NORTH FORK
Bancorporation, Inc.
March ___, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of North
Fork Bancorporation, Inc., to be held at the Marriott Windwatch Hotel, 1717
Vanderbilt Motor Parkway, Hauppauge, New York, at 10 a.m. on Tuesday, April 22,
1997.
There are two matters scheduled to be acted upon at the meeting:
o The election of four directors to Class 1 of the Board of Directors;
and
o The amendment of the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock to two hundred million,
which will enable the Company to effect a two-for-one stock split and
to issue shares for other corporate purposes.
The Board of Directors believes that the election of the nominees listed in the
attached proxy statement and the amendment of the Certificate of Incorporation
of the Company described herein are in the best interests of the Company and its
stockholders and unanimously recommends a vote "FOR" the nominees and the
amendment of the Certificate of Incorporation.
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,
/s/ John Adam Kanas
John Adam Kanas
Chairman of the Board and President
275 BROAD HOLLOW ROAD, MELVILLE, NEW YORK 11747 (516) 844-1004
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1997
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 Marriott Windwatch Hotel, 1717 Vanderbilt Motor Parkway, Hauppauge,
New York 11788, on Tuesday, April 22, 1997, at 10 a.m. for the purpose of
considering and voting upon the following items:
1. The election of four 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; and
2. The amendment of the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock from fifty
million to two hundred million; 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 1997 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 99 Smithtown
Bypass, 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 ___, 1997
/s/ Anthony J. Abate
---------------------------------
ANTHONY J. ABATE
Sr. 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>
NORTH FORK BANCORPORATION, INC.
275 Broad Hollow Road
Melville, New York 11747
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
April 22, 1997
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 10 a.m. on Tuesday, April 22, 1997, at the Marriott
Windwatch Hotel, 1717 Vanderbilt Motor Parkway, 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 19, 1997.
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 $6,000, 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 February 28,
1997, 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 _____________ 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 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
1
<PAGE>
on the amendment of the Company's Certificate of Incorporation is the
affirmative vote of a majority of the Company's outstanding Common Stock. The
required vote on any other matter that may be 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 count all shares represented by proxy
or in person at the Meeting for purposes of determining a quorum. Shares
represented by proxies or voted in person on 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. In the election of directors (Item 1), which requires 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" will have
the effect of a vote "AGAINST" any or all nominees for director. With respect to
the vote on the proposed amendment of the Company's Certificate of Incorporation
(Item 2), ballots marked "ABSTAIN" and broker non-votes will both have the
effect of a vote "AGAINST" such proposal. With respect to the vote on any other
matter, ballots marked "ABSTAIN" will have the effect of a vote "AGAINST" such
matters but broker non-votes will not have the effect of a vote "AGAINST" such
matters.
Votes will be counted and vote totals announced at the Meeting by the
inspectors of election.
Certain Beneficial Ownership
As of December 31, 1996, there was no person known by the Board of
Directors of the Company to be the beneficial owner of more than 5 percent 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 four
directors to Class 1 of the Board of Directors, each to hold office for three
years (through the annual meeting in the year 2000) and until his successor
shall have been duly elected and qualified. Presently, the Board of Directors of
the Company consists of eleven members divided into three classes.
All proxies timely received by the Secretary in response to this
solicitation that are in proper form and that have not been revoked will be
voted "FOR" the four 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 a direction to "WITHHOLD"
authority to vote for any or all of the nominees.
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
2
<PAGE>
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 current director whose term of office extends beyond the date
of the Meeting.
<TABLE>
Nominees for Director and Directors Continuing in Office
Shares of
<CAPTION>
Common Stock
Served Beneficially
as a Owned as of
Name, Age, Principal Occupation and Director December 31, 1996(c)
Other Positions With the Company (a)(b) Since No. of Shares Percent
--------------------------------------- ----- ------------- -------
NOMINEES FOR DIRECTOR:
CLASS 1 (terms to expire in 2000):
<S> <C> <C> <C>
Allan C. Dickerson, 64................................................................ 1988 15,578(1) *
Former President, Roy H. Reeve Agency, Inc. (general insurance
company) (1975-1994)
Lloyd A. Gerard, 65................................................................... 1981 55,264(2) *
Antique Dealer and Auctioneer
John Adam Kanas, 50................................................................... 1981 662,425(3) 2.04%
Chairman, President and Chief Executive Officer
of the Company and North Fork Bank
Irvin L. Cherashore, 61............................................................... [1997] 21,068 *
Former analyst/broker and chairman of the executive committee of
Sterling, Grace & Company, Inc. (institutional brokerage company);
Director of Winchester Group, Inc. (money management and institutional brokerage);
Former Director of North Side Savings Bank
DIRECTORS CONTINUING IN OFFICE:
CLASS 2 (terms to expire in 1998):
James F. Reeve, 56.................................................................... 1988 54,241(4) *
President, Harold R. Reeve & Sons, Inc. (general construction)
George H. Rowsom, 61.................................................................. 1981 7,716(5) *
President, S.T. Preston & Son, Inc. (retail marine supplies store)
Raymond W. Terry, Jr., 66............................................................. 1988 36,000(6) *
Former Chairman and President of Southold Savings Bank
Dr. Kurt R. Schmeller, 59............................................................. 1994 32,730(7) *
President, Queens Borough Community College, CUNY.
CLASS 3 (terms to expire in 1999):
John Bohlsen, 54...................................................................... 1986 236,155(8) *
President, The Helm Development Corp. (real estate);
Vice Chairman of the Company and North Fork Bank
Thomas M. O'Brien, 46................................................................. 1997 375,232(9) 1.1%
Vice Chairman of the Company and North Fork Bank (since January 1997)
Former Chairman, President and Chief Executive Officer
of North Side Savings Bank
James H. Rich, Jr., 69................................................................ 1988 11,860(10) *
President, Southold Lumber Co., Inc. (building supplies)
3
</TABLE>
<PAGE>
<TABLE>
Shares Beneficially Owned By Other Executive Officers And All
Directors and Officers As A Group(11)
<CAPTION>
Shares of
Common Stock
Beneficially
Owned as of
Name, Age, and Positions December 31, 1996(c)
With the Company No. of Shares Percent
---------------- ------------- -------
<S> <C> <C>
Daniel M. Healy, 54................................................................... 175,240(12) *
Executive Vice President and Chief Financial Officer of the Company
All 12 Director Nominees, Continuing Directors and Executive
Officers as a Group.................................................................. 1,683,509(13) 5.18%
</TABLE>
NOTES TO BENEFICIAL OWNERSHIP TABLE:
* 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. Mr. O'Brien was appointed in
January 1997 to Class 3 of the Board to fill the unexpired term of
Malcolm J. Delaney, who retired in July 1996.
