HAVEN BANCORP, INC.
93-22 JAMAICA AVENUE
WOODHAVEN, NEW YORK 11421
1-888-237-2265
March 18, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders
(the "Annual Meeting") of Haven Bancorp, Inc. (the "Company"), the holding
company for CFS Bank, formerly Columbia Federal Savings Bank (the "Bank"), which
will be held on April 22, 1998, at 9:00 a.m., at the Holiday Inn Crowne Plaza,
104-04 Ditmars Blvd., East Elmhurst, New York.
The attached notice of the Annual Meeting and proxy statement describe
the formal business to be transacted at the meeting. Directors and officers of
the Company, as well as a representative of KPMG Peat Marwick LLP, the Company's
independent auditors, will be present at the meeting to respond to any questions
our stockholders may have.
The Board of Directors of the Company has determined that a favorable
vote on the matters to be considered at the Annual Meeting is in the best
interests of the Company and its stockholders. For the reasons set forth in the
proxy statement, the Board unanimously recommends a vote "FOR" each matter to be
considered.
PLEASE SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. YOUR
COOPERATION IS APPRECIATED SINCE A MAJORITY OF THE COMMON STOCK MUST BE
REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A QUORUM FOR THE
CONDUCT OF BUSINESS. IF YOU ARE A STOCKHOLDER WHOSE SHARES ARE NOT REGISTERED IN
YOUR OWN NAME, YOU WILL NEED ADDITIONAL DOCUMENTATION FROM YOUR RECORDHOLDER TO
ATTEND AND TO VOTE PERSONALLY AT THE ANNUAL MEETING. EXAMPLES OF SUCH
DOCUMENTATION WOULD INCLUDE A BROKER'S STATEMENT, LETTER OR OTHER DOCUMENT THAT
WILL CONFIRM YOUR OWNERSHIP OF SHARES OF THE COMPANY.
On behalf of the Board of Directors and all of the employees of the
Company and the Bank, we wish to thank you for your continued support. We
appreciate your interest.
Sincerely yours,
George S. Worgul Philip S. Messina
Chairman of the Board President and Chief
Executive Officer
<PAGE>
HAVEN BANCORP, INC.
93-22 JAMAICA AVENUE
WOODHAVEN, NEW YORK 11421
1-888-237-2265
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 22, 1998
---------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Haven Bancorp, Inc. (the "Company") will be held on April
22, 1998, at 9:00 a.m., at the Holiday Inn Crowne Plaza, 104-04 Ditmars Blvd.,
East Elmhurst, New York.
The Annual Meeting is for the purpose of considering and voting upon
the following matters:
1. The election of three directors for terms of three years each
or until their successors are elected and qualified;
2. The approval of the amendment to the Haven Bancorp, Inc. 1996
Stock Incentive Plan to increase the number of shares
available for issuance thereunder;
3. The approval of the amendment to the Certificate of
Incorporation of the Company to increase the number of shares
of common stock the Company is authorized to issue;
4. The ratification of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending December
31, 1998; and
5. Such other matters as may properly come before the Annual
Meeting or any adjournments thereof. The Company is not aware
of any such business.
The Board of Directors has established March 4, 1998 as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and at any adjournments thereof. Only recordholders of the common
stock of the Company as of the close of business on that date will be entitled
to vote at the Annual Meeting or any adjournments thereof. In the event there
are not sufficient votes for a quorum or to approve or ratify any of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company. A
list of stockholders entitled to vote at the Annual Meeting will be available at
CFS Bank, 93-22 Jamaica Avenue, Woodhaven, New York, for a period of ten days
prior to the Annual Meeting and will also be available for inspection at the
Annual Meeting.
By Order of the Board of Directors,
Joseph W. Rennhack
Secretary
Woodhaven, New York
March 18, 1998
<PAGE>
HAVEN BANCORP, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1998
----------
GENERAL
This proxy statement is being furnished to stockholders of Haven
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors of the Company (the "Board of Directors") of proxies to be used at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on April
22, 1998, at 9:00 a.m., at the Holiday Inn Crowne Plaza, 104-04 Ditmars Blvd.,
East Elmhurst, New York, and at any adjournments thereof. The 1997 Annual Report
to Stockholders, including the consolidated financial statements for the fiscal
year ended December 31, 1997, accompanies this proxy statement, which is first
being mailed to recordholders on or about March 18, 1998.
Regardless of the number of shares of common stock of the Company
("Common Stock") owned, it is important that recordholders of a majority of the
shares be represented by proxy or be present in person at the Annual Meeting.
Stockholders are requested to vote by completing the enclosed proxy card and
returning it signed and dated in the enclosed postage-paid envelope.
Stockholders are urged to indicate their vote in the spaces provided on the
proxy card. PROXIES SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY WILL BE
VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN. WHERE NO INSTRUCTIONS ARE
INDICATED, SIGNED PROXIES WILL BE VOTED FOR THE ELECTION OF EACH OF THE NOMINEES
FOR DIRECTOR NAMED IN THIS PROXY, FOR THE APPROVAL OF THE AMENDMENT TO THE HAVEN
BANCORP, INC. 1996 STOCK INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES
AUTHORIZED FOR ISSUANCE THEREUNDER, FOR THE APPROVAL OF THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF THE COMPANY TO INCREASE THE NUMBER OF SHARES OF
COMMON STOCK THE COMPANY IS AUTHORIZED TO ISSUE AND FOR THE RATIFICATION OF KPMG
PEAT MARWICK LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1998.
The Board of Directors knows of no additional matters that will be
presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment on such other business, if
any, that may properly come before the Annual Meeting or any adjournments
thereof.
RECORD DATE AND VOTING SECURITIES
The securities which may be voted at the Annual Meeting consist of
shares of Common Stock of the Company, with each share entitling its owner to
one vote on all matters to be voted on
1
<PAGE>
at the Annual Meeting except as described below. There is no cumulative voting
for the election of directors.
On October 23, 1997, the Board of Directors of the Company declared a
2-for-1 stock split (the "Stock Split") effected as a 100% stock dividend
distributed on November 28, 1997 to holders of record as of October 31, 1997.
All stock information in this proxy statement reflects this Stock Split.
The close of business on March 4, 1998 has been fixed by the Board of
Directors as the record date (the "Record Date") for the determination of
stockholders of record entitled to notice of and to vote at the Annual Meeting
and any adjournments thereof. The total number of shares of Common Stock
outstanding on the Record Date was [ ] shares.
As provided in the Company's Certificate of Incorporation,
recordholders of Common Stock who beneficially own in excess of 10% of the
outstanding shares of Common Stock (the "Limit") are not entitled to any vote
with respect to the shares held in excess of the Limit. A person or entity is
deemed to beneficially own shares owned by an affiliate of, as well as persons
acting in concert with, such person or entity. The Company's Certificate of
Incorporation authorizes the Board of Directors (i) to make all determinations
necessary to implement and apply the Limit, including determining whether
persons or entities are acting in concert and (ii) to demand that any person who
is reasonably believed to beneficially own stock in excess of the Limit supply
information to the Company to enable the Board to implement and apply the Limit.
The presence, in person or by proxy, of the holders of at least a
majority of the total number of shares of Common Stock entitled to vote at the
meeting (after subtracting any shares in excess of the Limit pursuant to the
Company's Certificate of Incorporation) is necessary to constitute a quorum at
the Annual Meeting. Abstentions are considered in determining the presence of a
quorum. In the event there are not sufficient votes for a quorum or to approve
or ratify any proposal at the time of the Annual Meeting, the Annual Meeting may
be adjourned in order to permit the further solicitation of proxies.
VOTE REQUIRED
As to the election of directors, the proxy card being provided by the
Board of Directors enables a stockholder of record to vote "FOR" the election of
the nominees proposed by the Board, or to "WITHHOLD AUTHORITY" to vote for one
or more of the nominees being proposed. Under Delaware law and the Company's
Bylaws, directors are elected by a plurality of votes cast, without regard to
either (i) broker non-votes or (ii) proxies as to which authority to vote for
one or more of the nominees being proposed is withheld.
As to the approval of the amendment to the Haven Bancorp, Inc. 1996
Stock Incentive Plan (the "Stock Incentive Plan"), the proxy card enables a
stockholder, by checking the appropriate box, to: (i) vote "FOR" the item; (ii)
vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on such item. Under the
Company's Certificate of Incorporation and Bylaws, unless otherwise required by
2
<PAGE>
law, the approval of the amendment to the 1996 Stock Incentive Plan shall be
determined by a majority of the votes cast. Accordingly, shares as to which the
"ABSTAIN" box has been selected on the proxy card will be counted as votes cast
and will have the effect of a vote against such proposal. Shares underlying
broker non-votes will not be counted as votes cast and will have no effect on
the vote for such proposal.
As to the approval of the amendment to the Certificate of Incorporation
of the Company, the proxy card enables a stockholder, by checking the
appropriate box, to: (i) vote "FOR" the item; (ii) vote "AGAINST" the item; or
(iii) "ABSTAIN" from voting on such item. Under the Company's Certificate of
Incorporation and Bylaws and as required by Delaware law, the approval of the
amendment of the Certificate of Incorporation of the Company shall be determined
by a majority of the outstanding stock entitled to vote. Accordingly, shares as
to which the "ABSTAIN" box has been selected on the proxy card will have the
effect of a vote against such proposal. Shares underlying broker non-votes will
also be counted as a vote against such proposal.
As to the ratification of KPMG Peat Marwick LLP as independent auditors
of the Company, the proxy card enables a stockholder, by checking the
appropriate box, to: (i) vote "FOR" the item; (ii) vote "AGAINST" the item; or
(iii) "ABSTAIN" from voting on such item. Under the Company's Certificate of
Incorporation and Bylaws, unless otherwise required by law, the ratification of
independent auditors of the Company shall be determined by a majority of the
votes cast. Accordingly, shares as to which the "ABSTAIN" box has been selected
on the proxy card will be counted as votes cast and will have the effect of a
vote against such proposal. Shares underlying broker non-votes will not be
counted as votes cast and will have no effect on the vote for such proposal.
Proxies solicited hereby will be returned to the Company's transfer
agent, and will be tabulated by inspectors of election designated by the Board
of Directors, who will not be employed by, or be a director of, the Company or
any of its affiliates.
REVOCABILITY OF PROXIES
A proxy may be revoked at any time prior to its exercise by filing a
written notice of revocation with the Secretary of the Company, delivering to
the Company a duly executed proxy bearing a later date or attending the Annual
Meeting and voting in person if a written revocation is filed with the Secretary
of the Annual Meeting prior to the voting of such proxy. A stockholder whose
shares are not registered in his or her own name will need additional
documentation from the recordholder to vote personally at the Annual Meeting.
