Anthony D. Andora
Chairman of the Board
Dear Interchange Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
on Thursday, May 25, 1995, at 3 p.m. at the Company's executive offices on the
fourth floor of Park 80 West/Plaza Two in Saddle Brook, New Jersey.
The Notice of the Annual Meeting and Proxy Statement accompanying this
letter describe the business to be acted upon at the meeting. Please promptly
vote, date, sign and return your proxy for the meeting even though you plan to
attend. You may vote in person at that time if you so desire.
Sincerely
Anthony D. Andora
April 20, 1995
<PAGE>
Notice of Annual Meeting of Stockholders
The Annual Meeting of Stockholders of Interchange Financial Services
Corporation will be held on Thursday, May 25, 1995, at 3:00 p.m. at the
Company's executive offices on the fourth floor of Park 80 West/Plaza Two in
Saddle Brook, New Jersey to consider and act upon the following matters:
1. The election of four directors for three-year terms.
2. The approval of the amendment of the Company's Stock Option Plan of 1989 to
increase shares of common stock reserved for issuance.
3. The ratification of the appointment of Deloitte & Touche as the Company's
independent auditors for 1995.
4. The transaction of such other business as may properly come before the
meeting or any adjournment thereof. The Company knows of no other business
to be brought before the meeting.
Benjamin Rosenzweig
Secretary
Please complete, sign, and return promptly the enclosed proxy in the
postage-paid envelope provided.
April 20, 1995
<PAGE>
PROXY STATEMENT
This proxy statement and the accompanying proxy/voting card (proxy card)
are being mailed beginning April 20, 1995, in connection with the solicitation
of proxies by the Board of Directors, for the Annual Meeting of Stockholders on
May 25, 1995. Proxies are solicited to give all stockholders of record at the
close of business on April 20, 1995, an opportunity to vote on matters that come
before the meeting. On that date, 2,697,100 shares of common stock were
outstanding, each of which is entitled to one vote on each matter brought before
the meeting.
When your proxy card is returned properly signed, the shares represented
will be voted in accordance with your directions. Abstentions are voted neither
"for" nor "against," but are counted in the determination of a quorum. You can
specify your choices by marking the appropriate boxes on the enclosed proxy
card. If your proxy card is signed and returned without specifying choices, the
shares will be voted as recommended by the directors.
1. Election of Directors
(Item 1 on Proxy Card)
The accompanying proxy will be voted for the election of the following
nominees unless otherwise instructed. Each nominee for director and each
continuing director also serves as director of Interchange State Bank (the
"Bank"), a subsidiary of the Company. If a nominee should become unavailable for
any reason, which management does not anticipate, the proxy will be voted for a
substitute or, if no substitute is selected, the number of directors may be
reduced.
<PAGE>
Nominees and Directors
"Nominees to be elected Directors for terms of three years expiring in 1998."
ANTHONY D. ANDORA, age 64, is President of Andora, Palmisano & Geaney, a
professional corporation in Elmwood Park, New Jersey. Mr. Andora, a member
of the Board of Directors of the Company since 1984 and of the Bank since
1969, is Chairman of the Board and is ex-officio on all committees.
J. FLETCHER CREAMER, JR., age 44, is President (since 1982) of J. Fletcher
Creamer and Son, Inc. and Creamer Brothers, Inc. of Hackensack, New Jersey.
J. Fletcher Creamer and Son is a full-service, multifaceted contracting
company serving the business community, governmental agencies and utilities
throughout the United States. The company specializes in the installation
of underground transmission lines for communication, cable TV, electric,
sewer, gas and water systems, in addition to heavy and highway
construction. Mr. Creamer was appointed to the Board of Directors of the
Company and the Bank in December 1993 and serves on the Audit Committee and
the Nominating Committee and is an alternate member of the Executive
Committee.
DAVIDR. FICCA, age 63, served as Vice Chairman, Executive Vice President and
Senior Legal Officer of Kidde, Inc., prior to March 1988. He has been a
Director of the Company since 1984 and of the Bank since 1983. He is a
member of the Executive Committee and the Compensation/Stock Option
Committee.
BENJAMIN ROSENZWEIG, age 69, is the Senior Executive Partner of Azco Steel
Company, Saddle Brook, New Jersey, a nationwide steel distributor. He has
been a member of the Board of Directors of the Company since 1984 and of
the Bank since 1976 and is Secretary of the Board. He serves as a member of
the Executive Committee, Compensation/Stock Option Committee, the
Nominating Committee and is Chairman of the Investment Committee.
<PAGE>
"Directors to continue in office for terms expiring in 1996."
ANTHONY S. ABBATE, age 55, is President and Chief Executive Officer. Mr. Abbate
has been a member of the Board of Directors of the Company since 1984 and
the Bank since 1981. He is a member of the Executive Committee and serves
ex-officio on all committees.
ANTHONY AMATO, age 64, formerly a principal of Amato Grain & Seed Company, is
active in real estate development, ownership and management. Mr. Amato has
been a member of the Board of Directors of the Company and the Bank since
1985. He serves as a member of the Executive Committee, Investment
Committee and the Compensation/Stock Option Committee.
JOHN J. ECCLESTON, age 69, is a partner of R.D. Hunter & Company, Public
Accountants. Prior to January 1995, he was Senior Partner of John J.
Eccleston & Company, Public Accountants. Mr. Eccleston has been a member of
the Board of Directors of the Company since 1984 and the Bank since 1969.
He is Chairman of the Audit Committee and a member of the Executive
Committee and Investment Committee.
ELEANORE S. NISSLEY, age 63, is President of Steffens Realty Company, a
commercial real estate brokerage firm and she serves as Vice Chairperson of
the Hackensack Meadowlands Development Commission. Mrs. Nissley has been a
director of the Company and of the Bank since 1992. She is a member of the
Audit Committee and the Nominating Committee and is an alternate member of
the Executive Committee.