(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.
(1) Includes 7,605 shares held by Mr. Dickerson's wife.
(2) Includes 1,858 shares held by Mr. Gerard in joint tenancy with his
daughter, 1,000 shares held by his wife and 100 shares held by his wife
in her capacity as custodian for a granddaughter.
(3) Includes 95,556 shares of restricted stock and options to purchase
398,560 shares previously granted to Mr. Kanas under the Company's
compensatory stock plans, 25,100 shares held by him in joint tenancy
with his wife, 20,941 shares held by his wife, and 4,700 shares held by
his dependent children.
(4) Includes 17,816 shares held by Mr. Reeve's wife.
(Notes continued on next page.)
4
<PAGE>
NOTES CONTINUED:
(5) Includes 1,000 shares held by Mr. Rowsom in joint tenancy with his wife,
155 shares held by his wife, and 3,561 shares held by the S. T. Preston
& Sons, Inc. Profit Sharing Trust, in which Mr. Rowsom shares voting
power with two others.
(6) Includes 30,205 shares held by Mr. Terry in joint tenancy with his wife.
(7) Includes options to purchase 13,748 shares of the Company's Common
Stock, received by Dr. Schmeller in exchange for his options to purchase
Metro Bancshares, Inc. stock in connection with the merger of Metro into
the Company on December 1, 1994.
(8) Includes 35,000 shares of restricted stock and options to purchase
86,300 shares previously granted to Mr. Bohlsen under the Company's
compensatory stock plans, 9,560 shares held by his wife, and 10,056
shares held by his dependent children.
(9) Includes 90,535 shares held by Mr. O'Brien in joint tenancy with his
wife, 432 shares as custodian for his dependent children and options to
purchase 42,882 shares received by Mr. O'Brien in exchange for his
options to purchase North Side Savings Bank stock in connection with the
merger of North Side Savings Bank into the Company on December 31, 1996.
(10) Includes 6,742 shares held by Mr. Rich in joint tenancy with his wife,
and 150 shares held by his wife.
(11) Includes 18,000 shares of restricted stock and options to purchase
123,064 shares previously granted to Mr. Healy under the Company's
compensatory stock plans, 3,000 shares held by his wife and 2,000 shares
held in his name as custodian for a daughter.
(12) Includes 148,556 shares of restricted stock and options to purchase an
aggregate of 664,554 shares previously granted to such persons under the
Company's compensatory stock plans.
During 1996, the Company's directors and executive officers 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.
The Board of Directors met 14 times during 1996. 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
5
<PAGE>
rendered by the Company's independent public accountants. The present members of
the Audit Committee are directors Terry, Gerard and Schmeller. The Audit
Committee met 5 times during 1996.
The Company's Board of Directors also has a Compensation and Stock
Committee (the "Compensation Committee"). The Compensation Committee reviews and
makes recommendations on the compensation of senior executives and other
officers, determines senior executive bonuses under the Company's Annual
Incentive Compensation Plan and administers all of the Company's compensatory
stock plans. The Compensation Committee consists of three directors appointed by
the Company's Board of Directors, none of whom may be an employee or have
substantial separate business dealings with the Company. 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 1996 the Committee met 7 times. (See "Report of the Compensation
Committee" on page ____.)
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 an officer or an
employee of the Company or any of its subsidiaries or has been at any time an
officer of the Company or any of its subsidiaries.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors of the Company receives an annual
fee of $25,000. This fee is for all duties 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. The Board of Directors of North Fork Bank (who,
collectively, are currently the same individuals who serve as directors of the
Company) received a fee of $750 for each meeting of the Board or any committee
of the Board attended. Chairmen of Bank Board committees receive an additional
$250 per committee meeting attended. Directors Kanas, Bohlsen and O'Brien do not
receive any separate fees for attendance at any Company or Bank committee
meetings.
The Company maintains a Directors' Deferred Compensation Plan, under
which a director may defer receipt of either 50 percent or 100 percent 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 customers on any
certificate of deposit or individual retirement account, determined on a
quarterly basis.
Certain directors of the Company who were directors of Southold Savings
Bank prior to the Company's acquisition of Southold in 1988 now receive, or in
the future will 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 these individuals while they were directors
of Southold 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
6
<PAGE>
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 will be entitled to receive such payments in the
future.
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
from the Company, including salary and bonus, exceeded $100,000 in 1996.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
----------------------------------------- ----------------------- -----------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Annual Restricted Options/ Other
Name and Compen- Stock SARs(4) LTIP Compen-
Principal 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 1996 $584,000 $750,000 $8,440 $1,020,000 50,000 $0 $49,422
Chairman of the Board, 1995 507,000 500,000 19,099 421,900 35,000 0 40,236
President and Chief 1994 425,400 250,000 8,239 0 50,000 0 33,066
Executive Officer
John Bohlsen 1996 334,750 350,000 6,611 680,000 30,000 0 16,638
Vice Chairman of the 1995 266,500 250,000 4,569 246,950 20,000 0 9,045
Board 1994 192,031 125,000 0 0 30,000 0 6,750
Daniel M. Healy 1996 300,000 200,000 4,164 340,000 20,000 0 14,288
Executive Vice President 1995 275,000 150,000 6,723 120,950 20,000 0 10,503
and Chief Financial Officer 1994 240,000 100,000 4,002 0 30,000 0 9,353
</TABLE>
7
<PAGE>
NOTES TO SUMMARY COMPENSATION TABLE:
(1) Includes salary deferred at the election of the named executive officer,
(including deferral amounts 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 1996 were $9,000 for Mr.
Kanas, $9,000 for Mr. Bohlsen and $9,000 for Mr. Healy. Total directors'
fees for 1996 were $34,000 for Mr. Kanas and $34,750 for Mr. Bohlsen.
(2) Listed amounts represent tax payments made by the Company on the taxable
contributions made by the Company on behalf of the named executive
officers under the Company's Supplemental Executive Retirement Plan
("SERP").
(3) Represents the dollar value of shares of restricted stock received by
the named executive officers in compensatory awards for the year in
question, based on the closing market price of the Company's Common
Stock on the date of grant. Generally, shares of restricted stock
granted under the Company's compensatory stock plans carry the same
dividend rights as unrestricted shares of Common Stock from the date of
grant. As of year-end 1996, the total market value of the restricted
stock held by executive officers Kanas, Bohlsen and Healy was
$3,404,183, $1,246,875 and $641,250, respectively, based on the year-end
market price for Common Stock of $35.625 per share.