Examples of such documentation would include a broker's statement, letter or
other document that will confirm such ownership of shares of Common Stock of the
Company.
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will
be borne by the Company. In addition to the solicitation of proxies by mail,
Morrow & Co., Inc., a proxy solicitation
3
<PAGE>
firm, will assist the Company in soliciting proxies for the Annual Meeting and
will be paid a fee estimated to be $5,000 plus out-of-pocket expenses. Proxies
may also be solicited personally or by telephone or telegraph by directors,
officers and regular employees of the Company and its wholly owned subsidiary,
CFS Bank, formerly Columbia Federal Savings Bank (the "Bank"), without
additional compensation. The Company will also request persons, firms and
corporations holding shares in their names, or in the name of their nominees,
which are beneficially owned by others to send proxy material to, and obtain
proxies from, such beneficial owners and will reimburse such holders for their
reasonable expenses in doing so.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as to those persons
or groups believed by management to be beneficial owners of more than 5% of the
Company's outstanding shares of Common Stock as of the Record Date based upon
certain reports regarding such ownership filed with the Company and with the
Securities and Exchange Commission (the "SEC"), in accordance with Sections
13(d) or 13(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") by such persons or groups. Other than those listed below, the Company is
not aware of any person or group that owns more than 5% of the Company's Common
Stock as of the Record Date.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS(1)
- --------------- ----------------------- -------------------- ---------
<S> <C> <C> <C>
Common Stock Columbia Federal Savings Bank 650,348(2) 7.4%
Employee Stock Ownership Plan and
Trust (the "ESOP"), 93-22
Jamaica Avenue, Woodhaven, NY
11421
</TABLE>
- ---------
(1) As of the Record Date there were [ ] shares of Common Stock
outstanding.
(2) Shares of Common Stock were acquired by the ESOP in connection with the
conversion of CFS Bank from mutual to stock form (the "Conversion"). A
Committee of the Board of Directors has been appointed to administer
the ESOP (the "ESOP Committee"). An unrelated third party has been
appointed as the corporate trustee for the ESOP (the "ESOP Trustee").
The ESOP Committee may instruct the ESOP Trustee regarding investment
of funds contributed to the ESOP. The ESOP Trustee must vote all
allocated shares held in the ESOP in accordance with the instructions
of the participating employees. As of the Record Date, 279,558 shares
of Common Stock in the ESOP have been allocated to participating
employees. Under the ESOP, unallocated shares held in the suspense
account will be voted by the ESOP Trustee in a manner calculated to
most accurately reflect the instructions received from participants
regarding the allocated stock so long as such vote is in accordance
with the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
4
<PAGE>
PROPOSALS TO BE VOTED ON AT THE ANNUAL MEETING
PROPOSAL 1.
ELECTION OF DIRECTORS
Pursuant to its Bylaws, the number of directors of the Company is
currently set at nine (9) unless otherwise designated by the Board of Directors.
Each of the nine members of the Board of Directors of the Company also currently
serves as a director of the Bank. Directors are elected for staggered terms of
three years each, with a term of office of one of the three classes of directors
expiring each year. Directors serve until their successors are elected and
qualified.
The three nominees proposed for election at the Annual Meeting are
Messrs. Sprotte, Fitzpatrick and Jennings. All nominees named are currently
directors of the Company and the Bank. No person being nominated as a director
is being proposed for election pursuant to any agreement or understanding
between any person and the Company.
In the event that any such nominee is unable to serve or declines to
serve for any reason, it is intended that proxies will vote for the election of
the balance of those nominees named and for such other persons as may be
designated by the present Board of Directors. The Board of Directors has no
reason to believe that any of the persons named will be unable or unwilling to
serve. UNLESS AUTHORITY TO VOTE FOR THE DIRECTORS IS WITHHELD, IT IS INTENDED
THAT THE SHARES REPRESENTED BY THE ENCLOSED PROXY CARD, IF EXECUTED AND
RETURNED, WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES PROPOSED BY THE BOARD
OF DIRECTORS.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
ALL NOMINEES NAMED IN THIS PROXY STATEMENT.
INFORMATION WITH RESPECT TO THE NOMINEES, CONTINUING DIRECTORS AND CERTAIN
EXECUTIVE OFFICERS
The following table sets forth, as of the Record Date, the names of the
nominees, continuing directors and "named executive officers," as defined below,
as well as their ages; a brief description of their recent business experience,
including present occupations and employment; certain directorships held by
each; the year in which each became a director of the Bank and the year in which
their term (or in the case of nominees, their proposed term) as director of the
Company expires. This table also sets forth the amount of Common Stock and the
percent thereof beneficially owned by each nominee, continuing director and
"named executive officer" and all directors and executive officers as a group as
of the Record Date. All shares of Common Stock reported as beneficially owned
have been adjusted in the following table and in tables throughout this proxy
statement to reflect the Stock Split.
5
<PAGE>
<TABLE>
<CAPTION>
SHARES OF OWNERSHIP
NAME AND PRINCIPAL EXPIRATION COMMON STOCK AS PERCENT
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS(3)
----------------------- --- -------- -------- -------- --------
NOMINEES
<S> <C> <C> <C> <C> <C>
Robert M. Sprotte 61 1974 2001 96,771 (6)(7) [ ]
President of Schmelz Bros., Inc., a
plumbing contractor; President of RDR
Realty Corp., a real estate holding
company; President of Three Rams
Realty
Michael J. Fitzpatrick 59 1988 2001 68,771(6)(7) [ ]
CPA, Retired, former Vice President-
National Thrift Director at E.F. Hutton &
Company, Inc., a national securities firm,
Director of Legal Aid Society of Suffolk
County
William J. Jennings II(4) 52 1996 2001 38,267(6)(7) [ ]
Managing Director - Chief of Staff to
Chairman of Salomon Smith Barney,
Inc., a brokerage firm
CONTINUING DIRECTORS
George S. Worgul(5) 70 1983 1999 265,756(6)(7)(8) [ ]
Chairman of the Board and Retired (9)(10)
President of the Company and the Bank
Robert L. Koop 75 1968 1999 78,771(6)(7) [ ]
President of Haven Chevrolet
Michael J. Levine 53 1996 1999 35,267(6)(7) [ ]
President of Norse Realty Group, Inc.
and Affiliates, a real estate owner and
developer, Partner in Levine and
Schmutter Certified Public Accountants
Philip S. Messina 54 1986 2000 260,154(8)(9)(10)(11) [ ]
President and Chief Executive Officer of
the Company and the Bank; Director
and Chairman of the Board of CFSB
Funding, Inc., Columbia Resources,
Inc., CFS Investments, Inc. and
Columbia Preferred Capital Corporation,
all subsidiaries of the Bank
Joseph A. Ruggiere 69 1979 2000 154,971(6)(7) [ ]
President of Ohlert-Ruggiere, Inc., a
financial service company
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
SHARES OF OWNERSHIP
NAME AND PRINCIPAL EXPIRATION COMMON STOCK AS PERCENT
OCCUPATION AT PRESENT DIRECTOR OF TERM AS BENEFICIALLY OF
AND FOR PAST FIVE YEARS AGE SINCE(1) DIRECTOR OWNED(2) CLASS(3)
----------------------- --- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Msgr. Thomas J. Hartman 51 1997 2000 11,349(6)(7) [ ]
President and Chief Executive Officer of
Radio and Television for the Diocese of
Rockville Centre for Telicare Television
Studios, a cable television station
NAMED EXECUTIVE OFFICERS
Joseph W. Rennhack 56 -- -- 149,098(8)(9)(10)(11) [ ]
Senior Vice President-Secretary of the
Company and the Bank; President and
Director of CFSB Funding, Inc.; Director
of Columbia Resources, Inc.;
Administrative Trustee of Haven Capital
Trust I, Secretary of Columbia Preferred
Capital Corporation
Thomas J. Seery 53 -- -- 90,160(8)(9)(10)(11) [ ]
Executive Vice President-Operations
of the Company and Bank; Director
of CFS Investments, Inc.
Catherine Califano 39 -- -- 73,420(8)(9)(11) [ ]
Senior Vice President - Chief Financial
Officer of the Company and the Bank;
Director of Columbia Resources;
Director of CFSB Funding, Inc; former
Vice President-Controller of the
Company and the Bank; former Senior
Vice President-Chief Financial Officer of
Home Savings Bank, Brooklyn, New
York; Administrative Trustee of Haven
Capital Trust I, Vice President and
Director of Columbia Preferred Capital
Corporation
Gerard H. McGuirk 55 -- -- 73,218(8)(9)(10)(11) [ ]
Executive Vice President - Chief
Lending Officer of the Company and
the Bank; President and Director of
Columbia Resources, Inc.; former Group
Head of Real Estate Workouts for Fleet
Bank, N.Y., President and Director of
Columbia Preferred Capital Corporation
All directors and executive
officers of the Company
as a group (13 persons) -- -- -- [ ] [ ]
- ----------
* Does not exceed 1.0% of the Company's voting securities.
(NOTES CONTINUED ON NEXT PAGE)
</TABLE>
7
<PAGE>
(1) Includes years of service as director of the Company's predecessor, the
Bank.
(2) Each person or relative of such person whose shares are included
herein, exercises sole or shared voting or dispositive power as to the
shares reported.
(3) Percentages with respect to each person or group have been calculated
on the basis of [ ] shares of Common Stock outstanding as of the Record
Date and include the number of shares of Common Stock which each such
person or group of persons has the right to acquire within 60 days of
the Record Date.
(4) Mr. Jennings' wife is the first cousin of Mr. Messina.
(5) Mr. Worgul retired as President of the Company and the Bank on June 30,
1994.
(6) Includes 4,134, 4,134 and 4,132 shares of restricted stock awarded to
each of Messrs. Levine, Jennings and Msgr. Hartman under the Columbia
Federal Savings Bank Recognition and Retention Plan for Outside
Directors ("DRP"), as to which each individual has sole voting power
but no investment power. Also includes 263 shares of restricted stock
awarded to each of Messrs. Ruggiere, Fitzpatrick, Sprotte, Worgul,
Koop, Levine, Jennings and Msgr. Hartman under the 1996 Stock Incentive
Plan, as to which each individual has sole voting power but no
investment power.
(7) Includes 37,194 shares subject to options granted to each of Messrs.
Koop, Sprotte, Ruggiere and Fitzpatrick along with 18,602 shares
subject to options granted to each of Messrs. Levine and Jennings under
the Haven Bancorp, Inc. 1993 Stock Option Plan for Outside Directors
("Directors' Stock Option Plan") which are currently exercisable. Also
includes 8,000 shares subject to options granted to each of Messrs.