"Directors to continue in office for terms expiring in 1997"
DONALD L. CORRELL, age 44, is Chairman, President and CEO (since 1992) of United
Water Resources, Inc.. Prior to 1992 he was Senior Vice President of
Finance, Treasurer and Chief Financial Officer of United Water Resources,
Inc. United Water Resources, Inc., is a holding company whose subsidiaries
are active in public water supply, water-related services and real estate.
Mr. Correll was appointed to the Board of Directors of the Company and the
Bank in January 1994 and serves on the Audit Committee and
Compensation/Stock Option Committee and is an alternate member of the
Executive Committee. He is a director of United Water Resources, Inc.
JAMESE. HEALEY, age 54 is Comptroller (since 1987) of CPC International Inc.
which is a multinational food manufacturing company. Prior to election as
Comptroller, he served as Vice President of Finance and Administration for
CPC's Corn Refining Division. Previously, he served in a number of senior
financial roles. Mr. Healey was appointed to the Board of Directors of the
Company and the Bank in November 1993 and serves on the Audit Committee,
Nominating Committee, Investment Committee, Compensation/Stock Option
Committee and is an alternate member of the Executive Committee.
JEREMIAH F. O'CONNOR, age 61, is Managing Director of NatWest Financial Markets
Group and a past Commissioner of the Board of Public Utilities for the
State of New Jersey. Prior to that he was Managing Director and Executive
Vice President of Jersey Capital Market Group, Inc., an investment banking
firm and formerly Vice President of Product and Financial Planning of The
Micro Energy Group of Bell & Howell Corporation. Mr. O'Connor has been a
member of the Board of Directors of the Company since 1984 and the Bank
since 1969. He is Vice Chairman of the Board. He serves on the Executive
Committee and Nominating Committee and is Chairman of the
Compensation/Stock Option Committee.
ROBERT P. RITTEREISER, age 56, is Chairman of Yorkville Associates Corp., a
private investment and financial advisory concern formed in April 1989. He
served as Chairman since November 1992 and President and Chief Executive
Officer from March 1993 until February 1995 of Nationar, a banking services
corporation. On February 6, 1995, the Acting Superintendent of Banks, State
of New York, filed a Petition in the New York Supreme Court to take over
the business of Nationar. Prior to March 1993, he was President and Chief
Executive Officer of E.F. Hutton Group until its merger with Shearson
Lehman Bros. Until June 1985 he was Executive Vice President and Chief
Administrative Officer of Merrill Lynch & Co. He has been a Director of the
Company and of the Bank since July 1989. He is a member of the
Compensation/Stock Option Committee and is an alternate member of the
Executive Committee. He is a Director of Ferrofluidics Corporation and the
Main Stay Family of Funds. He is a Trustee of the DBL Liquidating Trust.
<PAGE>
Board Committees, Meetings and Compensation
The Company has an Audit Committee of the Board of Directors consisting
of Mrs. Nissley, Messrs. Correll, Creamer, Eccleston (Chairman) and Healey. This
committee reviews significant audit, accounting and other principles, policies
and practices, the activities of independent auditors and of the Company's
internal auditors, and the conclusion and recommendations of auditors and the
reports of regulatory examiners upon completion of their respective audits and
examinations. The committee met five times in 1994.
The Compensation/Stock Option Committee administers management incentive
compensation plans, including the stock option plan. The committee makes
recommendations to the Board with respect to compensation of directors and of
the officers as listed on page 11. The Committee, which met seven times in 1994,
consists of Messrs. Amato, Correll, Ficca, Healey, O'Connor (Chairman),
Rittereiser and Rosenzweig.
The Nominating Committee advises and makes recommendations to the Board
concerning the selection of candidates as nominees for election as directors.
The committee consists of Mrs. Nissley, Messrs. Andora (Chairman), Creamer,
Healey, O'Connor and Rosenzweig and met three times after its formation in July
1994. Prior to its formation, the Executive Committee functioned as a nominating
committee. The committee will consider nominations recommended by stockholders.
Such nominations should be addressed to the Secretary of the Board and must be
received not later than January 2 of the year of the annual meeting of
stockholders.
In 1994, each director not employed by the Company was paid a retainer
at an annual rate of $11,000, a fee of $150 for each board meeting attended and
a fee of $125 for each committee meeting attended. The Chairman of the Board,
the Vice Chairman of the Board and Secretary of the Board received additional
retainers of $14,500, $11,250 and $1,100, respectively, and directors who chair
committees of the Board receive an additional retainer of $1,000 annually. A
director who is an employee of the Company or any subsidiary receives no
retainer or fees.
Directors participate in a retirement benefit plan which entitles the
director to receive either (1) an amount equal to the annual retainer being paid
directors (exclusive of additional amounts paid to the Chairman of the Board,
the Vice Chairman of the Board, the Secretary of the Board and to committee
chairmen) multiplied by his or her years of service on the board; or (2) an
amount based on the cash surrender value of a life insurance policy or an
annuity contract purchased by the Company. The life insurance policies or
annuity contracts are owned by the Company and annual contributions of $5,000
are made by the Company for each director who has five years of service as a
director. The Company's contribution increases by $1,000 for each year's service
until it reaches $10,000 annually, the level at which it remains. Benefits to a
director who retires after ten years of service are equal to the greater of (1)
or (2) above. Mr. Abbate, the only director who is employed by the Company, and
any director who retires after completing at least five years but less than ten
years of service are entitled to benefits only under (2) above.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
The following table sets forth information concerning the ownership of
the Company's common stock as of March 1, 1995, for (a) certain beneficial
owners known to the Company to own more than five percent to the common stock;
(b) each director and nominee for director; (c) each of the named officers (the
"named officers" as defined in the Compensation Report, herein) not listed as a
director; and (d) directors and executive officers as a group. Except as
otherwise noted, the nominees, the directors and the executive officers or
family members had sole voting and investment power with respect to such
securities.
