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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
Astoria Financial Corporation
----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO] [LETTERHEAD]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 19, 1999
The Annual Meeting of Shareholders of Astoria Financial Corporation will be
held on Wednesday, May 19, 1999, at 9:30 a.m., Eastern time, at the New Hyde
Park Inn, 214 Jericho Turnpike, New Hyde Park, New York 11040. The meeting will
be held to consider and act upon the following matters:
1. The election of five directors for terms of three years each;
2. The approval of the 1999 Stock Option Plan For Officers and Employees of
Astoria Financial Corporation;
3. The approval of the 1999 Stock Option Plan For Outside Directors of
Astoria Financial Corporation;
4. The approval of the Astoria Financial Corporation Executive Officer
Annual Incentive Plan;
5. The ratification of the appointment of independent auditors; and
6. Such other matters as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
Holders of record of Astoria Financial Corporation common stock, as of the
close of business on March 23, 1999, are entitled to notice of and to vote at
the Annual Meeting and any adjournment or postponement thereof. A list of
shareholders entitled to vote at the Annual Meeting will be available at the
meeting, and at Astoria Financial Corporation, One Astoria Federal Plaza, Lake
Success, New York 11042 and at Astoria Federal Savings and Loan Association,
Mortgage Center, 2000 Marcus Avenue, New Hyde Park, New York 11042 for a period
of ten days prior to the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE AS SOON AS
POSSIBLE.
By Order of the Board of Directors,
/s/ William K. Sheerin
William K. Sheerin
Executive Vice President & Secretary
Dated: April 9, 1999
<PAGE>
ASTORIA FINANCIAL CORPORATION
One Astoria Federal Plaza
Lake Success, New York 11042-1085
---------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
May 19, 1999
---------------------------------
General Information
This Proxy Statement and the accompanying proxy card are being furnished to
holders of Astoria Financial Corporation ("AFC") common stock in connection with
the solicitation of proxies by the Board of Directors of AFC (the "Board") for
use at the AFC Annual Meeting of Shareholders to be held on May 19, 1999, and at
any adjournment or postponement thereof (the "Annual Meeting"). The Annual
Meeting will be held at 9:30 a.m., Eastern time, at the New Hyde Park Inn, 214
Jericho Turnpike, New Hyde Park, New York 11040. Only holders of record of AFC's
issued and outstanding common stock, par value $0.01 per share ("AFC Common
Stock"), as of the close of business on March 23, 1999 (the "Record Date") are
entitled to vote at the Annual Meeting. The 1998 Annual Report and Form 10-K,
including the consolidated financial statements of AFC for the fiscal year ended
December 31, 1998, accompanies this Proxy Statement and the proxy card which are
first being mailed or given to shareholders of record on or about April 9, 1999.
Voting and Quorum Requirements
As of the Record Date, there were 55,227,552 shares of AFC Common Stock
issued and outstanding and entitled to vote at the Annual Meeting. Each share of
AFC Common Stock outstanding on the Record Date entitles the holder thereof to
one vote on each matter to properly come before the Annual Meeting, except as
described below. The presence, either in person or by proxy, of the holders of a
majority of all of the shares of AFC Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Annual Meeting.
The election of directors shall be by a plurality of votes cast by the
holders of AFC Common Stock present, in person or by proxy, and entitled to vote
thereon. Holders of AFC Common Stock may not vote their shares cumulatively with
respect to the election of directors. The approval of the 1999 Stock Option Plan
For Officers and Employees of Astoria Financial Corporation (the "1999 Officer
Option Plan"), the approval of the 1999 Stock Option Plan For Outside Directors
of Astoria Financial Corporation (the "1999 Director Option Plan"), the approval
of the Astoria Financial Corporation Executive Officer Annual Incentive Plan
(the "Executive Incentive Plan"), the ratification of the appointment of
independent auditors and any other matters as may properly come before the
Annual Meeting each requires the affirmative vote of a majority of the votes
cast by the holders of AFC Common Stock present, in person or by proxy, and
entitled to vote thereon.
Shares of AFC Common Stock as to which the "ABSTAIN" box has been selected
on the proxy card, with respect to the approval of the 1999 Officer Option Plan,
the approval of the 1999 Director Option Plan, the approval of the Executive
Incentive Plan and the ratification of the appointment of KPMG LLP as
independent auditors for AFC, will be counted as present and entitled to vote
and will have the effect of a vote against the proposal so indicated. In
contrast, shares of AFC Common Stock underlying broker non-votes will not be
counted as present and entitled to vote and will have no effect on the vote on
each matter presented.
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Every properly executed proxy that is timely received by AFC will be voted
in accordance with the instructions contained therein unless otherwise revoked.
Properly executed unmarked proxies will be voted FOR the election of the Board's
nominees as directors, FOR the approval of the 1999 Officer Option Plan, FOR the
approval of the 1999 Director Option Plan, FOR the approval of the Executive
Incentive Plan, and FOR the ratification of the appointment of independent
auditors. If you are a shareholder whose shares are not registered in your own
name, you will need an assignment of voting rights from the shareholder of
record to vote personally at the Annual Meeting.
Pursuant to the Certificate of Incorporation of AFC, no record shareholder
of AFC Common Stock which is beneficially owned, directly or indirectly, by a
shareholder who as of the Record Date beneficially owns more than ten percent
(10%) of AFC Common Stock outstanding on such date will be entitled or permitted
to vote any shares of AFC Common Stock in excess of ten percent (10%) of AFC
Common Stock outstanding as of the Record Date. For purposes of this limitation,
neither the Astoria Federal Savings and Loan Association ("Association")
Employee Stock Ownership Plan (the "ESOP"), The Long Island Savings Bank, FSB
("LISB") Employee Stock Ownership Plan ("LISB ESOP") nor the trustees of such
plans are considered the beneficial owner of the AFC Common Stock held by the
ESOP or the LISB ESOP.
Revocation of Proxies
Any shareholder who executes a proxy has the right to revoke it at any
time before it is voted. A proxy may be revoked by delivering to the Secretary
of AFC, at its principal office, either a written revocation or a proxy, duly
executed, bearing a later date, or by attending the Annual Meeting and voting in
person.
Interest of Management in the Outcome of Certain Proposals
The Board of AFC is seeking shareholder approval of the 1999 Officer Option
Plan and the 1999 Director Option Plan. If approved, these plans will authorize
the grant of additional stock options to eligible employees and outside
directors, respectively. The Board is also seeking shareholder approval of the
Executive Incentive Plan which would authorize the payment of annual performance
based compensation to eligible executives. Because these plans relate to
compensation opportunities of the directors and executive officers of AFC, each
of them may be deemed to have a personal financial interest in the outcome of
the shareholder vote.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information, as of the Record Date,
with respect to the beneficial ownership of AFC Common Stock by each person or
group of persons, as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), known to AFC to be the beneficial
owner of more than 5% of AFC voting stock. For purposes of the Annual Meeting,
the AFC Common Stock is the only AFC voting stock outstanding.
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<PAGE>
<TABLE>
Amount and Nature of Percent of
Title of Class Name & Address of Beneficial Owner Beneficial Ownership Class
- -------------- ---------------------------------- -------------------- ----------
<S> <C> <C> <C>
Common J. P. Morgan & Co., Inc. 5,041,142 (1) 9.1
60 Wall Street
New York, New York 10260
Common FMR Corp. 3,720,575 (2) 6.7
82 Devonshire Street
Boston, Massachusetts 02109
Common State Street Bank and Trust Company, Trustee 2,802,510 (3) 5.1
225 Franklin Street
Boston, Massachusetts 02110
</TABLE>
- -------------------
(1) According to a filing on Schedule 13G filed as of February 22, 1999, J. P.
Morgan & Co., Inc. ("J.P. Morgan") holds in the aggregate 3,612,148 shares
of AFC Common Stock as to which J. P. Morgan has sole voting power, 7,820
shares of AFC Common Stock as to which J. P. Morgan has shared voting power,
5,032,822 shares of AFC Common Stock as to which J. P. Morgan has sole
dispositive power and 7,820 shares of AFC Common Stock as to which J. P.
Morgan has shared dispositive power.
(2) According to a filing on Schedule 13G dated February 16, 1999, Edward C.
Johnson 3d and Abigail P. Johnson own 12.0% and 24.5%, respectively, of the
outstanding voting common stock of FMR Corp. Mr. Johnson is Chairman and Ms.
Johnson is a director of FMR Corp. The members of the Johnson family may be
deemed to form a controlling group with respect to FMR Corp. Fidelity
Management & Research Company, a wholly owned subsidiary of FMR Corp. and an
investment advisor registered under Section 203 of the Investment Advisors
Act of 1940, as amended, is the beneficial owner of 2,765,100 shares of AFC
Common Stock as a result of acting as investment advisor to various
investment companies registered under Section 8 of the Investment Company
Act of 1940. Mr. Johnson and FMR each claim sole dispositive power with
respect to such shares of AFC Common Stock. Fidelity Management Trust
Company, a wholly owned subsidiary of FMR Corp., is the beneficial owner of
854,275 shares of AFC Common Stock. Edward C. Johnson 3d and FMR Corp.,
through their control of Fidelity Management Trust Company, each claim sole
dispositive power over 854,275 shares of AFC Common Stock and sole power to
direct the voting of 713,230 shares, and no power to vote or direct the
voting of 141,045 shares of AFC Common Stock owned by institutional
account(s). Fidelity International Limited ("FIL") is a Bermudian joint
stock company, 39.89% of the voting stock of which is held by Mr. Johnson
and members of his family. FIL claims sole voting and dispositive power as
to 101,200 shares of AFC Common Stock.
(3) State Street Bank and Trust Company ("State Street") is the trustee of the
ESOP, which is administered by the ESOP Committee consisting of four (4)
officers of the Association, one of whom is an executive officer of AFC. As
of December 31, 1998, State Street held 2,518,105 shares of AFC Common Stock
for the benefit of the participants of the ESOP. Under the terms of the
ESOP, the Trustee votes the shares held by the ESOP Trust based upon
directions received from the participants as "named fiduciaries" in the
ESOP. As of December 31, 1998, approximately 1,028,048 shares of AFC Common
Stock were allocated to participants in the ESOP. For voting purposes, each
participant as a "named fiduciary" will be eligible to direct the Trustee
how to vote at the Annual Meeting as to the number of shares of AFC Common
Stock which have been allocated to his or her account under the ESOP. The
remaining unallocated shares and any allocated shares with respect to which
no voting instructions have been received, will be voted by the Trustee at
the Annual Meeting in the same manner and proportion as the allocated
shares, with respect to which voting instructions have been received, so
long as such vote is in accordance with the provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Due to the
requirements of ERISA, the Trustee is deemed to have shared voting power as
to all shares held in the ESOP Trust. According to a filing on Schedule 13G
dated February 8, 1999, as of December 31, 19 98, State Street holds in the
aggregate 279,960 shares of AFC Common Stock as to which State Street has
sole voting power, 2,518,105 shares of AFC Common Stock as to which State
Street has shared voting power, 283,505 shares of AFC Common Stock as to
which State Street has sole dispositive power and 2,519,005 shares of AFC
Common Stock as to which State Street has shared dispositive power.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board consists of fifteen directors divided into three classes of five
directors each. Upon election by the shareholders, the directors of each class
serve for a term of three years, with the directors of one class elected each
year.
In all cases, directors serve until their respective successors are duly
elected and qualified. Pursuant to the Bylaws of AFC, no person is eligible for
election or appointment as a director who is seventy-five (75) years of age or
older, and no person shall continue to serve as a director after the regular
Board meeting immediately preceding his
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seventy-fifth (75th) birthday. Mr. Bolton will reach mandatory retirement age
following the regular board meeting held in June 1999. Effective upon his
retirement, the Board has reduced its number to fourteen.
The directors whose terms expire at the Annual Meeting are George L.
Engelke, Jr., Robert J. Conway, Peter C. Haeffner, Jr., Ralph F. Palleschi and
Leo J. Waters. Each of these directors (singularly the "Board Nominee" and
collectively the "Board Nominees") has been nominated by the Board to stand for
reelection, and, if elected, to serve for a term expiring at the annual meeting
of shareholders of AFC to be held in 2002. Each Board Nominee has consented to
being named in this Proxy Statement and to serve if elected.
If any Board Nominee should refuse or be unable to serve, the proxies will
be voted for such person as shall be designated by the Board to replace such
nominee. The Board presently has no knowledge that any of the Board Nominees
will refuse or be unable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD NOMINEES FOR
---------------------------
ELECTION AS DIRECTORS OF AFC FOR TERMS OF THREE YEARS EACH.
Board Nominees, Directors and Executive Officers
The following table sets forth certain information regarding the Board
Nominees for election and members of the Board.
<TABLE>
<CAPTION>
Name Age (1) Positions Held with AFC (2) Director Since Term Expires
- ---- ------- --------------------------- -------------- ------------
<S> <C> <C> <C> <C>
George L. Engelke, Jr. 60 Director, Chairman of the Board, President, 1993 1999
Chief Executive Officer and Nominee
John J. Conefry, Jr. 54 Director and Vice Chairman 1998 2001
Gerard C. Keegan 52 Director, Vice Chairman and Chief 1997 2000
Administrative Officer
Robert G. Bolton 74 Director 1993 2001 (3)
Andrew M. Burger 64 Director 1993 2000
Denis J. Connors 57 Director 1993 2000
Robert J. Conway 63 Director and Nominee 1998 1999
Thomas J. Donahue 58 Director 1993 2000
William J. Fendt 73 Director 1993 2001
Peter C. Haeffner, Jr. 60 Director and Nominee 1997 1999
Ralph F. Palleschi 52 Director and Nominee 1996 1999
Lawrence W. Peters 69 Director and Consultant 1998 2001
Thomas V. Powderly 61 Director 1995 2001
Leo J. Waters 64 Director and Nominee 1998 1999
Donald D. Wenk 68 Director 1998 2000
</TABLE>
- -----------------------
(1) As of the Record Date.
(2) All directors of AFC also serve as directors of the Association.
(3) Mr. Bolton will reach mandatory retirement age following the regular board
meeting held in June 1999. Effective upon his retirement, the Board has
reduced its number to fourteen.
The following table sets forth certain information regarding the non-
director executive officers of AFC.
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<TABLE>
<CAPTION>
Name Age (1) Positions Held With AFC
---- ------ -----------------------
<S> <C> <C>
Thomas W. Drennan 54 Executive Vice President
Alan P. Eggleston 45 Executive Vice President, Assistant Secretary &
General
Arnold K. Greenberg 58 Counsel
Monte N. Redman 48 Executive Vice President & Assistant Secretary
William K. Sheerin 63 Executive Vice President & Chief Financial Officer
Executive Vice President & Secretary
</TABLE>
- ---------------------------
(1) As of the Record Date.
All executive officers of AFC are elected annually and serve until their
respective successors have been chosen, subject to their removal as officers at
any time by the affirmative vote of a majority of the authorized number of
directors then constituting the Board. See "Executive Compensation - Employment
Agreements."
Biographical Information
The following is a brief description of the business experience of the
directors, Board Nominees and executive officers for at least the past five
years and their respective directorships, if any, with other public companies
that are subject to the reporting requirements of the Exchange Act.
Directors and Board Nominees
George L. Engelke, Jr. has been President, Chief Executive Officer and a
director of AFC since its formation in 1993. He has served as Chairman of the
Board and Chairman of the Board of Directors of the Association since April
1997. A certified public accountant, he joined the Association in 1971 as Vice
President and Treasurer. He was named Executive Vice President and Treasurer in
1974, Chief Operating Officer in 1986 and President and Chief Executive
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Officer in 1989. He has served as a director of the Association since 1983. Mr.