(4) Represents total number of shares subject to options granted to the
named executive officers. No options granted under the Company's stock
plans are accompanied by stock appreciation rights ("SARs").
(5) The Company has no "long-term incentive plans" as defined in the
Securities and Exchange Commission Rules.
(6) Includes, among other things, Company contributions on behalf of the
named executive officers to the 401(k) Plan and the defined contribution
plan feature of the SERP and specified premiums paid by the Company on
certain insurance arrangements covering the executive officers. Listed
amounts for 1996 include 401(k) Plan contributions by the Company on
behalf of executive officers Kanas, Bohlsen and Healy of $6,750 each;
contributions by the Company to the defined contribution plan feature of
the SERP on behalf of executive officers Kanas, Bohlsen and Healy of
$12,660, $4,234 and $4,714, respectively; and the following insurance
premiums paid by the Company on their behalf: for Mr. Kanas, $12,810 in
premiums on a disability policy, $8,806 in premiums on two life
insurance policies and $8,396 in premiums on two split dollar life
insurance policies; for Mr. Bohlsen, $5,654 in premiums on a split
dollar life insurance policy; and for Mr. Healy, $2,824 in premiums on a
split dollar life insurance policy.
8
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning stock options
granted during 1996 to each of the named executive officers in the Summary
Compensation Table on page _____.
<TABLE>
Options/SAR Grants in the Year ended December 31, 1996
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number f % of Total
Securities Options/
Underlying SARs Exercise
Options/ Granted to or Base Grant Date
SARs Employees Price Present
Granted(1) in Fiscal (dollars/ Expiration Value(2)
Name (shares) Year share) Date (dollars)
---- -------- ---- ------ ---- ---------
<S> <C> <C> <C> <C> <C>
John Adam Kanas 50,000 21% $ 34.00 12/09/06 $346,275
John Bohlsen 30,000 13% 34.00 12/09/06 207,765
Daniel M. Healy 20,000 8% 34.00 12/09/06 138,510
<FN>
NOTES:
(1) All options listed were received by the executive under the Company's
compensatory stock plans. All options received in 1996 have a per share
exercise price equal to the market price of the Common Stock on the date
of grant. All such options also contained a "reload feature" under which
the optionee, if he subsequently elects to exercise the option by
surrender of previously owned shares or by so-called "immaculate
exercise," will simultaneously receive a reload option to purchase a
number of shares equal to the number of shares surrendered or withheld
upon exercise of the underlying option, including shares surrendered for
tax withholding purposes. The exercise price of any such reload option
will equal the market price of the Common Stock on the date of grant of
the reload option and the reload option will expire on the date the
underlying option would have expired.
(2) The listed Grant Date Present Value of the options is an estimate
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 19.29 percent (volatility is calculated
based on fluctuations of 1996 weekly closing stock prices); (d) the
dividend yield on the Common Stock was assumed to be 2.4 percent for
purposes of the analysis only; and (e) a discount of 5 percent was
utilized to reflect anticipated risk of forfeiture prior to exercise.
</FN>
</TABLE>
9
<PAGE>
The following table sets forth information concerning all stock
options that were either exercised in 1996 or held at year-end 1996 by the named
executive officers in the Summary Compensation Table on page _____.
<TABLE>
Aggregated Option/SAR Exercises in the Year Ended December 31, 1996,
and Year-End Option/SAR Values
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of Unexercised
Unexercised In-the-Money
Option Exercises in 1996 Options/SARs at Options/SARs at
December 31, December 31,
1996(2) 1996(3)
Shares Acquired (Exercisable/ (Exercisable/
on Exercise Value Realized(1) Unexercisable) Unexercisable)
Name (shares) (dollars) (shares) (dollars)
- ---- -------- --------- -------- ---------
<S> <C> <C> <C> <C>
John Adam Kanas 31,000 $427,269 E- 398,560 E- $6,613,306
U- 30,440 U- 348,526
John Bohlsen 23,640 460,980 E- 86,300 E- 1,396,098
U- 16,060 U- 51,938
Daniel M. Healy 15,000 237,188 E- 123,064 E- 2,242,243
U- 7,936 U- 163,680
<FN>
NOTES:
(1) Calculated by subtracting the exercise price of the options from the
market value of the shares received as of the date of exercise.
(2) In December 1996, the Compensation Committee added a "reload feature" to
all unexercised non-qualified stock options received by the named
executive officers before 1996, as well as to all of the stock options
then granted to them for 1996. The total number of options bearing
reload features held by named executive officers Kanas, Bohlsen and
Healy at year-end 1996 was: 413,260, 101,000 and 123,064, respectively.
(3) Calculated by subtracting the exercise price of options from the market
value of underlying shares as of the fiscal year-end, based on a closing
market price of the Common Stock on December 31, 1996, of $35.625 per
share.
</FN>
</TABLE>
AGREEMENTS WITH EXECUTIVE OFFICERS
At the end of 1994, the Board of Directors of the Company approved
change-in-control agreements for three executive officers of the Company --
Chairman, President and Chief Executive Officer John Adam Kanas, Vice Chairman
John Bohlsen and Chief Financial Officer Daniel M. Healy. The agreements, each
dated December 20, 1994, are substantially identical in form. Under each
agreement the executive is entitled to receive from the Company a lump sum
payment equal to 299 percent of his base salary if, within 24 months after a
change in control of the Company (as defined in the agreement), his employment
is terminated by the Company (other than for cause) or by the executive
voluntarily. Each agreement is a rolling three-year agreement and will continue
in effect until retirement or until two years after a decision is reached by the
10
<PAGE>
Board not to renew the agreement. The agreements provide, in effect, that if any
payments thereunder would be treated as excess parachute payments under Section
280G of the Internal Revenue Code, the aggregate amount of those payments is to
be reduced to the extent necessary to avoid that treatment, except that any
payment to the executive under the Company's Performance Plan or any
acceleration of the vesting of his stock-based awards will not trigger such a
reduction.