<PAGE>
<TABLE>
<CAPTION>
Beneficially Deferral Percent
Name Owned Plans(1) Total of Class
- ------------------------------------------------ ----------- ------- ----- --------
(a)
<S> <C> <C> <C> <C>
Interchange State Bank Capital Investment
Plan
Park 80 West/Plaza Two
Saddle Brook, NJ 07663. . . . . . . . . . . . . . . 138,231 138,231 5.1 %
First Union Corporation
One First Union Center
Charlotte, NC 28288. . . . . . . . . . . . . . . . 177,400 (2) 177,400 6.6
(b)
Anthony S. Abbate. . . . . . . . . . . . . . . . . 42,712 (3) 16,719 59,431 2.2
Anthony Amato. . . . . . . . . . . . . . . . . . . 66,725 66,725 2.5
Anthony D. Andora. . . . . . . . . . . . . . . . . 72,687 (4) 72,687 2.7
Donald L. Correll. . . . . . . . . . . . . . . . . 200 200 *
J. Fletcher Creamer. . . . . . . . . . . . . . . . 2,750 2,750 *
John J. Eccleston. . . . . . . . . . . . . . . . . 32,671 (4) 32,671 1.2
David R. Ficca. . . . . . . . . . . . . . . . . . 33,090 33,090 1.2
James E. Healey. . . . . . . . . . . . . . . . . . 5,200 5,200 *
Eleanore S. Nissley. . . . . . . . . . . . . . . . 14,000 14,000 *
Jeremiah F. O'Connor. . . . . . . . . . . . . . . 36,259 (4) 36,259 1.3
Robert P. Rittereiser. . . . . . . . . . . . . . . 11,500 11,500 *
Benjamin Rosenzweig. . . . . . . . . . . . . . . . 37,430 37,430 1.4
(c)
Frank R. Giancola. . . . . . . . . . . . . . . . . 7,138 (5) 7,106 14,144 *
Robert N. Harris. . . . . . . . . . . . . . . . . . 11,610 (6) 8,083 19,693 *
Richard N. Latrenta. . . . . . . . . . . . . . . . 6,318 (7) 7,431 13,749 *
(d)
Directors and executive officers as a group. . 364,336 (8) 39,339 403,675 14.7
<FN>
*Does not exceed one percent of class
Footnotes
1. Shares held in deferred compensation accounts to which individuals have
sole power to vote but no investment powers.
2. Includes beneficial ownership of 139,400 shares to which First Union
Corporation has sole power to vote and 38,000 shares to which it shares
power to vote. First Union Corporation has sole investment power for
177,400 shares.
3. Includes beneficial ownership of 21,986 shares which may be acquired within
60 days pursuant to stock options.
4. Includes beneficial ownership of 7,927 shares held by Washington
Interchange Corporation in which Messrs. Andora, Eccleston and O'Connor are
principals.
5. Includes beneficial ownership of 6,152 shares which may be acquired within
60 days pursuant to stock options.
6. Includes beneficial ownership of 7,877 shares which may be acquired within
60 days pursuant to stock options.
7. Includes beneficial ownership of 6,318 shares which may be acquired within
60 days pursuant to stock options.
8. Includes beneficial ownership of 42,333 shares which may be acquired within
60 days pursuant to stock options awarded under an employee incentive
compensation plan.
</FN>
</TABLE>
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and certain of its officers to file reports of their ownership of
Interchange stock and of changes in such ownership with the Securities and
Exchange Commission (the "SEC") and the American Stock Exchange. SEC regulations
also require the Company to identify in this proxy statement any person subject
to this requirement who failed to file any such report on a timely basis.
J. Fletcher Creamer, Jr., a director of the Company, failed to report two
transactions that occurred during the year and filed the Annual Statement of
Beneficial Ownership required for this circumstance after the date required by
Section 16(a). John J. Eccleston, a director of the Company, filed the Annual
Statement of Beneficial Ownership required to report the acquisition of
Interchange stock in an ongoing acquisition plan after the date required by
Section 16(a).
COMPENSATION/STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Strategy
The objectives of this committee's strategy are to attract and retain top
quality executives and provide compensation programs designed to motivate and
reward executives to achieve business goals that foster both the enhancement of
long-term stockholder values through stock appreciation and yields, and also,
the long-term best interest of the organization. Compensation programs for
executives link compensation to the performance of the Company and generally
provide competitive compensation for executives at the mean pay level of peer
group banks and other organizations of similar size, performance and geographic
location. The committee utilizes professional surveys prepared by outside
consultants focusing on compensation levels of the aforementioned groups in
order to assure competitiveness in its compensation programs. The compensation
mix reflects a balance of cash awards, including incentive awards, and
equity-based incentives. Annual cash compensation (base salaries and annual
bonus) is granted based on the achievement of corporate financial targets and
individual performance. The Stock Option Plan, approved by stockholders in 1989,
is intended to function as the basis for fostering alignment of executive
compensation with the interest of stockholders.
The policies, with respect to each of these compensation elements as well
as the basis for determining the compensation of executive officers, including
the President and CEO, Mr. Abbate, are described below:
Base salary
Base salaries for executive officers are based on the salary ranges that
are established for each position. These position salary ranges are determined
by evaluating the responsibilities and accountabilities of the position and
comparing it with other executive officer positions in the market place on an
annual basis. The base salary of each executive officer, including President and
CEO, is reviewed annually and adjusted within the position range based upon a
performance evaluation. Evaluations of other executive officers are submitted to
the committee by the President and CEO. These evaluations, and an evaluation of
the President and CEO by the committee, are reviewed and submitted together with
the committee's recommendations to the full board for action. Salary increases
are generally based upon the extent to which the executive is considered to have
contributed to a furtherance of the Company's goals and/or met objectives
specifically assigned to that individual.
