his wife.
(10) Although not listed in this table, Conrad J. Gunther, Jr., who is 47 years
of age, served as Executive Vice President of the Company and North Fork
Bank from November 1989 until December 31, 1993, on which date his service
in these positions ended. As of December 31, 1993, Mr. Gunther beneficially
owned 75,574 shares, constituting less than 1 percent of the total number
of shares issued and outstanding. Included in this total were 10,000 shares
of restricted stock and options to purchase 61,000 shares previously
granted to Mr. Gunther under the Company's compensatory stock plans and
warrants to purchase 1,000 shares. The beneficial ownership totals listed
for all nominees, continuing directors and executive officers as a group
include Mr. Gunther's beneficially-owned shares.
(11) Includes options to purchase 46,000 shares previously granted to Mr. Healy
under the Company's compensatory stock plans, and warrants to purchase
3,500 shares held by him.
(12) Includes 71,333 shares of restricted stock and options to purchase an
aggregate of 407,900 shares previously granted to such persons under the
Company's compensatory stock plans and warrants to purchase 26,100 shares
held by such persons.
During 1993, the nominees, continuing directors and executive officers of
the Company made timely filings of all securities transaction reports required
to be filed by them with the Securities and Exchange Commission under Section
16(a) of the Securities Exchange Act of 1934, except for one late
5
<PAGE> 9
filing of a transaction report by director Dickerson (filed seven days late) and
one late filing of a transaction report by former director F. Y. Reeve (filed 27
days late).
The Board of Directors met 19 times during 1993. Each of the directors
attended at least 75 percent of the total number of meetings of the Board and of
all committees of which the director was a member during the period he was a
director or served on such committees.
BOARD COMMITTEES
The Board of Directors of the Company has an Audit Committee. The functions
performed by the Audit Committee include reviewing the adequacy of internal
controls, internal auditing and the results of examinations made by supervisory
authorities and the scope and results of audit and nonaudit services rendered by
the Company's independent public accountants. The present members of the Audit
Committee are directors Delaney, Gerard and Rowsom. The Audit Committee met
eight times during 1993.
The Company's Board of Directors also has a Compensation and Stock
Committee (the "Compensation Committee"). The Compensation Committee reviews and
makes recommendations on senior officer compensation and administers all of the
Company's compensatory stock plans. The Committee has been designated to
administer the proposed 1994 Key Employee Stock Plan (see Item 2 of this proxy
statement). The Compensation Committee consists of three directors appointed by
the Company's Board of Directors, none of whom may be eligible to participate in
any of the Company's discretionary stock plans. The present members of the
Committee are directors Dickerson, Gerard and Rowsom. Mr. Healy attends meetings
of the Compensation Committee in an ex officio capacity, to provide information
requested by, or to respond to questions from, Committee members. During 1993
the Committee met five times. (See "Report of the Compensation Committee" on
page 12.)
The Company's Board of Directors has no nominating committee or committee
performing functions similar to those of a nominating committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is now, or has been at any time
within the past three years, an officer or employee of the Company or any of its
subsidiaries.
COMPENSATION OF DIRECTORS
At the July 27, 1993, meeting of the Board of Directors of the Company, the
Board set the fee for directors of the Company at $18,000 per year. This fee is
for all services as a director of the Company, including any service as a member
of one or more committees of the Board of Directors of the Company. Also in July
1993, the Board of Directors of North Fork Bank set the fee for directors of the
Bank (who currently are the same individuals as the directors of the Company) at
$400 for each meeting attended of the Bank's Board of Directors and each meeting
attended of any committee thereof of which the director is a member (except that
Mr. Kanas does not receive a fee for attendance at any committee meetings). The
Chairman of the Bank's Strategic Planning Subcommittee (presently,
6
<PAGE> 10
director Reeve) also receives $300 for each meeting of the Subcommittee
attended. The fee structure for directors of the Company and the Bank described
above represents a return to the fee structure which existed prior to November
1991, when the Boards of Directors of both the Company and the Bank voluntarily
reduced directors' fees to 50% of the above-described levels, in light of the
financial conditions which then prevailed.
The Company maintains a Directors' Deferred Compensation Plan, under which
a director may defer receipt of 50% or 100% of all fees earned by him as
director of the Company and the Bank for five or ten years or until retirement
or age 70. During the deferral period, amounts deferred earn interest at the
highest rate offered by North Fork Bank to its customers on its certificate of
deposit individual retirement accounts.
Certain directors of the Company who were previously directors of Southold
Savings Bank prior to the Company's acquisition of Southold in 1988 currently
receive, or in the future will be entitled to receive, payments from the Bank
under deferred directors' fee agreements entered into by them with Southold
prior to the acquisition. These agreements, similar to the Company's optional
Deferred Compensation Plan for directors described above, permitted Southold
directors to defer receipt of some or all of their director's fees in exchange
for a right to receive, commencing on some designated future date and continuing
for a fixed period thereafter, regular monthly cash payments in a specified
amount. The designated payment amounts essentially represented the estimated
future value of the deferred fees, with compounding of interest at assumed rates
during the intervening years. Company director Rich is currently receiving
payments from the Bank under such a deferred fee agreement, and Company
directors Dickerson and Reeve are entitled to receive such payments in the
future.
7
<PAGE> 11
EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation and
compensatory awards received in the last three years by the Chief Executive
Officer of the Company and each other executive officer whose cash compensation,
including salary and bonus, exceeded $100,000 in 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS
---------------------------------- ---------------------- PAYOUTS
(E) ---------- (I)
(A) OTHER (F) (G) ALL
NAME AND ANNUAL RESTRICTED OPTIONS/ (H) OTHER
PRINCIPAL (B) (C) (D) COMPEN- STOCK SARS(4) LTIP COMPEN-
POSITION YEAR SALARY(1) BONUS SATION(2) AWARDS(3) (SHARES) PAYOUTS(5) SATION(6)
- ------------------------------ ----- --------- ------- ------- ---------- -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John Adam Kanas............... 1993 $388,254 $75,000 $43,341 $128,750(7) 103,000 (7) $0 $31,863
Chairman of the Board, 1992 374,862 0 0 0 0 0 20,138
President, Chief 1991 415,352 0 0 0 0 0
Executive Officer
John Bohlsen(8)............... 1993 122,485 40,000 0 38,625(7) 46,000 (7) 0 5,192
Vice Chairman of the 1992 -- -- -- -- -- -- --
Board 1991 -- -- -- -- -- --
Daniel M. Healy............... 1993 240,000 50,000 2,095 38,625(7) 51,000 (7) 0 11,119
Executive Vice President, 1992 173,654 0 0 34,875 25,000 0 7,697
Chief Financial Officer 1991 -- -- -- -- -- -- --
Conrad J. Gunther, Jr.(9)..... 1993 250,000 0 0 0 10,000 0 6,745
Executive Vice President 1992 233,653 0 0 10,875 8,000 0 2,670
1991 225,000 0 0 30,750 10,000 0
</TABLE>
- ---------------
NOTES:
(1) Includes salary deferred at the election of the named officer (such as
deferred salary under the Company's 401(k) Plan) and all directors' fees
from the Company and the Bank, whether paid or deferred. Salary deferrals
under the 401(k) Plan in 1993 were $8,994 for Mr. Kanas, $6,923 for Mr.
Bohlsen, $8,994 for Mr. Healy, and $8,994 for Mr. Gunther. Total directors'
fees for 1993 were $17,100 for Mr. Kanas and $17,100 for Mr. Bohlsen.
(2) Listed amounts represent tax payments made by the Company on behalf of the
named officer under the Company's newly-adopted Supplemental Executive
Retirement Plan ("SERP").
(3) Represents the dollar value of shares of restricted stock granted to the
named officer during the year in question, calculated by multiplying the
closing market price of the Company's Common Stock on the date of grant by
the number of shares awarded. Generally, shares of restricted stock granted
under the Company's compensatory stock plans carry from the date of grant
the same dividend rights as unrestricted shares of Common Stock. However,
those shares of restricted stock conditionally granted to certain of the
named officers in December 1993 under the proposed Key Employee Stock Plan
(see Note 7) will have no dividend rights until the date of stockholder
approval. As of December 31, 1993, the total market value of the restricted
stock held by Messrs. Kanas, Bohlsen, Healy and Gunther was $815,412,
$38,625, $38,625, and $128,750,
8
<PAGE> 12
respectively, based on a market price for Common Stock on that date of
$12.875 per share. Such totals include any shares of restricted stock
conditionally granted to these officers in December 1993.
(4) Includes total number of shares subject to options and/or stand-alone stock
appreciation rights (SARs) granted to the named officers during the year in
question. (No options granted to the named officers have been accompanied
by SARs.)
(5) The Company has no "long-term incentive plans" as defined in the Securities
and Exchange Commission Rules.
(6) Includes, among other things, any Company contributions to the 401(k) Plan
and the defined contribution plan feature of the SERP on behalf of the
named officer and specified premiums paid by the Company on certain
insurance arrangements covering the officer. In 1993, listed amounts
include 401(k) Plan contributions by the Company on behalf of Messrs.