Also at the end of 1994, the Board adopted the Performance Plan, under
which executives and other officers and employees may receive cash payments
following a change in control of the Company, if certain financial performance
targets are met in connection with the change-in-control transaction. (See
"Report of the Compensation Committee - Change-in-Control Arrangements" on page
_____.)
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
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
NFB 100.00 170.80 270.66 294.25 556.62 805.27
S&P 500 Index 100.00 107.55 118.32 119.89 164.92 202.45
KBW Eastern Region 100.00 138.10 144.02 127.85 217.03 297.67
Index
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 (the
"Committee") is responsible for conducting periodic reviews of executive
compensation and for taking certain actions affecting the compensation of senior
executives, including the Chief Executive Officer. The 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 or have any separate, substantial business
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relationships with the Company. The names of current Committee members are
listed at the end of this report. The Committee makes recommendations to the
full Board of Directors concerning salary levels for senior executives and
officers generally and other compensatory arrangements for these individuals. In
addition, the Committee plays a major role in determining the size of annual
bonuses paid to senior executives and other key employees and has sole
discretion over grants of awards to such persons under the Company's stock-based
compensation plans. Finally, the Committee has responsibility for monitoring
post-retirement compensation arrangements for senior executives and for
establishing performance targets under the Company's long-term performance plan
that may impact on the level of post-retirement payments made to senior
executives.
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 policy is to provide an incentive
for executives to achieve corporate and individual goals and to reward
executives when these goals are met. Central to the concept and design of the
executive compensation strategy is the paramount importance of long-term
stockholder interests and the need to align senior management incentives with
those interests.
Compensation levels for executives are established after consideration
of corporate performance measurements and executive compensation practices
followed in the banking industry generally. Included in the deliberative process
are personal factors such as commitment, leadership, teamwork and community
involvement. Increasingly, the Committee also finds it necessary to monitor
compensation practices followed by companies in its market area that are not
banks but compete directly with the Company for key personnel. Awareness of
non-bank compensation practices has become more important as the Company
continues to grow and broaden its menu of financial products to meet changing
public demand.
Before making its recommendations and decisions, the Committee elicits
suggestions and advice from the CEO and certain other executive officers
regarding appropriate or desired levels of compensation for them individually
and for management personnel generally. The Committee has access to all
necessary Company financial reports, personnel records and other data and
obtains the advice of experts and compensation consultants if appropriate.
Committee members also have regular contact with senior management as a result
of their service on the Board and other Board committees, giving members a
direct basis upon which to evaluate the individual qualities and capabilities of
the officers.
The ultimate purpose of the Company's executive compensation structure
is to attract and retain executives of the highest caliber and to motivate these
individuals to put forth maximum effort toward the achievement of specified
corporate goals identified through the strategic planning process of the Board
and management.
Components of Compensation
In its deliberations regarding executive compensation, the Compensation
Committee focuses upon the following fundamental components: salary, annual
incentive compensation and long-term incentive compensation.
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Salary
The Committee conducts an annual review of salary levels for all
Company executives and other officers, establishes general policy on salary
levels and makes recommendations or determinations on specific salaries or
salary modifications for executives. Salary levels are reflective of an
individual's responsibilities, experience and performance, as well as
competitive marketplace conditions. Average salary increases in recent years for
executive officers and key employees as a group have been typical of the average
salary increases experienced by other top-performing banks.
Annual Incentive Compensation
The annual incentive component of executive compensation has
historically been provided, if and as appropriate, through the Company's Annual
Incentive Compensation Plan (the "Bonus Plan"). Following profitable years,
executives and other key employees have received year-end cash distributions out
of a designated annual bonus pool established under the Bonus Plan. The overall
size of the pool is determined by the level of the Company's financial success,
based on a set formula.
Generally, under the Bonus Plan, the Committee establishes corporate
performance targets each year that determine the overall size of the bonus pool.
The Committee may select one or several measures of financial performance as
targets and may designate a graduated series of performance targets, with the
size of the bonus pool to depend upon the particular target level achieved. The
principal measure of Company performance that has been used in the past in
setting the overall size of the bonus pool is earnings per share (net of
extraordinary or nonrecurring items).
At the 1996 annual meeting of stockholders, the Bonus Plan was amended
to ensure that amounts paid thereunder to executives would continue to be fully
tax deductible to the Company. Under the amended Bonus Plan, the Committee, in
addition to setting general performance targets that govern the funding of the
bonus pool on a Company-wide basis, must also establish, on or before March 31
of each year, certain specific performance goals for the executive officers
named in the Summary Compensation Table. Each year these specific executive
officer goals consist of an Earnings Per Share Target and a Stock Valuation
Target. Unlike the Company-wide goals, the executive officer goals, once
established, may not subsequently be modified during the year. If at year-end
either of the pre-established executive officer goals has been met, the
executives may receive as their maximum bonus payments out of the bonus pool an
amount calculated under an objective formula based on the Company's "net income"
for the year as defined in the Bonus Plan. The maximum of all bonus amounts
payable under the Bonus Plan to the named executives in the Summary Compensation
Table was limited in 1996 to 3.4 percent of "net income" as thus defined.
The Committee in its sole discretion determines at year-end the actual
amount of the annual bonus received by each executive officer, which may be less
than (but may not exceed) the objectively determined maximum annual bonus for
each.
Long-Term Incentive Compensation
The third component of the Company's executive compensation strategy is
a long-term incentive compensation program, under which executives may be
granted stock options and other 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. The
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Committee continues to believe that a substantial portion of the total
compensation of senior executives over a period of years should consist of such
long-term incentive awards. The awards under this component of the compensation
program are given after an evaluation of company performance measured against
its peers, practices in the banking and other industries, achievement of goals
and the salary component of compensation, previously discussed. Currently, the
primary vehicle for granting stock-based incentive awards is the 1994 Key
Employee Stock Plan (the "1994 Plan"). Under the 1994 Plan, awards may be
granted to executives and other key employees in the form of incentive stock
options, nonqualified stock options or restricted stock.
At year end 1996, the Committee recommended two changes in the overall
structure of the Company's long-term incentive compensation program. First, in
order to encourage the Company's senior executives to exercise their holdings of
stock options without at the same time reselling substantial quantities of the
option shares into the marketplace, the Committee recommended and the Board of
Directors approved certain modifications to the Company's stock option plans. As
an initial step, the plans, including the 1994 Plan, were amended to permit the
so-called "immaculate exercise" of stock options granted to the executives. This
is an option exercise in which the optionee, without tendering cash or pre-owned
shares, receives only that number of shares having a current aggregate market
value equal to the option spread on the date of exercise, which is always less
than the total number of shares to which the option relates. This feature is
presently common in other company plans and is standard industry practice.
As a further measure to encourage option exercise by executives, the
Committee recommended and the Board approved a new policy under which senior
executives who exercise their stock options by surrendering pre-owned shares of
Common Stock or who elect an immaculate exercise procedure for their options
will automatically receive so-called "reload" stock options from the Company.