Annual Bonus
The Management Incentive Plan is a short-term annual incentive plan
designed to reward key management employees for achievement of specific
financial, individual and business results. The specific financial target is
primarily based upon the year-to-year increase in the Company's net after-tax
earnings. The targeted goal is established annually through a budgeting process
which is reviewed and approved by the full board using input relating to
performance opportunities for the year and the historical performance results of
the Company. An objective of the Management Incentive Plan is to relate a
portion of the executives compensation to the overall financial results of the
operations for the year. The bonus for 1994 results reflects the achievement in
excess of 100 percent of the financial target set in 1993 and the granting of
discretionary amounts. The committee reserves the right to award discretionary
bonus awards in the event the financial target is not met or is exceeded. In so
doing, the committee, among other matters, will take into account whether the
Company, while not reaching its threshold target, has performed better on a
comparable basis than its peers. In addition to the attainment of the earnings
target, the level of the President and CEO's annual bonus award is also based
upon performance related factors including the completion of prudent acquisition
strategies, management of overall company efficiencies, attainment of long range
planning goals, and capital requirement and asset utilization necessary to
ensure long-term growth.
<PAGE>
Stock Option Plan
The Stock Option Plan approved by stockholders in 1989 is designed to align
stockholders' and executive officers' interests. The Plan is administered by the
Compensation/Stock Option Committee and awards are determined by that committee.
Stock options are granted with an exercise price equal to the price of a share
of stock at the close of business on the date of the grant as reported by the
American Stock Exchange. Stock options may be exercisable between one and ten
years from the date granted. Such stock options provide a retention and
motivational program for executives and an incentive for the creation of
shareholder value over the long-term since their full benefit cannot be realized
unless an appreciation in the price of the Company's common stock occurs over a
specified number of years. A total of 80,000 shares were made available for
option under the Plan of which 64,251 shares have been granted to date.
CEO Compensation
The compensation of the President and CEO, Mr. Anthony S. Abbate, is
reviewed by the Compensation/Stock Option Committee which presents its
recommendations to the board for action. Mr. Abbate participates in the same
plans as the other executive officers, including the base salary program, the
annual bonus plan, the Stock Option Plan, and the staff benefit programs as
outlined elsewhere in this Proxy. Mr. Abbate receives no compensation for his
duties as a director; however, he does participate in the Directors' Retirement
Plan. The committee bases Mr. Abbate's compensation on the same criteria used
for all executive officers with particular emphasis on the factors which will
promote the Company's long-term growth, organization stability, and financial
strength. Mr. Abbate's salary was at the midpoint of the 1994 salary range for
his position and his annual bonus for 1994 performance was 100% of target due to
exceeding the plan goals for that year. Mr. Abbate continues to provide the
Company and the Bank with exemplary leadership, vision and commitment, and
strives to meet the long-term strategic goals.
Submitted by the Compensation/Stock Option Committee
Jeremiah F. O'Connor, Chairman
Anthony Amato
Donald L. Correll
David R. Ficca
James E. Healey
Robert P. Rittereiser
Benjamin Rosenzweig
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
All Other
Long-term Compensation
Annual Compensation Compensation ($) (2)
---------------------------------- Options -----------
Name and Principal Position (1) Year Salary($) Bonus($) (No. of Shares)
- -------------------------------------------------- ----- --------- -------- --------------
<S> <C> <C> <C> <C> <C>
Anthony S. Abbate. . . . . . . . . . . . . . . . . . 1994 $264,000 $ 69,000 -- $ 41,254
President and CEO 1993 240,000 49,584 10,650 20,552
1992 220,000 55,000 -- 20,018
Frank R. Giancola. . . . . . . . . . . . . . . . . . 1994 110,000 24,600 -- 3,973
Senior Vice President 1993 97,000 15,000 4,400 3,504
Retail Banking 1992 88,000 17,600 -- 3,393
Robert N. Harris. . . . . . . . . . . . . . . . . . 1994 137,000 23,500 -- 19,024
Executive Vice President 1993 125,000 19,368 5,450 8,664
1992 110,000 22,000 -- 8,590
Richard N. Latrenta. . . . . . . . . . . . . . . . 1994 112,000 30,000 -- 4,045
Senior Vice President 1993 101,000 15,644 4,500 3,430
Senior Loan Officer 1992 92,000 18,400 -- 3,496
(1) Includes the President and CEO and all other officers whose total annual
salary and bonus exceeded $100,000 in 1994.
(2) Represents payments as shown below:
Year Abbate Giancola Harris Latrenta
---- ------ -------- ------
Amounts contributed to 401(k) plan in 1994 $ 6,119 $3,300 $4,110 $3,360
1993 and 1994; to ESOP in 1992 1993 6,906 2,910 3,750 3,030
1992 6,372 3,042 3,929 3,129
Value of life insurance premium paid in 1994 3,150 673 4,914 685
respect to coverage in excess of $50,000 1993 2,016 594 4,914 400
1992 2,016 351 4,661 367
Contribution to life insurance policy/ 1994 10,000 - 10,000 -
annuity contract 1993 10,000 - - -
1992 10,000 - - -
Premium paid on disability policy 1994 6,245 - - -
1993 1,630 - - -
1992 1,630 - - -
Contribution to Supplemental Executives' 1994 15,740 - - -
Retirement Plan 1993 - - - -
1992 - - - -
</TABLE>
<PAGE>
<TABLE>
YEAR-END VALUES OF OPTIONS
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Option at Year End In-the-Money Options
Shares Shares at Year-end
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Anthony S. Abbate . . . . . . . . . 21,986 7,100 $ 79,699 -
Frank R. Giancola . . . . . . . . . 6,152 2,934 22,301 -
Robert N. Harris . . . . . . . . . 7,877 3,634 28,554 -
. .