Kanas, Bohlsen, Healy, and Gunther of $6,745, $5,192, $6,745 and $6,745,
respectively; contributions by the Company to the defined contribution plan
feature of the SERP on behalf of Messrs. Kanas and Healy of $6,753 and
$2,920, respectively; and the following insurance premiums paid by the
Company on behalf of Mr. Kanas: $10,641 in premiums paid on a disability
policy, $686 in premiums paid on a $100,000 life insurance policy, $4,900
in premiums paid on a $1 million life insurance policy and $2,138 in
premiums paid on a $2 million split dollar insurance policy. The total for
Mr. Healy also includes $1,454 in residual moving expenses paid by the
Company in connection with Mr. Healy's relocation.
(7) Includes a conditional award of restricted stock or stock options, granted
on December 21, 1993, to the named officer under the proposed 1994 Key
Employee Stock Plan. Such conditional awards are as follows: Mr. Kanas -
$25,750 of restricted stock, options for 45,000 shares; Mr. Bohlsen -
$38,625 of restricted stock, options for 25,000 shares; Mr. Healy - $38,625
of restricted stock, options for 30,000 shares. All such awards are
conditional upon stockholder approval of the Plan (See Item 2) and will be
deemed null and void if the Plan is not approved. Such awards of restricted
stock carry no voting or dividend rights until stockholder approval of the
Plan.
(8) Mr. Bohlsen served as a director of the Company in the years preceding 1993
but did not become an executive officer until 1993.
(9) On December 31, 1993, Mr. Gunther's service ended as Executive Vice
President of the Company and the Bank. Under the terms of an arrangement
subsequently reached between Mr. Gunther and the Company, Mr. Gunther will
be paid at a rate equal to 100 percent of his 1993 base salary for the
first six months of 1994 and at a rate equal to 50 percent of his 1993 base
salary for the last six months of 1994. In return, Mr. Gunther will provide
consultative and such other services as are requested by the Company. If
Mr. Gunther should accept other full-time employment at any time during
1994, his compensation from the Company will be reduced to $100 per week
for the remainder of the year. Also under the arrangement, all options held
by Mr. Gunther on December 31, 1993, and not then exercisable by him were
made exercisable immediately and through March 31, 1995.
9
<PAGE> 13
STOCK OPTIONS
The following table sets forth information concerning stock options granted
in 1993 to the executive officers named in the Summary Compensation Table on
page 8.
<TABLE>
<CAPTION>
OPTIONS/SAR GRANTS IN THE YEAR ENDED DECEMBER 31, 1993
- ------------------------------------------------------------------------------------------------
(C)
% OF
(B) TOTAL
NUMBER OF OPTIONS/
SECURITIES SARS (D)
UNDERLYING GRANTED EXERCISE (F)
OPTIONS/ TO OR BASE GRANT DATE
SARS EMPLOYEES PRICE (E) PRESENT
(A) GRANTED(1) IN FISCAL (DOLLARS/ EXPIRATION VALUE(2)
NAME (SHARES) YEAR SHARE) DATE (DOLLARS)
- -------------------------- ---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
John Adam Kanas........... 25,000(3) 8.79% $ 7.9375 1/14/03 $ 80,750
25,000(4) 8.79% 11.50 8/18/03 116,750
8,000(5) 2.81% 12.69 12/21/03 41,280
31,500(6) 11.07% 15.00 12/21/03 122,227
13,500(7) 4.75% 15.00 12/21/03 57,150
John Bohlsen.............. 15,000(4) 5.27% 11.50 8/18/03 70,050
6,000(5) 2.11% 12.69 12/21/03 30,960
25,000(6) 8.79% 15.00 12/21/03 105,190
Daniel M. Healy........... 15,000(3) 5.27% 7.9375 1/14/03 48,450
6,000(5) 2.11% 12.69 12/21/03 30,960
30,000(6) 10.54% 15.00 12/21/03 122,858
Conrad J. Gunther, Jr..... 10,000(3) 3.51% 7.9375 1/14/03 32,300
</TABLE>
- ---------------
NOTES:
(1) All options listed were granted without tandem stock appreciation rights.
(2) Estimated grant date present value determined by using the Black-Scholes
option pricing model, a commonly-used method of valuing options on the date
of grant. The assumptions utilized in applying the Black-Scholes model were
as follows: (a) the useful life of the options was estimated to be five
years from the date of grant; (b) the risk-free discount rate applied for
purposes of the valuation, consistent with the five-year estimated life of
the options, was the five-year Treasury Rate as of the date of grant; (c)
the volatility factor utilized was the one-year volatility of the Company's
Common Stock, or 39.1 percent (volatility is calculated based on
fluctuations of 1993 weekly closing stock prices); (d) the dividend yield on
the Common Stock was assumed to be zero for purposes of the analysis only;
and (e) a discount of 5 percent per year was utilized reflecting anticipated
risk of forfeiture prior to vesting (for example, options vesting within one
year have been discounted at 5 percent, and options vesting in three years
have been discounted at 15 percent).
(3) Incentive stock options, granted on January 14, 1993. Of the grants to Mr.
Kanas and Mr. Healy, options for 12,598 shares were, in each case, first
exercisable on the date of grant, and options for the remaining shares first
become exercisable on the first anniversary of the date of grant. All such
options granted to Mr. Gunther were immediately exercisable on the date of
grant.
(4) Nonqualified stock options, granted on August 18, 1993. All such options
were immediately exercisable on the date of grant.
10
<PAGE> 14
(5) Nonqualified stock options, granted on December 21, 1993. All such options
were immediately exercisable on the date of grant.
(6) Incentive stock options, conditionally granted on December 21, 1993, under
the proposed 1994 Key Employee Stock Plan, and subject to stockholder
approval of the Plan (see Item 2 of the proxy statement). For Mr. Kanas, the
options first become exercisable for approximately one quarter of the
underlying shares on each of the second, third, fourth and fifth
anniversaries of the date of grant, respectively. For Mr. Bohlsen, 31.5
percent of the options first become exercisable on each of the first, second
and third anniversaries of the date of grant, and the remaining options on
the fourth anniversary. For Mr. Healy, approximately 21 percent of the
options first become exercisable on the first anniversary of the date of
grant, approximately 26 percent on each of the second, third and fourth
anniversaries, and the remaining options on the fifth anniversary.
(7) Nonqualified stock options, conditionally granted on December 21, 1993,
under the proposed 1994 Key Employee Stock Plan, and subject to stockholder
approval of the Plan (see Item 2 of the proxy statement). One-third of the
options initially become exercisable on each of the first, second and third
anniversaries of the date of grant, respectively.
The following table sets forth information concerning stock options
exercised in 1993 or held at year-end 1993 by the executive officers named in
the Summary Compensation Table on page 8.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN THE YEAR ENDED DECEMBER 31, 1993,
AND YEAR-END OPTION/SAR VALUES
- --------------------------------------------------------------------------------------------------------------
(D) (E)
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
DECEMBER 31, DECEMBER 31,
(B) 1993 1993(1)
SHARES ACQUIRED (C) (EXERCISABLE/ (EXERCISABLE/
(A) ON EXERCISE VALUE REALIZED UNEXERCISABLE) UNEXERCISABLE)
NAME (SHARES) (DOLLARS) (SHARES) (DOLLARS)
- ------------------------------ --------------- -------------- --------------- --------------------
<S> <C> <C> <C> <C>
John Adam Kanas............... 0 $0 E - 257,498 E - $281,396
U - 89,402(2) U - 61,235
John Bohlsen.................. 0 0 E - 21,000 E - 21,735
U - 25,000(2) U - 0
Daniel M. Healy............... 0 0 E - 43,598 E - 239,876
U - 32,402(2) U - 11,860
Conrad J. Gunther, Jr......... 0 0 E - 61,000 E - 183,125
U - 0 U - 0
</TABLE>
- ---------------
NOTES:
(1) Calculated by subtracting the exercise price of options from the market
value of underlying securities as of the fiscal year-end, based on a closing
market price of the Common Stock on December 31, 1993, of 12.875 per share.
(2) Includes options conditionally granted on December 21, 1993, under the 1994
Key Employee Stock Plan, subject to stockholder approval of the Plan, as
follows: Mr. Kanas, options for 45,000 shares; Mr. Bohlsen, options for
25,000 shares; and Mr. Healy, options for 30,000 shares.
11
<PAGE> 15
PERFORMANCE GRAPH
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate by reference future
filings, including this Proxy Statement, in whole or in part, the following
Performance Graph and Compensation Committee Report shall not be incorporated by
reference into any such filings.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS
AMONG NORTH FORK BANCORPORATION, S&P 500 AND KBW EASTERN
<TABLE>
<CAPTION>
NORTH FORK
MEASUREMENT PERIOD BANCORPORA- S&P 500 IN- KBW EASTERN
(FISCAL YEAR COVERED) TION DEX REGION
<S> <C> <C> <C>
1988 100.00 100.00 100.00
1989 92.00 130.59 102.03
1990 35.20 126.49 62.88
1991 30.28 164.80 110.58
1992 51.72 177.25 152.71
1993 81.95 194.98 159.26
</TABLE>
The KBW Eastern Region Index is a market-capitalization-weighted stock
index combining stock price information from 12 of the larger bank holding
companies in the eastern United States.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors is
responsible for conducting periodic reviews of executive compensation and for
taking certain actions regarding the compensation of senior executives,
including the Chief Executive Officer. The Compensation Committee consists of
not less than three directors, none of whom may be an officer or employee of the
Company or any of its subsidiaries. The names of current Committee members are
listed at the end of this report. The Compensation Committee makes
recommendations to the full Board of Directors concerning salary levels for
senior executives and other officers and types and amounts of cash bonuses to be
distributed
12
<PAGE> 16
to these individuals if and as appropriate. The Compensation Committee also has
the discretion to determine grants of compensatory awards to key employees,
including senior officers, under certain of the Company's stock-based
compensation plans.