Engelke serves as a director of the Community Preservation Corporation and the
Advisory Board of Neighborhood Housing Services of New York City, Inc. He is a
director of the Federal Home Loan Bank of New York and a member of the Thrift
Institutions Advisory Panel to the Federal Reserve Bank of New York. He is a
past Chairman and currently a director of the Community Bankers Association of
New York State and a member of the Government Affairs Steering Committee, the
Government Affairs Council and a former director of America's Community Bankers.
Mr. Engelke previously served as a member of the Financial Accounting Standards
Advisory Council.
John J. Conefry, Jr. has served as Vice Chairman of AFC since September 30,
1998 when he joined AFC following the acquisition of Long Island Bancorp, Inc.
("LIB") and the merger of LIB and its wholly owned subsidiary, LISB, with and
into AFC and the Association, respectively (the "LISB Acquisition"). Prior to
joining AFC, Mr. Conefry served as Chief Executive Officer of LIB and LISB from
1993 through the consummation of the LISB Acquisition. He was named President of
LIB and LISB in 1996. Mr. Conefry served as a director of LISB from 1980 and of
LIB since 1993. He served as Chairman of the Board of Directors of LIB from 1993
and of LISB from 1994. Prior to joining LISB in 1993, Mr. Conefry was employed
by Merrill Lynch, Pierce, Fenner & Smith, Inc., where he served as a Senior Vice
President from 1981 to 1993. Prior to that, he was a partner in the public
accounting firm of Deloitte Haskins & Sells, the predecessor of Deloitte &
Touche LLP. Mr. Conefry also serves on a number of boards of not-for-profit
organizations.
Gerard C. Keegan has been Vice Chairman and Chief Administrative Officer of
AFC and the Association since September 30, 1997 when he joined AFC following
the acquisition of The Greater New York Savings Bank ("The Greater") and its
merger with and into the Association ("The Greater Acquisition"). Prior to
joining AFC, Mr. Keegan served from 1991 to 1997 as Chairman, President and
Chief Executive Officer of The Greater. From 1988 to 1991, he served as
President and Chief Operating Officer of The Greater. He served as a director of
The Greater from 1988 to 1997.
Robert G. Bolton, in 1989, retired from his position as Vice President of
the Association. Prior to his service with the Association, Mr. Bolton was Chief
Executive Officer of Oneonta Federal Savings and Loan Association, which was
acquired by the Association in 1988. He has served as a director of the
Association since 1988.
Andrew M. Burger is President of Atlantic Iron Works, Inc., a steel
fabricating company located in Long Island City, New York. He has served as a
director of the Association since 1975.
Denis J. Connors is the former Chairman and Chief Executive Officer of
Curran & Connors, Inc., a designer and publisher of annual reports. He has
served as a director of the Association since 1990.
Robert J. Conway has been a director of AFC since September 30, 1998,
following completion of the LISB Acquisition. Prior to the LISB Acquisition, he
served as a director of LIB since 1993. He became a director of LISB in 1983.
Mr. Conway was employed by AMF Bowling, Inc. for 29 years. His last position
with AMF Bowling, Inc. was Corporate Vice President and Group Executive of the
Worldwide Bowling Products Group. He has worked as a professional equities
trader.
Thomas J. Donahue, a certified public accountant, retired as a partner of
Peat, Marwick, Mitchell & Co., the predecessor of KPMG LLP, in 1986. Following
his retirement and prior to becoming a director of the Association, Mr. Donahue
served as president and a director of other savings institutions from 1987 to
1990. Presently, Mr. Donahue is self-employed as a financial consultant. He has
served as a director of the Association since 1990.
William J. Fendt is a retired executive of New York Telephone Company, a
predecessor of Bell Atlantic Corporation. He has served as a director of the
Association since 1976.
Peter C. Haeffner, Jr. is Senior Director, Financial Services Group, of
Cushman & Wakefield, Inc., a real
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estate firm. Mr. Haeffner served as Senior Managing Director, Financial Services
Group, Corporate Advisory and Finance Division of Cushman & Wakefield, Inc. from
December 1997 to December 1998 and as its Eastern Regional Director, Financial
Services Group from May 1994 to December 1997. Previously, Mr. Haeffner was
President and Managing Director of Sonnenblick-Goldman Company, a real estate
firm, for eight years. Mr. Haeffner also serves as a director of Stewart Title
Insurance Company of New York and of World Mae Association LLC, a global
mortgage banking firm. Mr. Haeffner served as a director of The Greater from
1992 to 1997.
Ralph F. Palleschi, a certified public accountant, co-founded, in 1983,
First Long Island Investors, Inc., a registered investment advisor pursuant to
the Investment Advisors Act of 1940, as amended, and a registered broker/dealer
with the National Association of Securities Dealers, Inc. He continues to serve
as a director and is Executive Vice President and Chief Financial Officer of
such company. He has also served from 1993 to 1997 as Chief Operating Officer of
the New York Islanders hockey team. From 1977 to 1983, he served as Vice
President - Finance and Chief Financial Officer of Entenmann's Inc., a publicly
traded food products company. From 1968 to 1977, he was employed by Peat,
Marwick, Mitchell & Co., the predecessor of KPMG LLP.
Lawrence W. Peters has been a director and consultant to AFC since
September 30, 1998, following the completion of the LISB Acquisition. Prior to
the LISB Acquisition, he served as a director of LIB since 1993. He joined LISB
in 1989 as a Senior Executive Vice President and Chief Lending Officer. Mr.
Peters retired from his management position with LISB in 1995 and rejoined LIB
and LISB as President and Chief Operating Officer in 1997. Prior to initially
joining LISB, Mr. Peters was employed by The Dime Savings Bank of New York,
F.S.B. as Vice Chairman and a director, and was in charge of all lending
functions.
Thomas V. Powderly served in a variety of capacities with Fidelity New
York, F.S.B. ("Fidelity") prior to its acquisition by the Association following
the close of business on January 31, 1995 ( the "Fidelity Acquisition"). From
1986 to 1990, he served as Executive Vice President. In 1990, he was appointed
President and Chief Operating Officer and in 1992 was named Chief Executive
Officer. He was named Chairman of the Board of Directors of Fidelity in 1993.
From 1993 until January, 1995, he served as Chairman and Chief Executive
Officer. Prior to 1986, Mr. Powderly held positions with Edward S. Gordon, Inc.,
a commercial real estate brokerage and management firm, and with several thrift
institutions.
Leo J. Waters has been a director of AFC since September 30, 1998,
following completion of the LISB Acquisition. Prior to the LISB Acquisition, he
served as a director of LIB since 1993. He became a director of LISB in 1990.
Mr. Waters is the President of a private investment consulting firm.
Donald D. Wenk has been a director of AFC since September 30, 1998,
following completion of the LISB Acquisition. Prior to the LISB Acquisition, he
served as a director of LIB since 1993. He became a director of LISB in 1974.
From 1992 until 1994, Mr. Wenk served as Chairman of the Board of Directors of
LISB. From 1994 until 1996, Mr. Wenk served as Chairman of the Executive
Committee of the Boards of Directors of LIB and LISB. He is the Chairman of the
Board of Directors of American Casting & Manufacturing Corporation.
Executive Officers Who Are Not Directors
Thomas W. Drennan, a certified public accountant, has served as Executive
Vice President of AFC since December 1997 and as Senior Vice President from its
formation in 1993 to 1997. He is the senior lending officer of the Association.
He joined the Association in 1986 as Senior Vice President, Mortgage Services.
Alan P. Eggleston has served as Executive Vice President and General
Counsel of AFC since December 1997. He served as Senior Vice President and
General Counsel of AFC from 1995 to 1997. He joined the Association in 1993 as
Vice President and General Counsel. In 1994, he was named Vice President and
General Counsel of AFC. In 1995, he became First Vice President and General
Counsel of AFC and the Association. Prior to joining the Association, he served
as an executive officer and counsel to several thrift institutions.
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<PAGE>
Arnold K. Greenberg has served as Executive Vice President of AFC since
December 1997, as Senior Vice President from its formation in 1993 to 1997. He
is responsible for banking office and retail operations of the Association. He
joined the Association in 1975 as Vice President and was appointed Senior Vice
President in 1979 and as Executive Vice President in 1997. In 1986, Mr.
Greenberg became Senior Vice President, Administration and Operations, and in
January of 1993, Senior Vice President, Consumer Services.
Monte N. Redman has served as Executive Vice President and Chief Financial
Officer of AFC since December 1997. He served as Senior Vice President,
Treasurer and Chief Financial Officer of AFC from its formation in 1993 to 1997.
He joined the Association in 1977. In 1979, he was named Assistant Controller,
and, in 1982, Assistant Vice President. Mr. Redman became Vice President,
Investment Officer in 1985, in 1989 was appointed Senior Vice President,
Treasurer and Chief Financial Officer and, in 1997 was appointed Executive Vice
President and Chief Financial Officer.
William K. Sheerin has served as Executive Vice President and Secretary of
AFC since December 1997. He served as Senior Vice President and Secretary of AFC
from its formation in 1993 to 1997. He is responsible for the human resources,
auditing, general services, facilities and security functions. He joined the
Association in 1956. He was named Assistant Treasurer and promoted to Branch
Manager in 1966. In 1974, he was promoted to Secretary and head of Savings
Operations. In 1979, he was named Vice President and, in 1986, he was appointed
Senior Vice President, Consumer Services. In 1993, Mr. Sheerin became Senior
Vice President, Administrative Services, and in 1997 became Executive Vice
President and Secretary.
Committees and Meetings of the Board
The Board meets on a monthly basis and may have additional special meetings
upon the request of the Chairman, President and Chief Executive Officer or any
three (3) members of the Board. During the fiscal year ended December 31, 1998,
the Board met fifteen (15) times. No director attended less than 75% of the
total number of meetings held by the Board and its committees on which such
director served. The Board has established three (3) standing committees.
The Compensation Committee of AFC consists of Mr. Fendt, as Chairman, and
Messrs. Burger, Connors, Donahue and Palleschi. Mr. Engelke serves ex officio as
a non-voting member of the Compensation Committee. The function of the
Compensation Committee is to review the performance and compensation of the
officers of AFC, make recommendations to the Board with respect thereto and
administer the Astoria Financial Corporation 1993 Incentive Stock Option Plan
(the "Incentive Option Plan")and the 1996 Stock Option Plan for Officers and
Employees of Astoria Financial Corporation (the "1996 Officer Option Plan")
including the granting of options pursuant thereto, and the 1996 Stock Option
Plan for Outside Directors of Astoria Financial Corporation (the "1996 Director
Option Plan"). This committee meets as needed and met three (3) times during
1998.
The Nominating Committee currently consists of Messrs. Bolton, Fendt and
Powderly. The purpose of this committee is to recommend to the Board nominees
for election to the Board with respect to those directorships which become
vacant or whose terms expire at the next annual meeting of shareholders, to
review any nominations for election to the Board made by any shareholder of AFC
and to determine compliance with the provisions of the Bylaws of AFC applicable
thereto. See "Additional Information - 'Shareholders Proposals' and 'Notice of
Business to be Conducted at an Annual Meeting' ." The committee meets as needed
and met one (1) time during 1998.
The Audit Committee consists of Mr. Donahue, as Chairman, and Messrs.
Burger, Connors, Fendt, Haeffner and Powderly. The purpose of this committee is
to meet with the independent and internal auditors of AFC and the Association
and review the plans and reports of such auditors. This committee meets, at a
minimum, on a quarterly basis, and met four (4) times during 1998.
There is no family relationship between any director, any Board Nominee,
any officer or any significant
8
<PAGE>
employee of AFC, except that Mr. Connors' spouse is the first cousin of Mr.
Sheerin and Mr. Conefry's spouse is the niece of the sister-in-law of Mr.
Conway.
Transactions with Certain Related Persons
It is the policy of AFC and the Association that all transactions,
including loans, between AFC or the Association and its directors, executive
officers, members of their families, holders of 10% or more of the shares of any
class of its common stock, and affiliates thereof, will be made in the ordinary
course of AFC's and the Association's business and contain terms no less
favorable to AFC or the Association than could have been obtained in arms-length
negotiations with unaffiliated persons and will be approved by a majority of
independent outside directors of AFC or the Association, respectively, not
having any interest in the transaction or, as allowed by law, are benefits
provided generally to all full time employees of the Association on a
nondiscriminatory basis and such benefits have been similarly approved by the
Board. Loans may not involve more than the normal risk of collection or present
other unfavorable features. All loans outstanding to the directors, Board
Nominees or executive officers of AFC or members of their immediate families
were made in conformity with the Association's policy in this regard and have
not been disclosed as non-accrual, past due, restructured or potential problem
loans.
Effective following the close of business on September 30, 1998, AFC
completed the LISB Acquisition. AFC agreed, in connection therewith, that upon
completion of the LISB Acquisition and in accordance with the terms thereof, Mr.
John J. Conefry, Jr. would be employed by AFC as Vice Chairman, Mr. Lawrence W.
Peters would be retained by AFC as a consultant and Messrs. Conefry, Conway,
Peters, Waters and Wenk would be elected as directors of AFC and the Association
by the Board and the Board of Directors of the Association, respectively.
Effective after the close of business on September 30, 1997, AFC completed The
Greater Acquisition. AFC agreed, in connection therewith, that upon completion
of The Greater Acquisition and in accordance with the terms thereof, Mr. Gerard
C. Keegan would be employed by AFC and the Association as Vice Chairman and
Chief Administrative Officer and Messrs. Keegan and Haeffner would be elected as
directors of AFC and the Association by the Board and the Board of Directors of
the Association, respectively.
AFC has entered into an employment agreement with Mr. Conefry to serve as
Vice Chairman and as a director of AFC, which agreement has an initial term of
three years. The agreement provides for Mr. Conefry to serve at an initial
minimum annual salary of $700,000, subject to annual review and adjustment by
the Board, which in any case shall be maintained at a level equal to at least
80% of the annual base salary paid to the Chief Executive Officer of AFC and to
receive a grant of an option to acquire 25,000 shares of AFC Common Stock
pursuant to the 1996 Officer Option Plan and an award of 10,000 shares of AFC
Common Stock pursuant to the Association Recognition and Retention Plan for
Officers and Employees (the "Officer RRP"). The agreement further provides that
future option grants and incentive awards, if any, shall be maintained at a
level equal to at least 80% of the grants or awards made to the Chief Executive
Officer of AFC.
AFC has entered into a consulting agreement with Mr. Peters to facilitate a
smooth transition of LIB and LISB with and into AFC and the Association,
respectively. The agreement has an initial term of one year and provides for
compensation of $500,000.
In connection with the LISB Acquisition, AFC agreed to honor all existing
employment, severance and other compensation agreements and arrangements,
including employment agreements, as previously amended, between LIB and LISB and
Mr. Conefry and Mr. Peters. Pursuant to the terms of the LISB Acquisition, AFC
paid to Messrs. Conefry and Peters $4,610,249 and $2,276,513, respectively, in
settlement of their respective employment agreements with LIB and LISB and
certain related rights and benefits.
Pursuant to the LISB Acquisition agreement, AFC also agreed to convert all
options to acquire LIB's common stock outstanding as of the closing date of the
LISB Acquisition into options to purchase shares of AFC Common Stock. Based upon
this agreement, AFC, upon completion of the LISB Acquisition, granted to Messrs.
Conefry, Conway,
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<PAGE>
Peters, Waters and Wenk, in satisfaction of their outstanding options to acquire
LIB's common stock, options to purchase 350,494 shares, 63,087 shares, 23,001
shares, 33,807 shares and 33,211 shares, respectively, of AFC Common Stock with
weighted average exercise prices equal to $11.89, $10.82, $38.37, $11.52 and
$10.71 per share, respectively. Such options were exercisable upon grant. The
options have various remaining terms, ranging from approximately five to nine
years, that are equal to the remaining terms of the converted options.