Richard N. Latrenta . . . . . . . . 6,318 3,000 22,903 -
</TABLE>
<PAGE>
FIVE-YEAR PERFORMANCE COMPARISON
The graph below provides an indicator of cumulative total stockholder
returns for the Company as compared with a Peer Group and the AMEX Market Value
Index.(1)
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
Interchange 100 68 118 153 181 186
Peer Group 100 68 69 97 126 140
Amex Market Value 100 82 105 106 127 115
Assumes $100 invested on December 31, 1989, in Interchange Common Stock, the
Amex Market Value Index and Peer Group Common Stock.
Total stockholder returns assumes reinvestment of dividends.
Footnote
1. The Peer Group comprises 25 banking institutions representing all such
institutions in Connecticut, New Jersey and New York with asset size of at
least $250 million, but less than $1 billion, as of December 31, 1994, as
reported in the SNL Quarterly Bank Digest of March 1995. The banking
institutions included are: BNH Bancshares, Inc., Dime Financial Corp.,
Putnam Trust Co. of Greenwich, Lafayette American Bancorp and Westport
Bancorp, Inc. (CT); B.M.J. Financial Corp., Broad National BanCorporation,
Flemington National Bank & Trust, Garden State Bancshares, Independence
Bancorp, Inc., United National Bancorp, Vista Bancorp,(NJ); Arrow Financial
Corporation, CNB Financial Corp., Commercial Bank of New York, Community
Bank Systems, Inc., Evergreen Bancorp, Inc., FNB Rochester Corp., First of
Long Island Corporation, Gateway Bancorp, Inc., Hudson Chartered Bancorp,
Inc., State Bancorp, Inc., Sterling Bancorp, Suffolk Bancorp and Tompkins
County Trust Company (NY).
<PAGE>
PENSION PLANS
The Company maintains a non-contributory defined benefit pension plan
covering all eligible employees including Messrs. Abbate, Giancola, Harris and
Latrenta. Retirement income is based on years of service under the Plan and,
subject to certain limits, on final average compensation.
Effective January 1, 1994, the Company adopted a Supplemental Executives'
Retirement Plan, a non-qualified plan intended to provide retirement income that
would have been paid but for limitations imposed by the Internal Revenue Code
under the qualified plan.
The following tables show the annual benefits payable based on a range of
average compensation and years of future service at normal retirement date.
<PAGE>
<TABLE>
<CAPTION>
Interchange State Bank Pension Plan
5-Year
Average Years of Future Service at Normal Retirement Date
Compensation 5 10 20 30 35
----------- ------ ------ ------ -------- -------
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 6,225 $ 12,450 $ 24,900 $ 37,350 $ 43,575
150,000 9,975 19,950 39,900 59,850 69,825
200,000 10,575 26,250 54,900 82,350 96,075
250,000 10,575 26,250 69,900 104,850 122,325
300,000 10,575 26,250 81,900 127,350 148,575
400,000 10,575 26,250 81,900 172,350 201,075
<FN>
Footnotes:
1. This Plan was effective January 1, 1993.
2. Plan benefits are calculated using future service from January 1, 1995, and
base salary only. The maximum salary that may be used is limited by law and
regulations. The maximum salary that can be used for 1995 is $150,000. The
chart above anticipates future salary increases as well as increases to
these legal limits.
3. The above chart is based on the average age of the executive officer group
which is 49.8 years as of January 1, 1995.
4. Average compensation is the average of base salary over the five (5)
consecutive calendar years producing the highest average.
5. Annual benefit is payable as a life annuity which is the normal form of
retirement benefit for married participants. The normal form of retirement
benefit for married participants is an actuarial equivalent joint and 50%
survivor annuity.
</FN>
</TABLE>
<TABLE>
Supplemental Executives' Retirement Plan
<CAPTION>
5-Year
Average Years of Future Service at Normal Retirement Date
Compensation 5 10 15 20
------------ ------ -------- -------- -------
<S> <C> <C> <C> <C>
$ 200,000 $ 13,950 $ 27,900 $ 41,850 $ 55,800
250,000 17,700 35,400 53,100 70,800
300,000 21,450 42,900 64,350 85,800
350,000 25,200 50,400 75,600 100,800
400,000 28,950 57,900 86,850 115,800
<FN>
Footnotes:
1. This Plan was effective January 1, 1994.
2. Plan benefits are calculated using future service from January 1, 1995, and
base salary only. The chart above anticipates future salary increases,
ignores legal limits on both compensation and benefits and includes
benefits payable from the qualified defined benefit plan.
3. The above chart is based on the age of the covered officer which is 55.1 as
of January 1, 1995.
4. Average Compensation is the average of base salary over five (5)
consecutive calendar years producing the highest average.
5. Annual benefit is payable as a life annuity which is the normal form of
retirement benefit for unmarried participants is an actuarially equivalent
Joint and 50% Survivor annuity.
</FN>
</TABLE>
<PAGE>
Transactions with Management
Officers and directors of the Company and their affiliated companies are
customers and are engaged in transactions with the Company and its subsidiaries
in the ordinary course of business on substantially the same terms as those
prevailing with other borrowers and suppliers.
The following directors are engaged in transactions with the Company and
are expected to continue to transact such business in the future.
Mr. Andora is a member of Andora, Palmisano & Geaney, a firm that renders
various legal services to the Company and its subsidiaries and received fees for
those services of $426,500 in 1994, including $95,000 paid pursuant to retainer
contracts; $80,000 representing fees incurred in representing the Bank in
connection with the lawsuit described in the Company's Annual Report to
Stockholders for the year 1994; and $31,500 representing fees for real estate
matters, the bulk of which was reimbursed to the Bank by its customers. The Bank
leases its consumer credit office located in Elmwood Park, New Jersey, from a
partnership in which Mr. Andora is a principal. Lease payments in 1994 totaled
$27,220 under a lease expiring in 1995.