The reload option, an increasingly common device to encourage option exercise,
involves the issuance to the person exercising the underlying option of a new
option to acquire the same number of shares surrendered or withheld upon
exercise of the underlying option. The intention is to return the option holder
to the same overall position of equity holdings. The reload option bears an
exercise price equal to the fair market value of the stock on the date of
exercise, and expires on the same date the underlying option would have expired.
Using the new reload option policy, in early 1997 the Company's top executives
exercised a substantial portion of their stock option holdings in
stock-for-stock or immaculate exercises and simultaneously received reload
options equal to the number of shares surrendered or withheld.
A second change in the long-term compensation program recommended by
the Committee at year-end 1996 was a shift in emphasis from stock awards that
vest in a few years to awards that vest at a much later date, in some cases, at
the anticipated date of the executive's retirement. The Committee believes that
deferred or retirement-based vesting of incentive stock awards will encourage
the senior executives to commit to the Company for a longer period of time, to
the Company's benefit. Currently, stock-based awards granted under the long-term
compensation plans typically vest in a three- to seven-year time frame. Under
the Committee's new approach, a substantial portion of future stock-based
awards, particularly future grants of restricted stock, will be structured to
vest only upon the executive's retirement, or upon any earlier change-in-control
transaction. In return for substantially longer vesting periods for awards,
including retirement-based vesting, top executives would receive awards for
proportionately larger numbers of shares. Such an approach should provide even
more incentive to top management to work for the long-term financial success of
the Company. With the approval of the Board, the Committee currently is
exploring the possibility of instituting a new incentive stock plan specifically
designed to implement the concept of retirement-based vesting of stock awards.
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Tax Deductibility of Certain Payments
Under a provision of the Internal Revenue Code, Section 162(m),
publicly-traded companies are denied a tax deduction for compensation exceeding
$1 million paid to any top executive, subject to certain exemptions. The
Company's Bonus Plan and its compensatory stock plans are designed so that bonus
awards and stock options granted thereunder qualify for an exemption from this
statute, such that the related amounts of executive compensation remain tax
deductible to the Company. The Committee's current intention is that
compensation paid to the Company's senior executives should continue to be tax
deductible to the extent this goal is achievable consistent with the Company's
long-term objectives and the need to attract and retain top executive talent in
a competitive marketplace.
Compensation Committee Review of Executive Compensation
The Compensation Committee, in reviewing executive compensation at
year-end, begins by observing that 1996 marked the Company's fifth consecutive
year of excellent financial results. Moreover, the continued earnings growth was
achieved against a backdrop of dynamic expansion. The Company almost doubled in
size during the year by completing three major strategic acquisitions (acquiring
the domestic business of Extebank and the Long Island branches of First
Nationwide Bank in March and the North Side Savings Bank in December). The
Committee noted that management successfully integrated the Extebank and First
Nationwide acquisitions and that prospects for similar results with North Side
in 1997 are expected. In the midst of this rapid growth, the Company continues
to be a top industry performer. Return on average assets in 1996, adjusted for
nonrecurring charges related to the acquisitions, remained at a very high 1.55%.
Return on average equity for 1996, as similarly adjusted, was an excellent
19.85%. In addition, asset quality continued to improve during 1996, as the
ratio of non-performing assets to total assets decreased to a five-year low. The
Company's net interest margin continued at a healthy level, above the industry
average.
The Committee notes that the Company's efficiency ratio, increasingly
accepted as the leading indicator of a well managed bank, also remained among
the best in its peer group in 1996 at a very low 42.5%.
For this successful melding of growth and efficiency, the Company and
its management received significant national media acclaim in 1996, and
deservedly so. Furthermore, the Committee believes that management has laid a
foundation for solid financial performance in the future, regardless of whether
the Company continues its current pace of expansion. In order to enhance its
long-term capital position the Company successfully completed a private
placement of $100 million of trust-preferred securities. These additional funds
should provide the Company's management with increased flexibility in
implementing selected financial strategies in the coming years.
Equally important as the Company's recent strong financial performance
in the midst of expansion has been the substantial rise in the market value of
the Company's Common Stock. Even allowing for the persistent "bull market" of
the past several years, the Company's Common Stock has performed exceptionally
well, among the best of its peer group of stocks. During 1996 alone, the market
price of the Common Stock, measured from year-end 1995 to year-end 1996,
increased by 41%, and the quarterly cash dividend was increased by 25% in
November. The five-year growth in the market value of the Common Stock is also
impressive. As the stock performance graph immediately preceding this Report
demonstrates, from year-end 1991 to year-end 1996 the market price of the Common
Stock (adjusted for reinvestment of cash dividends) increased by 805%, a growth
substantially higher than that experienced by regional bank stocks generally or
by the S&P 500 Index over the period. Even allowing for the fact that the
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Company's stock price was temporarily depressed at year-end 1991 following a
severe recession in the Long Island economy, the Company's Common Stock has
still outperformed its peer group as well as the broader market in recent years.
At year-end 1996, the Company's total market capitalization exceeded $1 billion,
almost ten times its total market capitalization five years earlier, and most of
this increase took the form of an increase in per share value.
Thus, under any standard measure of bank performance, the Company
solidified its position during the past year as one of the outstanding
commercial banks of its size in the United States.
The Committee believes that senior management deserves much of the
credit for the foregoing achievements. Accordingly, the Committee determined at
year-end that the executive team should receive substantial increases in all
areas of compensation, including salary, cash bonuses and stock-based awards.
Salary
The full Board of Directors accepted the Committee's recommendations on
year-end salary increases for executives. For the top executives listed in the
Summary Compensation Table, increases ranged from 16% to 33% over 1996 salary
levels. Most other Company officers and key employees also received reasonable
year-end salary increases, reflecting their significant contributions to the
Company's success.
Annual Incentive Compensation
The Committee determined at year-end that the annual bonuses payable to
the senior management under the Bonus Plan also should exceed the prior year's
bonus levels. Thus, amounts awarded to the three executives listed in the
Summary Compensation Table represented increases over their 1996 bonus amounts.
Even so, due to the excellent financial results realized by the Company in 1996,
the maximum bonus amounts payable under the Bonus Plan to the three executives
listed in the Summary Compensation Table, determined under the objective formula
established by the Committee in accordance with the Plan at the start of 1996,
would have been substantially higher than the bonus amounts actually awarded
them by the Committee at year end. Utilizing the discretion given it under the
Bonus Plan, the Committee made downward adjustments from the specific bonus
amounts that would otherwise have been payable to the three executives under the
objective formula. The bonus amounts actually paid to the three executives for
1996 are identified in the Summary Compensation Table.