As part of the LIB Acquisition, AFC assumed the obligations of LIB and LISB
pursuant to the LIB Non-Employee Directors Retirement Benefit Plan. Pursuant to
the terms of such plan, Messrs. Conway, Waters and Wenk, among others, upon
termination of their service as directors will receive a monthly benefit for a
period of ten years. The aggregate present value of such benefits with respect
to Messrs. Conway, Waters and Wenk is approximately $600,000.
AFC also agreed, for a period of six years following the LISB Acquisition,
to indemnify and hold harmless certain persons, including Messrs. Conefry,
Conway, Peters, Waters and Wenk, (each, an "Indemnified Party"), against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation arising out
of matters existing or occurring at or prior to the LISB Acquisition, and to
advance any such Costs to each Indemnified Party as they are from time to time
incurred, in each case to the fullest extent such Indemnified Party would have
been indemnified as a director or officer of LIB or LISB, as applicable, and as
permitted under then applicable law. In connection with the LISB Acquisition,
AFC also purchased for a period of six years after the LISB Acquisition,
policies of directors' and officers' liability insurance providing the same
coverage and containing terms which are no less advantageous to the
beneficiaries thereof, including Messrs. Conefry, Conway, Peters, Waters and
Wenk, as maintained by LIB and LISB prior to the LISB Acquisition.
For a discussion of the compensation received by directors, Board Nominees
and executive officers, see "Director Compensation" and "Executive
Compensation."
Security Ownership of Management
The following table sets forth certain information concerning the interests
in AFC Common Stock as of the Record Date of each director or Board Nominee of
AFC, each executive officer of AFC named in the Summary Compensation Table and
all directors and executive officers of AFC as a group.
10
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature Percent of
Title of Class Name of Beneficial Owner of Beneficial Ownership (1) Class (2)
- -------------- ------------------------ --------------------------- ----------
<S> <C> <C> <C>
Common George L. Engelke, Jr. 968,816 (3)(17) 1.74
Common John J. Conefry, Jr. 507,787 (4)(17)
Common Gerard C. Keegan 203,922 (5)(17)
Common Robert G. Bolton 59,333 (17)
Common Andrew M. Burger 109,315 (17)
Common Denis J. Connors 121,262 (6)(17)
Common Robert J. Conway 104,472 (17)
Common Thomas J. Donahue 121,966 (7)(17)
Common William J. Fendt 131,474 (17)
Common Peter C. Haeffner, Jr. 14,348 (8)(17)
Common Ralph F. Palleschi 13,000 (17)
Common Lawrence W. Peters 59,340 (9)(17)
Common Thomas V. Powderly 94,512 (10)(17)
Common Leo J. Waters 50,503 (11)(17)
Common Donald D. Wenk 155,623 (12)(17)
Common Monte N. Redman 269,558 (13)(17)
Common Thomas W. Drennan 256,519 (14)(17)
Common Arnold K. Greenberg 460,850 (15)(17)
All directors, Board Nominees and
executive officers as a group
(20 persons) 3,765,520 (16)(17) 6.56
</TABLE>
- --------------------
(1) Except as otherwise indicated, each person listed has sole voting and
investment power with respect to the shares of AFC Common Stock indicated.
(2) Except as otherwise indicated, the percent of class beneficially owned does
not exceed one percent (1.00%).
(3) Included are 239,413 shares of AFC Common Stock as to which Mr. Engelke has
shared voting and investment power, 8,173 shares of AFC Common Stock as to
which he has shared voting and no investment power, and 8,437 shares of AFC
Common Stock as to which he has shared voting and sole investment power.
(4) Included are 4,860 shares of AFC Common Stock as to which Mr. Conefry has
shared voting and investment power, 5,000 shares of AFC Common Stock as to
which he has sole voting and no investment power, 3,490 shares of AFC
Common Stock as to which he has shared voting and no investment power, and
1,332 shares of AFC Common Stock as to which he has shared voting and sole
investment power.
(5) Included are 23,549 shares of AFC Common Stock as to which Mr. Keegan has
shared voting and investment power, 5,000 shares of AFC Common Stock as to
which he has sole voting and no investment power, and 2,372 shares of AFC
Common Stock as to which he has shared voting and no investment power.
(6) Included are 10,000 shares of AFC Common Stock as to which Mr. Connors has
shared voting and investment power.
(7) Included are 24,813 shares of AFC Common Stock as to which Mr. Donahue has
shared voting and investment power.
(8) Included are 200 shares of AFC Common Stock as to which Mr. Haeffner has
shared voting and investment power.
(9) Included are 2,514 shares of AFC Common Stock as to which Mr. Peters has
shared voting and no investment power.
(10) Included are 6,784 shares of AFC Common Stock as to which Mr. Powderly has
shared voting and investment power.
(11) Included are 285 shares of AFC Common Stock as to which Mr. Waters has
shared voting and investment power.
(12) Included are 1,150 shares of AFC Common Stock as to which Mr. Wenk has
shared voting and investment power.
(13) Included are 825 shares of AFC Common Stock as to which Mr. Redman has
shared voting and investment power, 8,173 shares of AFC Common Stock as to
which he has shared voting and no investment power, and 8,875 shares of AFC
Common Stock as to which he has shared voting and sole investment power.
(14) Included are 55,347 shares of AFC Common Stock as to which Mr. Drennan has
shared voting and investment power, 8,173 shares of AFC Common Stock as to
which he has shared voting and no investment power, and 9,986 shares of AFC
Common Stock as to which he has shared voting and sole investment power.
(15) Included are 237,614 shares of AFC Common Stock as to which Mr. Greenberg
has shared voting and investment power, 8,173 shares of AFC Common Stock as
to which he has shared voting and no investment power, and 12,865 shares of
AFC Common Stock as to which he has shared voting and sole investment
power.
(16) Included are 398,955 shares of AFC Common Stock as to which directors,
Board Nominees and executive officers, as a group, have shared voting and
investment power, 10,000 shares of AFC Common Stock as to which they have
sole voting and no investment power, 55,295 shares of AFC Common Stock as
to which they have shared voting and no investment power, and 56,698 shares
of AFC Common Stock as to which they have shared voting and sole investment
power.
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<PAGE>
(17) Included are shares of AFC Common Stock which could be acquired within 60
days of the Record Date pursuant to options to acquire AFC Common Stock as
follows: Mr. Engelke (486,100 shares), Mr. Conefry (374,917 shares), Mr.
Keegan (139,750 shares), Mr. Bolton (34,314 shares), Mr. Burger (84,314
shares), Mr. Connors (74,314 shares), Mr. Conway (69,087 shares), Mr.
Donahue (84,314 shares), Mr. Fendt (64,314 shares), Mr. Haeffner (8,000
shares), Mr. Palleschi (10,000 shares), Mr. Peters (29,001 shares), Mr.
Powderly (70,132 shares), Mr. Waters (39,807 shares), Mr. Wenk (97,911
shares), Mr. Redman (150,282 shares), Mr. Drennan (120,282 shares), Mr.
Greenberg (71,614 shares) and all directors, Board Nominees and executive
officers as a group (2,126,658 shares).
Director Compensation
Directors' and Other Fee Arrangements
All non-employee directors of AFC receive an annual retainer of $15,000. No
additional fees for attendance at Board or committee meetings are paid. All
members of the Board also serve as directors of the Association. All non-
employee directors of the Association receive an annual retainer of $30,000. No
additional fees for attendance at Association Board of Directors or committee
meetings are paid.
Directors' Option Plans
AFC maintains the AFC 1993 Stock Option Plan for Outside Directors (the
"1993 Directors Option Plan"), which has remained frozen by the Board since
1996, and the 1996 Director Option Plan pursuant to which non-employee directors
of AFC and the Association are granted options on terms previously approved by
the shareholders of AFC.
Pursuant to the 1996 Director Option Plan, each person who becomes a non-
employee director of AFC or the Association after May 15, 1996 is granted, on
the 15th day of the month following the month in which he becomes a non-employee
director, an option to purchase 4,000 shares of AFC Common Stock at an exercise
price per share equal to the closing bid quotation for AFC Common Stock on The
Nasdaq Stock Market on the date of grant. In addition, on January 15th of each
succeeding year, each person who is then a non-employee director receives a
grant of an option to purchase an additional 2,000 shares of AFC Common Stock at
an exercise price per share equal to the closing bid quotation for AFC Common
Stock on The Nasdaq Stock Market on the date of grant. All options granted
pursuant to the 1996 Director Option Plan vest and become exercisable upon
grant.
All options granted under the 1993 Directors Option Plan or the 1996
Director Option Plan expire upon the earlier of 10 years following the date of
grant or one year following the date the director ceases to be a director for
any reason other than removal for cause, in which case the director's options
immediately terminate.
Directors' Retirement Plan
This plan provides retirement benefits for directors, who are not and have
not been employees of AFC, the Association or any of their predecessors in
interest, with at least 10 years of service as a director. The annual benefit is
a life annuity payable beginning in the month following termination of service
as a director or attainment of age 65, whichever is later. The annual benefit
amount is equal to 100% of the annualized aggregate rate of fees paid for
service as a non-employee director of AFC or the Association for the last month
of service prior to retirement, reduced by 5% for each year that the director's
years of service is less than 20 years. In the event of a change of control of
AFC or the Association, each director may require the Association or its
successor to pay either (i) a lump sum payment equal to the actuarially
determined present value of the future benefits payable to the director or (ii)
an amount into a grantor trust adequate to fund the benefits as they become due.
In March 1999, AFC and the Association amended this plan to provide that no
director who first joins the Board or the Board of Directors of the Association
after March 1, 1999 will be eligible to participate in the plan.
Directors Deferred Compensation Plan
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<PAGE>
Pursuant to this plan, outside directors of either AFC or the Association
may elect to defer receipt of all or any part of their directors' fees. Deferred
fees are carried on the books of AFC as an unfunded obligation and are credited
with interest quarterly at a rate equal to the average of AFC's consolidated
cost of funds and yield on investments for the preceding quarter, unless the
cost of funds exceeds the yield on investments, in which case the rate is based
upon the preceding quarter's consolidated yield on investments. In the event of
a change of control of AFC or the Association, each participating director may
elect that his fees, with accrued interest, be placed in a grantor trust
established for the benefit of the director, applied to the purchase of an
insurance company annuity contract or be paid directly by AFC or its successor.
Directors' Death Benefit
This plan provides that if a non-employee director dies while in service as
a director of AFC or the Association, the decedent's designated beneficiary will
receive from AFC a payment equal to the decedent's aggregate directors' fees for
the last month of service as a director of AFC and the Association annualized.
If a director leaves the service of AFC and the Association for any reason other
than death, all rights to any benefit under this plan cease.
Executive Compensation
The Report of the Compensation Committee on Executive Compensation and the
Stock Performance Chart shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended (the "Securities Act") or
the Exchange Act, except to the extent that AFC specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
Report of the Compensation Committee on Executive Compensation
Under rules established by the SEC, AFC is required to provide certain data
and information regarding the compensation and benefits provided to AFC's Chief
Executive Officer and certain other executives of AFC. The disclosure
requirements for the Chief Executive Officer and such other executives include
the use of tables and a report explaining the rationale and considerations that
led to fundamental compensation decisions affecting those individuals. In
fulfillment of this requirement, the Compensation Committee of AFC, at the
direction of the Board, has prepared the following report for inclusion in this
proxy statement.
General. The compensation of the executive and other officers of AFC for
fiscal year 1998 was reviewed by the Compensation Committees of AFC and the
Association and ratified by the Boards of Directors of AFC and the Association
in December 1997.
The Compensation Committee of AFC met on three (3) occasions in fiscal
1998. Its activities included granting stock options under the 1996 Officer
Option Plan to, among others, executive officers, ratifying certain actions of
the Association's Compensation Committee relating to payments earned by, among
others, executive officers under the Association Incentive Compensation Plan for
Select Executives (the "Incentive Compensation Plan"), and the establishment of
compensation levels for the executive officers of AFC for fiscal year 1999.
In connection with this 1998 activity and in light of the significant
expansion of AFC's operations as a result of the LISB Acquisition and The
Greater Acquisition, the Compensation Committee retained the services of William
M. Mercer, Inc., and undertook a comprehensive review of the compensation
structure employed by AFC for its executive and senior officers. This review
included both a review of current compensation techniques and practices as well
a peer group review and comparison to determine whether the level of overall and
specific components of compensation were appropriate. The results of this review
indicated that no significant adjustments were needed to the overall structure
and philosophy of executive compensation. Salary levels for executive officers
were determined to be slightly below peers, but not by significant amounts. A
major finding was that short-term incentive compensation
13
<PAGE>
opportunities for AFC's executive officers fell, in most cases, significantly
below AFC's peer group. The review also undertook to determine the appropriate
level of long-term incentives, primarily stock option grants, that would be
appropriate at various officer levels, given the recent expansion of the
Association's officer ranks, since both options and restricted stock awards
granted in AFC's initial public offering would fully vest in January 1999. It
was determined that the level of option grants deemed appropriate would
necessitate the request for shareholder approval of the 1999 Officer Option
Plan.
As a result of this review, AFC is requesting its shareholders at the
Annual Meeting approve the Executive Incentive Plan and the 1999 Officer Option
Plan discussed more fully below.
Executive Compensation Philosophy. The primary objective of the executive
compensation program of AFC and the Association is to attract and retain highly
skilled and motivated executive officers who will manage AFC in a manner to
promote its growth and profitability and advance the interests of its
shareholders. The compensation program is designed to provide levels of
compensation which are competitive and reflective of the organization's
performance in achieving its goals and objectives, both financial and non-
financial, as determined in its business plan. The program aligns the interests
of the executives with those of the shareholders of AFC by providing a
proprietary interest in AFC, the value of which can be significantly enhanced by
the appreciation of AFC Common Stock. The program also seeks to adequately
provide for the needs of the executive upon retirement based upon the length of
service provided to AFC and the Association.
In structuring its executive compensation program, AFC considers the before
and after tax financial impact the program will have on AFC and the Association.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
places a limitation of $1 million on the deductibility by AFC of certain
elements of compensation earned by each of the executives named in the "Summary
Compensation Table" below (individually a "Named Executive" or collectively, the
"Named Executives"). This limitation does not apply to all institutions within
AFC's industry or to all companies from which it would recruit executive
personnel. For 1998, based upon the level and composition of the compensation of
its executive officers, the limitations contained in Section 162(m) of the Code
did not impact the financial condition or results of operations of AFC. AFC is
submitting to its shareholders a proposal at the Annual Meeting to approve the
Executive Incentive Plan in order to maintain the deductibility of payments made
to the Named Executives pursuant to the Executive Incentive Plan. For a
discussion of the terms and conditions of the Executive Incentive Plan, see
Proposal No. 4 below.
The executive compensation program of AFC consists of four (4) elements:
base salary, short-term incentive compensation, long-term incentive compensation
and retirement benefits. The following is a discussion of each of these
components.
Base Salary. Salary levels are designed to be competitive with cash
compensation levels paid to similar executives at banking and thrift
institutions of similar size and standing, giving due consideration to the
marketplace in which AFC and the Association operate. Base salary is considered
in conjunction with the short-term incentive compensation component of the
executive compensation program. Base salary is set at a level to provide a
reasonably competitive level of base compensation even if AFC, due to factors
outside of the control of the executives, fails to meet its minimum threshold
targets such that no awards are made under the short-term incentive component of
the compensation program.