The Compensation Committee is submitting this report summarizing its
involvement in the compensation decisions and policies adopted by the Company
for executive officers generally and for Chairman, President and Chief Executive
Officer, John Adam Kanas, specifically.
GENERAL POLICY
The Company's executive compensation practices are designed to reward and
provide an incentive for executives based on the achievement of corporate and
individual goals. Compensation levels for executives are established after
giving consideration to a variety of quantitative measures including, but not
limited to, financial performance, peer group comparisons and labor market
conditions. Furthermore, qualitative factors such as commitment, leadership,
teamwork and community involvement are included in compensation deliberations.
Before making decisions, the Compensation Committee elicits the recommendations
and advice of the CEO and other executive officers regarding appropriate or
desired levels of compensation for them and management personnel generally. The
Committee has complete access to all necessary Company personnel records,
financial reports and other data and may seek the advice of experts and analysts
if appropriate. Furthermore, members of the Compensation Committee have periodic
contact with members of management through their involvement in other board
committees, thus providing Committee members with additional information on
which to base their assessments.
The ultimate purpose of the Company's compensation structure is to attract
and retain executives of the highest caliber and to motivate these executives to
put forth maximum effort toward the achievement of specified corporate goals
identified through the strategic planning process of the Board and management.
Also, the compensation design is intended to create an incentive process that
will encourage these individuals to maintain their focus on the paramount
importance of long-term stockholder interests.
COMPONENTS OF COMPENSATION
In evaluating executive compensation, the Compensation Committee focuses
upon several fundamental components: salary, annual bonus and long-term
incentive compensation.
Salary levels for senior executives and other officers are reviewed by the
Compensation Committee on an annual basis. Currently, the Company and its
subsidiaries do not have any long-term employment agreements with executive
officers. Salary levels are reflective of an individual's responsibilities and
experience and competitive marketplace conditions.
The annual bonus component of executive compensation has historically been
provided, if and as appropriate, through the Company's annual incentive
compensation program (the "Annual Bonus Program"). During profitable periods,
the Annual Bonus Program has been used to provide year-end cash distributions to
Company executives, depending upon a variety of factors relating to individual
performance, Company performance and, in selected cases, operational department
achievements.
13
<PAGE> 17
The decision on annual bonuses for executives typically is made on or about the
end of each calendar year.
The third component of the Company's executive compensation strategy is its
long-term incentive compensation program, under which executives receive
stock-based awards offering them the possibility of future value, depending on
the executives' continued employment by the Company and the long-term price
appreciation of the Company's Common Stock. In the view of the Committee, a
substantial portion of the total compensation of senior executives over a period
of years should consist of such long-term incentive awards. In the past, these
awards have been granted through the Company's stock-based compensation plans,
including its 1982 and 1985 Incentive Stock Option Plans, 1987 Long-Term
Incentive Plan and 1989 Executive Management Compensation Plan. Awards under
these plans have consisted of stock options and restricted stock. Because
virtually no shares remain available for issuance under the Company's existing
stock-based compensation plans, the Committee has approved, and recommends for
stockholder approval at the 1994 annual meeting, a new Key Employee Stock Plan.
Under this new Plan, awards for up to 700,000 shares of Common Stock would be
available for issuance to key employees in the form of incentive stock options,
nonqualified stock options or restricted stock. In 1993, Congress adopted a new
provision of the Internal Revenue Code, Section 162(m), which disallows a tax
deduction to public companies for any compensation exceeding $1 million paid to
certain top executives. The 1994 Key Employee Stock Plan has been designed so
that options granted under the Plan will qualify for an exemption under this new
statute for certain types of performance-based compensation.
The Committee has made conditional awards under this new Plan to the
Company's top three executives, subject to stockholder approval. See Item 2 of
the proxy statement for a discussion of the new Plan. Although the Committee may
grant awards under the Company's stock plans at any time, it generally makes
such determinations at year-end, concurrent with its review and recommendations
regarding base salary and annual bonuses for senior executives.
COMPENSATION COMMITTEE REVIEW OF EXECUTIVE COMPENSATION
The Compensation Committee, in making its recommendations and
determinations at year-end 1993 regarding executive compensation, was influenced
by numerous positive considerations. The principal factor underlying the
Committee's decisions was the significant progress accomplished in the past year
toward restoring the Company to profitability and financial strength and the
role of management and, in particular, key members of the senior management team
in that accomplishment. All of the basic measurements of financial performance
reflected major improvement that either met or exceeded previously-established
goals. The specific areas of performance where target goals were realized or
surpassed in 1993 included, without limitation, capital creation, earnings,
improved asset quality, enhanced asset and liability management techniques and
expense controls. Other accomplishments during the year not measurable in
quantitative form but of equal importance to the Company included improvements
in strategic direction, strengthened internal controls and regulatory
compliance. The Committee believes that as a result of management's efforts, the
Company is favorably positioned to attain future successful performance and thus
benefit its shareholders. In response to
14
<PAGE> 18
recent and anticipated future performance, the market price of the Company's
stock increased by 58% between year-end 1992 and 1993.
The Committee believes that management was primarily responsible for the
restoration of the Company's financial strength and the speed with which it was
achieved. Moreover, as the area's largest independent commercial bank, North
Fork has successfully met the challenge of diversifying its services to attract
new and retain existing customers. Also, the Committee believes management has
not lost sight of its obligation to service those communities in which it is
located. At the same time, enhanced stockholder value has remained management's
primary focus.
When the Company experienced financial difficulties at the beginning of the
1990s, the Committee concurred in the Board's determination to freeze executive
salaries and benefits and to reduce management staffing, even though it was
widely perceived that many of the Company's problems at the time were
attributable to harsh economic conditions in its market area and in the
financial services industry generally. The Committee also elected to curtail
stock award grants during these years, with the exception of occasional small
grants offered to attract new executives in lieu of other forms of compensation.
Management accepted the Committee's disciplinary approach and has responded
effectively, with the results noted.
In light of the positive changes in 1993, the Committee determined at
year-end that moderate increases in executive compensation were justifiable, if
structured so as both to reward management for accomplishments to date and to
encourage future performance. Accordingly, at year-end 1993 the Committee
accepted management's proposal and recommended to the Board a schedule of modest
salary increases and cash bonuses for management which the Committee believes
were commensurate with the financial results.
Moreover, the Committee elected at year-end to grant modest levels of
stock-based awards to management. The Committee first utilized the limited
remaining capacity under existing stock plans to grant awards of options and
restricted stock to members of management. In order to permit appropriate
additional stock-based awards to senior executive officers at the present time,
as well as to enable future grants of awards to management generally, the
Committee also approved at year-end (and has recommended for stockholder
approval at the meeting) a new Key Employee Stock Plan, discussed in Item 2 of
the proxy statement. After the Committee and the Board of Directors approved the
new Plan, the Committee made grants of options and restricted stock under the
new Plan to the Company's three senior executives, conditional upon stockholder
approval of the Plan. The Committee notes that all options granted at year-end
under this new Plan were "premium options," that is, the option exercise price
was set at a premium of 18% above the current market price of the Common Stock
on the date of grant. This above-market option pricing, although unusual, is
expected to give the executives an even stronger incentive to improve the
Company's financial performance, which presumably will increase the market price
of its stock.
The Committee also has concurred with management's proposal to establish
for senior officers of the Company a new Supplemental Executive Retirement Plan
effective for 1993. This Plan, which is funded through a secular trust, restores
to senior executives upon their retirement from the Company the full level of
retirement benefits which they would have been entitled to receive under the
formula
15
<PAGE> 19
contained in the Company's retirement plan, absent the provision in federal law
limiting maximum payouts under tax-qualified retirement plans.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In assessing appropriate types and amounts of compensation for the Chief
Executive Officer, the Compensation Committee evaluates both corporate and
individual performance. Corporate factors included in the evaluation are return
on stockholders' equity, return on assets, levels and changes in non-performing
assets, the market price of the Common Stock and the Company's performance
compared to peer group institutions. Individual factors include the CEO's
initiation and implementation of successful business strategies, formation of an
effective management team and various personal qualities, including leadership,
commitment and professional and community standing.
After reviewing the 1993 corporate results, as discussed in the preceding
section on executive compensation generally, as well as individual
contributions, the Committee concluded that CEO John Adam Kanas performed with
skill and diligence during 1993. The year was marked by substantial improvement
in financial performance, and Mr. Kanas deserves a large measure of the credit
for this accomplishment. He assumed personal responsibility for an array of
ambitious operating strategies which were adopted and successfully pursued,
including aggressive cost-cutting across the organization and streamlining of
systems and personnel. At the same time, Mr. Kanas devoted substantial time and
effort to the Company's program for resolving problem assets, which realized
significant progress during the period in bringing asset quality under control.
Finally, Mr. Kanas has been personally responsible, the Committee believes, for
the rapidity with which the Company has rebounded from its financial
difficulties; he has brought a sense of mission and urgency to the recovery
process which, in the Committee's view, has been vital.