Long-Term Incentive Compensation
The Committee also determined at the end of 1996 to grant an increased
number of stock-based awards to senior management under the Company's
compensation stock plans, so as to give these individuals even greater incentive
to keep the Company on a high-performance track. In December, the three
executives listed in the Summary Compensation Table received stock-based awards
(options or restricted stock) for an aggregate of 160,000 shares. As previously
discussed, these awards were extended based on several performance factors and
balanced with the salary portion of compensation for the executives. Further,
due consideration was given to prior year practices and experiences in
determining the number of shares subject to the award. As discussed earlier in
this Report, the Committee also decided at the end of 1996 to adopt a policy of
granting reload options to senior management, to encourage them to exercise
their vested stock options.
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Change-in-Control Arrangements
The Committee concurs in the Company's traditional policy of not
extending long-term employment agreements to executive officers except in
extraordinary circumstances. Currently, no named executive officer in the
Summary Compensation Table is serving under an employment agreement.
The Committee also believes, however, that the long-term interests of
stockholders are well served by extending to senior management certain
protections in the event a change-in-control of the Company should occur in the
future. In approving these arrangements, the Committee has sought to align
management's interest with that of stockholders, such that top executives would
be actively encouraged to seek out and aggressively explore possible
change-in-control transactions for the Company at the optimum time for the
optimum price.
The Company's change-in-control program for senior management involves
two elements, change-in-control agreements and a Performance Plan, each of
which is discussed in more detail below.
The Committee does not believe that management will act to protect its
own positions or interests at stockholder expense. Nor is the Committee aware of
any current offers to acquire the Company or negotiations regarding any such
acquisition.
Change-in-Control Agreements
In 1994, the Company extended change-in-control agreements to the three
executive officers named in the Summary Compensation Table. These agreements,
which are fairly standard in form and substance, essentially provide that, if
there is a change in control of the Company and within a designated period
thereafter the executive's employment terminates, the executive will receive an
amount in cash equal to a multiple of the executive's salary before termination.
These change-in-control agreements are described in more detail elsewhere in
this Proxy Statement under "Agreements With Executive Officers."
Performance Plan
At the Committee's recommendation, the Company also adopted a
Performance Plan in 1994. This Plan offers not only to senior executives but to
all officers and salaried employees of the Company the possibility of a special,
one-time cash distribution if the Company is acquired in a transaction that
produces an above-average return to the Company's stockholders. Under the
Performance Plan, if a change in control of the Company occurs and the change in
control involves or follows attainment of above-average financial results for
stockholders, a special performance pool will be funded, from which senior
executives and other officers and employees of the Company will receive
distributions. The availability and size of the special performance pool will
depend upon the level of financial success achieved by the Company, measured
against pre-established, objective performance targets. No pool will be funded
or distributed in connection with any acquisition of the Company that does not
exceed the industry average for such transactions, using as the basis of
comparison the ratio of the acquisition price paid to the market value and/or
book value of the Company's Common Stock.
The Committee is charged with setting annual performance targets under
the Performance Plan. At the end of each calendar year, the Committee determines
specific performance targets that must be met in order for a performance pool to
be funded and distributed in connection with any change in control of the
Company that may be announced or completed in the ensuing year. The Committee
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also determines the size of any such performance pool or the objective criteria
to be used in determining the size of the pool. In setting these targets, the
Committee is required to utilize objective measures of corporate performance.
Once established for a particular year, the performance targets and the criteria
for the performance pool may not later be altered or canceled. In adopting
specific performance targets, the Committee is directed to adhere to the general
Performance Plan goal that no performance pool amounts should be funded or
distributed except upon attainment of above-average financial results by the
Company prior to or as part of a change in control. The maximum size of any
performance pool distributable under the Performance Plan upon a change in
control is three percent of the Company's market capitalization at the time the
change in control is completed, including in the measurement of market
capitalization any premium paid to the Company's stockholders in the
transaction. Under the Performance Plan, a change in control is defined to mean
a merger, consolidation or other similar transaction in which the Company is
acquired by another corporation or one or a series of transactions in which a
majority of its outstanding stock is acquired by another corporation or
individual person or a related group. Once a performance pool is distributed,
the Performance Plan terminates.
Distributions of a performance pool after a change in control will be
made in three tranches. Tranche 1 will consist of senior executives, including
the Chief Executive Officer and such other senior officers as may be determined
by the Committee on a year-to-year basis. Tranche 2 will consist of other
officers, as determined by the Committee prior to a pool distribution. Tranche 3
will include all other employees then participating in the Company's retirement
plan. Under the Performance Plan, the participants in Tranche 3 will always
receive at least 10 percent of any performance pool. The Committee may
determine, on an ongoing basis, how the remaining portion of the pool is to be
divided between the Tranche 1 and Tranche 2 participants. Currently, the
Committee has decided that [75] percent of any performance pool payable in 1997
would be distributed to the Tranche 1 executives, who for 1997 will be the three
executives named in the Summary Compensation Table. The precise percentage
allocations among the participants in any specific tranche would be determined
by the Committee immediately prior to a change in control. Under the Performance
Plan, the Chief Executive Officer currently is entitled to receive at least [30]
percent of Tranche 1.
If the performance pool is distributable under the Performance Plan
because a change in control has occurred and the pre-established performance
targets have been satisfied, the entire pool must be distributed. Participating
executives, officers or employees of the Company need not resign or retire in
order to receive distributions. In addition, the Performance Plan provides a
so-called tax gross-up provision for senior executives, under which the Company
would pay any taxes payable by the senior executives on pool distributions to
them, including any excise taxes on any portions of distributions constituting
"excess parachute payments" under the Internal Revenue Code.
In establishing particular performance targets for 1997, the Committee
selected as a benchmark for measuring any change-in-control transaction that may
be announced or completed in 1997, an index maintained by a designated industry
analyst for public sector commercial bank acquisition transactions announced in
the 12 months preceding announcement of the Company's transaction. Specifically,
if the Company's transaction, upon announcement, involves a multiple of sale
price to market price that exceeds the median multiple of sale price to market
price in the index, a performance pool will be funded upon completion of the
transaction. The size of the pool would depend on the extent to which the
multiple in the Company's transaction exceeded the median multiple, ranging from
a pool of 1.5 percent of market capitalization at closing for transactions
barely exceeding the median to 3.0 percent of market capitalization at closing
for transactions in the top decile under the index.