To determine whether or not base salary and short-term incentive
compensation, discussed below, for 1998 were set at levels that were
competitive, the Compensation Committee reviewed a number of sources of
information, including SNL Executive Compensation Review 1997, Thrift
Institutions, and the SNL Executive Compensation Review 1997, Commercial Banks.
Particular emphasis was placed on those institutions that were of similar asset
size and standing to that of AFC.
As a result of their analysis, the Compensation Committees in December 1997
approved, and the Board and
14
<PAGE>
the Board of Directors of the Association ratified, total 1998 base salary
compensation for the then seven (7) executive officers of $2,380,000, compared
to $2,216,250 paid, on an annualized basis, to such officers for 1997. The Chief
Executive Officer initially received an increase of $60,000, from $600,000 to
$660,000, or 10.00%, effective January 1, 1998. In addition, in September 1998,
the Compensation Committee recommended and the Board approved that the
compensation of the Chief Executive Officer be increased, in anticipation of the
closing of the LISB Acquisition to $750,000. No further increase was approved
for the Chief Executive Officer for 1999. The remaining six (6) executive
officers received for 1998 increases averaging 6.42%, ranging from a high of
12.82% to a low of 0.0%. All such increases reflected contributions to the goals
and objectives of AFC and the increased cost of living within the market from
which AFC draws its work force.
Short-term Incentive Compensation. Short-term incentive compensation
consists of awards paid pursuant to the Association's Incentive Compensation
Plan. The Board and Compensation Committee of AFC recognize that the operation
of AFC is substantially affected by the environment in which it operates. It is
expected that its executives will maintain systems in place to monitor that
environment and will take steps to foresee and manage the various risks that
such environment presents. The Board and the Compensation Committee also believe
that to be effective, the attainment of targets established under the short-term
incentive component of the compensation program should be both attainable, yet
challenging.
The Incentive Compensation Plan for 1998 provided for a target incentive
for the Chief Executive Officer equal to forty percent (40%) of his base salary
and, in the case of the other executive officers, excluding Mr. Conefry, equal
to thirty percent (30%) of each executive's base salary. Individual awards to
the Chief Executive Officer are computed based upon AFC's consolidated financial
performance, to the extent of eighty percent (80%) of the award, and an
evaluation of his contribution to and the overall level of achievement of the
goals and objectives of AFC's business plan, to the extent of twenty percent
(20%) of the award. Other executive officers' awards were similarly computed
with AFC's consolidated financial performance comprising seventy-five percent
(75%) of the award and individual performance related to AFC's business plan
comprising twenty-five percent (25%).
The financial performance measurements utilized for 1998 for the financial
performance portion of such awards were as follows: (i) eighty percent (80%) of
the financial performance measure was based upon the diluted earnings per share
of AFC Common Stock; and (ii) twenty percent (20%) was based upon the return on
average assets of AFC. For each of these measurements, a series of achievement
levels was established, with each level assigned a percentage award from zero
percent (0%) up to one hundred percent (100%). The zero percent (0%) award
represented performance below a reasonable threshold level of achievement. If
the range of performance specified for a one hundred percent (100%) award was
exceeded, the executive could be paid an award of up to one hundred fifty
percent (150%) of the financial performance measurement award. The Compensation
Committee of the Association, which administers the plan, has discretion under
the Incentive Compensation Plan to exclude from AFC's financial performance
unusual items of income or loss in determining the actual awards to be granted
and may make additional awards to any employee who has made an unusual and
important contribution outside of the ordinary course of his or her duties.
For fiscal year 1998, AFC's financial performance, after adjustment by the
Compensation Committee, resulted in awards of 87% of target amounts for
financial performance. Executive officers also received 100% of their individual
performance awards.
Long-term Incentive Compensation. The long-term incentive compensation
portion of AFC's and the Association's compensation program consists of the
Officer RRP, the Incentive Option Plan and the 1996 Officer Option Plan. These
plans are designed to provide incentives for long-term positive performance of
the executive officers and to align their financial interests to those of AFC
shareholders by providing the opportunity to participate in AFC Common Stock
price appreciation, if any, which may occur after the date of grant of such
award or option.
The Compensation Committee of the Association administers the Officer RRP,
determines which eligible employees will be granted plan share awards (the "Plan
Share Awards") and grants Plan Share Awards. Officer RRP
15
<PAGE>
Plan Share Awards, which are nontransferable and nonassignable, are granted in
the form of shares of AFC Common Stock and are held in trust until the Plan
Share Awards vest.
Recipients of the Plan Share Awards become vested in the shares of AFC
Common Stock covered by the Plan Share Awards over a period of time. The Plan
Share Awards granted to the Named Executives, excluding Mr. Keegan and Mr.
Conefry, vest in equal installments of twenty percent (20%) on the tenth
business day of January each year, commencing on January 17, 1995. Effective
September 30, 1997, Mr. Keegan was granted a Plan Share Award of 15,000 shares
of AFC Common Stock which vests in three equal annual installments commencing on
January 10, 1998. Effective September 30, 1998, Mr. Conefry was granted a Plan
Share Award of 10,000 shares of AFC Common Stock which will vest in two equal
annual installments commencing on January 10, 1999. Plan Share Awards
immediately vest upon termination of employment due to death, disability or
retirement of the award holder or following a change of control of AFC or the
Association, as defined in the Officer RRP. In the event that an award holder
otherwise terminates employment with AFC or the Association, the award holder's
non-vested awards will be forfeited. See "Executive Compensation - Employment
Agreements" below.
Vested shares are distributed to recipients as soon as practicable
following the vesting date. At such time, the recipients also receive amounts
equal to accumulated dividends with respect to such shares. Prior to vesting,
recipients of Plan Share Awards may direct the voting of shares of AFC Common
Stock granted to them and held in the trust. Shares of AFC Common Stock held by
the Officer RRP trust which have not been awarded are voted by the trustee in
the same proportion as the awarded shares are voted in accordance with the
directions given by the recipients. See the "Summary Compensation Table" below
for description of the Plan Share Awards outstanding to the Named Executives as
of December 31, 1998. See the table above related to the beneficial ownership of
AFC Common Stock by the directors, Board Nominees and executive officers of AFC
and "Executive Compensation - Incentive Option Plans" below for further
information regarding options related to the Named Executives. See also Proposal
No. 2 below regarding approval of the 1999 Officer Option Plan.
Retirement Benefits. Retirement benefits are designed to provide for an
adequate level of income to the executive officer following his or her
retirement from AFC and the Association based upon length of service and to
support the goals and objectives of the rest of the compensation program. The
retirement benefits are provided through the ESOP, the Association Incentive
Savings Plan, the Association Employees' Pension Plan (the "Pension Plan"), the
Association Excess Benefit Plan (the "Excess Plan"), and the Association
Supplemental Benefit Plan (the "Supplemental Plan"). See "Executive Compensation
- - Pension Plans" for a description of the Pension Plan, Excess Plan and
Supplemental Plan which are all defined benefit pension plans.
The Association maintains the ESOP and ESOP Trust for the benefit of the
salaried employees of AFC and the Association. The ESOP provides for the
allocation of shares of AFC Common Stock and other contributions, if any, based
on payments by the Association of a loan made by AFC in 1993 to the ESOP to fund
the acquisition of 2,642,354 shares of AFC Common Stock. As part of the LISB
Acquisition, the Association became the sponsor of the LISB ESOP. The LISB ESOP
also provides for the allocation of shares of AFC Common Stock and other
contributions, if any, based on payments by the Association of a loan made by
AFC, as successor to LIB, in 1994 to the LISB ESOP to fund the acquisition of
2,380,500 shares of AFC Common Stock. Currently all executive officers,
excluding Mr. Conefry, are participants in the ESOP. Mr. Conefry, until such
time as AFC establishes and implements a program of compensation and benefits
designed to cover all similarly situated employees on a uniform basis as is
required under the LISB Acquisition agreement, is a participant in the LISB
ESOP. See the "Summary Compensation Table" below and the table above related to
the beneficial ownership of AFC Common Stock by the directors, Board Nominees
and executive officers of AFC for further information regarding the ownership of
AFC Common Stock by the Named Executives.
Compensation of the Chief Executive Officer. The Compensation Committees of
AFC and the Association met in December 1997 to review the performance of the
executive officers during 1997, to establish recommended compensation levels for
such officers for 1998 and to commence discussions regarding appropriate goals
and
16
<PAGE>
participation levels with respect to such officers participation in the
Incentive Compensation Plan.
At the December 1997 meeting, the financial performance of AFC and the
accomplishments of financial and non-financial goals and objectives of AFC and
the Association, as set forth in the prior year business plan, were reviewed as
was the performance of the executive officers of AFC. Mr. Engelke provided to
the Committees his insights as to both his own performance and that of the other
executive officers.
The Compensation Committees, based upon these discussions, determined the
level of salary for the executive officers, including the Chief Executive
Officer, to take effect January 1, 1998, after reviewing the overall executive
compensation program for the executive officers including the Chief Executive
Officer. As a part of that review, the Committees utilized relative information
provided in the SNL Executive Compensation Review 1997, Thrift Institutions and
the SNL Executive Compensation Review 1997, Commercial Banks. As noted above, in
September 1998, the Compensation Committee recommended and the Board approved
that the compensation of the Chief Executive Officer be increased, in
anticipation of the closing of the LISB Acquisition, to $750,000. This increase
reflected both the performance of Mr. Engelke and the increased level of
responsibility associated with the larger institution that resulted from the
LISB Acquisition.
Compensation Committee of AFC
William J. Fendt, Chairman Thomas J. Donahue
Andrew M. Burger Ralph F. Palleschi
Denis J. Connors George L. Engelke, Jr. (ex officio)
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions.
Recommendations to the Compensation Committees of AFC and the Association
as to officers' salaries, excluding those of executive officers, are developed
by an internal salary committee including Messrs. Engelke and Sheerin and the
Association's Vice President - Human Resources, a non-executive officer. These
recommendations are presented to the Compensation Committees by Mr. Engelke. Mr.
Engelke also provides insight to the Compensation Committees regarding his and
the performance of the other officers of AFC and the Association, both executive
and non-executive, and provides recommendations regarding executive officer
compensation. Mr. Engelke is an ex officio member of the Compensation Committees
and does not participate in the Committee deliberations or approval of
compensation issues relating to himself. There are no interlocking relationships
requiring disclosure hereunder between any executive officers of AFC, members of
the Compensation Committee of AFC and any other entity.
Stock Performance Chart.
The following graph shows a comparison of cumulative total shareholder
return on AFC Common Stock for its last five fiscal years commencing with the
close of The Nasdaq Stock Market on December 31, 1993, with the cumulative total
returns of both a broad market index, The Nasdaq Market (U.S.) Index produced by
the Center for Research in Security Prices ("CRSP"), and a peer group index, The
Nasdaq Financial Stock Index also produced by CRSP. The peer group index set
forth in the graph below consists of a different set of institutions than that
considered by the Compensation Committees, the Board or the Board of Directors
of the Association in determining the compensation of the executive officers.
17
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN OF
AFC COMMON STOCK, NASDAQ MARKET INDEX AND PEER GROUP INDEX (1)
<TABLE>
<CAPTION>
AFC Common Stock Nasdaq Market Index Nasdaq Financial Index
---------------- ------------------- ----------------------
<S> <C> <C> <C>
December 31, 1993 $100.000 $100.000 $100.000
December 30, 1994 94.595 97.752 100.237
December 29, 1995 165.924 138.256 145.981
December 31, 1996 272.218 170.015 187.131
December 31, 1997 416.516 208.580 285.867
December 31, 1998 347.711 293.209 276.585
</TABLE>
- -------------------
(1) Assumes $100 invested on December 31, 1993 and all dividends reinvested
through the end of AFC's fiscal year ended December 31, 1998. Nasdaq Market
Index and Nasdaq Financial Index values calculated using monthly values for
CRSP Total Return Indexes as of the applicable date.
Summary Compensation Table
The following table shows, for the fiscal years ended December 31, 1998,
1997 and 1996, the cash compensation paid by AFC and the Association, as well as
certain other compensation paid or accrued for those years, to the Chief
Executive Officer and the four highest paid executive officers of AFC and the
Association who received salary and bonuses in excess of $100,000 for the 1998
fiscal year.
18
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
----------------------- --------------------------------------
Awards Payouts
------------------------ -------
Securities
Other Restricted Underlying All
Annual Stock Options/ LTIP Other
Name and Salary Bonus Compensation Awards SARs Payouts Compensation
Principal Positions Year ($) ($) (2) ($) ($) (3) (#) (5) ($) ($) (6)
- ------------------- ---- ------ ------- ------------ ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George L. Engelke, Jr. 1998 684,231 245,230 --- --- 86,000 --- 60,614
Chairman, President, 1997 600,000 252,000 --- --- 30,000 --- 77,188
CEO and Director 1996 560,000 215,600 --- --- 20,000 --- 56,080
Gerard C. Keegan (1) 1998 350,000 94,765 --- --- 20,000 --- 54,173
Vice Chairman, 1997 87,500 21,875 --- 754,687 (4) 151,090 (4) --- 67,140
Chief Administrative 1996 0 0 --- --- --- ---
Officer and Director
Monte N. Redman 1998 320,000 86,640 --- --- 35,000 --- 60,614
Executive Vice 1997 295,000 81,000 --- --- 17,500 --- 77,188
President and Chief 1996 270,000 74,250 --- --- 10,000 --- 56,080
Financial Officer
Thomas W. Drennan 1998 310,000 83,935 --- --- 24,000 --- 60,614
Executive Vice 1997 285,000 78,000 --- --- 17,500 --- 77,188
President 1996 265,000 72,875 --- --- 10,000 --- 56,080
Arnold K. Greenberg 1998 300,000 81,225 --- --- 20,000 --- 60,614
Executive Vice 1997 281,250 70,000 --- --- 12,500 --- 77,188
President 1996 265,000 66,250 --- --- 10,000 --- 56,080
</TABLE>
- ---------------------
(1) Amounts indicated for Mr. Keegan reflect amounts paid to Mr. Keegan for
1997 and 1998 by AFC and the Association and do not include amounts paid to
Mr. Keegan by The Greater prior to The Greater Acquisition.
(2) Consists of payments under the Incentive Compensation Plan which is a
short-term incentive plan. See "Executive Compensation - Report of the
Compensation Committee on Executive Compensation."
(3) Represents the value, based upon the closing price of AFC Common Stock as
quoted on The Nasdaq Stock Market on the date of the award, of an award of
15,000 shares of AFC Common Stock made to Mr. Keegan on September 30, 1997
pursuant to the Officer RRP. As to the award reflected in the table and
remaining unvested, Mr. Keegan will vest and have distributed to him 5,000
shares of AFC Common Stock per year on January 10, 1999 and 2000,
respectively. Pursuant to the Officer RRP, as of December 31, 1998, Messrs.
Engelke, Keegan, Redman, Drennan and Greenberg had outstanding grants of
restricted stock of 52,900, 10,000, 18,918, 18,918 and 18,918 shares of AFC
Common Stock, respectively. The awards, based upon the closing price of AFC
Common Stock of $45.75, as quoted on The Nasdaq Stock Market on December
31, 1998, had a value of $2,420,175, $457,500, $865,498, $865,498 and
$865,498, respectively. Dividends paid with respect to shares of AFC Common
Stock awarded to participants and remaining held in the Officer RRP are
held in and for the account of such participants and are distributed,
together with earnings thereon, at the time the related shares of AFC
Common Stock vest and are distributed to the participant.
(4) Restricted stock and options, excluding an option to acquire 3,500 shares
of AFC Common Stock, were awarded or granted in connection with The Greater
Acquisition. Options granted in connection with The Greater Acquisition
reflect the conversion of options to acquire the common stock of The
Greater into options to acquire AFC Common Stock.