For these reasons, the Committee concurred in August 1993 in the
reinstatement of Mr. Kanas' salary at its pre-recession level of $400,000, up
from the reduced level of $350,000 which Mr. Kanas voluntarily accepted in
November 1991. In addition, at the end of 1993, the Committee approved and
recommended payment of a $75,000 cash bonus to Mr. Kanas, as well as coverage of
Mr. Kanas under the newly-adopted SERP discussed above. The Committee also
granted to Mr. Kanas various incentive-based stock awards in 1993 under both
existing, pre-approved stock plans of the Company and the new Key Employee Stock
Plan, with the latter awards conditioned upon stockholder approval of the Plan.
CONCLUSION
The Compensation Committee believes that the compensation amounts and
awards recently established for the Company's senior executives reflect
appropriate levels, given Company and individual performance by management
during 1993. The Committee will continue to emphasize longer term strategic
performance objectives as the Company's recovery proceeds.
Committee members:
Allan C. Dickerson, Chairman
Lloyd A. Gerard
George H. Rowsom
16
<PAGE> 20
RETIREMENT PLANS
Executive officers of the Company participate in a retirement plan (the
"Retirement Plan") which is a defined benefit plan maintained and administered
by the Company. The Retirement Plan covers all employees who have attained age
21, completed at least one year of service and worked a minimum of 1,000 hours
per year. A participant becomes 100% vested under the Retirement Plan after five
years of service.
Under the Plan's benefit formula, participants accrue an amount through the
Plan each year equal to five percent of their annual compensation as defined
under the Plan plus a fixed rate of interest based on one-year Treasury Bill
rates, credited quarterly. These amounts are subject to limitations under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The
benefits subsequently paid under the Retirement Plan to each participant after
retirement are payments based on the accrued total amount in the Plan for that
participant, projected over an assumed life expectancy.
Compensation under the Retirement Plan is total salary and bonuses (i.e.,
columns (c) and (d) in the Summary Compensation Table, excluding any directors'
fees), as well as certain other taxable compensation received by the executives
that is listed in column (i) of the Summary Compensation Table, excluding
Company contributions under the 401(k) Plan and the defined contribution feature
of the SERP.
In addition to the Retirement Plan, the Company adopted in 1993 a new
Supplemental Executive Retirement Plan (the "SERP"). The SERP, which was
effective for fiscal year 1993, restores to specified senior executives upon
their retirement from the Company the full level of retirement benefits that
they would have been entitled to receive under the formula contained in the
Retirement Plan, absent the ERISA provision limiting maximum payouts and maximum
compensation under tax-qualified retirement plans. The SERP also provides for
participating executives a nonqualified defined contribution plan feature, under
which executives may elect to make post-tax contributions, which will be
entitled to matching Company contributions, much like 401(k) plan deferrals, but
not subject to the Internal Revenue Code's limitation on maximum 401(k) plan
contributions. The SERP may be funded through a combination of elective
contributions by covered individuals of post-tax dollars and Company
contributions to a secular trust. Under the SERP, the Company will also pay on
behalf of covered individuals any income taxes payable by them as a result of
Company contributions on their behalf. Of the executive officers named in the
Summary Compensation Table on page 8, Mr. Kanas and Mr. Healy are covered under
the SERP.
Based upon their current compensation, Messrs. Kanas, Bohlsen and Healy
would receive upon retirement at normal retirement age (65), annual benefits
payable thereafter, under both the Retirement Plan and the SERP, of
approximately $204,800, $17,500 and $30,300, respectively.
Although Mr. Gunther is no longer an executive officer of the Company and
all of his affiliation with the Company will end after 1994, he is fully vested
in the Retirement Plan. Based upon the compensation received or to be received
by Mr. Gunther from the Company prior to the end of his affiliation, it is
estimated that he would receive upon retirement at normal age (65) annual
benefits payable thereafter under the Retirement Plan of approximately $28,900.
17
<PAGE> 21
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS
AND ASSOCIATED PERSONS
Since January 1, 1993, certain of the directors and executive officers of
the Company (and members of their immediate families and corporations,
organizations and trusts with which these individuals are associated) have been
indebted to the Company's subsidiary bank in amounts of $60,000 or more. All
such loans were made in the ordinary course of business, did not involve more
than normal risk of collectability or present other unfavorable features, and
were made on substantially the same terms, including interest rates and
collateral requirements, as those prevailing at the same time for comparable
loan transactions with unaffiliated persons. No such loan was classified by the
subsidiary bank as of December 31, 1993, as a non-accrual, past due,
restructured or potential problem loan.
ITEM 2. APPROVAL OF 1994 KEY EMPLOYEE STOCK PLAN
The second item to be acted upon at the Meeting is a proposal to approve
the North Fork Bancorporation, Inc. 1994 Key Employee Stock Plan (the "1994
Plan" or the "Plan"). The 1994 Plan is intended to replace the Company's
existing compensatory stock plans. Virtually all of the shares authorized for
issuance to management and other key employees under these existing plans have
either been issued or are subject to outstanding but unexercised options. If the
Company is to continue its policy of including, as a major component of
executive compensation, grants of long-term incentive awards such as options and
restricted stock, the value of which is based not only on the executives'
remaining with the Company but also on the long-term appreciation of the
Company's stock price, approval of the new Plan is essential and appropriate. A
significant number of outstanding, unexercised options held by executives and
other key employees are currently "out of the money," that is, such options bear
exercise prices higher than the current market value of Common Stock. Although
the 1994 Plan will authorize the issuance of additional stock options to these
persons, it is not currently anticipated by the Board of Directors that the 1994
Plan will be used to issue so-called replacement options, replacing (presumably
at lower exercise prices) any out-of-the-money, unexercised options previously
granted to these persons.
The 1994 Plan will authorize the issuance of nonqualified stock options and
incentive stock options. In addition, the 1994 Plan will authorize the issuance
of restricted shares of Common Stock. These restricted stock awards, which are
described in more detail below, are generally considered to be at least as
effective as stock options in retaining the services of key employees and tying
their overall compensation to long-term corporate performance.
The total number of shares authorized for issuance under the 1994 Plan is
700,000 (subject to adjustments), which can be divided up in any fashion among
nonqualified stock options, incentive stock options and restricted stock,
provided that no more than 200,000 of such shares may be issued as restricted
stock. As of March 8, 1994, the last sale price of Common Stock, as reported on
the New York Stock Exchange, was 13.00 per share. No individual may receive
under the Plan in any one year option grants for more than 150,000 shares. The
1994 Plan will not authorize the grant of stock appreciation rights, often
referred to as "SARs," whether in conjunction with stock options or otherwise.
18
<PAGE> 22
On December 21, 1993, the Compensation Committee conditionally granted
awards under the 1994 Plan to three executive officers of the Company,
contingent upon subsequent stockholder approval of the Plan. In the aggregate,
the awards consisted of options to acquire 100,000 shares and 8,000 shares of
restricted stock. The awards granted to each of the executive officers are shown
in the New Plan Benefits table below. All options conditionally granted under
the Plan carried an option exercise price set at a significant premium (18.2%)
over the market price of the Company's Common Stock on the date of grant. All
8,000 shares of restricted stock conditionally granted under the Plan will not
possess dividend or voting rights until stockholder approval of the Plan.
Approval of the 1994 Plan requires the affirmative vote of a majority of
the shares of Common Stock represented in person or by proxy at the Meeting.
Dissenting votes give rise to no rights on the part of the dissenting
stockholders. The 1994 Plan was adopted by the Board of Directors on November
23, 1993, subject to approval by the stockholders of the Company.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
1994 KEY EMPLOYEE STOCK PLAN(1)
----------------------------------------------------
DOLLAR VALUE ($)(3) NUMBER OF UNITS
--------------------- ----------------------------
STOCK RESTRICTED STOCK OPTIONS RESTRICTED
NAME AND POSITION(2) OPTIONS SHARES (SHARES) SHARES
- ------------------------------------------------- -------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
John Adam Kanas(4)............................... $179,377 $ 25,750 45,000(5) 2,000
Chairman of the Board, President,
Chief Executive Officer
John Bohlsen..................................... 105,190 38,625 25,000(6) 3,000
Vice Chairman of the Board
Daniel M. Healy.................................. 122,858 38,625 30,000(7) 3,000
Executive Vice President, Chief Financial
Officer
Executive Group.................................. 407,425 103,000 100,000 8,000
Non-Executive Director Group..................... 0 0 0 0
Non-Executive Officer Employee Group............. 0 0 0 0
</TABLE>
- ---------------
NOTES:
(1) All listed options and restricted shares were conditionally granted by the
Compensation Committee on December 21, 1993. Any additional awards that may
be made under the 1994 Plan are not determinable at this time.
(2) Mr. Gunther, who was listed in the Summary Compensation Table on page 8, is
no longer an executive officer of the Company and is not eligible for awards
under the new Plan.
(3) The listed dollar value of the options is the estimated grant date present
value of such options, determined by using the Black-Scholes option pricing
model, discussed in footnote 2 to the table entitled "Options/SAR Grants in
the Year ended December 31, 1993" on page 10. The assumptions utilized in
applying the Black-Scholes model were the same assumptions set forth in the
earlier footnote 2. The dollar value of restricted shares, determined in
accordance with the rules of the
19
<PAGE> 23
Securities and Exchange Commission, represents the closing market price of
the Company's Common Stock on the date of grant multiplied by the number of
shares awarded. All options conditionally granted under the 1994 Plan that
are listed in the table above may be exercised at $15.00 per share, which
was approximately 18.2 percent above the fair market value of the Company's
Common Stock on the date of grant. The market value for the Company's Common
Stock as of March 8, 1994, was $13.00 per share.