Worgul, Koop, Sprotte, Ruggiere and Fitzpatrick, 2,666 shares subject
to options granted to each of Messrs. Levine and Jennings, also 6,666
shares subject to options granted to Msgr. Hartman pursuant to the 1996
Stock Incentive Plan, which maybe acquired within 60 days of the Record
Date. Does not include 4,000 shares subject to options granted to each
of Messrs. Worgul, Koop, Sprotte, Ruggiere and Fitzpatrick, 5,334,
5,334 and 13,334 shares subject to options granted to each of Messrs.
Levine, Jennings and Msgr. Hartman under the 1996 Stock Incentive Plan
which are not currently exercisable.
(8) Includes 198,374, 169,364, 109,250, 67,096, 53,534 and 53,534 shares
subject to options granted to Messrs. Worgul, Messina, Rennhack, Seery
and McGuirk and to Ms. Califano, respectively, pursuant to the Haven
Bancorp, Inc. 1993 Incentive Stock Option Plan ("Incentive Option
Plan") and the Haven Bancorp, Inc. 1996 Stock Incentive Plan ("1996
Stock Incentive Plan") which may be acquired within 60 days of the
Record Date. Does not include 3,170, 1,170, 1,170, 2,658 and 2,658
shares subject to options granted to Messrs. Messina, Rennhack, Seery,
and McGuirk and Ms. Califano under the 1993 Incentive Option Plan which
are not currently exercisable. Also not included are 38,000 options
granted to Mr. Messina and 14,000 options granted to each of Messrs.
Rennhack, Seery and McGuirk and Ms. Califano under the 1996 Stock
Incentive Plan which are not currently exercisable.
(9) The figures shown include shares held in trust pursuant to the ESOP
that were owned as of December 31, 1997 to individual accounts as
follows: Mr. Worgul, 2,266 shares; Mr. Messina, 8,556 shares; Mr.
Rennhack, 8,224 shares; Mr. Seery, 6,482 shares; Mr. McGuirk, 3,996;
shares and Ms. Califano, 5,590 shares. Such persons have sole voting
power but no investment power, except in limited circumstances, as to
such shares. The figures shown do not include 370,790 shares held in
trust pursuant to the ESOP that have not been allocated to any
individual's account and as to which the members of the Company's ESOP
Committee (consisting of Messrs. Ruggiere, Sprotte and Koop) may be
deemed to share investment power and as to which the named executive
officers may be deemed to share voting power, thereby causing each such
member or executive officer to be deemed a beneficial owner of such
shares. Each of the members of the ESOP Committee and the executive
officers disclaims beneficial ownership of such shares.
(10) The figures shown include shares held in the Employer Stock Fund of the
Bank's Employee 401(k) Thrift Incentive Savings Plan ("Employee Thrift
Savings Plan") as to which each person identified has shared voting and
investment power as follows: Mr. Worgul, 25,958 shares; Mr. Messina,
27,714 shares; Mr. Rennhack, 8,306 shares; Mr. Seery, 7,268 shares; and
Mr. McGuirk, 762 shares. The figures shown do not include [ ] shares
held in the Employer Stock Fund of the Employee Thrift Savings Plan as
to which the named executive officers have shared voting power and
investment power. Each of the executive officers disclaims beneficial
ownership of such shares.
(11) Includes 3,202, 4,960, 2,480, 4,000 and 4,000 shares awarded to Messrs.
Messina, Rennhack, Seery and McGuirk and to Ms. Califano, respectively,
under the Columbia Federal Savings Bank Recognition and Retention Plan
for Officers and Employees ("MRP") as to which each has sole voting
power but no investment power. Also includes 7,998 shares of restricted
stock awarded to Mr. Messina and 4,000 shares of restricted stock
awarded to each of Messrs. Rennhack, Seery and McGuirk and to Ms.
Califano, respectively, under the Haven Bancorp, Inc. 1996 Stock
Incentive Plan ("1996 Stock Incentive Plan").
8
<PAGE>
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
The Board of Directors conducts its business through meetings of the
Board and through activities of its committees. The Board of Directors meets
monthly and may have additional meetings as needed. During fiscal 1997, the
Board of Directors of the Company held 12 regular board meetings and one special
meeting. All of the directors of the Company attended at least 75% in the
aggregate of the total number of the Company's board meetings held and committee
meetings on which such director served during fiscal 1997. The Board of
Directors of the Company maintains committees, the nature and composition of
which are described below:
The Audit Committee of the Company and the Bank for fiscal 1997
consisted of Messrs. Fitzpatrick, Ruggiere, Levine and Msgr. Hartman. Msgr.
Hartman was appointed to the Committee to fill a vacancy created by the
resignation of Mr. Cashill from the directorate in February 1997. This Committee
met four times in fiscal 1997 and recommends an independent audit firm to be
submitted for stockholder approval at the Company's Annual Meeting, approves
internal audit schedules and reviews internal audit reports.
The Company's Nominating Committee for the 1998 Annual Meeting consists
of Messrs. Ruggiere, Koop and Msgr. Hartman. The Committee considers and
recommends the nominees for directors to stand for election at the Company's
Annual Meeting. The Company's Certificate of Incorporation and Bylaws also
provide for stockholder nominations of directors. These provisions require such
nominations to be made pursuant to timely notice in writing to the Secretary of
the Company. The stockholder's notice of nomination must contain all information
relating to the nominee which is required to be disclosed by the Company's
Bylaws and by the Exchange Act. The Nominating Committee met once in preparation
for the 1998 Annual Meeting.
The Compensation Committee for the Company and Bank consists of Messrs.
Sprotte, Koop, Worgul and Jennings who are responsible for the 1998 Compensation
Committee Report on Executive Compensation. The Compensation Committee is
responsible for determining executive compensation. The Compensation Committee
met twice in 1997.
DIRECTORS' COMPENSATION
DIRECTORS' FEES. In 1997, Directors who were not employees of the
Company or the Bank received a retainer of $18,000 a year, one third of which
was paid in the form of restricted stock granted pursuant to the 1996 Stock
Incentive Plan, and a fee of $1,000 for each Board meeting attended. The
Chairman's annual retainer was $30,000. One third of these fees were paid by the
Company. Committee members received a fee of $1,500 for each regular and special
meeting attended. The Chairman of each Committee received an additional retainer
of $1,500 per year. Directors are also eligible for coverage under the Company's
health and dental insurance plans in the same manner as employees.
DIRECTORS' STOCK OPTION PLAN. Under the Directors' Stock Option Plan,
each outside director who was not an officer of the Company or the Bank at the
time of the Bank's Conversion was
9
<PAGE>
granted options to purchase 37,194 shares of Common Stock at an exercise price
of $5.00 per share on the date of grant, September 23, 1993. Shares of Common
Stock granted and the exercise price under this and all other stock option plans
of the Company reflect the Stock Split effected on November 28, 1997. To the
extent options for shares are available for grant under the Directors' Stock
Option Plan, each subsequently appointed or elected outside director will be
granted options as of the date on which such director is qualified and first
begins to serve as an outside director. Pursuant to the Directors' Stock Option
Plan, effective October 24, 1996, Messrs. Levine and Jennings were each granted
options to purchase 18,602 shares of common stock at an exercise price of $13.41
per share, the fair market value on the date of grant. All options granted under
the Directors' Stock Option Plan are exercisable one year from the date of
grant. Upon death, disability or retirement of the participant or upon a change
in control of the Company or the Bank, all options previously granted would
automatically become exercisable.
HAVEN BANCORP, INC. 1996 STOCK INCENTIVE PLAN. The Company's
stockholders approved the 1996 Stock Incentive Plan at the Annual Meeting held
April 24, 1996. On such date, each eligible outside director was granted a
non-qualified stock option to purchase 12,000 shares of Common Stock at an
exercise price of $12.14 per share. To the extent options for shares are
available for grant under the 1996 Stock Incentive Plan, each subsequently
appointed or elected outside director will be granted options as of the date on
which such outside director is qualified and first begins to serve as an outside
director. Effective October 24, 1996, Messrs. Levine and Jennings were each
granted non-qualified stock options to purchase 8,000 shares of Common Stock at
an exercise price of $13.41 per share. Effective March 25, 1997, Msgr. Hartman
was granted non-qualified stock options to purchase 20,000 shares of Common
Stock at an exercise price of $17.28, the fair market value on the date of
grant. All options granted under the 1996 Stock Incentive Plan are exercisable
in three equal installments beginning one year from the date of grant. Upon
death, disability or retirement of the participant or upon a change in control
of the Company or the Bank, all options previously granted would automatically
become exercisable.
Pursuant to the 1996 Stock Incentive Plan, effective as of January 1,
1996 and as of the first business day of each of the first four calendar years
beginning after the January 1, 1996 ("Grant Date"), each eligible outside
director will be granted a number of shares of restricted stock in lieu of
receiving one-third of the annual retainer that would otherwise be paid in cash
to such eligible outside director for the calendar year in which the Grant Date
occurs. The number of shares of restricted stock to be granted to an eligible
outside director on each Grant Date shall be equal to the dollar value of
one-third of the eligible outside director's annual retainer for the calendar
year in which the Grant Date occurs, divided by the fair market value of a share
on the effective date of the grant, disregarding any fractional shares resulting
from such calculation. Effective January 1, 1996, each eligible outside director
was granted 494 shares in lieu of cash. Messrs. Levine and Jennings were
subsequently granted 116 shares on October 24, 1996. Effective January 1, 1997,
each eligible outside director was granted 420 shares, in lieu of cash,
representing one-third of such director's annual retainer for 1997. Msgr.
Hartman, after his election to the Board of Directors, was granted 288 shares in
lieu of cash equal to one-third of his portion of the annual retainer for 1997
pro rated for his commencement of service on March 25, 1997. In addition,
effective January 1, 1998 each
10
<PAGE>
eligible outside director was granted 263 shares, in lieu of cash, representing
one-third of such director's annual retainer for 1998.
DIRECTORS' RECOGNITION AND RETENTION PLAN. Under the DRP, each of the
six outside directors at the time of the Conversion received awards of 12,398
shares. On October 24, 1996, Messrs. Levine and Jennings were each awarded 6,200
shares. On March 25, 1997, Msgr. Hartman was awarded 4,132 shares. Awards to
directors vest in three equal annual installments commencing on the first
anniversary of the effective date of the award. Awards will be 100% vested upon
termination of employment or service as a director due to death, disability or
retirement of the director or following a change in the control of the Bank or
the Company. In the event that before reaching normal retirement a director
terminates service with the Bank or the Company, the director's non-vested
awards will be forfeited. When shares become vested and are actually distributed
in accordance with the DRP, the recipients will also receive amounts equal to
any accrued dividends with respect thereto. Prior to vesting, recipients of
awards may direct the voting of the shares allocated to them. Shares not subject
to an award will be voted by the trustees of the DRP in proportion to the
directions provided with respect to shares subject to an award.