(5) Options with limited stock appreciation rights ("LSARs") attached were
granted to the Named Executives during 1998, 1997 and 1996. No freestanding
SARs have been granted to the Named Executives. See "Executive Compensation
- Incentive Option Plans" below.
(6) Represent the fair market value of AFC Common Stock and cash which was
allocated under the ESOP to the account of the Named Executive during the
year ended December 31, 1998, 1997, and 1996, respectively, based upon the
closing price per share of AFC Common Stock of $45.75, $55.75 and $36.875
as quoted on The Nasdaq Stock Market on December 31, 1998, 1997 and 1996,
respectively.
19
<PAGE>
Employment Agreements
AFC and the Association have entered into employment agreements with each
of the executive officers, except Mr. Conefry, whose agreement is with AFC only.
Messrs. Engelke's and Keegan's employment agreements each provide for a three-
year term. The employment agreements entered into with the remaining Named
Executives each provide for two-year terms. The Association's agreements each
run from January 1st, except for Mr. Keegan's which runs from October 1st. Prior
to January 1st each year, the Board of Directors of the Association may extend
the agreements with the Association for an additional year such that the
remaining terms shall be 3 years, in the cases of Mr. Engelke and Mr. Keegan,
and 2 years, for the other Named Executives. Prior to January 1, 1999, such
employment agreements were so extended. The agreements with AFC automatically
extend daily, so as to maintain their original term, unless written notice of
non-renewal is given by the Board. No such notice has been given to any Named
Executive.
The employment agreements provide for minimum salaries and the Named
Executives' participation in retirement plans, group life, medical and
disability insurance plans and any other employee benefit programs. The
employment agreements also provide that AFC and the Association will maintain
for the benefit of the Named Executives directors' and officers' liability
insurance and will indemnify the Named Executives on prescribed terms for claims
and related costs and liabilities, arising from the services provided pursuant
to the employment agreements for a period of six years beyond the termination of
such agreements.
The employment agreements provide for termination of each of the Named
Executive's employment at any time by AFC or the Association with or without
cause. The Named Executive would be entitled to a severance payment in the event
the Named Executive's employment terminates (i) due to AFC's or the
Association's (A) failure to re-elect the executive to his current office, and
in Messrs. Engelke's and Keegan's agreements, to the Board; (B) failure by
whatever cause to vest in the executive the functions, duties or
responsibilities prescribed for the executive in such agreement; (C) material
breach of the employment agreements or reduction of the executive's base salary
or other change to the terms and conditions of the executive's compensation and
benefits which either individually or in the aggregate, as to such executive,
has a material adverse effect on the aggregate value of the total compensation
package provided to such executive; or (D) relocation of the executive's
principal place of employment outside of Nassau or Queens Counties of New York;
or (ii) for reasons other than (A) for cause; (B) voluntary resignation, except
as a result of the actions specified under clause (i) above or following a
change of control, as defined in the agreements; (C) following the executive's
attainment of mandatory retirement age for executive officers (currently 70
years of age); (D) death; (E) long term disability or (F) expiration of the term
of the agreement.
The severance payment to which a Named Executive would be entitled
includes: (i) continued life, medical and disability insurance benefits for the
remainder of the contract term; (ii) a lump sum payment equal to the present
value of the salary, incentive compensation, pension, profit-sharing and ESOP
benefits the executive would have earned during the remainder of the contract
term; (iii) accelerated vesting of all outstanding options and restricted stock
awards; and (iv) a cash settlement, at the election of AFC or the Association,
of all outstanding options and restricted stock awards.
For any taxable year in which the executive would be liable for the payment
of excise taxes under Section 4999 of the Code with respect to any compensation
paid by AFC or any of its affiliated companies, AFC will pay to or on behalf of
the executive, an amount, in addition to the severance payment, sufficient to
maintain the after-tax severance benefit as though the excise tax specified in
Section 4999 of the Code did not apply.
Incentive Option Plans
The following table sets forth all grants of options (and limited SARs)
under the 1996 Officer Option Plan to the Named Executives during 1998 and
contains certain information about the potential value of these options based
20
<PAGE>
upon certain assumptions as to the appreciation of AFC Common Stock over the
life of the option. During 1998, no options or SARs were granted pursuant to the
Incentive Option Plan nor did AFC adjusted or amended the exercise price of any
stock options or SARs previously awarded to any of the Named Executives.
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock
Price
Appreciation
Individual Grants for Option Term (4)
---------------------------------------------------------------------------
% of Total
Options/
Securities SARs
Underlying Granted to Exercise
Options/ Employees or Base
SARs in Fiscal Price Per Expiration
Granted (1) Year (2) Share (3) Date 5% 10%
------------------------------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C>
George L. Engelke, Jr. 86,000 4.20% $45.0625 12/15/2008 $2,437,203 $6,176,350
Gerard C. Keegan 20,000 .98% $45.0625 12/15/2008 $ 566,791 $1,436,360
Monte N. Redman 35,000 1.71% $45.0625 12/15/2008 $ 991,885 $2,513,631
Thomas W. Drennan 24,000 1.17% $45.0625 12/15/2008 $ 680,150 $1,723,632
Arnold K. Greenberg 20,000 .98% $45.0625 12/15/2008 $ 566,791 $1,436,360
</TABLE>
- ------------------
(1) Of the options granted, each Named Executive received the grant of an
option to purchase 2,219 shares of AFC Common Stock which are intended to
qualify as incentive stock options. The remainder are non-qualified stock
options. All options granted to the Named Executives have a ten year term
and vest on January 10, 2002. See "Executive Compensation - Employment
Agreements" above. All such options also vest and become immediately
exercisable upon death, disability, retirement or in the event of a Change
of Control or Threatened Change of Control, as defined in the 1996 Officer
Option Plan. All such options were granted in tandem with LSARs which
provide that, in the event of a Change of Control, during the period
commencing on the Change of Control and ending at the latter of six (6)
months following such date or thirty (30) days following the earliest date
on which the Named Executive may exercise the LSAR without subjecting
himself to liability under Section 16 of the Exchange Act, the Named
Executive may, in lieu of exercising the option, surrender the option and
receive a payment in cash, on a per share basis, equal to the difference
between the exercise price per share and the greater of (i) the highest
price paid per share of AFC Common Stock by any person who initiated or
sought to effect the Change of Control during the one year period ending on
the date of the Change of Control or (ii) the average of the Fair Market
Value per share as defined in the 1996 Officer Option Plan over the last
ten trading days preceding the date of exercise of the LSAR.
(2) Includes options granted as part of the LISB Acquisition, in substitution
of options to acquire shares of common stock of LIB, to former employees
and directors of LIB and LISB.
(3) The exercise price may be paid in whole or in part in cash, through the
surrender of previously held shares of AFC Common Stock, or the surrender
of options granted pursuant to the 1996 Officer Option Plan.
(4) The amounts stated assume the specified annual rates of appreciation only.
Actual experience is dependent on the future performance of AFC Common
Stock and overall stock market conditions. There can be no assurance that
the amounts reflected in this table will be achieved.
The following table provides certain information with respect to options
exercised by the Named Executives during 1998 and the number of shares of AFC
Common Stock represented by outstanding stock options held by the Named
Executives as of December 31, 1998. Also reported are the values for "in-the-
money" options, which represent the positive spread between the exercise price
of any outstanding stock options and the closing price per share of AFC Common
Stock of $45.75 as quoted on The Nasdaq Stock Market on December 31, 1998.
21
<PAGE>
Fiscal Year End Option/SAR Values
<TABLE>
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised in-the-Money
Options/SARS Options/SARs
at Fiscal Year- at Fiscal Year-
End (#) End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise (#) Value Realized (1) Unexercisable Unexercisable (2)
- ------------------------ --------------- ----------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
George L. Engelke, Jr. 8,000 $ 369,000 398,880 / 181,220 $11,795,260 / $3,225,190
Gerard C. Keegan 11,340 $ 441,120 139,750 / 20,000 289,219 / $ 13,750
Monte N. Redman 20,000 $ 866,125 137,726 / 67,556 $ 3,762,514 / $1,106,549
Thomas W. Drennan 40,000 $1,671,250 105,726 / 56,556 $ 2,698,514 / $1,098,987
Arnold K. Greenberg 74,612 $2,913,671 71,612 / 52,556 $ 1,730,474 / $1,096,237
</TABLE>
- ----------------------
(1) Represents the fair market value per share of AFC Common Stock as quoted on
The Nasdaq Stock Market on the day the option was exercised minus the
exercise price per share of the option exercised times the number of shares
of AFC Common Stock as to which the option was exercised.
(2) Represents the fair market value per share of AFC Common Stock at fiscal
year end based upon the closing price of $45.75, as quoted on The Nasdaq
Stock Market on December 31, 1998, minus the exercise price per share of
the options outstanding times the number of shares of AFC Common Stock as
to which the option relates. Excluded are options with an exercise price in
excess of $45.75.
Pension Plans. The Employees' Pension Plan is a non-contributory defined
benefit pension plan for the benefit of eligible employees. The Excess Plan is a
non-qualified plan that provides benefits that would have been provided under
the Employees' Pension Plan but for the maximum annual benefit limitation in
Section 415 of the Code ($130,000 for 1998, payable in the form of a ten-year
certain and continuous annuity at age 65) and the maximum annual compensation
limitation in Section 401(a)(17) of the Code ($160,000 for 1998). The
Supplemental Plan is a non-qualified plan under which selected participants in
the Employees' Pension Plan receive the retirement benefits that would have been
provided under the Employees' Pension Plan had the benefit formula in effect
immediately prior to January 1, 1989 remained in effect.
The following tables set forth the estimated annual benefits payable under
the defined benefit pension plans described above upon retirement at age 65 in
calendar year 1998, expressed in the form of a ten-year certain and continuous
annuity, for the highest five-year average annual base wage (referred to in the
table as remuneration) and years of service classifications specified.
22
<PAGE>
<TABLE>
<CAPTION>
Pension and Excess Plans
Creditable Years of Service at Age 65 (1)
------------------------------------------------------------------------
Remuneration (2) 15 20 25 30 35 (3)
- ------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 27,200 $ 36,300 $ 45,300 $ 54,400 $ 54,400
150,000 33,200 44,300 55,300 66,400 66,400
175,000 39,200 52,300 65,300 78,400 78,400
200,000 45,200 60,300 75,300 90,400 90,400
225,000 51,200 68,300 85,300 102,400 102,400
250,000 57,200 76,300 95,300 114,400 114,400
300,000 69,200 92,300 115,300 138,400 138,400
400,000 93,200 124,300 155,300 186,400 186,400
450,000 105,200 140,300 175,300 210,400 210,400
500,000 117,200 156,300 195,300 234,400 234,400
750,000 177,200 236,300 295,300 354,400 354,400
1,000,000 237,200 316,300 395,300 474,400 474,400
<CAPTION>
Pension, Excess and Supplemental Plans
Creditable Years of Service at Age 65 (1)
------------------------------------------------------------------------
Remuneration (2) 15 20 25 30 35 (3)
- ------------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$125,000 $ 32,100 $ 42,800 $ 53,500 $ 64,200 $ 64,200
150,000 49,600 52,800 66,000 79,200 79,200
175,000 47,100 62,800 78,500 94,200 94,200
200,000 54,600 72,800 91,000 109,200 109,200
225,000 62,100 82,800 103,500 124,200 124,200
250,000 69,600 92,800 116,000 139,200 139,200
300,000 84,600 112,800 141,000 169,200 169,200
400,000 114,600 152,800 191,000 229,200 229,200
450,000 129,600 172,800 216,000 259,200 259,200
500,000 144,600 192,800 241,000 289,200 289,200
750,000 219,600 292,800 366,000 439,200 439,200
1,000,000 294,600 392,800 491,000 589,200 589,200
</TABLE>
- ---------------------
(1) The benefits listed in the retirement benefits table are not subject to any
Social Security or other offset amounts.
(2) Remuneration under the Employees' Pension Plan, the Excess Plan and the
Supplemental Plan is calculated based upon the amount shown in the column
of the "Summary Compensation Table" entitled "Salary" and does not include
amounts shown in the column entitled "Bonus." The Employees' Pension Plan
is a qualified plan and is subject to the compensation limit, described
above, contained in Section 401(a)(17) of the Code for calculating the
participant's benefit.
(3) Benefits do not accrue for service in excess of 30 years.
The Named Executives, as of December 31, 1998, had the following years of
credited service (i.e., benefit service): George L. Engelke, Jr., 27 years 6
months; Gerard C. Keegan, 27 years 9 months; Monte N. Redman, 21 years 7 months;
Thomas W. Drennan, 12 years 6 months; and Arnold K. Greenberg, 23 years 7
months.
INFORMATION REGARDING AFC'S STOCK OPTION PLANS
AFC is presenting for shareholder approval the 1999 Officer Option Plan and
the 1999 Director Option Plan. AFC expects to grant stock options under these
plans each year to selected officers and employees and to outside directors. The
value of these grants will depend on future increases in the trading price of
AFC Common Stock. They will link the compensation paid to directors, officers
and employees to the value delivered to shareholders through share price
appreciation. The table below presents information about both the options that
are currently outstanding under either existing stock option plans or the terms
of AFC's merger agreements in the Fidelity Acquisition, The Greater
23
<PAGE>
Acquisition and the LISB Acquisition and options available for future grant
under existing plans.
<TABLE>
<CAPTION>
Stock Options Outstanding as Stock Options Available for
of the Record Date Future Grant
------------------------------------ ----------------------------
No. of Shares
No. of Shares of of
AFC Common Percent of Class AFC Common Percent of Class
Stock (1) Stock (1)
---------------- ---------------- ------------ ------------------
<S> <C> <C> <C> <C>
Incentive Option Plan 1,156,965 2.09 1,248 (2) 0.00 (4)
1993 Director Option Plan 311,924 0.56 0 0.00
1996 Officer Option Plan 859,500 1.56 60,000 (2) 0.11
1996 Director Option Plan 90,000 0.16 24,000 (3) 0.04
Fidelity Acquisition 103,778 0.19 0 0.00
The Greater Acquisition 245,750 0.44 0 0.00
LISB Acquisition 1,319,234 2.39 0 0.00
Total 4,087,151 7.40 85,248 0.15
</TABLE>
- --------------------
(1) Percent of Class is calculated by dividing the number of shares as to which
stock options are outstanding or available for future grant , respectively,
by the number of shares of AFC Common Stock outstanding as of the Record
Date.
(2) Upon approval of the 1999 Officer Option Plan by the shareholders, the
shares of AFC Common Stock indicated will no longer be available for future
grant.
(3) Upon approval of the 1999 Director Option Plan by the shareholders, the
shares of AFC Common Stock indicated will no longer be available for future
grant.
(4) Percent of Class is less than .01%.
PROPOSAL NO. 2
APPROVAL OF THE 1999 STOCK OPTION PLAN FOR OFFICERS AND EMPLOYEES OF ASTORIA
FINANCIAL CORPORATION
Why We Are Asking For Shareholder Approval
AFC is asking the shareholders to approve the 1999 Officer Option Plan that
will let AFC grant options to purchase 2,500,000 shares of AFC Common Stock.