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The Committee may elect in future years to alter the performance
targets, the definition of the performance pool or the size and constituency of
the tranches. There can be no assurances that a change-in- control transaction
will be effected within any certain period or at any time.
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.
The Committee believes that much of the credit for the Company's
excellent financial performance in 1996 and in recent years generally belongs to
CEO John Adam Kanas. In this regard, the Committee is of the view that Mr. Kanas
deserves particular mention for the success with which the Company has been able
to pursue an expansion campaign while maintaining a solid earnings record. In
both the design and the implementation phases of the Company's recent
acquisitions, Mr. Kanas has played the key role. The blueprint for North Fork's
growth has largely been his own, and he has been the indispensable person in
bringing it to fruition. The Committee notes that the demands on the time and
efforts of Mr. Kanas and the other members of his senior management team
resulting from the expansion program have been extraordinary in recent periods.
The Committee also observes that the long-run success of an acquisition
program depends on rapid integration of the target businesses into the acquiror.
Here, too, the Committee believes, Mr. Kanas has played an active and critical
role. In just a few years, the Company has quadrupled in size, but Mr. Kanas and
his management team, with the addition of a few key officers from the target
companies, have been able to absorb the acquisitions into the North Fork
organization rapidly and efficiently.
Finally, the Committee notes that Mr. Kanas has continued to maintain
day-to-day control over all aspects of the Company's operations, and has
represented the Company ably and energetically in the communities it serves.
For all of the above reasons, the Committee recommended to the full
Board at year-end 1996 that Mr. Kanas' salary be increased by 18% and determined
that his cash bonus under the Bonus Plan would be increased by 50% over his 1995
bonus. The Committee also made year-end awards to Mr. Kanas of options to
acquire 50,000 shares and 30,000 shares of restricted stock.
Committee members:
Allan C. Dickerson, Chairman
Lloyd A. Gerard
George H. Rowsom
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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 percent vested under the Retirement Plan
after five years of service.
Under the Retirement 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 has a Supplemental
Executive Retirement Plan (the "SERP"). The SERP 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 on a tax-deferred basis and 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
and Company matching contributions, both made 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. Each
of the named executive officers in the Summary Compensation Table on page _____,
is covered under the SERP.
Based upon their current covered compensation and assuming retirement
at normal retirement age (65), executive officers Kanas, Bohlsen and Healy would
receive under the Retirement Plan and the SERP combined annual benefit payments
of approximately $244,000, $50,000 and $43,000, respectively.
TRANSACTIONS WITH DIRECTORS, EXECUTIVE OFFICERS
AND ASSOCIATED PERSONS
Since January 1, 1996, 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 North Fork 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 North
Fork Bank as of December 31, 1996, as a non-accrual, past due, restructured or
potential problem loan.
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Item 2. AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE
AUTHORIZED SHARES AND EFFECT A TWO-FOR-ONE STOCK SPLIT
On February 25, 1997, the Board of Directors of the Company unanimously
adopted a resolution declaring it advisable that the Company's Certificate of
Incorporation be amended to increase the number of authorized shares of Common
Stock of the Company, having a par value of $2.50 per share, from 50 million to
200 million (the "Amendment"). The Board of Directors further directed that the
Amendment be submitted for consideration by stockholders at the Company's annual
meeting. In the event the Amendment is approved by stockholders, the Company
will thereafter execute and submit to the Delaware Secretary of State for filing
a Certificate of Amendment of the Certificate of Incorporation providing for the
Amendment. The Amendment will become effective at the close of business on the
date the Certificate of Amendment is accepted for filing by the Secretary of
State.
On February 25, 1997, the Board of Directors also unanimously adopted
a resolution authorizing and declaring, subject to stockholder approval of the
Amendment, a two-for-one stock split (the "Stock Split"), under which the
Company would issue one additional share of Common Stock for each authorized
share of Common Stock outstanding or in the Treasury as of the close of business
on April 25, 1997, and will reserve for issuance one additional share of Common
Stock for each share of Common Stock then reserved for issuance (e.g., under
employee stock plans). The par value of the Common Stock will remain the same
and the Stock Split will thus take the form of a 100 percent stock dividend.
As of the record date for the Meeting, there were approximately _____
million shares of Common Stock outstanding and another 920,992 shares of Common
Stock had been reserved for issuance under the Company's various employee
benefit and compensatory stock plans and other stock distribution plans. Thus,
absent the Amendment increasing the authorized shares of Common Stock, there
would not be a sufficient number of authorized shares to effect the Stock Split.
STOCKHOLDER APPROVAL OF THE AMENDMENT IS REQUIRED IN ORDER FOR THE PROPOSED
TWO-FOR-ONE STOCK SPLIT TO BE EFFECTED. IF THE PROPOSED AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION IS NOT APPROVED BY THE STOCKHOLDERS, THE
STOCK SPLIT CANNOT BE EFFECTED.
The shares issued pursuant to the Stock Split will have the same rights
as currently outstanding shares of Common Stock. At present, in addition to 50
million shares of Common Stock, the authorized stock of the Company includes 10
million shares of Preferred Stock. No shares of Preferred Stock are currently
outstanding. NO CHANGE TO THE COMPANY'S PREFERRED STOCK AUTHORIZATION IS
REQUESTED BY THIS AMENDMENT.
The purpose of the Amendment is to enable the Company to effect the
Stock Split and provide additional authorized shares of Common Stock for
possible use in connection with future financings, investment opportunities,
business transactions (including corporate mergers and acquisitions), employee
benefit plan or dividend reinvestment plan purchases, distributions to existing
stockholders (such as stock dividends or stock splits) or for other corporate
purposes. The issuance of additional shares of Common Stock for any of these
purposes could have a dilutive effect on earnings per share, depending on the
circumstances, and could dilute a stockholder's percentage voting power in the
Company. The Board of Directors will make the determinations for future
issuances of authorized shares of Common Stock, which will not require further
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action by the stockholders except in certain cases, such as where a very
substantial number of shares is to be issued in a single transaction.
Other than the shares which are required to effect the Stock Split, the
Company has no definitive plans or commitments requiring the issuance of
additional shares of Common Stock, except for such shares as may be issuable in
the normal course under the Company's employee benefit or compensatory stock
plans, within the amounts reserved for such purposes. The Board of Directors
believes authorization of the additional shares is appropriate, however, so that
it may have the flexibility to issue shares from time to time, without the delay
of seeking stockholder approval (unless required by law or exchange
regulations), whenever, in its judgment, such issuance is in the best interest
of the Company and its stockholders.