CONSULTATION AND RETIREMENT PLAN FOR NON-EMPLOYEE DIRECTORS. Under the
Company's Consultation and Retirement Plan for Non-Employee Directors (the
"Directors Retirement Plan"), a director who is not an employee or officer of
the Company is a participant in the Directors Retirement Plan. Any participant
who has served as a director for at least 60 months, has attained age 55 and,
after retirement, executes a Consulting Agreement to provide continuing service
to the Bank and Company, will be eligible to receive benefits under the
Directors Retirement Plan. The annual retirement benefit will be an amount equal
to two thirds of the sum, measured as of the date of retirement, of (i) the
amount of retainer fees paid to directors, (ii) the aggregate of the annual
Board of Directors committee fees paid to the director and (iii) the aggregate
of the twelve regular meeting fees of the Board of Directors.
EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE AND THE STOCK PERFORMANCE
GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT
INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"), EXCEPT TO THE EXTENT THAT
THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL
NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION. Under rules
established by the SEC, the Company is required to provide certain data and
information in regard to the compensation and benefits provided to the Company's
chief executive officer and other executive officers of the Company. The
disclosure requirements for the chief executive officer and such other executive
officers include the use of tables and a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting those
individuals. In fulfillment of this requirement, the joint Compensation
Committee of the Company and Bank (the "Compensation
11
<PAGE>
Committee"), at the direction of the Board of Directors, has prepared the
following report for inclusion in the proxy statement. The members of the 1997
Compensation Committee were Messrs. Sprotte, Koop, Worgul, and Jennings.
The Compensation Committee of the Board of Directors of the Bank is
responsible for establishing the compensation levels and benefits of executive
officers of the Bank, who also serve as executive officers of the Company, and
for reviewing recommendations of management for compensation and benefits for
other officers of the Bank. The Compensation Committee establishes compensation
on a calendar year basis. The Compensation Committee was responsible for
compensation decisions in 1997.
COMPENSATION OF THE PRESIDENT AND OTHER EXECUTIVE OFFICERS. The
compensation of the President and other executive officers consists of salary,
bonus, stock options, restricted stock awards, pension and fringe benefits.
During 1992, the Board of Directors on behalf of the Compensation Committee
engaged the services of KPMG Peat Marwick LLP to review the Bank's compensation
practices (the "Salary Review Program"). The focus of such program was to
develop a salary management program for officer positions and develop a
management incentive program for executive and senior officers. The Salary
Review Program established competitive salary ranges for executive officers
developed by reviewing market data as of July 1, 1992. Subsequent thereto, the
ranges were updated annually through discussions with KPMG Peat Marwick LLP to
reflect remuneration data with respect to thrift institutions of comparable size
in the New York metropolitan area. Base salary levels are generally within a
range consistent with and competitive with that of other institutions that are
similar to the Bank in asset size, function and geographical markets. The
institutions used to compare salaries are not necessarily the same as those
which make up the peer group used in the Stock Performance Graph. Executive
compensation is based upon consideration of an individual's performance and
contribution to the viability of the Company and the performance of the Company
as a whole. On March 1, 1998, Mr. Messina's salary as President and Chief
Executive Officer was increased from $475,000 to $600,000 by the Compensation
Committee. The Compensation Committee reasoned that such amount would remunerate
Mr. Messina within the range in the Company's Salary Review Program, and within
the market average base salary range of area public thrifts with assets greater
than $1 billion. The Compensation Committee authorized the payment of incentive
awards to executive management of the Company under a management incentive
program implemented during 1995. The program provides for use of key financial
factors and pre-defined levels of achievement established by the Compensation
Committee as the basis for determining incentive awards. The Compensation
Committee at its discretion may consider the weight of each of the identified
factors and may increase or decrease the achievement levels for any one year.
Based upon the growth of the Company due to the supermarket branch expansion
program of the Bank combined with other events, such as the formation of a Real
Estate Investment Trust as a subsidiary of the Bank, the renovation of the
Company's new headquarters and the change in the Bank's name necessitated by
opening supermarket branches in New Jersey and Connecticut, the Compensation
Committee decided to award incentive compensation payments based on the overall
achievements of the Company during the 1997 year. The members reasoned that the
short term negative impact upon 1997 operation costs attributed to the
activities of the Company described
12
<PAGE>
above, is expected to provide long-term accretive benefits to the Company's
stockholders. Therefore, Mr. Messina was awarded an incentive payment of
$125,000 for the 1997 year.
During the second quarter of 1996, the Board of Directors engaged the
services of KPMG Peat Marwick's Performance and Compensation Management Division
to evaluate, update and recommend changes to the Company's compensation program.
The 1996 Executive Compensation Review Report contained a study of the Company's
compensation practices compared to a peer group of financial institutions in the
New York geographic area that are of similar size and nature of business. This
report focused upon base salaries, annual incentives, total cash compensation,
long term incentives and total compensation. In addition, the study addressed
the financial performance of the Company compared to its peers, provided an
analysis of stock granted to executives at Conversion and conveyed KPMG Peat
Marwick LLP's prospective recommendations for cash compensation, annual
incentives and long term grants. This study was used by the Committee during
1997 to evaluate and establish executive compensation levels.
Stock options and stock awards are compensation plans maintained by the
Company and serve as a long-term incentive by linking executive compensation
with the interests of the Company's stockholders. Stock based compensation is
designed to retain employees and build loyalty while promoting stockholder
value. Stock options and restricted stock awards were granted to Mr. Messina as
well as to other officers at the time of the Bank's Conversion to a publicly
held company on September 23, 1993. The Compensation Committee based such grants
to executive officers on practices of other financial institutions as verified
by external surveys as well as the executives' level of responsibilities,
seniority and past contribution to the Bank. The restricted stock awards granted
to Mr. Messina vested over three years at 33 1/3% per year; vesting commenced on
September 23, 1994, one year from the date of grant. The stock options and
restricted stock awards granted to other executive officers were based on
similar data and factors as those used in determining appropriate levels of
stock options and restricted stock awards to be granted to Mr. Messina. The
restricted stock granted to other executive officers vests over a five year
period at 20% per year. For some officers, vesting commenced on September 23,
1994 and for other officers vesting commenced February 23, 1996, in each case,
one year from date of grant.
The Board of Directors, having thoroughly reviewed the recommendation
of KPMG Peat Marwick LLP with respect to compensation matters, granted stock
options and restricted stock awards to Mr. Messina as well as to other officers
at a meeting held on May 23, 1996. The restricted stock awards and stock options
granted vest over three years at 33 1/3% per year; vesting commenced on May 23,
1997, one year from date of grant.
The grants and awards for the President and Chief Executive Officer
along with the grants and awards for other executive officers are reflected in
the Summary Compensation Table.
13
<PAGE>
COMPENSATION COMMITTEE:
Robert M. Sprotte Robert L. Koop
George S. Worgul William J. Jennings II
BOARD OF DIRECTORS:
Michael J. Fitzpatrick Msgr. Thomas J. Hartman George S. Worgul
Robert M. Sprotte Philip S. Messina Robert L. Koop
William J. Jennings II Joseph A. Ruggiere Michael J. Levine
14
<PAGE>
STOCK PERFORMANCE GRAPH. The following graph shows a comparison of
cumulative total stockholder return on the Company's Common Stock, based on the
market price of the Common Stock assuming reinvestment of dividends, with the
cumulative total return of companies in The Nasdaq Stock Market and in the SNL
Thrift Index for the period beginning on September 23, 1993, the day the
Company's Common Stock began trading, through December 31, 1997.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG HAVEN BANCORP, INC.
COMMON STOCK, NASDAQ U.S. INDEX AND SNL THRIFT INDEX
SEPTEMBER 23, 1993 - DECEMBER 31, 1997
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
09/23/93 12/31/93 12/31/94 12/31/95 12/31/96 12/3197
-------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Haven Bancorp, Inc. 100.00 128.76 132.50 238.30 294.76 470.88
NASDAQ (US) 100.00 103.81 101.47 143.51 176.50 216.60
Thrifts (All) 100.00 100.90 99.71 155.29 202.33 344.28
</TABLE>
Notes:
A. The lines represent index levels derived from compounded daily returns
that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the interval, based on the fiscal year-end, is not a trading day,
the preceding trading day is used.
D. The index level for all series was set to $100.00 on 09/23/93.
15
<PAGE>
Summary Compensation Table. The following table sets forth the
compensation paid by the Company and/or Bank for services during the years ended
December 31, 1997, 1996 and 1995, to the Chief Executive Officer and the four
other highest paid executive officers of the Company and/or the Bank who each
received total salary and bonus in excess of $100,000 (the "Named Executive
Officers") in 1997.
<TABLE>
<CAPTION>
Long Term Compensation
----------------------------------------------------
Annual Compensation Awards Payouts
------------------------------------------ ----------------------------------------------------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Awards Options/SARs Payouts Compensation
Position Year ($) ($)(1) ($)(2) ($)(3)(4) (#)(5) ($)(6) ($)(7)
------------------ ---- ------ ----- ------------ --------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip S. Messina 1997 450,481 125,000 2,999 -- -- -- 32,317
President and CEO 1996 369,230 131,250 1,800 240,450 61,754 -- 33,296
1995 293,077 75,000 -- -- -- -- 23,335
Joseph W. Rennhack 1997 170,154 40,000 1,500 -- -- -- 32,214
Senior Vice President 1996 161,865 40,000 900 85,875 22,754 -- 35,536
and Secretary 1995 151,962 22,950 -- -- -- -- 22,911
Thomas J. Seery 1997 151,607 40,000 1,500 -- -- -- 29,022
Executive Vice President- 1996 134,654 33,750 900 85,875 22,754 -- 26,397
Operations 1995 116,615 20,060 -- -- -- -- 17,386
Gerard H. McGuirk 1997 164,823 40,000 1,500 -- -- -- 30,901
Executive Vice President- 1996 154,952 38,750 900 85,875 22,754 -- 31,238
Chief Lending Officer 1995 135,337 23,375 -- 118,125 40,000 -- 1,932
Catherine Califano 1997 159,519 40,000 1,500 -- -- -- 31,271
Senior Vice President- 1996 150,721 37,500 900 85,875 22,754 -- 29,342
Chief Financial Officer 1995 132,740 20,625 -- 118,125 40,000 -- 11,036
</TABLE>
- ----------
(1) Bonus shown for the years 1995 through 1997 consists of payments
pursuant to Bank's Executive Incentive Compensation Plan.
(2) For 1995 there were no (a) perquisites over the lesser of $50,000 or
10% of the individual's total salary and bonus for the year; (b)
payments of above-market preferential earnings on deferred
compensation; (c) the payment reimbursements or (d) preferential
discounts on stock. Amounts listed for 1996 and 1997 are dividends
received on restricted stock granted under the 1996 Stock Incentive
Plan which are distributed when paid, even if prior to the vesting of
restricted stock.