(4) Mr. Kanas is also a nominee for election as director.
(5) The options conditionally granted to Mr. Kanas in December 1993 consisted of
incentive stock options for 31,500 shares and nonqualified stock options for
13,500 shares, and together constitute more than five percent of the total
number of options which may be granted under the 1994 Plan. These options
will terminate December 21, 2003 (unless terminated sooner under the terms
of the 1994 Plan), and are first exercisable as follows: (a) nonqualified
stock options for 4,500 shares on December 21, 1994; (b) nonqualified stock
options for 4,500 shares and incentive stock options for 7,880 shares on
December 21, 1995; (c) nonqualified stock options for 4,500 shares and
incentive stock options for 7,880 shares on December 21, 1996; (d) incentive
stock options for 7,880 shares on December 21, 1997; and (e) incentive stock
options for 7,860 shares on December 21, 1998.
(6) The options conditionally granted to Mr. Bohlsen in December 1993 are all
incentive stock options. These options will terminate December 21, 2003
(unless terminated sooner under the terms of the 1994 Plan), and are first
exercisable as follows: (a) options for 7,880 shares on December 21, 1994;
(b) options for 7,880 shares on December 21, 1995; (c) options for 7,880
shares on December 21, 1996; and (d) options for 1,360 shares on December
21, 1997.
(7) The options conditionally granted to Mr. Healy in December 1993 are all
incentive stock options. These options will terminate December 21, 2003
(unless terminated sooner under the terms of the 1994 Plan), and are first
exercisable as follows: (a) options for 6,304 shares on December 21, 1994;
(b) options for 7,880 shares on December 21, 1995; (c) options for 7,880
shares on December 21, 1996; (d) options for 7,880 shares on December 21,
1997; and (e) options for 56 shares on December 21, 1998.
PURPOSE
It is intended that the 1994 Plan will provide increased incentive for
certain key employees of the Company or any subsidiary or affiliate of the
Company and will encourage them to acquire a proprietary interest in the Company
and to work diligently to help the Company achieve its long-term goals,
including consistent profitability and the attainment of better-than-average
financial results as compared to its peer group. It is also believed that the
Plan will assist the Company in attracting and retaining high quality personnel.
Awards under the 1994 Plan will be made only to key employees of the Company or
any subsidiary or affiliate of the Company as determined from time to time by
the Compensation Committee of the Board of Directors of the Company. The
Compensation Committee will also serve as administrator of the Plan.
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<PAGE> 24
AUTHORIZED TYPES OF AWARDS
Awards granted under the 1994 Plan may take one of three forms: incentive
stock options, nonqualified stock options or restricted shares. The 700,000
shares authorized for issuance under the Plan may be divided among these types
of awards as the Compensation Committee sees fit, provided that not more than
200,000 restricted shares may be issued under the Plan.
Incentive Stock Options. The 1994 Plan provides for the grant of incentive
stock options as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). An incentive stock option differs from a nonqualified
stock option in that the optionee exercising an incentive stock option is not
subject to federal income taxation upon exercise but only upon subsequent
disposition of the shares; by contrast, the optionee exercising a nonqualified
stock option is subject to federal income taxation upon exercise. See "Federal
Income Tax Consequences." The exercise price per share for incentive stock
options may not be less than the fair market value per share of Common Stock on
the date of grant, with fair market value to be determined according to the New
York Stock Exchange price listing (or the price listing of another applicable
exchange or market system or, if no such exchange or system applies, by the
Compensation Committee). An incentive stock option, by its terms, may be
exercised only during an option period established by the Compensation Committee
upon grant of the option, provided that the option period may not commence
earlier than the date six months after the date of grant and may not extend
longer than ten years after the date of grant, and subject to certain additional
restrictions. Incentive stock options may be exercised only during a limited
period after termination of employment as established by the Compensation
Committee, which will not normally extend for more than three months after
termination. There are certain quantity limitations on the number of incentive
stock options that may be granted to any one employee in any calendar year. In
addition, if optionees exercising incentive stock options are to receive the tax
benefits provided under the Code for such options, the shares received by them
upon exercise of incentive stock options may not be sold for a period of one
year following exercise or for a period of two years following grant. A sale
within either of these periods will result in disqualification of the incentive
stock option status of the option and loss of the tax benefits. Full payment for
shares purchased shall be made at the time of exercise of an option. Payment
must be made in cash or, if authorized by the Compensation Committee in the
grant, in whole or in part in Common Stock valued at fair market value. Options
may be exercised in whole or in part.
Nonqualified Stock Options. The 1994 Plan also provides for the grant of
nonqualified stock options ("NQSOs"). Unlike incentive stock options, NQSOs are
not subject to any restrictions under the Code, but are limited only by the
terms of the Plan. Like incentive stock options, NQSOs may be exercised only
during an option period specified by the Compensation Committee upon grant of
the option, which may not commence earlier than six months after the date of
grant and may not extend longer than ten years after the date of grant. Also
like incentive stock options, NQSOs granted under the Plan may be exercised only
during a limited period following termination of employment as established by
the Compensation Committee upon grant, which will not normally extend for more
than one year after termination. The manner of exercise provisions for NQSOs are
identical to those provisions for incentive stock options. The exercise price
per share for NQSOs as set by the
21
<PAGE> 25
Compensation Committee may not be less than the fair market value of the
underlying shares on the date of grant.
Restricted Shares. Restricted shares also may be granted under the 1994
Plan. Typically, restricted shares will be granted at no purchase price,
although if required under applicable corporate law, the Compensation Committee
may establish a purchase price set at par value of the Common Stock, payable in
cash or by other means, including recognition of past employment. Restricted
shares are merely shares of Common Stock which the grantee is not entitled to
sell or otherwise transfer until ownership of the shares vests. The vesting
schedule for restricted shares is determined by the Compensation Committee upon
grant. The minimum vesting period is three years. If so determined by the
Compensation Committee upon grant, recipients of restricted shares may receive
certain other rights attaching to shares of Common Stock generally, such as
dividend and voting rights, as of the date of grant or such later date as the
Committee may determine (but not later than the date of vesting for such
shares). If the recipient of restricted shares ceases to be employed by the
Company including its subsidiaries and affiliates before the vesting date, the
restricted shares will be forfeited to the Company.
FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the federal income tax consequences of
the various awards which may be granted under the 1994 Plan. The discussion is
for purposes of general information only and does not address the specific facts
and circumstances that may apply to individual award recipients. All persons who
receive awards under the Plan should consult their own tax advisor to determine
the particular tax consequences to them of their Plan awards.
Incentive Stock Options. Persons receiving incentive stock options under
the 1994 Plan will not recognize any income for federal income tax purposes upon
the grant to them of the options, nor will the Company receive any tax deduction
at the time of the grant. Moreover, if upon exercise of the incentive stock
option the optionee complies with all provisions of the Code relating to
incentive stock options and subsequently complies with the Code provisions
requiring holding periods before disposing of the shares, the optionee will not
recognize any taxable income upon exercise. Upon subsequent disposition of the
shares, the optionee will recognize capital gain or loss equal to the difference
between the sale price of the shares and the purchase price paid therefor upon
exercise, and the Company will receive no tax deduction. If an optionee disposes
of the option shares before expiration of the required holding periods under the
Code (one year after exercise, two years after grant), some or all, depending on
the facts, of the optionee's gain upon disposition of the option shares will be
characterized as compensation income taxable as ordinary income.
Nonqualified Stock Options. Persons receiving NQSOs under the 1994 Plan
will not recognize any income for federal income tax purposes upon the grant to
them of the options, nor will the Company receive any tax deduction at the time
of grant. Upon exercise of a nonqualified stock option, in cash or by surrender
of stock already owned, the difference between the fair market value of the
shares acquired at exercise and the purchase price paid therefor will be treated
as ordinary income received as additional compensation, subject to federal
income tax withholding and employment tax provisions,
22
<PAGE> 26
and the Company will receive a corresponding tax deduction. Generally,
subsequent disposition of the option shares will result in recognition by the
holder of capital gain or loss.
Restricted Shares. Under Section 83 of the Code, persons receiving
restricted shares under the 1994 Plan will not recognize any income for federal
income tax purposes upon grant, and the Company will not receive any tax
deduction, as long as the restricted shares are subject to a substantial risk of
forfeiture and are non-transferable. At such time as the substantial risk of
forfeiture ceases to exist or the shares become transferable, the shares will be
taxable to the recipient as ordinary income received as compensation in an
amount equal to the then fair market value of the shares (less the purchase
price of the shares, if any), subject to federal income tax withholding and
employment tax provisions, and the Company will be entitled to a corresponding
tax deduction.
The above description is a summary of the significant provisions of the
1994 Plan. Stockholders may obtain a copy of the Plan for their review upon
request to the Secretary of the Company, Mr. Anthony J. Abate, at North Fork
Bancorporation, 9025 Route 25, Mattituck, New York 11952, (516) 298-5000.
The Board of Directors believes adoption of the 1994 Plan will be in the
best interests of the stockholders and, accordingly, recommends a vote FOR this
proposal, which is ITEM 2 on the Proxy Card. Proxies received in response to the
Board's solicitation will be voted "FOR" approval of the 1994 Plan if no
specific instructions are included thereon for Item 2.