Applicable law does not require that AFC have shareholder approval before
granting stock options to its officers and employees. However, if AFC grants
stock options under this plan without shareholder approval, it could jeopardize
AFC's eligibility to list AFC Common Stock for trading on The Nasdaq Stock
Market. Under the Code, AFC cannot deduct fiscal year taxable compensation in
excess of $ 1,000,000 that it pays to either its Chief Executive Officer or any
of its other Named Executives, unless such compensation meets the law's
definition of "qualified performance-based compensation." Stock options that AFC
grants must be authorized by shareholders to be considered qualified
performance-based compensation. AFC is seeking approval to grant additional
stock options so that it can preserve its shareholders' access to The Nasdaq
Stock Market for purchases and sales of AFC Common Stock and to maximize the
federal tax deductions available for stock options that it grants.
If the shareholders approve the 1999 Officer Option Plan, the Incentive
Option Plan and the 1996 Officer Option Plan will be frozen and no further
option grants will be made pursuant to such plans. Shareholder approval of the
1999 Officer Option Plan will not affect options currently outstanding. If the
shareholders do not approve the 1999 Officer Option Plan, AFC may continue to
grant stock options that shareholders have previously authorized under the
Incentive Option Plan and the 1996 Officer Option Plan. It will not implement
the 1999 Officer Option Plan.
24
<PAGE>
Material Provisions of the Plan
Exhibit A to this proxy statement contains the full text of the plan.
Exhibit A is incorporated by reference into the following plan summary. The
summary is qualified in its entirety by this reference.
Nature of the Plan. Under this plan, AFC may grant officers and employees
options to purchase shares of AFC Common Stock. An option is a right to purchase
a share of AFC Common Stock during a specified period of time for a specified
purchase price.
Maximum Shares Available. If the shareholders approve the proposed plan,
AFC will have authority under the plan to grant options to purchase 2,500,000
shares of AFC Common Stock. The fair market value of such shares is
$117,500,000, based on the closing price of AFC Common Stock of $47.00 as quoted
on The Nasdaq Stock Market as of the Record Date. This is the amount option
holders would pay to AFC to exercise such options, if all were granted on the
Record Date at an exercise price equal to the fair market value of the shares on
such date.
Administration of the Plan. A committee of outside directors administers
this plan. Its members are the members of the Compensation Committee of the
Board who are "disinterested directors" under the federal tax and securities
laws. In general, disinterested directors are directors who (1) are not, and
never were, officers or employees of AFC or the Association; (2) do not receive
material compensation from AFC and the Association except for service as a
director; and (3) are ineligible for discretionary stock option grants under
this plan. The administrative committee must have at least three members and has
broad discretionary powers.
Eligibility. Eligibility is open to all officers and employees of AFC and
the Association, a total of 2,430 people. The administrative committee selects
the individuals who receive stock option grants. In practice, the administrative
committee in the past has granted stock options under previous plans to only a
select group of officers of AFC and the Association. In 1998, this group
included 50 people.
Terms and Conditions of Stock Option Grants. The administrative committee
sets the terms and conditions of the stock options that it grants. In setting
terms and conditions, it must observe the following restrictions:
[_] It may not grant a stock option with a purchase price that is less
than the fair market value of a share of AFC Common Stock on the date
it grants the stock option.
[_] It may not grant a stock option with a term that is longer than 10
years.
[_] It may not grant a stock option with a term that extends beyond
termination of employment for cause, more than one year beyond
termination of employment due to retirement, death or disability, or
more than three months beyond termination of employment for other
reasons.
[_] It may not grant stock options that would commit AFC to issue more
than the maximum number of shares authorized for the plan.
The administrative committee may grant incentive stock options that qualify
for special federal income tax treatment or non-qualified stock options that do
not qualify for special federal income tax treatment
Maximum Option Grants to An Individual. The administrative committee has
complete flexibility in setting the size of stock option grants and may grant to
a single individual options to purchase all of the shares authorized under the
plan.
Change of Control Provisions. The administrative committee may grant
options that may not be exercised until the option recipient satisfies a future
condition, such as continued employment for a specified period. If there is
25
<PAGE>
a change of control of AFC or the Association, if our shareholders approve a
transaction that would result in a change of control, or if there is a tender
offer or proxy contest that would result in a change of control if it succeeds,
these conditions will be waived. A waiver of this kind would make all stock
options outstanding under this plan immediately exercisable. Holders of
outstanding stock options may also have the right to surrender their outstanding
stock options for a cash payment following a change of control. AFC may cancel
its obligations to make these cash payments if (1) it has agreed to a change of
control transaction that must be accounted for as a pooling of interests, (2)
its accountants tell it that making the payments will prevent the use of pooling
of interests accounting and (3) it substitutes for the cash payment stock
options or other property of equivalent value.
Anti-dilution Adjustments. If AFC declares a stock dividend or stock split,
reclassifies its common stock, or enters into a merger or consolidation or other
transaction that affects the holders of AFC Common Stock, it will make certain
automatic adjustments under this plan without asking for your approval. It will
adjust the number or type of shares authorized for the plan, the number or type
of shares subject to outstanding option grants and the maximum number of shares
that may be optioned to any single individual. Any adjustment so made will be
designed to neither enlarge nor diminish its authority to grant stock options
and the relative rights of option holders. The administrative committee
determines these adjustments.
Amendment and Termination. This plan, if approved by the shareholders, will
be in effect for a ten-year period that begins on the date the shareholders
approve the plan. The Board may suspend or terminate the plan before then. It
may also amend this plan at any time and in any respect. Any amendment that
would change the class of eligible employees, increase the number of stock
options that may be granted to any person or in total, or reduce the minimum
option price must first be approved by AFC's shareholders.
Federal Tax Consequences for Option Recipients. Incentive stock options
will not create federal income tax consequences when they are granted. If they
are exercised during employment or within three months after termination of
employment, the exercise will not create federal income tax although such an
exercise is a preference item for alternative minimum tax purposes. When the
shares acquired on exercise of an incentive stock option are sold, the seller
must pay federal income taxes on the amount by which the sales price exceeds the
purchase price. This amount will be taxed at capital gains rates if the sale
occurs at least two years after the option was granted and at least one year
after the option was exercised. Otherwise, it is taxed as ordinary income.
Incentive stock options that are exercised more than three months after
termination of employment due to retirement are treated as non-qualified stock
options.
Non-qualified stock options will not create federal income tax consequences
when they are granted. When they are exercised, federal income taxes must be
paid on the amount by which the fair market value of the shares acquired by
exercising the option exceeds the exercise price. When an option holder sells
shares acquired by exercising non-qualified stock option, he must pay federal
income taxes on the amount by which the sales price exceeds the purchase price
plus the amount included in ordinary income at option exercise. This amount will
be taxed at capital gains rates, which will vary depending upon the time that
has elapsed since the exercise of the option. A cash payment under the plan's
change of control provisions is taxed as if it were the exercise of a non-
qualified stock option followed immediately by a resale of the stock acquired by
exercising the option.
Federal Tax Consequences for AFC. AFC will recognize compensation expense
for accounting purposes when stock options are exercised. The measurement of
this expense will depend on whether treasury shares or newly issued shares are
used to complete the option exercise. When a non-qualified stock option is
exercised, AFC may be allowed a federal income tax deduction for the same amount
that the option holder includes in his or her ordinary income. This amount may
be the same as the related compensation expense or it may be different. When an
incentive stock option is exercised, there is no tax deduction unless the shares
acquired are resold sooner than two years after the option was granted or one
year after the option was exercised. A cash payment under the plan's change of
control provisions is deductible as if it were the exercise of a non-qualified
stock option.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL
-----------------
26
<PAGE>
OF THE 1999 STOCK OPTION PLAN FOR OFFICERS AND EMPLOYEES OF ASTORIA FINANCIAL
CORPORATION.
PROPOSAL NO. 3
APPROVAL OF THE 1999 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS OF ASTORIA
FINANCIAL CORPORATION
Why We Are Asking For Shareholder Approval
AFC is asking shareholders to approve the 1999 Director Option Plan that
will let AFC grant options to purchase 175,000 shares of AFC Common Stock.
Applicable law does not require that AFC have shareholder approval before
granting stock options to its outside directors. However, if AFC grants stock
options under this plan without shareholder approval, it could jeopardize AFC's
eligibility to list AFC Common Stock for trading on The Nasdaq Stock Market. AFC
is seeking approval to grant stock options so that it can preserve its
shareholders' access to The Nasdaq Stock Market for purchases and sales of AFC
Common Stock.
If the shareholders approve the 1999 Director Option Plan, the 1996
Director Option Plan will be frozen and no further option grants will be made
pursuant to such plan. Shareholder approval of the 1999 Director Option Plan
will not affect options currently outstanding. If the shareholders do not
approve the 1999 Director Option Plan, AFC will continue to grant stock options
that shareholders have previously authorized under the 1996 Director Option
Plan. It will not implement the 1999 Director Option Plan.
Material Provisions of the Plan
Exhibit B to this proxy statement contains the full text of the plan.
Exhibit B is incorporated by reference into the following plan summary. The
summary is qualified in its entirety by this reference.
Nature of the Plan. Under this plan, AFC grants non-qualified stock options
to outside directors.
Terms and Conditions of Stock Option Grants. Pursuant to the plan, on
January 15th of each year, AFC will grant an option to purchase 2,000 shares of
AFC Common Stock to each outside director. In addition, a newly elected outside
director will receive an option to purchase 4,000 shares on the 15th day of the
month after his initial election. The options are exercisable at any time during
the ten-year period beginning on the date of grant. However, if AFC removes an
outside director for cause, it cancels any unexercised options immediately upon
such removal. The exercise price will equal the closing bid quotation for a
share of AFC Common Stock on The Nasdaq Stock Market on the date of the option
grant. The grants are automatic as long as AFC has authority to grant a
sufficient number of options.
Maximum Shares Available. If the shareholders approve the proposed plan,
AFC will have authority under the plan to grant options to purchase 175,000
shares. The fair market value of such shares is $8,225,000, based on the closing
price of AFC Common Stock as quoted on The Nasdaq Stock Market as of the Record
Date. This is the amount option holders would pay to AFC to exercise such
options, if all were granted on the Record Date at an exercise price equal to
the fair market value of the shares on such date.
Administration of the Plan. The committee that administers the 1999 Officer
Option Plan also administers this plan. However, it has less discretion in
administering this plan.
Change of Control Provisions. Holders of outstanding stock options under
this plan may have the right to surrender their outstanding stock options for a
cash payment following a change of control of AFC or the Association. AFC may
cancel its obligations to make these cash payments if (1) it has agreed to a
change of control transaction that
27
<PAGE>
must be accounted for as a pooling of interests, (2) its accountants tell it
that making the payments will prevent the use of pooling of interests accounting
and (3) it substitutes for the cash payment stock options or other property of
equivalent value.
Anti-dilution Adjustments. If AFC declares a stock dividend or stock split,
reclassifies AFC Common Stock, or enters into a merger or consolidation or other
transaction that affects the holders of AFC Common Stock, it will make certain
automatic adjustments under this plan without asking for your approval. It will
adjust the number or type of shares authorized for the plan, the number or type
of shares subject to outstanding option grants and the maximum number shares
that may be optioned to any single individual. Any adjustments made will be
designed to neither enlarge nor diminish AFC's authority to grant stock options
and the relative rights of option holders. The administrative committee
determines these adjustments.
Amendment and Termination. This plan, if approved by the shareholders, will
be in effect for a ten-year period that begins on the date the shareholders
approve the plan. The Board may suspend or terminate the plan before the end of
its term. It may also amend this plan at any time and in any respect. Any
amendment that would change the class of eligible directors, increase the number
of stock options that may be granted to any person or in total, or reduce the
minimum option price must first be approved by AFC's shareholders.
Federal Tax Consequences for Option Recipients. Granting non-qualified
stock options does not create federal income tax consequences. When they are
exercised, federal income taxes must be paid on the amount by which the fair
market value of the shares acquired by exercising the option exceeds the
exercise price. When an option holder sells shares acquired by exercising a non-
qualified stock option, he must pay federal capital gains taxes on the amount by
which the sales price exceeds the basis. The basis equals the purchase price
plus the amount included in ordinary income at option exercise. A cash payment
under the plan's change of control provisions is taxed as if it were the
exercise of a non-qualified stock option followed immediately by a resale of the
stock acquired by exercising the option.
Federal Tax Consequences for AFC. When an option holder exercises a non-
qualified stock option, AFC may claim a federal income tax deduction for the
same amount that the option holder includes in his or her ordinary income. A
cash payment under the plan's change of control provisions is deductible as if
it were the exercise of a non-qualified stock option.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
-----------------
THE 1999 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS OF ASTORIA FINANCIAL
CORPORATION.
PROPOSAL NO. 4
APPROVAL OF THE ASTORIA FINANCIAL CORPORATION EXECUTIVE OFFICER ANNUAL INCENTIVE
PLAN
Why We Are Asking For Shareholder Approval
AFC is asking shareholders to approve the Executive Incentive Plan to help
AFC and the Association maximize the tax deductibility of bonuses that we pay to
our executive officers.
AFC and the Association tie a portion of their executive officers' cash
compensation to the achievement of performance goals. We have done this using a
bonus plan under which executive officers earn bonuses that vary based on
performance relative to pre-set goals. Under the Code, AFC cannot deduct fiscal
year taxable compensation in excess of $1,000,000 that it pays to either its
Chief Executive Officer or any of the other Named Executives, unless such
compensation meets the law's definition of "qualified performance-based
compensation." Bonuses cannot be qualified performance-based compensation unless
AFC pays them under a written plan that its shareholders approve. AFC and the
Association are replacing an existing bonus plan for its executive officers with
the Executive Incentive Plan so that
28
<PAGE>
the bonuses may be tax deductible as qualified performance-based compensation.
If the shareholders do not approve this plan, AFC and the Association will
not pay annual bonuses under the plan.
Material Provisions of the Plan
Exhibit C to this proxy statement contains the full text of the plan.
Exhibit C is incorporated by reference into the following plan summary. The
summary is qualified in its entirety by this reference.
Nature of the Plan. Under this plan, AFC and the Association will pay
annual cash bonuses. The amount of bonuses will vary based on the level of
attainment of pre-established performance goals. Bonuses may be zero if minimum
performance goals are not attained.
Administration of the Plan. A committee of outside directors administers
this plan. Its members are the members of the Compensation Committee of the
Board who are "disinterested directors" under the federal tax laws. In general,
disinterested directors are directors who (1) are not, and never were, officers
or employees of AFC or the Association and (2) do not receive material
compensation from AFC except for service as a director. The administrative
committee must have at least two members and has broad discretionary powers.
Eligibility. Eligibility is restricted to top-level executive employees of
AFC and the Association who are responsible for establishing strategic direction
and long-range plans. Currently, all Executive Vice Presidents, all Vice
Chairmen and the Chief Executive Officer, a total of 8 people, are eligible.
During the first 90 days of each year, the administrative committee selects the
year's participants from among the eligible employees. After the first 90 days,
the administrative committee may allow participation on a pro-rated basis by
employees who are placed in eligible positions through hiring, promotion or
transfer before August 31st of the year.
Target Awards and Performance Goals. When the administrative committee
selects a participant for a year, it sets the participant's target bonus and the
performance goals which must be achieved to earn the bonus. The target bonus is
a percentage of the participant's base salary. The performance goals will be
target levels established with respect to any or all of the following corporate
performance measures:
Basic earnings per common share, Efficiency ratio,
Basic cash earnings per common share, Cash efficiency ratio,
Diluted earnings per common share, Return on average assets,
Diluted cash earnings per common share, Cash return on average assets,
Net income, Return on average stockholders'
Cash earnings, equity,
Net interest income, Cash return on average stockholders'
Non-interest income, equity,
General and administrative expense to Return on average tangible
average assets ratio, stockholders' equity,
Cash general and administrative Cash return on average tangible
expense to average assets ratio, stockholders' equity.