(3) Pursuant to the MRP, an award of 4,802 shares of restricted stock was
made to Mr. Messina on May 23, 1996, which award vests in three equal
annual installments commencing on May 23, 1997. In addition, awards of
10,000 shares of restricted stock were made pursuant to the MRP to each
of Mr. McGuirk and Ms. Califano on February 23, 1995, which
(NOTES CONTINUED ON NEXT PAGE)
16
<PAGE>
awards vest in five equal annual installments commencing on February 23,
1996. When shares become vested and are distributed, the recipient also
receives an amount equal to accumulated dividends and earnings thereon (if
any). The dollar amounts in the table for 1996 are based upon the closing
market price of $14.3125 per share of Common Stock on December 31, 1996,
as reported on the Nasdaq National Market System and the dollar amounts in
the table for 1995 are based upon the closing market price of $11.8125 per
share of Common Stock on December 29, 1995, as reported on the Nasdaq
National Market System.
(4) Pursuant to the 1996 Stock Incentive Plan, Mr. Messina was granted an
award of 11,998 shares of restricted stock and each of Messrs.
Rennhack, Seery, and McGuirk and Ms. Califano were granted awards of
6,000 shares of restricted stock on May 23, 1996, which vest in three
annual installments commencing May 23, 1997. The dollar amounts in the
table for 1996 are based upon the closing market price of $14.3125 per
share of Common Stock on December 31, 1996, as reported on the Nasdaq
National Market System.
(5) Includes options awarded under the Company's Incentive Option Plan and
the 1996 Stock Incentive Plan. For a discussion of the terms of the
grants and vesting of options, see footnote accompanying Fiscal Year
End Option/SAR Values Table.
(6) The Company does not maintain long-term incentive plans, and therefore,
there were no payments under such plans for fiscal 1997, 1996 or 1995.
(7) Amounts represent life insurance premiums paid by the Bank with respect
to Messrs. Messina, Rennhack, Seery and McGuirk and Ms. Califano.
Amounts for 1997 include the dollar value of an allocation of Common
Stock made to the named executive officer's account under the ESOP
during 1997, with respect to the plan year ending December 31, 1996.
Based on the closing market price of the Common Stock on December 31,
1996 of $14.3125 per share, the market value of such allocation was
$26,067, $25,964, $23,169, $24,651 and $25,146 with respect to Messrs.
Messina, Rennhack, Seery, and McGuirk and Ms. Califano. The allocations
to be made under the ESOP for the plan year ending December 31, 1997
have not yet been determined. The Bank made no matching contributions
to the Employee Thrift Savings Plan on behalf of the named executive
officers in 1995. Matching contributions resumed for the Employee
Thrift Savings Plan on July 1, 1996. The matching contributions for
1996 for Messrs. Messina, Rennhack, Seery, McGuirk and Ms. Califano
were $1,260, $2,386, $1,065, $2,364 and $2,441. The matching
contributions for 1997 for Messrs. Messina, Rennhack, Seery, McGuirk
and Ms. Califano were $4,750, $4,750, $4,475, $4,750 and $4,750.
EMPLOYMENT AGREEMENT. The Company entered into an employment agreement
with Mr. Messina, effective as of September 21, 1995, which was amended as of
May 28, 1997 ("Company Employment Agreement"). In addition, the Bank entered
into an employment agreement with Mr. Messina, effective as of May 27, 1997
("Bank Employment Agreement"). The Company Employment Agreement and the Bank
Employment Agreement (collectively, the "Employment Agreements") are intended to
clarify the terms of Mr. Messina's employment and to ensure the Company and the
Bank of his continued availability with a minimum of personal distraction in the
event of a proposed or threatened change in control of the Company or the Bank.
The continued success of the Company and the Bank depends to a significant
degree on Mr. Messina's skills and competence.
The Company Employment Agreement provides for a five-year term, and
beginning on the second anniversary of its effective date, automatically extends
for one day each day, such that the term is always three years, until either the
Board of Directors or Mr. Messina provides written notice to the other party of
an intention not to extend the term of the employment agreement, at which time
the remaining term of the agreement will be fixed at three years from the date
of written notice. The Company Employment Agreement, as amended, provides that
Mr. Messina will receive a base salary from the Company at an initial annual
rate of $158,333, which will be reviewed annually by the Board of Directors.
The Bank Employment Agreement provides for an initial term of three
years, beginning on the date of the agreement. On or about September 23, 1997
and on each anniversary of such date
17
<PAGE>
thereafter, the Bank's Board of Directors shall review the terms of this
agreement and the performance of the executive and may, in the absence of the
executive's objection, approve an extension of the employment agreement to the
third anniversary of such date. Accordingly, at a meeting held in September
1997, the Board of Directors extended the employment agreement to September 23,
2000. The Bank Employment Agreement provides that Mr. Messina will receive a
base salary from the Bank at an initial annual rate of $316,667.
In addition to base salary, the Employment Agreements provide for,
among other things, disability pay, participation in stock plans and other
employee benefit plans, fringe benefits applicable to executive personnel and
supplemental retirement benefits to compensate the executive for the benefits
that he cannot receive under the Company's and the Bank's tax-qualified employee
benefit plans due to the limitations imposed on such plans by the Internal
Revenue Code of 1986 (the "Code"). The Employment Agreements also provide that
the Company and the Bank will indemnify Mr. Messina during the term of the
Employment Agreements and for a period of six years thereafter against any
costs, liabilities, losses and exposures for acts and omissions in connection
with his service as an officer or director, to the fullest extent allowable
under federal and Delaware law.
The Employment Agreements provide for termination of the executive by
the Company or the Bank for cause at any time. Under the Company Employment
Agreement, in the event the Company chooses to terminate the executive's
employment for reasons other than for cause or for disability, or in the event
of the executive's resignation from the Company following: (i) a failure to
re-elect or re-appoint the executive to his current offices; (ii) a material
change in the executive's functions, duties or responsibilities; (iii) a
relocation of his principal place of employment; (iv) a material reduction in
his compensation, benefits or perquisites; or (v) a "Change in Control" as
defined in the agreement, the executive or, in the event of his death, his
estate, would be entitled to a payment equal to the salary payable or due during
the remaining term of the employment agreement, the other cash compensation and
benefits that would have been accrued or received by the executive if he had
remained employed by the Company during the remaining unexpired term of the
employment agreement and continued life, health, dental, accident and disability
insurance coverage for the remaining unexpired term of the employment agreement.
In the event that the executive's termination occurs following a Change in
Control, the insurance coverage described above shall be provided for the
executive's lifetime and he shall also be entitled to receive continued fringe
benefits and perquisites for the remaining unexpired term of the employment
agreement and a payment equal to the difference between the value of his normal
and supplemental retirement benefits and an unreduced early retirement benefit
commencing at age 55. Payments made to Mr. Messina under the Company Employment
Agreement upon a change in control may result in an "excess parachute payment"
as defined under Section 280G of the Code, which may result in the imposition of
an excise tax on Mr. Messina and a denial of a deduction for such excess amounts
for the Company. Under the employment agreement, the Company would indemnify Mr.
Messina for any such excise taxes, and any additional income, employment and
excise taxes imposed as a result of such indemnification. The estimated value of
Mr. Messina's Company Employment Agreement in the event of his termination of
employment following a Change in Control is approximately [ ] based upon
certain assumptions regarding the timing and structure of such a transaction.
18
<PAGE>
Under the Bank Employment Agreement, in the event the Bank chooses to
terminate the executive's employment for reasons other than for cause or
disability, or in the event of the executive's resignation from the Bank
following (i) a failure to re-elect or re-appoint the executive to his current
offices; (ii) a material change in the executive's functions, duties or
responsibilities; (iii) a relocation of his principal place of employment; (iv)
a material reduction in his compensation, benefits or perquisites; or (v) a
Change in Control followed by the executive's demotion, loss of title or
significant authority or responsibility, relocation or exclusion from
compensation or benefit programs, the executive, or, in the event of his death,
his estate, would be entitled to the same type of severance payments and
benefits provided for under the Company Employment Agreement, but not in excess
of three times his average annual compensation for the preceding five calendar
years.
The Company Employment Agreement provides that the Company guarantees
the payment of any benefits and compensation due to Mr. Messina under the Bank
Employment Agreement and that amounts payable under the Company Employment
Agreement will be reduced to avoid duplication of amounts payable under the Bank
Employment Agreement.
CHANGE IN CONTROL AGREEMENTS. For similar reasons as with the
employment agreement, the Bank and the Company have entered into change in
control agreements with Messrs. Rennhack, Seery and McGuirk and Ms. Califano.
Each change in control agreement with the Bank provides for a two-year term, and
commencing on the first anniversary of the date of the agreement and continuing
on each anniversary thereafter, the agreement may be extended by the Board of
Directors of the Bank for an additional year such that the remaining term of the
Bank's change in control agreement shall be two years. Each change in control
agreement with the Company provides for a three-year term which automatically
extends for one day each day, such that the term will always be three years,
until either the Board of Directors of the Company or the executive provides
written notice of an intention not to extend the term of the agreement. Each
change in control agreement provides that at any time following a "Change in
Control" (as defined in the agreements) of the Company or the Bank, if the
Company or the Bank terminates the employee's employment for any reason other
than cause or, in the case of the Bank's change in control agreements, if the
employee voluntarily resigns following demotion, loss of title, office or
significant authority, a reduction in compensation, or a relocation of the
employee's principal place of employment and, in the case of the Company's
change in control agreements, if the employee resigns without regard as to
whether a change in status, compensation or working conditions or location has
occurred, then the employee or, in the event of death, the employee's
beneficiary would be entitled to receive a payment equal to the salary, bonus
and benefits, and perquisites in the case of the Company's agreements, that the
employee would have accrued or received if employment continued for the
remaining unexpired term of the agreement. The change in control agreements with
the Company provide that the Company would indemnify the executive for any
excise taxes imposed on "excess parachute payments" deemed made to the executive
under Section 280G of the Code and for any additional income, employment and
excise taxes imposed as a result of such indemnification. Payments to be made
under the Company's change in control agreement with an executive will be offset
by any payments to be made under the Bank's change in control agreement with
such executive. Payments to the executive under the Bank's change in control
agreement are guaranteed by the Company if payments or benefits are not paid by
the Bank. The estimated value of the change in control
19
<PAGE>
agreements in the event of the executives' termination of employment following a
Change in Control is approximately $[ ], $[ ], [ ], and $[ ] for Messrs.
Rennhack, Seery and McGuirk and Ms. Califano, respectively, based upon certain
assumptions regarding the timing and structure of such a transaction.