STOCKHOLDER PROPOSALS
Stockholder proposals to be considered for inclusion in the Company's proxy
materials for the 1995 Annual Meeting of Stockholders must be received in
writing by the Secretary of the Company at the Company's principal executive
office no later than November 18, 1994. Such proposals must also meet the other
requirements established by the Securities and Exchange Commission for
stockholder proposals.
INDEPENDENT AUDITORS
KPMG Peat Marwick, Certified Public Accountants, were the independent
auditors of the Company for the year ended December 31, 1993, and have also been
selected to serve as auditors for 1994. Representatives of KPMG Peat Marwick are
expected to be present at the Meeting with an opportunity to make a statement if
they so desire and are expected to be available to respond to appropriate
questions from stockholders.
23
<PAGE> 27
OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors of the Company is not aware of any other matters
that may come before the Meeting. However, the proxies may be voted with
discretionary authority with respect to any other matters that may properly come
before the Meeting.
Date: March 18, 1994
By Order of the Board of Directors
ANTHONY J. ABATE
--------------------------------------
ANTHONY J. ABATE
Vice President and Secretary
24
<PAGE> 28
PROXY
NORTH FORK BANCORPORATION, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
APRIL 26, 1994
The undersigned stockholder(s) of North Fork Bancorporation, Inc., a Delaware
corporation (the "Company"), hereby appoint(s) Irving L. Price, Jr., and Alma
T. Suter, and each of them, with full power to act alone, the true and lawful
attorneys-in-fact and proxies of the undersigned, with full power of
substitution, and hereby authorize(s) them and each of them, to represent the
undersigned and to vote all shares of common stock of the Company which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Radisson Hotel Islandia, 3635 Express Drive North,
Hauppauge, New York at 9:00 a.m. on Tuesday, April 26, 1994, and at any
adjournments or postponements thereof, with all powers the undersigned would
possess if personally present, on the following proposals and any other matters
coming before said meeting.
1. Election of Directors to the class of the Board of Directors whose
term expires at the 1997 Annual Meeting of Stockholders
Nominees: Allan C. Dickerson, Lloyd A. Gerard, John Adam Kanas
(Check one box only for all nominees.)
2. Approval of the 1994 Key Employee Stock Plan
(CHANGE OF ADDRESS)
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
(Over)
This proxy will be voted in the manner directed herein by the undersigned. If
no direction is given, this proxy will be voted FOR proposals 1 and 2, and in
the discretion of the proxies on such other matters as may properly come before
the annual meeting or any adjournments or postponements thereof.
SEE REVERSE
SIDE
[X] Please mark your votes as in this example. 0103
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2
FOR WITHHELD
1. Election of [ ] [ ]
Directors
(see reverse)
WITHHOLD for the following only. Write name(s) below.
- ----------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of 1994 [ ] [ ] [ ]
Key Employee
Stock Plan
Receipt of the Notice of Annual Meeting of Stockholders and accompanying Proxy
Statement is hereby acknowledged.
Please indicate below whether you plan on attending the Meeting.
[ ]
SIGNATURE(S) DATE
----------------------------------------------- -------------
NOTE: Please sign exactly as your name appears on this proxy. Joint owners
should each sign personally. If signing as attorney, executor,
administrator, trustee or guardian, please include your full title.
Corporate proxies should be signed by an authorized officer.
PLEASE FOLD AND DETACH HERE
<PAGE> 29
[THIS STOCK PLAN IS BEING TRANSMITTED VIA EDGAR TO THE SECURITIES AND EXCHANGE
COMMISSION (SEC) PURSUANT TO THE REGULATIONS REQUIRING THAT A COPY OF A STOCK
PLAN (TO BE PRESENTED FOR SHAREHOLDER APPROVAL) BE PROVIDED TO THE SEC AT THE
TIME THE PROXY STATEMENT AND FORM OF PROXY ARE FILED WITH THE SEC. THE STOCK
PLAN IS NOT A PART OF THE PROXY STATEMENT AND HAS NOT BEEN MAILED TO
SHAREHOLDERS.]
NORTH FORK BANCORPORATION, INC.
1994 KEY EMPLOYEE STOCK PLAN
SECTION 1. ESTABLISHMENT AND PURPOSE
North Fork Bancorporation, Inc. (the "Company") hereby establishes a
long term incentive plan to be named the North Fork Bancorporation, Inc. 1994
Key Employee Stock Plan (the "Plan"), for officers and other key employees of
the Company and its subsidiaries. The purpose of this Plan is to encourage
those key employees who are given awards by the committee administering the
Plan to acquire and maintain an interest in the Common Stock of the Company and
thus to have additional incentive to continue to work for the success of the
Company and its subsidiaries.
SECTION 2. DEFINITIONS
Whenever used herein, the following terms shall have the respective
meanings set forth below:
(a) AWARD means any Option or Restricted Stock granted under the
Plan.
(b) AWARD AGREEMENT means the written agreement evidencing an
Award under the Plan, which shall be executed by the Company
and the Participant.
(c) BOARD means the Board of Directors of the Company.
(d) CODE means the Internal Revenue Code of 1986, as amended and
in effect from time to time.
(e) COMMITTEE means the Stock and Compensation Committee of the
Board, the members of which shall not be eligible (and, during
the one year period prior to becoming a member, shall not have
been eligible) for participation in the Plan or any other plan
of the Company which provides for the issuance of equity
securities of the Company, except as provided in Rule
16b-3(c)(2)(i)(A)-(D), or any successor regulation.
(f) COMPANY means North Fork Bancorporation, Inc., a Delaware
corporation.
<PAGE> 30
(g) DISABILITY means permanent and total disability as defined in
Section 22(e)(3) of the Code, as determined by the Committee
in good faith, upon receipt of and in reliance on sufficient
competent medical advice.
(h) EMPLOYEE means a salaried employee (including officers and
directors who are also employees) of the Company or any
Subsidiary.
(i) EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
(j) EXERCISE PRICE of an Option means a price fixed by the
Committee upon grant of the Option as the purchase price for
Stock under the Option, as such may be adjusted under Section
11 of the Plan.
(k) FAIR MARKET VALUE means, for any particular day, (i) for any
period during which the Stock shall be listed for trading on a
national securities exchange, the average of the high and low
price per share of Stock on such exchange on such day, (ii)
for any period during which the Stock shall not be listed for
trading on a national securities exchange, but when prices for
the Stock shall be reported by the National Market System of
the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), the average of the high and low
transaction price per share as quoted by the National Market
System of NASDAQ for such day, (iii) for any period during
which the Stock shall not be listed for trading on a national
securities exchange or its price reported by the National
Market System of NASDAQ, but when prices for the Stock shall
be reported by NASDAQ, the average of the high and low bid
price per share as reported by NASDAQ for such day, or (iv) in
the event none of (i), (ii) and (iii) above shall be
applicable, the fair market price per share of Stock for such
day as determined by the Board of Directors. If Fair Market
Value is to be determined as of a day when the securities
markets are not open, the Fair Market Value on that day shall
be the Fair Market Value on the nearest preceding day when the
markets were open.
(l) OPTION means the right to purchase Stock at the Exercise Price
for a specified period of time. For purposes of the Plan, an
Option may be an INCENTIVE STOCK OPTION within the meaning of
Section 422 of the Code or any successor provision, or a
NONQUALIFIED (nonstatutory) STOCK OPTION.
(m) PARTICIPANT means any Employee designated by the Committee to
receive an Award under the Plan.
(n) PERIOD OF RESTRICTION means the period during which Restricted
Stock is subject to restrictions on transfer and subject to
forfeiture under Section 10 of the Plan.
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<PAGE> 31
(o) REPORTING PERSON means a person subject to Section 16 of the
Exchange Act.
(p) RESTRICTED STOCK means an Award of shares of Stock under
Section 10 of the Plan, which shares shall cease to be
Restricted Stock upon expiration of the Period of Restriction.
(q) RULE 16b-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission pursuant to the Exchange Act, or any
successor regulation.
(r) STOCK means the Common Stock of the Company.
(s) SUBSIDIARY means a subsidiary corporation of the Company as
defined in Section 424(f) of the Code.
(t) TAXABLE EVENT means an event relating to an Award granted
under the Plan which requires federal, state or local tax to
be withheld by the Company or a Subsidiary.
(u) TERMINATED FOR CAUSE means, for Employees serving under an
employment agreement containing a provision for termination of
employment for "cause," termination of employment of the
Employee for "cause" pursuant to such provision, and for other
Employees, termination of employment of the Employee by a
two-thirds vote of the entire Board of Directors of the
Company or the Subsidiary employing such Employee, expressly
for one or more of the following "causes," as evidenced in a
certified resolution of the Board:
(i) any willful misconduct by the Employee which is
materially injurious to the Company or the
Subsidiary, monetarily or otherwise;
(ii) any willful failure by the Employee to follow the
reasonable directions of the Board of Directors or a
higher-ranking executive officer of the Company or
the Subsidiary; or
(iii) conviction of the Employee with no further
possibility of appeal of a felony under applicable
state or federal banking or financial institution
laws, or the agreement of the Employee to plead
guilty to any such felony.
SECTION 3. ADMINISTRATION
The Plan will be administered by the Committee. The determinations of
the Committee shall be made in accordance with its judgment as to the best
interests of the Company and its stockholders and in accordance with the
purposes of the Plan.