The administrative committee will assign a weight to each performance goal. The
weight for any one goal may be zero, but the aggregate weight for all goals must
be 100%. The committee may also set one or more performance levels below or
above the target level and assign lower or higher bonus percentages that will be
paid if these levels are attained.
Certification of Performance and Payment of Bonuses. After the end of each
year, the administrative committee will determine the extent of achievement of
the established performance goals and certify the results. AFC
29
<PAGE>
and the Association will pay the bonus amounts assigned to the performance level
achieved as soon as practicable. The maximum bonus that AFC may pay under the
plan to any participant for any year is $2,000,000.
Committee Discretion to Adjust Bonus Amounts and Performance Measures.
After setting the year's target bonuses and performance goals, the
administrative committee may change them only in limited instances. It may
exercise discretion to reduce, but not increase, the bonus payable to any
participant. If there is a change in generally accepted accounting principles, a
stock split, stock dividend, reclassification, merger, spin-off, infrequently
occurring or extraordinary item or other corporate event, it may adjust the
performance goals in a manner designed to neither enlarge nor diminish a
participant's bonus opportunity.
Retirement, Death, Disability and Change of Control. Generally, a
participant will not receive a bonus for a year unless he or she is an employee
on the last day of the year. In cases of retirement, death or disability, the
administrative committee may authorize a pro-rated payment. The administrative
committee may also authorize pro-rated payments following a change of control,
based on the attainment of adjusted performance goals through the date of the
change of control. Such payments may not be considered qualified performance-
based compensation for tax deduction purposes.
Amendment and Termination. If approved, this plan will be in effect for a
five-year period ending December 31, 2003. The Board may suspend it or terminate
it before then. It may also amend this plan at any time and in any respect. Any
amendment that would change the list of performance measures, the class of
eligible employees or the maximum annual bonus amount must first be approved by
shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF
-----------------
THE ASTORIA FINANCIAL CORPORATION EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN.
New Plan Benefits
The benefits or amounts that will be received by or paid to participants,
any Named Executive, the executive officers as a group or non-executive officers
as a group pursuant to the 1999 Officer Option Plan and the Executive Incentive
Plan, or that would have been paid in 1998 if these plans had been in effect,
are not currently determinable. The following table provides information with
respect to options which it is known, subject to shareholder approval of the
plan, will be granted pursuant to the 1999 Director Option Plan:
New Plan Benefits
1999 Stock Option Plan for Outside Directors of Astoria Financial Corporation
-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Name and Position (1) Dollar Value ($) Number of Units (2)
--------------------- --------------- ------------------
<S> <C> <C>
Robert J. Conway, Director and Nominee N/A 4,000
Peter C. Haeffner, Jr. , Director and Nominee N/A 2,000
Ralph F. Palleschi, Director and Nominee N/A 2,000
Leo J. Waters, Director and Nominee N/A 4,000
All current directors, who are not executive
officers (including Board Nominees), as a group N/A 32,000
</TABLE>
- ---------------------
(1) Named Executives, executive officers, and employees are not eligible to
participate in the 1999 Director Option Plan.
(2) The figures shown in the above table reflect the number of shares of AFC
Common Stock underlying options that would have been granted to outside
directors in fiscal year 1998, if the plan had been in effect as of January
1, 1998 and are the same as the grants actually made under the 1996
Director Option Plan.
30
<PAGE>
PROPOSAL NO. 5
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
AFC's independent auditors for the fiscal year ended December 31, 1998 were
KPMG LLP. The Board has reappointed KPMG LLP as independent auditors for AFC and
the Association for the year ending December 31, 1999, subject to ratification
of such appointment by the holders of the voting stock of AFC. Representatives
of KPMG LLP will be present at the Annual Meeting. They will be given an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions from shareholders present at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION
---------------------
OF THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS OF AFC.
Additional Information
Cost of Proxy Solicitation
The cost of solicitation of proxies by AFC, which is expected to be less
than $75,000, will be borne by AFC. Kissel-Blake, a division of Shareholder
Communications Corporation ("K-B") has been retained to assist in the
solicitation of proxies under a contract providing for payment of a fee of
$6,500 plus reimbursement for its expenses. In addition to solicitations by
mail, K-B, or a number of officers and employees of AFC and the Association, may
solicit proxies in person, by mail or by telephone, but none of these persons
will receive any compensation for their solicitation activities in addition to
their regular compensation. Arrangements will also be made with brokerage houses
and other custodians, nominees, and fiduciaries for forwarding solicitation
material to the beneficial owners of AFC Common Stock held of record by such
fiduciaries, and AFC will reimburse them for their reasonable expenses in
accordance with the rules of the SEC and The Nasdaq Stock Market.
Shareholder Proposals
To be considered for inclusion in AFC's proxy statement and form of proxy
relating to the annual meeting of shareholders to be held in 2000, a shareholder
proposal must be received by the Secretary of AFC at the address set forth on
the first page of this Proxy Statement not later than December 13, 1999. Any
such proposal will be subject to 17 C.F.R. (S)240.14a-8 promulgated by the SEC
under the Exchange Act.
Notice of Business to be Conducted at an Annual Meeting
The Bylaws of AFC provide an advance notice procedure for a shareholder to
properly bring business before an annual meeting or to nominate any person for
election to the Board. The shareholder must give written advance notice to the
Secretary of AFC not less than ninety (90) days before the date originally fixed
for such meeting; provided, however, that in the event that less than one
hundred (100) days notice or prior public disclosure of the date of the meeting
is given or made to shareholders, notice by the shareholder, to be timely, must
be received not later than the close of business on the tenth day following the
date on which AFC's notice to shareholders of the annual meeting date was mailed
or such public disclosure was made. The advance notice by shareholders must
include the shareholder's name and address, as they appear on AFC's record of
shareholders, the class and number of shares of AFC's capital stock that are
beneficially owned by such shareholder, a brief description of the proposed
business or the names of the person(s) the shareholder proposes to nominate,
and, as to business which the shareholder seeks to bring before an annual
meeting, the reason for conducting such business at the annual meeting and any
material interest of such shareholder in the proposed business. In the case of
nominations for election to the Board, certain information regarding the nominee
must also be provided. Such nominations and related information would be
reviewed by the Nominating Committee of the Board as described in "Committees
and Meetings of the Board" above. Nothing in this paragraph shall be deemed to
require AFC to include in its proxy statement and proxy relating to an annual
meeting any shareholder proposal which does not meet all of the requirements for
inclusion established by the SEC in effect at the time such
31
<PAGE>
proposal is received or any shareholder nomination.
Other Matters Which May Properly Come Before the Meeting
The Board knows of no business which will be presented for consideration at
the Annual Meeting other than as stated in the Notice of Annual Meeting of
Shareholders. If, however, other matters are properly brought before the Annual
Meeting, the dates by which shareholder proposals and notices of business to be
conducted at an Annual Meeting having been previously disclosed, it is the
intention of the persons named in the accompanying proxy to vote the shares
represented thereby on such matters as directed by the Board.
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 by
voting at the Annual Meeting.
An additional copy of AFC's annual report on Form 10-K (without exhibits)
for the year ended December 31, 1998, as filed with the SEC, will be furnished
without charge to any shareholder upon written request to Astoria Financial
Corporation, Investor Relations Department, One Astoria Federal Plaza, Lake
Success, New York 11042-1085.
By order of the Board of Directors,
/s/ William K. Sheerin
William K. Sheerin
Executive Vice President and Secretary
Lake Success, New York
April 9, 1999
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
32
<PAGE>
Exhibit A
1999 Stock Option Plan for Officers and Employees
-------------------------------------------------
of
--
Astoria Financial Corporation
-----------------------------
Article I
---------
Purpose
-------
Section 1.1 General Purpose of the Plan.
---------------------------
The purpose of the Plan is to promote the growth and profitability of
Astoria Financial Corporation, to provide certain key officers and employees of
Astoria Financial Corporation and affiliates with an incentive to achieve
corporate objectives, to attract and retain key individuals of outstanding
competence and to provide such individuals with an equity interest in Astoria
Financial Corporation.
Article II
----------
Definitions
-----------
The following definitions shall apply for the purposes of this Plan,
unless a different meaning is plainly indicated by the context:
Section 2.1 Association means Astoria Federal Savings and Loan
-----------
Association, a federally chartered savings institution, and any successor
thereto.
Section 2.2 Board means the board of directors of Astoria Financial
-----
Corporation.
Section 2.3 Change in Control of the Company means any of the
--------------------------------
following events:
(a) approval by the stockholders of Astoria Financial Corporation of a
transaction that would result in the reorganization, merger or
consolidation of Astoria Financial Corporation with one or more other
persons, other than a transaction following which:
(i) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the outstanding equity ownership interests in Astoria Financial
Corporation; and
(ii) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of Astoria Financial
Corporation;
(b) the acquisition of all or substantially all of the assets of
Astoria Financial Corporation or beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the
outstanding securities of Astoria Financial Corporation entitled to vote
generally in the election of directors by any person or by any persons
acting in concert, or
A-1
<PAGE>
approval by the stockholders of Astoria Financial Corporation of any
transaction which would result in such an acquisition;
(c) a complete liquidation or dissolution of Astoria Financial
Corporation, or approval by the stockholders of Astoria Financial
Corporation of a plan for such liquidation or dissolution;
(d) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board of Directors of Astoria Financial
Corporation do not belong to any of the following groups:
(i) individuals who were members of the Board of Directors of
Astoria Financial Corporation on the date of this Agreement; or
(ii) individuals who first became members of the Board of
Directors of Astoria Financial Corporation after the date of this
Agreement either:
(A) upon election to serve as a member of the Board of
Directors of Astoria Financial Corporation by affirmative vote of
three-quarters of the members of such Board, or of a nominating
committee thereof, in office at the time of such first election;
or
(B) upon election by the stockholders of Astoria Financial
Corporation to serve as a member of the Board of Astoria
Financial Corporation, but only if nominated for election by
affirmative vote of three-quarters of the members of the Board of
Directors of Astoria Financial Corporation, or of a nominating
committee thereof, in office at the time of such first
nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of the
Board of Astoria Financial Corporation; or
(e) any event which would be described in section 2.3(a), (b), (c) or
(d) if the term "Association" were substituted for the term "Company"
therein.
In no event, however, shall a Change in Control be deemed to have occurred as a
result of any acquisition of securities or assets of Astoria Financial
Corporation, the Association, or a subsidiary of either of them, by Astoria
Financial Corporation, the Association, or a subsidiary of either of them, or by
any employee benefit plan maintained by any of them. For purposes of this
section 2.3, the term "person" shall have the meaning assigned to it under
sections 13(d)(3) or 14(d)(2) of the Exchange Act.
Section 2.4 Code means the Internal Revenue Code of 1986 (including
----
the corresponding provisions of any succeeding law).
Section 2.5 Committee means the Committee described in section 3.1.
---------
Section 2.6 Company means Astoria Financial Corporation, a
-------
corporation organized and existing under the laws of the State of Delaware, and
any successor thereto, the Association and any successor thereto and, with the
prior approval of the Board, and subject to such terms and conditions as may be
imposed by the Board, any other savings bank, savings and loan association,
bank, corporation, financial institution or other business
A-2
<PAGE>
organization or institution.
Section 2.7 Disability means a condition of total incapacity,
----------
mental or physical, for further performance of duty with the Company which the
Committee shall have determined, on the basis of competent medical evidence, is
likely to be permanent.
Section 2.8 Disinterested Board Member means a member of the Board
--------------------------
who (a) is not a current employee of the Company, (b) is not a former employee
of the Company who receives compensation for prior services (other than benefits
under a tax-qualified retirement plan) during the taxable year, (c) has not been
an officer of the Company, (d) does not receive remuneration from the Company,
either directly or indirectly, in any capacity other than as a director and (e)
is not currently and for a period of at least one year has not been eligible for
discretionary awards under any stock compensation plan of the Company. The term
Disinterested Board Member shall be interpreted in such manner as shall be
necessary to conform to the requirements of section 162(m) of the Code and Rule
16b-3 promulgated under the Exchange Act.
Section 2.9 Effective Date means the date on which the Plan is
--------------
approved by the holders of a majority of the Shares represented in person or by
proxy at a meeting duly called and held.
Section 2.10 Eligible Individual means any individual whom the
-------------------
Committee may determine to be a key officer or employee of the Company and
select to receive a grant of an Option pursuant to the Plan.
Section 2.11 Exchange Act means the Securities Exchange Act of 1934.
------------
Section 2.12 Exercise Price means the price per Share at which
--------------
Shares subject to an Option may be purchased upon exercise of the Option,
determined in accordance with section 4.4.
Section 2.13 Fair Market Value means, with respect to a Share on a
-----------------
specified date:
(a) the final quoted sales price on the date in question (or if there
is no reported sale on such date, on the last preceding date on which any
reported sale occurred) as reported in the principal consolidated reporting
system with respect to securities listed or admitted to trading on the
principal United States securities exchange on which the Shares are listed
or admitted to trading; or
(b) if the Shares are not listed or admitted to trading on any such
exchange, the closing bid quotation with respect to a Share on such date on
the National Association of Securities Dealers Automated Quotations System,
or, if no such quotation is provided, on another similar system, selected
by the Committee, then in use; or
(c) if sections 2.13(a) and (b) are not applicable, the fair market
value of a Share as the Committee may determine.
Section 2.14 Incentive Stock Option means a right to purchase Shares
----------------------
that is granted pursuant to section 4.1, that is designated by the Committee to
be an Incentive Stock Option and that is intended to satisfy the requirements of
section 422A of the Code.
Section 2.15 Limited Stock Appreciation Right means a right granted
--------------------------------
pursuant to section 4.9.
Section 2.16 Non-Qualified Stock Option means a right to purchase
--------------------------
Shares that is granted pursuant to section 4.1, that is designated by the
Committee to be a Non-Qualified Stock Option and that is not intended to satisfy
the requirements of section 422A of the Code.
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<PAGE>
Section 2.17 Option means either an Incentive Stock Option or a Non-
------
Qualified Stock Option.
Section 2.18 Option Period means the period during which an Option
-------------
may be exercised, de termined in accordance with section 4.5.
Section 2.19 Person means an individual, a corporation, a bank, a
------
savings bank, a savings and loan association, a financial institution, a
partnership, an association, a joint-stock company, a trust, an estate, an
unincorporated organization and any other business organization or institution.
Section 2.20 Plan means the 1999 Stock Option Plan for Officers and
----
Employees of Astoria Financial Corporation, as amended from time to time.
Section 2.21 Qualified Domestic Relations Order means a Domestic
----------------------------------
Relations Order that: (a) clearly specifies (i) the name and last known mailing
address of the Option holder and of each person given rights under such Domestic
Relations Order, (ii) the amount or percentages of the Option holder's benefits
under this Plan to be paid to each person covered by such Domestic Relations
Order, (iii) the number of payments or the period to which such Domestic
Relations Order applies, and (iv) the name of this Plan; and (b) does not
require the payment of a benefit in a form or amount that is (i) not otherwise
provided for under the Plan, or (ii) inconsistent with a previous Qualified
Domestic Relations Order. For the purposes of this Plan, a "Domestic Relations
Order" means a judgment, decree or order (including the approval of a property
settlement) that is made pursuant to a state domestic relations or community
property law and relates to the provision of child support, alimony payments, or
marital property rights to a spouse, child or other dependent of an Option
holder.
Section 2.22 Retirement means retirement at the normal or early
----------
retirement date as set forth in any tax-qualified retirement/pension plan of the
Association.
Section 2.23 Share means a share of Common Stock, par value $.01 per
-----
share, of Astoria Financial Corporation.