INCENTIVE STOCK OPTION PLAN AND 1996 STOCK INCENTIVE PLAN. The Company
maintains the Incentive Stock Option Plan and the 1996 Stock Incentive Plan,
which provide discretionary awards to officers and key employees as determined
by a committee of disinterested directors who administer the plans. For a
description of the 1996 Stock Incentive Plan and the proposed amendment to the
1996 Stock Incentive Plan, see "Proposal 2 - Approval of the Amendment to the
Haven Bancorp, Inc. 1996 Stock Incentive Plan."
The following table provides certain information with respect to the
number of shares of Common Stock represented by outstanding options held by the
Named Executive Officers as of December 31, 1997. Also reported are the values
for "in-the-money" options which represent the positive spread between the
exercise price of any such existing stock options and the year-end price
of the Common Stock.
<TABLE>
<CAPTION>
FISCAL YEAR END OPTION/SAR VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS MONEY OPTIONS/SARS AT FISCAL
AT FISCAL YEAR END (#) YEAR END ($)(1)
---------------------------- ----------------------------
SHARES ACQUIRED VALUE
ON EXERCISE REALIZED
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------- ------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Philip S. Messina -- -- 169,364 41,170 2,796,625 385,969
Joseph W. Rennhack -- -- 109,250 15,170 1,850,255 142,219
Thomas J. Seery -- -- 67,096 15,170 1,112,560 142,219
Gerard H. McGuirk -- -- 53,534 16,658 736,425 168,259
Catherine Califano -- -- 53,534 16,658 736,425 168,259
</TABLE>
- ----------------------------
(1) Messrs. Messina, Rennhack, Seery and McGuirk and Ms. Califano have 148,780,
101,666, 59,512, 7,438 and 7,438 options with an exercise price of $5.00. In
addition Mr. McGuirk and Ms. Califano have 40,000 options with an exercise
price of $8.47. Messrs. Messina, Rennhack, Seery and McGuirk and Ms.
Califano also have 61,754, 22,754, 22,754, 22,754, and 22,754 options with
an exercise price of $13.125. As of December 31, 1997 the closing price of
the common stock was $22.50.
DEFINED BENEFIT PLAN. The Bank maintains the CFS Bank Retirement Income
Plan, a non-contributory defined benefit pension plan ("Retirement Plan").
RETIREMENT PLAN TABLE. The following table indicates the annual retirement
benefit that would be payable as of December 31, 1997 under the Retirement Plan
upon retirement at age 65 to a participant electing to receive his retirement
benefit in the standard form of benefit (single life annuity), assuming various
specified levels of average annual compensation and various specified years of
credited service.
20
<PAGE>
<TABLE>
<CAPTION>
AVERAGE 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
ANNUAL OF CREDITED OF CREDITED OF CREDITED OF CREDITED OF CREDITED OF CREDITED
COMPENSATION SERVICE SERVICE SERVICE SERVICE SERVICE(1) SERVICE
------------ ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
125,000 24,345 36,518 48,690 60,863 73,036 73,036
150,000 29,595 44,393 59,190 73,988 88,786 88,786
160,000 31,695 47,543 63,390 79,238 95,086 95,086
175,000(2) 34,845 52,268 69,690 87,113 104,536 104,536
200,000(2) 40,095 60,143 80,190 100,238 120,286 120,286
300,000(2) 61,095 91,643 122,190 152,738 183,286(3) 183,286(3)
400,000(2) 82,095 123,143 164,190 205,238(3) 246,286(3) 246,286(3)
500,000(2) 103,095 154,643 206,190(3) 257,738(3) 309,286(3) 309,286(3)
</TABLE>
- ------------------------
(1) Maximum amount of service credited for purposes of the Retirement Plan
is 30 years.
(2) The annual retirement benefits shown in the table reflect a deduction
for Social Security benefits and are not subject to further deduction.
The compensation covered by the Retirement Plan is total annual
compensation (as reflected in the Summary Compensation Table) including
all compensation reported by the Bank for federal income tax purposes.
The benefits shown corresponding to these compensation ranges are
hypothetical benefits based upon the Retirement Plan's normal
retirement benefit formula. Under Section 401(a)(17) of the Code, for
plan years beginning in 1994 through 1996, a participant's compensation
in excess of $150,000 (as adjusted to reflect cost-of-living increases)
was disregarded for purposes of determining average annual earnings.
This limitation was increased to $160,000 for plan years beginning in
1997. The amounts shown in the table include the supplemental
retirement benefits payable to Mr. Messina under his employment
agreement to compensate for the limitation on includible compensation.
(3) These are hypothetical benefits based upon the Retirement Plan's normal
retirement benefit formula. The maximum annual benefit permitted under
Section 415 of the Code in 1996 is $120,000 and is $125,000 for 1997,
or if higher, a member's current accrued benefit as of December 31,
1982 (but not more than $136,425). The $125,000 ceiling will be
adjusted to reflect cost of living increases in 1998 and succeeding
years in accordance with Section 415 of the Code. The amounts shown in
the table reflect the supplemental retirement benefits payable to Mr.
Messina under his employment agreement to compensate for the limitation
on annual benefits.
The following table sets forth the years of credited service (I.E.,
benefit service) as of June 30, 1996 for each of the Named Executive Officers.
CREDITED SERVICE(1)
--------------------------------
YEARS MONTHS
----- ------
Philip S. Messina.......................... 32 2
Joseph W. Rennhack......................... 28 5
Thomas J. Seery............................ 21 11
Gerard H. McGuirk.......................... 2 11
Catherine Califano......................... 3 1
- ----------
(1) The Retirement Plan was frozen effective as of June 30, 1996 for a
period of three years, at which time the status of the Plan will be
evaluated for reactivation.
21
<PAGE>
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT. The Bank has entered into
an agreement to provide supplemental retirement benefits for Mr. Worgul
("Executive"). The agreement is unfunded. As of December 31, 1996, the Company
has accrued the entire $1.2 million liability under the unfunded agreement. All
obligations arising under the agreement are payable from the general assets of
the Bank. However, the Bank is responsible for the payment of premiums on an
insurance policy which would reimburse the Bank for the payments due under the
agreement in the event of the Executive's death. The agreement provides for an
annual retirement benefit of $120,000 for 10 years after retirement upon
reaching the normal retirement age contained in the Retirement Plan. In the
event of a change in ownership of the Bank after retirement but prior to the
payment of the entire benefit or in the event of the Executive's death after
retirement, any unpaid benefit shall be paid in a lump sum to the Executive or
the Executive's estate, respectively.
TRANSACTIONS WITH CERTAIN RELATED PERSONS. The federal banking laws
require that all loans or extensions of credit to executive officers and
directors must be made on substantially the same terms, including interest rates
and collateral, and follow substantially the same credit underwriting procedures
as those prevailing at the time for comparable transactions with the other
persons and must not involve more than the normal risk of repayment or present
other unfavorable features. The Bank made a residential mortgage loan on the
home of Gerard H. McGuirk during 1997. The loan was underwritten on
substantially the same terms as those prevailing at the time for a comparable
transaction with employees of the Bank. The Bank's personnel policy provides for
an employee discount of 1% on primary residential properties, which is available
to all full time employees completing one year of service. Mr. McGuirk qualified
for such employee discount.
Michael J. Levine, a director since 1996, has an equity interest in a
number of companies that had commercial real estate loans outstanding with the
Bank in 1997, which loans were made prior to the time Mr. Levine became a
director. The Board of Directors at a meeting held December 17, 1997 approved
extending the maturity of one of the existing loans in which Mr. Levine has an
equity interest. The loan was extended for ten years at market interest rates,
with no additional funds advanced. The largest aggregate outstanding balance of
these loans in 1997 was approximately $27.8 million. Three such loans totalling
approximately $8.5 million were paid in full in 1997. At December 31, 1997 the
aggregate balance outstanding for all loans in which Mr. Levine has an equity
interest was approximately $19.2 million. Management expects all but the
recently extended loan to be paid in full by mid-year 1998. A loan with an
outstanding balance of $3 million was satisfied in February 1998. The loans to
such entities were made in the ordinary course of business on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons and management believes that
such loans do not involve more than the normal risk of collectibility or present
other unfavorable features.
In addition, Mr. Levine and his wife have a 30% interest in a company,
which they acquired in February 1996, that owns a building formerly occupied as
a branch office of the Bank. The Bank closed the office May 1997, subletting the
space. The lease payments on such property for 1997 was approximately $56,000.
22
<PAGE>
Joseph A. Ruggiere, a director since 1979, is President of
Ohlert-Ruggiere, Inc. During 1997, Ohlert-Ruggiere was paid approximately
$73,000 in agency commissions for the sale of property, casualty and liability
insurance, and for services provided as a travel agent. The Bank believes that
these transactions were on terms substantially similar to those available from
non-affiliated agents.
William J. Jennings II, a director since 1996, is managing director of
Salomon Smith Barney, Inc., an investment banking firm that performed services
for the Company in 1997 in connection with normal business transactions.
PROPOSAL 2.
AMENDMENT TO THE HAVEN BANCORP, INC.
1996 STOCK INCENTIVE PLAN
GENERAL INFORMATION IN CONNECTION WITH THE AMENDMENT TO THE 1996 STOCK INCENTIVE
PLAN
Effective as of February 18, 1998, the Company has adopted, subject to
the approval by shareholders of the Company, an amendment ("Amendment") to the
Haven Bancorp, Inc. 1996 Stock Incentive Plan ("Plan") to increase the number
shares of Common Stock of the Company ("Shares") that are available for issuance
pursuant to the Plan. The Plan was originally adopted by the Company and
approved by shareholders effective as of January 1, 1996. The Plan provides for
the grant of options to purchase Shares ("Options"), stock appreciation rights
("SARs") and restricted stock awards ("Awards") to certain officers, employees
and outside directors. The Amendment will not take effect, and no Options, SARs
or Awards grants relating to the additional number of Shares to be available
under the Plan thereunder will be effective, prior to the date of shareholder
approval ("Effective Date") of the Amendment. The Plan is not subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The
principal provisions of the Plan and the Amendment are summarized below.
PURPOSE OF THE PLAN
The purpose of the Plan is to advance the interests of the Company and
its shareholders by providing current directors, officers and employees of the
Company and its affiliates with an incentive to achieve corporate objectives, by
attracting and retaining directors, officers and employees of outstanding
competence through the award of equity interests in the Company, and by
providing a means for the payment of compensation earned under the Columbia
Federal Savings Bank Executive Incentive Compensation Plan in the form of
Options and Awards.