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<PAGE> 32
Notwithstanding the foregoing, the Committee in its discretion may delegate to
the President or other appropriate officers of the Company or any Subsidiary
the authority to make any or all determinations under the Plan (including the
decision to grant Awards and types of Awards granted) with respect and only
with respect to other Employees who are not Reporting Persons, notwithstanding
the fact that individuals to whom such authority is delegated may themselves be
Participants in the Plan and/or Reporting Persons. A majority of members of
the Committee shall constitute a quorum, and all determinations of the
Committee shall be made by a majority of its members. Any determination of the
Committee under the Plan may be made without notice or meeting of the
Committee, and all actions made or taken by the Committee pursuant to the
provisions of the Plan shall be final, binding and conclusive for all purposes
and upon all persons.
SECTION 4. SHARES RESERVED UNDER THE PLAN
There is hereby reserved for issuance under the Plan an aggregate of
700,000 shares of Stock, of which a maximum of 200,000 shares may be issued as
Restricted Stock, subject to adjustment as provided in Section 11 of the Plan.
Such shares may be authorized but unissued shares or treasury shares. Shares
of Stock underlying outstanding Options will be counted against the Plan
maximum while such Options are outstanding. Calculation of the number of
shares remaining available for issuance under the Plan shall be by those
methods permissible under Rule 16b-3 which result in the greatest number of
shares remaining available for issuance.
SECTION 5. PARTICIPANTS
Persons eligible for grants of Awards under the Plan will be those
officers and other key employees of the Company or any Subsidiary who are
expected to play a significant role in the success and future growth and
profitability of the Company, as determined by the Committee in its sole
discretion and as evidenced by the decision of the Committee to grant Awards to
such individuals. Designation of an Employee as a Participant to receive an
Award in any year shall not require the Committee to designate such Employee to
receive an Award in any other year or to designate any other Employee to
receive an Award in such year or any other year. The Committee shall consider
such factors as it deems pertinent in selecting Employees to receive Awards and
determining the type and amount of their respective Awards. No Employee may
receive under the Plan in any one calendar year grants of Options to purchase
more than 150,000 shares of Stock.
SECTION 6. TYPES OF AWARDS
The following Awards may be granted under the Plan in any proportion:
Incentive Stock Options, Nonqualified Stock Options and Restricted Stock, all
as described below. Except as specifically limited herein, the Committee shall
have complete discretion in determining the type and number of Awards to be
granted to any Employee and, subject to the provisions of the Plan, the terms
and conditions which attach to each Award, which
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<PAGE> 33
terms and conditions need not be uniform as among different Participants. Each
Award shall be evidenced by an Award Agreement, as provided in Section 7 of the
Plan. From time to time, as the Committee deems appropriate and in the best
long-term interests of the Company and its stockholders, the Committee may
elect to modify or waive one or more terms or conditions of an outstanding
Award previously granted to a Participant under the Plan, provided that (i) no
such modification or waiver shall give the Participant or any other Participant
under the Plan any right to a similar modification or waiver of any other Award
previously or subsequently granted under the Plan, (ii) no such modification or
waiver of an Award shall involve a change in the number of shares subject to
the Award or a change in the Exercise Price of an Option or the purchase price,
if any, of Restricted Stock which is the subject of the Award, and (iii) any
such modification or waiver which is adverse or arguably adverse to the
interests of the Participant holding such Award shall not be effective unless
and until the Participant shall consent thereto.
SECTION 7. AWARD AGREEMENTS
Within ten business days after the grant of an Award, the Company
shall notify the Participant of the grant and shall hand deliver or mail to the
Participant an Award Agreement, duly executed by and on behalf of the Company,
with the request that the Participant execute the Agreement within 30 days
after the date of mailing or delivery by the Company and return the same to the
Company. The date of execution and return of the Award Agreement shall not
necessarily be or affect the date of grant of the Award, which may precede such
date of execution and return, as the Committee may determine. If the
Participant shall fail to execute and return to the Company the Award Agreement
within said 30-day period, the Award shall be deemed void and never to have
been granted.
SECTION 8. INCENTIVE STOCK OPTIONS
(a) Incentive Stock Options shall consist of Options to purchase
shares of Stock at the Exercise Price established by the Committee upon grant,
which Exercise Price shall not be less than, but may be more than, 100 percent
of the Fair Market Value of the Stock on the date of grant. The aggregate Fair
Market Value (determined as of the date of grant) of all shares of Stock under
all incentive stock options granted by the Company or any affiliate of the
Company (under the Plan or any other stock option plan) to any Employee which
may first be acquired upon exercise in any one calendar year may not exceed
$100,000.
(b) The Committee shall establish upon grant the period of time
during which an Incentive Stock Option will be exercisable by the Participant,
provided that no Incentive Stock Option shall first become exercisable, in
whole or in part, earlier than six months after the date of grant and provided
further that no Incentive Stock Option shall continue to be exercisable, in
whole or in part, later than ten years after the date of grant. Subject to
these limitations, the Committee may provide, upon grant of an Incentive Stock
Option, that full exercisability will be phased in and/or phased out over some
designated period of time. The
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<PAGE> 34
Committee also may provide upon grant that exercisability of an Incentive Stock
Option will be accelerated, to the extent such Option is not already then
exercisable, upon the subsequent occurrence of a "change-in-control" of the
Company as defined by the Committee. Generally, exercisability of an Incentive
Stock Option also shall be conditioned upon continuity of employment by the
Participant with the Company and its Subsidiaries, provided that, if the
Committee so provides upon grant, exercisability of an Incentive Stock Option
may continue for some designated period of time after termination of
employment, within the following limitations: (i) if employment is terminated
other than due to the Disability or death of the Participant, exercisability
may be extended to not more than three months after termination; (ii) if
employment is terminated due to the Disability of the Participant,
exercisability may be extended to not more than one year after termination; and
(iii) if employment is terminated due to the death of the Participant,
exercisability may be extended to the normal end of the exercise period.
However, in no event may any Incentive Stock Option continue to be exercisable
more than ten years after the date of grant. In addition, no Incentive Stock
Option may be exercisable after Termination for Cause. Leaves of absence
granted by the Company for military service or illness and transfers of
employment between the Company and any Subsidiary shall not constitute
termination of employment.
(c) Upon exercise of an Incentive Stock Option, in whole or in
part, the Exercise Price with respect to the number of shares as to which the
Option is then being exercised may be paid by check or, if the Participant so
elects and the Committee shall have authorized such form of payment upon grant
of the Option, in whole or in part by delivery to the Company of shares of
Stock then owned by the Participant, provided such shares have been
beneficially owned by the Participant for at least six months. Any
Participant-owned Stock to be used in full or partial payment of the Exercise
Price shall be valued at the Fair Market Value of the Stock on the date of
exercise. Delivery by the Company of the shares as to which an Incentive Stock
Option has been exercised shall be made to the person exercising the Option or
the designee of such person. If so provided by the Committee upon grant of the
Option, the shares received upon exercise may be subject to certain
restrictions upon subsequent transfer or sale by the Participant. In the event
the Exercise Price is to be paid in full or in part by surrender of
Participant-owned Stock, in lieu of actual surrender of shares of Stock by the
Participant the Company may waive such surrender and instead deliver to or on
behalf of the Participant a number of shares equal to the total number of
shares as to which the Option is then being exercised less the number of shares
which would otherwise have been surrendered by the Participant to the Company.
(d) The Committee may require reasonable advance notice of
exercise of an Incentive Stock Option, not to exceed three business days, and
may condition exercise of an Incentive Stock Option upon the availability of an
effective registration statement or exemption from registration under
applicable federal and state securities laws relating to the Stock being issued
upon exercise.
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<PAGE> 35
SECTION 9. NONQUALIFIED STOCK OPTIONS
(a) Nonqualified Stock Options shall consist of Options to
purchase shares of Stock at the Exercise Price established by the Committee
upon grant, which Exercise Price shall not be less than, but may be more than,
100 percent of the Fair Market Value of the Stock on the date of grant.
(b) The Committee shall establish upon grant the period of time
during which a Nonqualified Stock Option will be exercisable by the
Participant, provided that no Nonqualified Stock Option shall first become
exercisable, in whole or in part, earlier than six months after the date of
grant and provided further that no Nonqualified Stock Option shall continue to
be exercisable, in whole or in part, later than ten years after the date of
grant. Subject to these limitations, the Committee may provide, upon grant of
a Nonqualified Stock Option, that full exercisability will be phased in and/or
phased out over some designated period of time. The Committee also may provide
upon grant that exercisability of a Nonqualified Stock Option will be
accelerated, to the extent such Option is not already then exercisable, upon
the subsequent occurrence of a "change-in-control" of the Company as defined by
the Committee. Generally, exercisability of a Nonqualified Stock Option also
shall be conditioned upon continuity of employment by the Participant with the
Company and its Subsidiaries, provided that, if the Committee so provides upon
grant, exercisability of a Nonqualified Stock Option may continue for some
designated period of time after termination of employment, within the following
limitations: (i) if employment is terminated other than due to the death of
the Participant, exercisability may be extended to not more than one year after
termination; and (ii) if employment is terminated due to the death of the
Participant, exercisability may be extended to the normal end of the exercise
period. However, in no event may any Nonqualified Stock Option continue to be
exercisable more than ten years after the date of grant. In addition, no
Nonqualified Stock Option may be exercisable after Termination for Cause.