The Bank leases its office located in Washington Township, New Jersey, from
a company of which Messrs. Andora, Eccleston and O'Connor are principals. Lease
payments in 1993 totaled $82,800 under a lease expiring in 2002.
The Bank leases its office located in Lodi, New Jersey, from a partnership
in which Mr. Amato is a principal. Lease payments in 1993 totaled $56,800 under
a lease expiring in 1996.
2. Proposal to Approve Amendment to the Stock Option Plan of 1989
(Item 2 on Proxy Card)
The Stock Option Plan of 1989 (the "Stock Option Plan"), approved by
stockholders in 1989, was designed to encourage officers and other key employees
to acquire a proprietary interest in the Company and thereby align their
interest with those of the shareholders, to continue their employment with the
Company and to render superior performance during such employment. The Stock
Option Plan, a copy of which is attached as Appendix A to this Proxy Statement,
enables the Company, through the Compensation/Stock Option Committee of the
Board of Directors, to grant incentive stock options and non-qualified stock
options to officers and key employees of the Company.
The Company's Board of Directors has adopted an amendment to the Stock
Option Plan to increase the number of shares of the Company's common stock
issuable pursuant to the Stock Option Plan from 80,000 shares to 270,000 shares.
This amendment requires stockholder approval.
The Board took such action to increase the number of available shares under
the Stock Option Plan because it believes that a stock option program is an
important factor in attracting, retaining and motivating key employees who will
dedicate their maximum productive efforts toward the advancement of the Company.
The Board believes that this amendment furthers these objectives by assuring
continuing availability of stock options in the appropriate circumstances. As of
the date of this Proxy Statement, no options have been granted from the proposed
increase in the number of shares under the Stock Option Plan approved by the
Board. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
3. Ratification of Appointment of Independent Auditors
(Item 3 on Proxy Card)
The board of directors, upon recommendation of the audit committee, has
reappointed the firm of Deloitte & Touche as the independent auditors to examine
the Company's financial statements for the year 1995. YOUR DIRECTORS RECOMMEND
THAT STOCKHOLDERS VOTE FOR RATIFICATION OF THIS APPOINTMENT.
Representatives of Deloitte & Touche are expected to attend the annual
meeting and will have the opportunity to make a statement if they desire and to
respond to appropriate questions.
Other Matters
The Board of Directors is not aware of any other matters to be presented at
the Annual Meeting. If any other matter proper for action at the meeting should
be presented, the holders of the accompanying proxy will vote the shares
represented by the proxy on such matter in accordance with their best judgment.
If any matter not proper for action at the meeting should be presented, the
holders of the proxy will vote against consideration thereof or action thereon.
The affirmative vote of a majority of the shares cast at the Annual Meeting
is necessary to elect the four directors.
The cost of soliciting proxies for the meeting will be borne by the
Company. Some directors, officers, and other employees of the Company may
solicit proxies in person and by telephone or otherwise. The Company will
reimburse brokers and others who are record holders of its shares for the
reasonable expenses incurred in obtaining voting instructions from beneficial
owners of such shares.
Submission of Stockholder Proposals
Proposals intended for inclusion in next year's proxy statement should be
sent to the Secretary of the Company at Park 80 West/Plaza Two, Saddle Brook, NJ
07663, and must be received by December 22, 1995.
Other Information
Consolidated financial statements of the Company and its subsidiaries are
included in the Company's Annual Report to Stockholders for the year 1994.
Additional copies of the Annual Report and the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K, may be obtained without charge
from the Secretary of Interchange Financial Services Corporation, Park 80
West/Plaza Two, Saddle Brook, NJ 07663.
The above notice and proxy statement are sent by order of the board of
directors.
Benjamin Rosenzweig,
Secretary
Dated: April 20, 1995
<PAGE>
(Front)
PROXY INTERCHANGE FINANCIAL SERVICES CORPORATION
Park 80 West, Plaza Two, Saddle Brook, New Jersey 07662
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Jeremiah F. O'Connor, Benjamin Rosenzweig
and John J. Eccleston as proxies, each with the power to appoint his substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of common stock of Interchange Financial Services Corporation held of
record by the undersigned on April 20, 1995, at the annual meeting of
stockholders to be held on May 25, 1995, or any adjournment thereof.
1. ELECTION OF DIRECTORS
FOR all nominees listed below |_| WITHHOLD AUTHORITY |_|
(except as marked to the contrary to vote for all nominees
below) listed below
Anthony D. Andora, J. Fletcher Creamer, Jr., David R. Ficca, Benjamin Rosenzweig
(INSTRUCTION: To withhold authority to vote for an individual nominee write
that nominee's name in the space provided below.)
2. PROPOSAL TO APPROVE AMENDMENT TO THE STOCK OPTION PLAN OF 1989.
|_| FOR |_| AGAINST |_| ABSTAIN
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
|_| FOR |_| AGAINST |_| ABSTAIN
(Back)
(Continued from other side)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
stockholder. If no direction is made, this proxy will be voted FOR ELECTION
OF DIRECTORS.
Please sign exactly as name
appears below. When shares
are held by joint tenants,
both should sign. When
signing as an attorney, as
executor, administrator,
trustee or guardian, please
give full title as such. If
a corporation, please sign
in full corporate name by
president or other
authorized officer. if a
partnership, please sign in
partnership name by
authorized person.
DATED: April 20, 1995
Signature
Signature if held jointly
PLEASE MARK, SIGN, DATE AND
RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED
ENVELOPE
<PAGE>
INTERCHANGE FINANCIAL SERVICES CORPORATION
STOCK OPTION PLAN OF 1989
1. PURPOSES. This Stock Option Plan of 1989 (the "Plan"), of
Interchange Financial Services Corporation (the "Company") is established so
that the Company may make available to officers and key employees ("Key
Employees") the opportunity to acquire ownership of Company Stock pursuant to
options intended to qualify as incentive stock options ("Incentive Stock
Options") within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), and stock options that do not qualify as
Incentive Stock Options (Non-Qualified Options). It is anticipated that such
stock options will materially assist the Company in providing incentives to Key
Employees, to provide long term gain through their outstanding service to the
Company and its stockholders and to assist in retaining people of ability and
initiative in senior management positions.