DESCRIPTION OF THE PLAN
ADMINISTRATION. The Compensation Committee of the Board of Directors
(or any successor committee) or such other committee as the Board may designate
("Committee"), administers the Plan. Such Committee is comprised of at least two
directors of the Company, and all directors on
23
<PAGE>
the Committee are "disinterested directors" (as that term is defined under
Section 16(b) of the Exchange Act and the rules and regulations promulgated
thereunder) who are not currently and have not at any time during the
immediately preceding one-year period been an employee of the Company, the Bank
or any affiliates. The Committee determines, within the limitations of the Plan,
the officers and employees to whom Options or Awards will be granted, the number
of shares subject to each Option or Award, the terms of such Options and Awards
(including provisions regarding exercisability and acceleration of
exercisability) and the procedures by which the Options and Awards shall be
exercised. Options and Awards granted to directors under the Plan are by
automatic formula grant, and the Committee has no discretion over such grants.
Subject to certain specific limitations and restrictions set forth in the Plan,
the Committee has full and final authority to interpret the Plan, to prescribe,
amend and rescind rules and regulations, if any, relating to the Plan and to
make all determinations necessary or advisable for the administration of the
Plan. The costs and expenses of administering the Plan will be borne by the
Company and not charged to any grant of an Option or Award nor to any
participating director, officer or employee.
STOCK SUBJECT TO THE PLAN UNDER THE AMENDMENT. Under the Plan as
originally adopted, the Company reserved 210,000 Shares for current and future
issuance of Options and Awards. Pursuant to the Stock Split, this number
increased to 420,000. Under the Amendment, if approved, an additional 400,000
Shares will be available for issuance pursuant to Option and Awards. As of
December 31, 1997, the fair market value of a Share was $22.50 (as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ"). All Shares available under the Plan may be authorized and unissued
shares or shares previously issued and reacquired by the Company. Any Shares
subject to grants under the Plan which expire or are terminated, forfeited or
cancelled without having been exercised or vested in full, shall again be
available for purposes of the Plan. The exercise of a SAR shall not be treated
as an exercise of the related Option.
ELIGIBILITY. Any employee of the Company and its affiliates who is
selected by the Committee is eligible to participate in the Plan as an "Eligible
Individual." Members of the Board or the board of directors of the Bank who are
not employees or officers of the Company or Bank are eligible to participate in
the Plan as an "Eligible Director." As of January 1, 1998, the number of
Eligible Individuals and Eligible Directors was 29 and 8, respectively.
TERMS AND CONDITIONS OF OPTIONS. The Committee may, in its discretion,
grant Options to Eligible Individuals. The Committee determines the number of
Shares subject to an Option granted to an Eligible Individual and the Exercise
Price and Exercise Period during which the Option may be exercised at the time
of the grant, and may establish a vesting schedule or other terms and conditions
applicable to the Option, in its discretion. The Exercise Period will not exceed
ten years from the date of the grant. On the effective date of the adoption of
the Plan, each Eligible Director who was an Eligible Director on such date was
granted a NQSO to purchase 12,000 Shares. Such Options have an Exercise Price
equal to the fair market value of a Share on the date of grant and an Exercise
Period commencing with the earliest of: (a) the first anniversary of the date
the Option was granted, (b) the date of the Eligible Director's Retirement (as
defined in the Plan), and (c) the date of a Change of Control of the Company (as
defined in the Plan). The Exercise Period applicable to an Eligible Director's
Option will expire on the earliest of (i) the last day of the one-year period
24
<PAGE>
commencing on the date he ceases to be an Eligible Director, other than due to a
termination for cause, (ii) the date he ceases to be an Eligible Director due to
a termination for cause, and (iii) the last day of the ten-year period
commencing on the date the Option was granted. In the event an Eligible Director
ceases to be an Eligible Director prior to the commencement of the Exercise
Period, his Option will be forfeited.
Unless otherwise designated, Options granted under the Plan are
non-qualified stock options ("NQSOs"). All or part of an Option granted under
the Plan to an Eligible Individual may, at the election of the Committee, be
designated as an incentive stock option ("ISO"), and the Exercise Price of such
Option designated to be an ISO will not be less than 100% of the Fair Market
Value (as defined in the Plan) of the Shares at grant; provided, however, that
if an ISO is granted to an employee who on the date of grant is the owner of
stock (determined under the ownership attribution rules of Section 424(d) of the
Code) possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any affiliate, the Exercise Price of the ISO will not
be less than 110% of the Fair Market Value of the Shares on the date of the
grant, and the ISO will not have a term in excess of five years from the date of
the grant. In the event that all or any portion of an Option designated as an
ISO cannot be exercised as an ISO in accordance with Section 422 of the Code",
such Option or portion thereof shall be treated as a NQSO.
Upon the exercise of an Option, the Exercise Price must be paid in
full. Payment may be made in cash or in such other consideration as the
Committee deems appropriate, including, but not limited to, Shares already owned
by the option holder or Shares to be acquired by the option holder upon exercise
of the Option, provided that the delivery of Shares concurrently with the
exercise of an Option does not violate Section 16(b) of the Exchange Act, or any
rules or regulations promulgated thereunder.
TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. The Committee may
also grant SARs to Eligible Individuals which may or may not relate to Options
granted to the recipient, at any time, and generally with such terms and
conditions as the Committee may determine in its discretion. An Eligible
Director who has been granted an Option pursuant to the Plan has also been
granted an SAR relating to all of the Shares subject to the Option, with same
Exercise Price and Exercise Period as the related Option, except as provided
below. In order to avoid adverse accounting treatment, all SARs granted under
the Plan may not become exercisable prior to a Change of Control. In addition,
all such SARs will contain such conditions upon exercise (including, without
limitation, conditions limiting the time of exercise to be specified periods) as
may be required to satisfy applicable regulatory requirements, including without
limitation, Section 16(b) of the Exchange Act and the rules and regulations
promulgated thereunder. Upon exercise of a SAR, the Eligible Individual will be
entitled to receive an amount equal to (a) the excess of the Change of Control
Consideration (as defined in the Plan) over the Exercise Price per Share
specified in the SAR, multiplied by (b) the number of Shares with respect to
which the SAR is being exercised. Change of Control Consideration is defined in
the Plan as the greater of (i) the highest price per Share paid by any person
who initiated or sought to effect the Change in Control during the one-year
period ending on the date of the Change in Control and (ii) the average Fair
Market Value of a Share over the last 10 trading days preceding the date of the
exercise of the SAR.
25
<PAGE>
DIVIDEND EQUIVALENT RIGHTS. The Committee, may, in its discretion, also
grant DERs relating to Options or SARs granted to Eligible Individuals. Such
DERs may provide for the current or deferred payment of the cash or stock
dividends that would have been paid on Shares subject to an Option or SAR had
they been outstanding, or may provide for other methods of reflecting dividends
paid on outstanding Shares.
TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS. The Committee may, in
its discretion, grant Awards of restricted stock to Eligible Individuals. The
Committee determines the number of Shares subject to an Award and the vesting
schedule applicable to an Award granted to an Eligible Individual at the time of
grant, and may establish other terms and conditions applicable to the Award, in
its discretion. On the effective date of the Plan and on the first business day
of each of the next four calendar years to begin after such date, each Eligible
Director is automatically granted an Award of restricted stock in lieu of
one-third of the annual cash retainer such Eligible Director would otherwise
receive for the calendar year in which the Award is made. The number of Shares
subject to an Award made to an Eligible Director will be determined by dividing
the dollar value of one-third of the Eligible Director's annual retainer by the
Fair Market Value of a Share on the date of the grant, disregarding any
fractional Shares. Awards granted to Eligible Directors will become vested six
months after the date of grant.
A stock certificate or stock certificates evidencing the Shares granted
pursuant to an Award are registered on Company's books in the name of the
recipient as of the date the Award is granted and bear a legend restricting the
transferability of such certificate or certificates until vesting and referring
to the terms, conditions and other restrictions, including forfeiture,
applicable to such Shares. The Company retains physical possession or custody of
such certificates until such time as such Shares become vested. Subsequent to
the date Shares subject to an Award have been granted and prior to the date such
Shares have become vested and are distributed, the Award recipient is entitled
to vote the Shares and to receive cash dividends declared and paid with respect
to such Shares. Any stock dividends declared and paid with respect to such
Shares are evidenced by a stock certificate or certificates registered in the
name of the Award recipient, retained in the possession or custody of the
Company, and made subject to the same restrictions, terms and conditions as the
Shares to which they pertain. Such stock dividends become vested and are
distributed at the same time as the Shares to which they pertain. As soon as
practicable following the vesting date of Shares subject to an Award, the
Company issues the Award recipient a stock certificate evidencing his ownership
of the Shares.
TERMINATION OR AMENDMENT OF THE PLAN
Unless sooner terminated, the Plan will terminate automatically on the
day preceding the tenth anniversary of the date the Plan was adopted. The Board
may suspend or terminate the Plan in whole or in part at any time prior to such
date by giving written notice of such suspension or termination to the
Committee. In the event of any suspension or termination of the Plan, all
Options, Awards, SARs and DERs theretofore granted under the Plan that are
effective on the date of such
26
<PAGE>
suspension or termination of the Plan will remain effective under the terms of
the agreements granting such Options, Awards, SARs and DERs.
The Board may amend or revise the Plan in whole or in part at any time;
provided, however, that if the amendment or revision (1) materially increases
the benefits accruing under the Plan, (2) materially increases the number of
Shares which may be issued under the Plan or (3) materially modifies the
requirements as to eligibility for Options, Awards, SARs or DERs under the Plan,
such amendment or revision will be subject to approval by the shareholders of
the Company. Subject to these above provisions, the Board will also have broad
authority to amend the Plan to take into account changes in applicable
securities and tax laws and accounting rules, as well as other developments.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion is intended only as a summary and does not
purport to be a comprehensive description of the federal tax laws, regulations
and policies affecting the Company and recipients of Options, SARs and Awards
that may be granted under the Plan. Any descriptions of the provisions of any
law, regulation or policy contained herein are qualified in their entirety by
reference to the particular law, regulation or policy. Any change in applicable
law or regulation or in the policies of various taxing authorities may have a
material effect on the discussion contained herein. The Plan does not constitute
a qualified Plan under section 401(a) of the Code.
With respect to the Options which may be granted under the Plan, there
are no federal income tax consequences for the Company or the option holder at
the date of the grant, provided that the Option is not considered to have an
ascertainable fair market value. Options granted under the Plan would generally
not be considered to have an ascertainable fair market value. Upon exercise of
an NQSO, the difference between the fair market value of the Shares on the date
of exercise and the option price will be taxable as compensation income to the
option holder under sections 61 and 83 of the Code, and the Company would be
entitled to a deduction for federal income tax purposes of the same amount. Upon
a subsequent sale or exchange of stock acquired pursuant to the exercise of an
Option, the option holder would have taxable gain or loss, measured by the
difference between the amount realized on the disposition and the tax basis of
such shares. In the event that the Company grants an ISO, the option holder
generally will not recognize taxable income either at the date of the grant or
the date of exercise. At the date of disposition of the underlying Shares, the
such option holder will recognize income at the capital gain rate on the
difference between the disposition proceeds and the Exercise Price of the ISO.