In the event stockholders approve the Amendment, Article Four of the
Company's Certificate of Incorporation will be amended to increase the number of
shares of Common Stock which the Company is authorized to issue from 50,000,000
to 200,000,000. The par value of such stock will remain two dollars and fifty
cents ($2.50) per share. Upon effectiveness of the Amendment, Paragraph (a) of
Article 4 of the Company's Certificate of Incorporation will read as follows:
"4. Capital Stock. (a) The authorized shares which the Corporation has
authority to issue shall be two hundred ten million (210,000,000),
divided into two hundred million (200,000,000) shares of Common Stock,
par value of two dollars and fifty cents ($2.50) each, and ten million
(10,000,000) shares of Preferred Stock, par value of one dollar ($1.00)
each, which Preferred Stock may be divided into and issued in series as
described herein."
The Company's Certificate of Incorporation was last amended to increase
the number of authorized shares of Common Stock in 1988. At that time the
Company had approximately 5,178,452 shares of Common Stock outstanding and
increased its authorized shares of Common Stock from 13 million to 50 million.
The Board of Directors believes that the proposed Stock Split will
result in a market price that should be more attractive to a broader spectrum of
investors, particularly individual investors. The aggregate number of shares
that may be sold under each of the Company's employee stock plans, the number of
shares covered by outstanding options and restricted stock awards under such
plans, and the exercise price of options granted under the plans, will also be
proportionately adjusted to reflect the Stock Split. For example, the Stock
Split will have the effect of doubling the number of shares of Common Stock
issuable upon exercise of outstanding options, and of reducing by one-half the
exercise price per share with respect to such options. The number of shares of
restricted stock previously granted to and held by key employees of the Company
will also be doubled accordingly.
Although an increase in the authorized shares of Common Stock could,
under certain circumstances, also be construed as having an anti-takeover effect
(for example, by permitting easier dilution of the stock ownership of a person
seeking to effect a change in the composition of the Board of Directors or
contemplating a tender offer or other transaction resulting in the acquisition
of the Company by another company), the proposed Amendment is not in response to
any effort by any person or group to accumulate the Company's stock or to obtain
control of the Company by any means. In addition, the proposal is not part of
any plan by the Board of Directors to recommend or implement a series of
anti-takeover measures.
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In the event Item 2 is approved, certificates representing shares of
the Company's Common Stock issued prior to the time the Stock Split becomes
effective will continue to represent the same number of shares of the Company's
stock as they did prior to such time, and each common stockholder of record at
the close of business on the record date for the Stock Split, April 25, 1997,
will be entitled to receive one additional share of Common Stock for each share
of Common Stock held on such date.
EXISTING CERTIFICATES WILL CONTINUE TO REPRESENT THE NUMBER OF SHARES
EVIDENCED THEREBY. EXISTING CERTIFICATES WILL NOT BE EXCHANGED FOR NEW
CERTIFICATES. PLEASE DO NOT RETURN ANY CERTIFICATES TO THE COMPANY OR OUR
TRANSFER AGENT.
If Item 2 is approved, the Company will also apply to the New York
Stock Exchange for the continued listing of the Company's Common Stock on a
split basis.
The Company has been advised by its tax counsel that under U.S. federal
income tax laws the receipt of additional shares of Common Stock in the Stock
Split will not constitute taxable income to the stockholders. In addition, the
cost or other tax basis to a stockholder of each old share held immediately
prior to the split will be divided equally between the corresponding two shares
held immediately after the split, and the holding period for each of the two
shares will include the period for which the corresponding old share was held.
The laws of jurisdictions other than the United States may impose taxes on
receipt by a stockholder of additional shares of Common Stock resulting from the
split. Stockholders subject to such other laws should consult with their own tax
advisors for additional information.
If a stockholder elects to sell or purchase shares of the Company's
Common Stock following the effectuation of the Stock Split, stock transfer
taxes, if applicable, may be higher in a transaction involving an equivalent
aggregate market value, because of the greater number of shares involved, and
the brokerage commissions associated with such activities may also be higher.
Stockholders may wish to determine from their brokers the taxes and commissions
applicable for the additional number of shares.
The Board of Directors believes adoption of the Amendment 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 Amendment 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 1998 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, 1997. Such proposals also must meet the other
requirements established by the Securities and Exchange Commission for
stockholder proposals.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, Certified Public Accountants, were the
independent auditors of the Company for the year ended December 31, 1996, and
have also been selected to serve as auditors for 1997.
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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.
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 ___, 1997
By Order of the Board of Directors
/s/ Anthony J. Abate
-----------------------------------------------
ANTHONY J. ABATE
Sr. Vice President and Secretary
24
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NORTH FORK BANCORPORATION, INC.
P PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
R This proxy is solicited on behalf of the Board of Directors
O April 22, 1997
X
Y
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 that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the Marriott Windwatch Hotel, 1717 Vanderbilt Motor
Parkway, Hauppauge, New York at 10:00 a.m. on Tuesday, April 22, 1997, 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 Board of
Directors for terms to expire at the
2000 Annual Meeting of Stockholders (CHANGE OF ADDRESS)
Nominees: Allan Dickerson, Lloyd A. Gerard,
John Adam Kanas, Irvin L. Cherashore __________________
(Check one box only for all nominees) __________________
__________________
(Over)
2. Amendment of the Certificate of Incorporation
to increase the number of authorized shares of
Common Stock from fifty million (50,000,000)
to two hundred million (200,000,000)
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]
<PAGE>
Please mark your
[x] votes as in this
example
- --------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Proposals 1 and 2
- --------------------------------------------------------------------------------
FOR WITHHOLD
1. Election of Directors
(see reverse) [ ] [ ]
WITHHOLD for the following only. Write names(s) below.
FOR AGAINST ABSTAIN
2. Amendment of the Certificate
of Incorporation [ ] [ ] [ ]
- --------------------------------------------------------------------------------
Please indicate below whether you plan on attending the Meeting.
I PLAN TO ATTEND I DO NOT PLAN CHANGE OF ADDRESS
TO ATTEND ON RESERVE SIDE
[ ] [ ] [ ]
Receipt of the Notice of Annual Meeting of Stockholders and accompanying Proxy
Statement is hereby acknowledged.
NOTE: Please sign exactly as your name appears on this proxy. Joint owners
should each sign SIGNATURE(S) DATE personally. If signing as attorney,
executor, administrator, trustee or guardian, please include your full
title. Corporate proxies should be signed by an authorized officer.
--------------------------------
--------------------------------
SIGNATURES(S) DATE