2. ADMINISTRATION. The Plan shall be administered by the Stock Option
Committee ( the "Committee"), which shall be appointed, from time to time, by
the Board of Directors, and shall consist of not less than three outside
directors of the Company. Any member of the Committee who is not a
"disinterested person" within the meaning of Rule 16b-3 (or any successor rule
or regulation) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") shall be excluded from all Committee actions and votes regarding
the Plan. The Committee shall have full power and authority, subject to the
terms and conditions of the Plan, to determine the Key Employees to whom awards
may be made under the Plan, the number of such shares and the type of option
(Incentive Stock Option, Non-Qualified Stock Option, or both) to be awarded to
each of such Key Employees, the applicable terms and conditions of such awards
and all other matters which may arise in the administration of the Plan. The
determination of the Committee concerning any matter arising under or with
respect to the Plan or any awards granted shall be final, binding and conclusive
on all interest persons. Awards shall be made only in accordance with the
recommendation of the Committee and with the approval of the Board of Directors.
The Committee may as to all questions of accounting rely conclusively upon any
determinations made by the independent auditors of the Company.
3. STOCK AVAILABLE FOR OPTIONS. There shall be available for option
under the Plan, a total of 80,000 shares of the Company's Common Stock (the
"Stock"), subject to any adjustments which may be made pursuant to Section 5(g).
Shares of Stock used for purposes of the Plan may be either authorized and
unissued shares or treasury shares or both. Stock covered by options which have
terminated or expired prior to exercise or have been surrendered and canceled as
contemplated by Section 7(b) shall be available for further option.
4. ELIGIBILITY. Key Employees of the Company, and of any subsidiary
corporation, as defined in Section 425(f) of the Code ("Subsidiary"), of the
Company, shall be eligible to receive options under the Plan, provided that no
option may be granted to any director who is not also an employee of the Company
or a subsidiary.
5. TERMS AND CONDITIONS OF OPTIONS. Each option granted shall be in writing
and shall contain such terms and conditions as the Committee may determine,
which terms and conditions need not be the same in each case, subject to the
following:
(a) OPTION PRICE. The price at which each share of Stock
covered by an option granted hereunder may be purchased shall be the average of
the high and the low sales price of a share of Stock on the date of grant as
reported on the National Association of Securities Dealers Automated Quotation
National Market System ("NASDAQ") or, if there is no reported trade on that
date, on the last preceding date on which a trade was reported. The "date of
grant" shall be the date as of which an option shall be come effective, as
determined by the Committee, provided that the date of grant cannot precede the
date on which the committee awards such option.
(b) OPTION PERIOD. The period for exercise of an option shall not
exceed ten years from the date the option is granted. Options shall become
exercisable during the option period at the rate set by the Committee, provided
that: (i) no option may be exercised prior to one year after date of grant, and
(ii) the aggregate fair market value (at time of grant) with respect to which
Incentive Stock Options are exercisable for the first time by an optionee during
any calendar year (under the Plan or any other stock option plan of the Company
or any Subsidiary) shall not exceed $100,000. Notwithstanding the foregoing,
upon a "Change of Control" (as defined below) options shall become immediately
exercisable to the full extent of the original award. "Change of Control" shall
occur upon:
(i) The acquisition by any person (including a group, within
the meaning of Section 13(d) or 14(d)(2) of the Exchange Act), other
than the Company or any of its Subsidiaries without the prior written
approval of the Company's Board of Directors, of beneficial ownership
(within the meaning of Exchange Act Rule 13d-3) of 20% or more of the
then outstanding shares of stock in a transaction or series of
transactions not approved by a vote of at least a majority of the
"Continuing Directors" (as defined below); or
(ii) Individuals who, as of January 1, 1989, constitute the
Board of Directors of the Company (generally the "Directors" and as of
January 1, 1989, the "Continuing Directors") cease for any reason to
constitute at least a majority thereof, provided that any person
becoming a Director subsequent to January 1, 1989, whose nomination for
election was approved by a vote of at least a majority of the
Continuing Directors (other than a nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors
of the Company, as such terms are used in Rule 14a-11 of Regulation 14A
under the Exchange Act) shall be deemed to be a Continuing Director.
Subject to the provisions of paragraph (d), options that have become exercisable
shall remain exercisable until expiration or exercise, whichever occurs first.
(c) EXERCISE OF OPTIONS. To exercise an option, the option holder shall
give written notice to the Company specifying the number of shares to be
purchased and accompanied by payment in full of the purchase price thereof. Such
purchase price may be paid in cash, or, with the consent of the Committee, in
whole or in part by the surrender of shares of Stock held for a period of time
as determined by the Committee and having a fair market value, as determined by
the Committee, equal to such purchase price of the portion thereof which is not
paid in cash. An option holder shall have none of the rights of a stockholder
until the shares are paid in full and issued to the option holder.
(d) EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH. No option may be
exercised after the termination of employment of an optionee, except that if
such termination occurs by reason of retirement, disability, or death (as
described below) an extended period is permitted to exercise those options which
are exercisable on the date of termination. Such extended period may not exceed
the original option period or the last day on which options may be exercised
under the Plan. If termination of employment occurs by reason of: (i) retirement
at normal or late retirement age under any tax-qualified retirement, profit
sharing or employee stock ownership plan maintained by the Company or any
Subsidiary in which the optionee is employed, the extended period shall be 90
days; (ii) disability, which shall mean the inability due to injury or illness
which prevents the optionee from performing the material duties of his position,
and said inability is expected to last for at least six months, the extended
period shall be 90 days; (iii) death while employed, the extended period is 180
days. Notwithstanding the foregoing, unexercisable options shall be forfeited
unless the Committee, in its sole discretion, accelerates the exercisability of
some or all of such options, In no event, however, shall any option be
exercisable more than ten years from the date of grant thereof.