Leaves of absence granted by the Company for military service or illness and
transfers of employment between the Company and any Subsidiary shall not
constitute termination of employment.
(c) Upon exercise of a Nonqualified Stock Option, in whole or in
part, the Exercise Price with respect to the number of shares as to which the
Option is then being exercised may be paid by check or, if the Participant so
elects and the Committee shall have authorized such form of payment upon grant
of the Option, in whole or in part by delivery to the Company of shares of
Stock then owned by the Participant, provided such shares have been
beneficially owned by the Participant for at least six months. Any
Participant-owned Stock to be used in full or partial payment of the Exercise
Price shall be valued at the Fair Market Value of the Stock on the date of
exercise. Delivery by the Company of the shares as to which a Nonqualified
Stock Option has been exercised shall be made to the person exercising the
Option or the designee of such person. If so provided by the Committee upon
grant of the Option, the shares received upon exercise may be subject to
certain restrictions upon subsequent transfer or sale by the Participant. In
the event the Exercise Price is to be paid in full or in part by surrender of
Stock, in lieu of actual surrender of shares of Stock
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<PAGE> 36
by the Participant the Company may waive such surrender and instead deliver to
or on behalf of the Participant a number of shares equal to the total number of
shares as to which the Option is then being exercised less the number of shares
which would otherwise have been surrendered by the Participant to the Company.
(d) The Committee may require reasonable advance notice of
exercise of a Nonqualified Stock Option, not to exceed three business days, and
may condition exercise of a Nonqualified Stock Option upon the availability of
an effective registration statement or exemption from registration under
applicable federal and state securities laws relating to the Stock being issued
upon exercise.
SECTION 10. RESTRICTED STOCK
(a) Restricted Stock shall consist of Stock awarded under the Plan
by the Committee which, during a Period of Restriction specified by the
Committee upon grant, shall be subject to (i) restriction on sale or other
transfer by the Participant and (ii) forfeiture by the Participant to the
Company if the Participant ceases to be employed by the Company and its
Subsidiaries. Restricted Stock shall be granted at no cost to Participants or
at such minimum purchase price as may be required under applicable law, which
shall be payable by the Participant to the Company in cash or by any other
means, including recognition of past employment, as the Committee deems
appropriate upon grant. The Committee may provide upon grant of an Award of
Restricted Stock that any shares of Restricted Stock as may be purchased by the
Participant thereunder and subsequently forfeited by the Participant prior to
expiration of the Period of Restriction shall be reacquired by the Company
from the Participant at the purchase price originally paid in cash by the
Participant therefor.
(b) The minimum Period of Restriction for Restricted Stock shall
be three years. The Committee may provide upon grant of an Award of Restricted
Stock that different numbers or portions of the shares subject to the Award
shall have different Periods of Restriction. The Committee also may establish
upon grant of an Award of Restricted Stock that some or all of the shares
subject thereto shall be subject to additional restrictions upon transfer or
sale by the Participant (although not forfeiture) after expiration of the
Period of Restriction.
(c) The Participant shall be entitled to all dividends declared
and paid on Stock with respect to all shares of Restricted Stock held by the
Participant from the date of grant, or from such later date prior to the
termination of the Period of Restriction as may be specified by the Committee
for the Award of Restricted Stock, and during the Period of Restriction and
thereafter (except in the event of forfeiture) and shall not be required to
return any such dividends to the Company in the event of forfeiture of the
Restricted Stock.
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(d) The Participant shall be entitled to vote all shares of
Restricted Stock held by the Participant from the date of grant, or from such
later date prior to the termination of the Period of Restriction as may be
specified by the Committee for the Award of Restricted Stock, and during the
Period of Restriction and thereafter (except in the event of forfeiture).
(e) Pending expiration of the Period of Restriction, certificates
representing shares of Restricted Stock shall be held by the Company or the
transfer agent for the Stock.
SECTION 11. ADJUSTMENT PROVISIONS
(a) If the Company shall at any time change the number of issued
shares of Stock without new consideration to the Company (such as by a stock
dividend or stock split), the total number of shares reserved for issuance
under the Plan, the maximum number of shares available for Award of Options to
a particular Participant and the number of shares (and, in the case of Options,
the Exercise Price) covered by each outstanding Award shall be adjusted so that
the aggregate consideration payable to the Company, if any, and the value of
each such Award to the Participant shall not be changed. Awards may also
contain provisions for their continuation or for other equitable adjustments
after changes in the Stock resulting from reorganization, sale, merger,
consolidation, issuance of stock rights or warrants or similar occurrence.
(b) Notwithstanding any other provision of this Plan, and without
affecting the number of shares reserved or available for issuance hereunder,
the Board of Directors shall use best efforts to authorize the issuance or
assumption of benefits under the Plan in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it may deem appropriate.
SECTION 12. NONTRANSFERABILITY
Each Award of an Option granted under the Plan to a Participant shall
not be transferable otherwise than by will or the laws of descent and
distribution or pursuant to a Qualified Domestic Relations Order (as defined in
Section 206(d)(3) of the Employee Retirement Income Security Act of 1974, as
amended, and the rules promulgated thereunder), and shall be exercisable,
during the Participant's lifetime, only by the Participant. In the event of
the death of a Participant holding an unexercised Option, exercise of the
Option may be made only by the executor or administrator of the estate of the
deceased Participant or the person or persons to whom the deceased
Participant's rights under the Option shall pass by will or the laws of descent
and distribution, and such exercise may be made only to the extent that the
deceased Participant was entitled to exercise such Option at the date of death.
If and to the extent the Committee shall so provide upon grant, the Period of
Restriction for Restricted Stock may be foreshortened upon the death of the
Participant during the Period of Restriction, such that the Stock shall be
deemed not to be forfeited and no longer to be Restricted Stock as of the date
of death.
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SECTION 13. TAXES
The Company shall be entitled to withhold, and shall withhold, the
minimum amount of any federal, state or local tax attributable to any shares
deliverable under the Plan, whether upon exercise of a Nonqualified Stock
Option or expiration of a Period of Restriction for Restricted Stock or
occurrence of any other Taxable Event, after giving the person entitled to
receive such delivery notice as far in advance of the Taxable Event as
practicable, and the Company may defer making delivery as to any Award, if any
such tax is payable, until indemnified to its satisfaction. To the extent the
Committee so provides upon grant of the Award, such withholding obligation of
the Company shall be satisfied by a reduction of the number of shares otherwise
deliverable to or on behalf of the Participant on such Taxable Event, with the
number of withheld shares to be calculated based on the Fair Market Value of
the Stock on the date of such Taxable Event.
SECTION 14. NO RIGHT TO EMPLOYMENT
A Participant's right, if any, to continue to serve the Company and
any Subsidiary as an officer, employee or otherwise shall not be enlarged or
otherwise affected by the designation of such Employee as a Participant under
the Plan.
SECTION 15. DURATION, AMENDMENT AND TERMINATION
No Award shall be granted more than ten years after the date of
adoption of this Plan. The Board of Directors may amend the Plan from time to
time or terminate the Plan at any time. No amendment of the Plan shall,
without the approval of the stockholders of the Company, increase the total
number of shares which may be issued under the Plan. No amendments requiring
stockholder approval in order for the Plan to continue to meet the requirements
of Rule 16b-3 shall be effective unless such stockholder approval is obtained.
By mutual agreement between the Company and a Participant, one or more Awards
may be granted to such Participant in substitution and exchange for, and in
cancellation of, any certain Awards previously granted such Participant under
the Plan, provided that any such substitution Award shall be deemed a new Award
for purposes of calculating any applicable exercise period for Options or
Period of Restriction for Restricted Stock. To the extent that any Awards
which may be granted within the terms of the Plan would qualify under present
or future laws for tax treatment that is beneficial to a Participant, any such
beneficial treatment shall be considered within the intent, purpose and
operational purview of the Plan and the discretion of the Committee, and to the
extent that any such Awards would so qualify within the terms of the Plan, the
Committee shall have full and complete authority to grant Awards that so
qualify (including the authority to grant, simultaneously or otherwise, Awards
which do not so qualify) and to prescribe the terms and conditions (which need
not be identical as among recipients) in respect to the grant or exercise of
any such Awards under the Plan.
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SECTION 16. MISCELLANEOUS PROVISIONS
(a) NAMING OF BENEFICIARIES. In connection with an Award, a
Participant may name one or more beneficiaries to receive the Participant's
benefits, to the extent permissible pursuant to the various provisions of the
Plan, in the event of the death of the Participant.
(b) SUCCESSORS. All obligations of the Company under the Plan
with respect to Awards issued hereunder shall be binding on any successor to
the Company.
(c) GOVERNING LAW. The provisions of the Plan and all Award
Agreements under the Plan shall be construed in accordance with, and governed
by, the laws of the State of Delaware without reference to conflict of laws
provisions, except insofar as any such provisions may be expressly made subject
to the laws of any other state or federal law.
SECTION 17. STOCKHOLDER APPROVAL
The Plan, in order to become effective, must be approved by the
stockholders of the Company. Any Award granted under this Plan and any Award
Agreement executed pursuant thereto prior to the submission of this Plan to the
stockholders of the Company for approval shall be void and of no effect if this
Plan is not approved by the stockholders.
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