The Company is not normally entitled to a deduction with respect to an ISO,
unless the option holder makes a "disqualifying disposition," whereupon the
Company would receive a deduction under section 162 of the Code in the year in
which the disqualifying disposition occurs.
In the case of SARs, upon exercise of a SAR, the SAR holder would have
to include the amount paid to him upon exercise in his gross income for federal
income tax purposes in the year in which payment is made, and the Company would
be entitled to a deduction for federal income tax purposes of the amount paid.
27
<PAGE>
In the case of Awards, when Shares subject to Awards become vested in
accordance with the Plan, the recipients will recognize income equal to the fair
market value of the Shares at that time, and the Company will ordinarily receive
an expense deduction in the amount of income recognized by the recipient.
The foregoing statements are intended to summarize the general
principles of current federal income tax law applicable to Options, SARs and
Awards that may be granted under the Plan. State and local tax consequences may
also be significant. PARTICIPANTS ARE ADVISED TO CONSULT WITH THEIR TAX ADVISOR
AS TO THE TAX CONSEQUENCES OF THE PLAN.
NO CURRENT NEW PLAN BENEFITS
The Amendment is intended to increase the number of Shares available
for future grants by the Committee of Options and Awards pursuant to the Plan.
It is anticipated that such grants will be made to officers and employees by the
Committee, in its discretion. No such grants have been made to date. Therefore
the benefits or amounts to be received by directors, officers or employees as a
result of the Amendment are not determinable at this time.
The approval of the amendment to the Haven Bancorp, Inc. 1996 Stock
Incentive Plan shall be determined by a majority of the votes cast. Accordingly,
abstentions will be counted as votes cast and will have the effect of a vote
against such proposal. Shares underlying broker non-votes will not be counted as
votes cast and will have no effect on the vote for such proposal.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY, IF EXECUTED AND RETURNED, WILL BE VOTED FOR THE AMENDMENT TO THE HAVEN
BANCORP, INC. 1996 STOCK INCENTIVE PLAN.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT
TO THE 1996 STOCK INCENTIVE PLAN.
PROPOSAL 3.
AMENDMENT OF THE CERTIFICATE
OF INCORPORATION OF HAVEN BANCORP, INC.
By resolution dated February 18, 1998, the Board of Directors declared
it advisable and in the best interests of the Company to amend the Company's
Certificate of Incorporation to increase the number of shares of stock that the
Company has the authority to issue to an aggregate of 32,000,000 (thirty-two
million) shares, of which 30,000,000 (thirty million) shares would be Common
Stock and 2,000,000 (two million) shares would be Preferred Stock, and directed
that the Certificate of Incorporation be submitted to a vote of the stockholders
at the Annual Meeting. If the proposal is adopted, Article FOURTH, Section A of
the Certificate of Incorporation will be hereby amended to read as follows:
28
<PAGE>
"FOURTH: A. The total number of shares of all classes of stock
which the Corporation shall have authority to issue is thirty-two
million (32,000,000) consisting of:
1. Two million (2,000,000) shares of Preferred Stock, par value
one cent ($0.01) per share (the "Preferred Stock"); and
2. Thirty million (30,000,000) shares of Common Stock
par value one cent ($0.01) per share (the "Common Stock")."
The Certificate of Incorporation currently authorizes the issuance of
up to 12,500,000 shares, consisting of 10,500,000 shares of Common Stock and
2,000,000 shares of Preferred Stock. As of December 31, 1997, the Company had
8,784,000 shares of Common Stock outstanding due to the Stock Split declared on
October 23, 1997 and distributed on November 28, 1997 to holders of record as of
October 31, 1997. No shares of Preferred Stock are outstanding. Because of the
Stock Split, the Company has nearly exhausted its existing authorized Common
Stock.
The Board of Directors believes that it is in the best interest of the
Company and its stockholders to increase the number of authorized shares of
Common Stock in order to have additional shares available for issuance to meet
various business needs as they may arise and to enhance the Company's
flexibility in connection with possible future actions. These business needs and
actions may include stock dividends, stock splits, employee benefit programs,
corporate business combinations, funding of business acquisitions, and other
corporate purposes. Although the Board periodically considers transactions such
as those listed above, it currently does not have plans to issue any significant
amount of such Common Stock, except as reserved for issuance under the Company's
stock option plans and its stockholder rights plan.
The authorized shares of Common Stock and Preferred Stock in excess of
those currently issued will be available for issuance at such times and for such
purposes as the Board of Directors may deem advisable without further action by
the Company's stockholders, except as may be
required by applicable laws or regulations.
Adoption of the amendment to the Certificate of Incorporation requires
the affirmative vote of the holders of at least a majority of the issued and
outstanding shares of Common Stock entitled to vote. Abstentions from voting on
this amendment and broker non-votes will have the effect as
a vote against this proposal.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY, IF EXECUTED AND RETURNED, WILL BE VOTED FOR THE APPROVAL OF THE AMENDMENT
TO THE CERTIFICATE OF INCORPORATION OF THE COMPANY.
In connection with this proposal, the Company recommends that each
stockholder consider the financial statements of the Company as set forth in the
Company's 1997 Annual Report to
29
<PAGE>
Stockholders, a copy of which is being furnished to each stockholder together
with this proxy statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE AMENDMENT TO THE CERTIFICATE OF
INCORPORATION.
PROPOSAL 4.
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December
31, 1997 were KPMG Peat Marwick LLP. The Company's Board of Directors has
reappointed KPMG Peat Marwick LLP to continue as independent auditors for the
Bank and the Company for the year ending December 31, 1998, subject to
ratification of such appointment by the stockholders.
A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting, will be given an opportunity to make a statement if so desired and will
be available to respond to appropriate questions from stockholders present at
the Annual Meeting.
UNLESS MARKED TO THE CONTRARY, THE SHARES REPRESENTED BY THE ENCLOSED
PROXY, IF EXECUTED AND RETURNED, WILL BE VOTED FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT
AUDITORS OF THE COMPANY.
ADDITIONAL INFORMATION
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement and proxy
relating to the Annual Meeting of Stockholders to be held in 1999, a stockholder
proposal must be received by the Secretary of the Company at the address set
forth on the first page of this Proxy Statement, not later than November 17,
1998. Any such proposal will be subject to 17 C.F.R. SS. 240.14a-8 of the Rules
and Regulations under the Exchange Act.
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
The Bylaws of the Company provide an advance notice procedure for a
stockholder to properly bring business before an Annual Meeting. The stockholder
must give written advance
30
<PAGE>
notice to the Secretary of the Company not less than ninety (90) days before the
date originally fixed for such meeting; provided, however, that in the event
less than one hundred (100) days notice or prior public disclosure of the date
of the Annual Meeting is given or made to stockholders, notice by the
stockholder to be timely must be received not later than the close of business
on the tenth day following the date on which the Company's notice to
stockholders of the Annual Meeting date was mailed or such public disclosure was
made. The advance notice by stockholders must include the stockholder's name and
address, as they appear on the Company's record of stockholders, a brief
description of the proposed business, the reason for conducting such business at
the Annual Meeting, the class and number of shares of the Company's capital
stock that are beneficially owned by such stockholder and any material interest
of such stockholder in the proposed business. In the case of nominations to the
Board of Directors, certain information regarding the nominee must be provided.
Nothing in this paragraph shall be deemed to require the Company to include in
its proxy statement and proxy relating to an Annual Meeting any stockholder
proposal which does not meet all of the requirements for inclusion established
by the SEC in effect at the time such proposal is received.
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than as stated in the Notice of Annual
Meeting of Stockholders. If, however, other matters are properly brought before
the Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote the shares represented thereby on such matters in accordance with
their best judgment.
Whether or not you intend to be present at the Annual Meeting, you are
urged to return your proxy card promptly. If you are present at the Annual
Meeting and wish to vote your shares in person, your proxy may be revoked in
writing and you may vote your shares at the Annual
Meeting.
A COPY OF THE FORM 10-K (WITHOUT EXHIBITS) FOR THE YEAR ENDED DECEMBER
31, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO STOCKHOLDERS OF RECORD UPON WRITTEN REQUEST TO HAVEN
BANCORP, INC., MR. JOSEPH W. RENNHACK, SENIOR VICE PRESIDENT AND SECRETARY,
93-22 JAMAICA AVE., WOODHAVEN, NEW YORK 11421.
By Order of the Board of Directors,
Joseph W. Rennhack
Secretary
Woodhaven, New York
March 18, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU
31
<PAGE>
ARE REQUESTED TO SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE.
32
<PAGE>
[FRONT]
REVOCABLE PROXY
HAVEN BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
April 22, 1998
9:00 a.m.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of the
Board of Directors of Haven Bancorp, Inc. (the "Company"), each with full power
of substitution, to act as attorneys and proxies for the undersigned, and to
vote all shares of Common Stock of the Company which the undersigned is entitled
to vote only at the Annual Meeting of Stockholders, to be held on April 22,
1998, at 9:00 a.m., at the Holiday Inn Crowne Plaza, 104-04 Ditmars Avenue, East
Elmhurst, New York, and at any adjournments thereof.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE PROPOSALS
LISTED. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST JUDGMENT. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE ANNUAL MEETING.
<PAGE>
[BACK]
<TABLE>
<CAPTION>
Please mark
your vote as
indicated in
this example /X/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
<S> <C>
1. The Election as directors of all Robert M. Sprotte, Michael J. 2. The approval of the amendment to
nominees listed: Fitzpatrick and William J. the Haven Bancorp, Inc. 1996 Stock Incentive
(Except as marked to the contrary below) Jennings, II Plan to increase the number of shares
available for issuance thereunder
INSTRUCTION: To withhold your vote
for any individual nominee, write
that nominee's name on the line provided below:
FOR VOTE WITHHELD FOR AGAINST ABSTAIN
/ / / / / / / / / /
__________________________________
3. The approval of the amendment to the 4. The ratification of KPMG Peat
Certificate of Incorporation of Haven Bancorp, Marwick LLP as independent auditors of Haven
Inc. to increase the number of shares of common Bancorp, Inc. for the fiscal year ending
stock the Company is authorized to issue December 31, 1998
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
/ / / / / / / / / / / /
</TABLE>
The undersigned acknowledges receipt from
the Company prior to the execution of this
[GRAPHIC OMITTED] proxy of a Notice of Annual Meeting of
Stockholders and of a Proxy Statement dated
March 18, 1998 and of the Annual Report to
Stockholders.
Please sign exactly as name appears on this
card. When signing as attorney, executor,
administrator, trustee or guardian, please
give full title. If shares are held jointly,
each holder may sign but only one signature
is required.
Date:---------------------------, 1998
-----------------------------------------
(Signature)
-----------------------------------------
(Signature if held jointly)
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