Nothing contained in the Plan or in any option granted shall confer on
any employee any right to continue his employment or interfere in any way with
the right of his employer to terminate his employment at any time.
(f) NONTRANSFERABILITY OF OPTIONS. During an optionee's lifetime his option
shall be exercisable only by him. No option shall be transferable other than by
will or the law of descent and distribution.
(g) ADJUSTMENT FOR CHANGE IN STOCK SUBJECT TO PLAN. In the event of a
stock split, stock dividend, combination of shares, recapitalization,
reorganization, merger, consolidation, rights offering, or any other change in
the corporate structure or shares of the Company, the board of Directors shall
make such adjustment, if any, as it deems appropriate for purposes hereof in the
number and kind of shares subject to the Plan, in the number and kind of shares
covered by outstanding options, or in the option prices.
(h) REGISTRATION, LISTING AND QUALIFICATION OF SHARES. Each option
shall be subject to the requirement that if at any time the Board of Directors
of the Company shall determine that the registration listing or qualification of
the shares covered thereby upon any securities exchange or under federal or
state law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the granting of
such option or the purchase of shares thereunder, no such option may be
exercised unless and until such registration, listing, qualification, consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the granting of such option or the purchase
of shares thereunder, no such option may be exercised unless and until such
registration, listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors. Any person exercising an option shall make such representations and
agreements and furnish such information as the Board of Directors may request to
assure compliance with the foregoing or any other applicable legal requirements.
6. DURATION. Unless sooner terminated by the Board of Directors, the Plan
shall terminate on, and no option shall be granted hereunder after December 31,
1998.
7. (a) AMENDMENT. The Board of Directors of the Company may amend the
Plan at any time. No amendment shall, unless approved by stockholders of the
Company: (i) increase the maximum number of shares for which options may be
granted under the Plan; (ii) reduce the minimum option price provided herein; or
(iii) extend the period during which options may be granted or exercised.
Notwithstanding the foregoing, the Board of Directors shall have the right to
accept the surrender of and cancel options issued under the Plan and reissue
those options and to amend the terms of outstanding options upon the following
terms and conditions.
(b) SURRENDER, CANCELLATION AND REISSUE OF OPTIONS. The Board of
Directors may, upon invitation by it during the term of this Plan to any
holder(s) of options under this Plan to do so, accept the surrender of
outstanding options, cancel such options and issue in exchange therefor new
options under this Plan provided
(1) the tender of options for surrender is in accordance with such
conditions as the Board of Directors set forth in its invitation for
that surrender.
(2) The number of shares covered by an option issued in exchange for a
surrendered and canceled option shall not exceed the number of shares
covered by the option surrendered and canceled;
(3) the price and all other terms of each option issued in exchange
shall comply with the requirements of this Plan for the issuance of
options; and
(4) no such invitation for surrender of options shall be made by the
Board of Directors unless it shall have first received a recommendation
of the Committee that it is in the interest of the Company to provide
an opportunity for the surrender and cancellation of outstanding
options and the issue of new options in exchange therefor upon more
appropriate terms and conditions, including exercise price.
8. EFFECTIVENESS OF PLAN. This Plan will be effective on the date it is
approved by the holders of not less than a majority of the outstanding shares of
voting stock of the Company represented and entitled to vote thereon at a
meeting thereof duly called and held for such purpose, and no option granted
shall be exercisable prior to such approval.
9. OTHER ACTIONS. This Plan shall not restrict the authority of the Board
of Directors of the Company, for proper corporate purposes, to grant or issue
stock options, other than under the Plan, to or with respect to any employee or
other person.
10. WITHHOLDING. The company shall have the right to require an
optionee or other person entitled to receive Stock, under a Non-Qualified Option
or under an Incentive Stock Option if the optionee makes a disqualifying
distribution as described in Section 422A of the Code, to pay to the Company the
amount which the Company is or will be required to withhold with respect to such
Stock in order for the Company to pay taxes or to claim an income tax deduction
with respect to such stock. In lieu of such payment, the Company will be
entitled to retain, or sell upon not less than 10 days' prior written notice to
the optionee, a sufficient number of such Stock to cover the amount required to
be withheld, such notice to be deemed given when sent first class, postage
prepaid, to the address of the optionee as it appears on the records of the
Company.
11. MISCELLANEOUS. The masculine pronoun wherever used included feminine
pronoun.
Any notices provided for under this Plan shall be in writing and sent
by certified mail. Notices to the Company shall be addressed to the address of
the Company's principal office in Saddle Brook, New Jersey--Attention: Stock
Option Committee. Notices sent by the Company shall be sufficiently made if sent
by certified mail addressed to such person at the address as it appears in the
regular records of the Company.
The Board of Directors and Officers of the Company shall be indemnified
by the Company against reasonable expenses, including attorney's fees, actually
and necessarily incurred in connection with the defense of any action, suit or
proceeding or in connection with any appeal thereof, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any award thereunder, and against all amounts paid
by them in settlement thereof (provided such settlement is approved by
independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such member of the Board has breached his duty of loyalty to the
Company, committed an act not of good faith or in knowing violation of law, or
has received an improper personal benefit; provided that within 60 days after
institution of any such action, suit or proceeding a member of the Board of
Directors shall in writing offer the Company the opportunity, as its own
expense, to handle and defend the same.
The Plan shall be construed, administered and enforced according to the
laws of the United States and the laws of the State of New Jersey to the extent
the latter is not preempted by the former. Further, if applicable, litigation is
to be restricted to the County of Bergen.
12. This Plan shall be known as the Stock Option Plan of 1989.