Section 2.24 Termination for Cause means the termination upon an
---------------------
intentional failure to perform stated duties, breach of a fiduciary duty
involving personal dishonesty, which results in material loss to the Company or
one of its affiliates or willful violation of any law, rule or regulation (other
than traffic violations or similar offenses) or final case-and-desist order
which results in material loss to the Company or one of its affiliates.
Section 2.25 Threatened Change in Control means (a) the circulation
----------------------------
of a proxy statement by any Person other than management of Astoria Financial
Corporation seeking stockholder approval of a transaction that would result in a
Change in Control of the Company or (b) the commencement of a tender offer
(within the meaning of section 14 of the Exchange Act) which, if consummated,
would result in a Change in Control of the Company.
Article III
-----------
Administration
--------------
Section 3.1 Committee.
---------
The Plan shall be administered by a Committee consisting of the
members of the Compensation Committee of Astoria Financial Corporation who are
Disinterested Board Members. If fewer than three members of the Compensation
Committee are Disinterested Board Members, then the Board shall appoint to the
Committee such additional Disinterested Board Members as shall be necessary to
provide for a Committee consisting of at least three Disinterested Board
Members.
Section 3.2 Committee Action.
----------------
The Committee shall hold such meetings, and may make such
administrative rules and regulations,
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as it may deem proper. A majority of the members of the Committee shall
constitute a quorum, and the action of a majority of the members of the
Committee present at a meeting at which a quorum is present, as well as actions
taken pursuant to the unanimous written consent of all of the members of the
Committee without holding a meeting, shall be deemed to be actions of the
Committee. All actions of the Committee shall be final and conclusive and shall
be binding upon the Company and all other interested parties. Any Person dealing
with the Committee shall be fully protected in relying upon any written notice,
instruction, direction or other communication signed by the secretary of the
Committee and one member of the Committee, by two members of the Committee or by
a representative of the Committee authorized to sign the same in its behalf.
Section 3.3 Committee Responsibilities.
--------------------------
Subject to the terms and conditions of the Plan and such limitations
as may be imposed from time to time by the Board, the Committee shall be
responsible for the overall management and administration of the Plan and shall
have such authority as shall be necessary or appropriate in order to carry out
its responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine all questions
that may arise under the Plan as to eligibility for participation in the
Plan, the number of Shares subject to the Options, if any, to be granted,
and the terms and conditions thereof;
(b) to adopt rules and regulations and to prescribe forms for the
operation and administration of the Plan; and
(c) to take any other action not inconsistent with the provisions of
the Plan that it may deem necessary or appropriate.
Article IV
----------
Stock Options
-------------
Section 4.1 In General.
----------
Subject to the limitations of the Plan, the Committee may, in its
discretion, grant to an Eligible Individual an Option to purchase Shares. Any
such Option shall be evidenced by a written agreement which shall:
(a) designate the Option as either an Incentive Stock Option or a Non-
Qualified Stock Option;
(b) specify the number of Shares covered by the Option;
(c) specify the Exercise Price, determined in accordance with section
4.4, for the Shares subject to the Option;
(d) specify the Option Period determined in accordance with section
4.5;
(e) set forth specifically or incorporate by reference the applicable
provisions of the Plan; and
(f) contain such other terms and conditions not inconsistent with the
Plan as the Com mittee may, in its discretion, prescribe with respect to an
Option granted to an Eligible Individual.
Section 4.2 Available Shares.
----------------
Subject to section 5.3, the maximum aggregate number of Shares with
respect to which Options may be granted at any time shall be equal to the excess
of:
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(a) 2,500,000 Shares; over
(b) the sum of:
(i) the number of Shares with respect to which previously granted
Options may then or may in the future be exercised; plus
(ii) the number of Shares with respect to which previously
granted Options have been exercised.
For purposes of this section 4.2, an Option shall not be considered as having
been exercised to the extent that such Op tion terminates by reason other than
the purchase of the related Shares.
Section 4.3 Size of Option.
--------------
Subject to section 4.2 and such limitations as the Board may from time
to time impose, the number of Shares as to which an Eligible Individual may be
granted Options shall be determined by the Committee, in its discretion. The
maximum number of Shares that may be granted to any one individual under this
Plan shall be the entire number of Shares then available under the Plan.
Section 4.4 Exercise Price.
--------------
The price per Share at which an Option granted to an Eligible
Individual may be exercised shall be determined by the Committee, in its
discretion; provided, however, that the Exercise Price shall not be less than
(a) the Fair Market Value of a Share on the date on which the Option is granted
and (b) in the case of an Option intended to be an Incentive Stock Option that
is granted to an Eligible Individual who, at the time the Option is granted,
owns Shares comprising more than 10% of the total combined voting power of all
classes of stock of the Company, shall not be less than 110% of the Fair Market
Value of a Share.
Section 4.5 Option Period.
-------------
The Option Period during which an Option granted to an Eligible
Individual may be exercised shall commence on the date specified by the
Committee in the Option agreement and shall expire on the earliest of:
(a) the date specified by the Committee in the Option agreement;
(b) the last day of the three-month period commencing on the date of
the Eligible Individual's termination of employment with the Company, other
than on account of death or Disability, Retirement or a Termination for
Cause;
(c) the last day of the one-year period commencing on the date of the
Eligible Individual's termination of employment due to death, Disability or
Retirement;
(d) as of the time and on the date the Eligible Individual ceases to
be an employee of the Company due to a Termination for Cause;
(e) the last day of the ten-year period commencing on the date on
which the Option was granted; and
(f) for an Option intended to be an Incentive Stock Option that is
granted to an Eligible Individual who, at the time the Option is granted,
owns Shares comprising more than 10% of the total combined voting power of
all classes of stock of the Company, the last day of the five-year period
commencing on the date on which the Option was granted;
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<PAGE>
provided, however, that in the event of a Threatened Change in Control or a
Change in Control of the Company while there is outstanding any Option whose
Option Period has not commenced, such Option Period shall automatically commence
on the earliest date on which the Threatened Change in Control or Change in
Control of the Company is deemed to have occurred.
Section 4.6 Method of Exercise.
------------------
(a) Subject to the limitations of the Plan and the Option agreement,
an Option holder may, at any time during the Option Period, exercise his right
to purchase all or any part of the Shares to which the Option relates; provided,
however, that the minimum number of Shares which may be purchased shall be 100,
or, if less, the total number of Shares relating to the Option which remain
unpurchased. An Option holder shall exercise an Option to purchase Shares by:
(i) giving written notice to the Committee, in such form and manner as
the Committee may prescribe, of his intent to exercise the Option;
(ii) delivering to the Committee full payment, consistent with section
4.6(b), for the Shares as to which the Option is to be exercised; and
(iii) satisfying such other conditions as may be prescribed in the
Option agreement.
(b) The Exercise Price of Shares to be purchased upon exercise of any
Option shall be paid in full in cash (by certified or bank check or such other
instrument as the Company may accept) or, if and to the extent permitted by the
Committee, by one or more of the following: (i) in the form of Shares already
owned beneficially for a period of more than six months by the Option Holder
having an aggregate Fair Market Value on the date the Option is exercised equal
to the aggregate Exercise Price to be paid; (ii) after a period of six months
from the date of grant of any such Option, by requesting the Company to cancel
without payment Options outstanding to such Person for that number of Shares
whose aggregate Fair Market Value on the date of exercise, when reduced by their
aggregate Exercise Price, equals the aggregate Exercise Price of the Options
being exercised; or (iii) by a combination thereof. Payment for any Shares to
be purchased upon exercise of an Option may also be made by delivering a
properly executed exercise notice to the Company, together with a copy of
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the purchase price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.
(c) When the requirements of section 4.6(a) and (b) have been
satisfied, the Committee shall take such action as is necessary to cause the
issuance of a stock certificate evidencing the Option holder's ownership of such
Shares. The Person exercising the Option shall have no right to vote or to
receive dividends, nor have any other rights with respect to the Shares, prior
to the date as of which such Shares are transferred to such Person on the stock
transfer records of the Company, and no adjustments shall be made for any
dividends or other rights for which the record date is prior to the date as of
which such transfer is effected, except as may be required under section 5.3.
Section 4.7 Limitations on Options.
----------------------
(a) An Option by its terms shall not be transferable by the Option
holder other than by will or the laws of descent and distribution, or pursuant
to the terms of a Qualified Domestic Relations Order, and shall be exercisable,
during the life of the Option holder, only by the Option holder or an alternate
payee designated pursuant to such a Qualified Domestic Relations Order;
provided, however, that an Eligible Individual may, at any time at or after the
grant of a Non-Qualified Stock Option under the Plan, apply to the Committee for
approval to transfer all or any portion of such Non-Qualified Stock Option which
is then unexercised to such Eligible Individual's spouse, and the lineal
ascendents and lineal descendants of such Eligible Individual or his spouse, or
any one or more of them, or to an entity wholly owned by (including but not
limited to a trust the exclusive beneficiaries of which are) one or more of them
or wholly owned jointly by one or more of them and the Eligible Individual. The
Committee may approve or withhold approval of such transfer in its sole and
absolute discretion. If such transfer is approved, it shall be effected
A-7
<PAGE>
by written notice to the Company given in such form and manner as the Committee
may prescribe and actually received by the Company prior to the death of the
person giving it. Thereafter, the transferee shall have with respect to such
Non-Qualified Stock Option, all of the rights, privileges and obligations which
would attach thereunder to the transferor. If a privilege of the Option depends
on the life, employment or other status of the transferor, such privilege of the
Option for the transferee shall continue to depend upon the life, employment or
other status of the transferor. The Committee shall have full and exclusive
authority to interpret and apply the provisions of the Plan to transferees to
the extent not specifically addressed herein.
(b) The Company's obligation to deliver Shares with respect to an
Option shall, if the Committee so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Option holder to whom such
Shares are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of applicable federal,
state or local law. It may be provided that any such representation shall
become inoperative upon a registration of the Shares or upon the occurrence of
any other event eliminating the necessity of such representation. The Company
shall not be required to deliver any Shares under the Plan prior to (i) the
admission of such Shares to listing on any stock exchange on which Shares may
then be listed, or (ii) the completion of such registration or other
qualification under any state or federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.
Section 4.8 Additional Restrictions on Incentive Stock Options.
--------------------------------------------------
In addition to the limitations of section 4.7, an Option designated by
the Committee to be an Incentive Stock Option shall be subject to the following
limitations:
(a) If, for any calendar year, the sum of (i) plus (ii) exceeds
$100,000, where (i) equals the Fair Market Value (determined as of the date
of the grant) of Shares subject to an Option intended to be an Incentive
Stock Option which first become available for purchase during such cal
endar year, and (ii) equals the Fair Market Value (determined as of the
date of grant) of Shares subject to any other options intended to be
Incentive Stock Options and previously granted to the same Eligible
Individual which first become exercisable in such calendar year, then that
portion of the Shares granted pursuant to such options which cause the sum
of (i) and (ii) to exceed $100,000 shall be deemed to be Shares granted
pursuant to a Non-Qualified Stock Option or Non-Qualified Stock Options,
with the same terms as the Option or Options intended to be an Incentive
Stock Option;
(b) Except with the prior written approval of the Committee, no
individual shall dispose of Shares acquired pursuant to the exercise of an
Incentive Stock Option until after the later of (i) the second anniversary
of the date on which the Incentive Stock Option was granted, or (ii) the
first anniversary of the date on which the Shares were acquired.
Section 4.9 Change in Control Cash Out.
--------------------------
(a) Each Option granted under this Plan shall be accompanied by a
Limited Stock Appreciation Right that is exercisable at the times and upon the
terms and conditions set forth herein. Each Limited Stock Appreciation Right
granted hereunder shall be exercisable for a period commencing on the date on
which a Change in Control of the Company occurs and ending six (6) months after
such date or, if later in the case of any Person, thirty (30) days after the
earliest date on which such Person may exercise the Limited Stock Appreciation
Right without subjecting himself to liability under section 16 of the Securities
Exchange Act of 1934, as amended. A Person in possession of a Limited Stock
Appreciation Right granted hereunder may exercise such Limited Stock
Appreciation Right by:
(i) giving written notice to the Committee, in such form and manner as
the Committee may prescribe, of his intent to exercise the Limited Stock
Appreciation Right; and
(ii) agreeing in such written notice to the cancellation of Options
then outstanding to
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<PAGE>
him for a number of Shares equal to the number of Shares for which the
Limited Stock Appreciation Right is being exercised.
Except as provided in section 4.9(c), within ten (10) days after the giving of
such a notice, the Committee shall cause the Company to deliver to such Person a
monetary payment in an amount per Share equal to the amount by which the Change
in Control Consideration exceeds the Exercise Price per Share of each of the
Options being canceled.
(b) For purposes of section 4.9(a), the term Change in Control
Consideration shall mean the greater of (i) the highest price per Share paid by
any Person who initiated or sought to effect the Change in Control for a Share
during the period of one (1) year ending on the date of the relevant Change in
Control of the Company; and (ii) the average Fair Market Value of a Share over
the last ten (10) trading days preceding the date of exercise of the Limited
Stock Appreciation Right.
(c) Notwithstanding anything herein contained to the contrary, the
Limited Stock Appreciation Rights granted hereunder shall be canceled
immediately prior to the effective time of a Change in Control of the Company
resulting from a transaction between the Company and another party pursuant to a
written agreement whereby the consummation of the transaction is conditioned
upon the availability of "pooling of interests" accounting treatment (within the
meaning of A.P.B. No. 16 or any successor thereto); provided, however, that the
cancellation of such Limited Stock Appreciation Rights shall be subject to the
following conditions:
(i) the existence of the Limited Stock Appreciation Rights would (in
the opinion of the firm of independent certified public accountants
regularly engaged to audit the Company's financial statements) render the
transaction ineligible for pooling of interests accounting treatment;
(ii) the cancellation of the Limited Stock Appreciation Rights would
(in the opinion of the firm of independent certified public accountants
regularly engaged to audit the Company's financial statements) render the
transaction eligible for pooling of interests accounting treatment;
(iii) the transaction is, in fact, consummated; and
(iv) the written agreement providing for the transaction provides for
each Person to whom a Limited Stock Appreciation Right has been granted to
receive, upon the effective date of such transaction, property with a fair
market value at least equal to the monetary payment that would be made upon
exercise of the Limited Stock Appreciation Right.
Article V
---------
Amendment and Termination
-------------------------
Section 5.1 Termination.
-----------
The Board may suspend or terminate the Plan in whole or in part at any
time prior to the tenth anniversary of the Effective Date by giving written
notice of such suspension or termination to the Committee. Unless sooner
terminated, the Plan shall terminate automatically on the day preceding the
tenth anniversary of the Effective Date. In the event of any suspension or
termination of the Plan, all Options theretofore granted under the Plan that are
outstanding on the date of such suspension or termination of the Plan shall
remain outstanding under the terms of the Option agreements granting such
Options.
Section 5.2 Amendment.
---------
The Board may amend or revise the Plan in whole or in part at any
time; provided, however, that if the amendment or revision:
(a) materially increases the benefits accruing under the Plan;
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<PAGE>
(b) materially increases the number of Shares which may be issued
under the Plan; or
(c) materially modifies the requirements as to eligibility for Options
under the Plan;
such amendment or revision shall be subject to approval by the shareholders of
the Company.
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<PAGE>
Section 5.3 Adjustments in the Event of a Business Reorganization.
-----------------------------------------------------
(a) In the event of any merger, consolidation, or other business
reorganization in which the Company is the surviving entity, and in the event of
any stock split, stock dividend or other event generally affecting the number of
Shares held by each Person who is then a holder of record of Shares, the number
of Shares covered by each outstanding Option and the number of Shares available
pursuant to section 4.2 shall be adjusted to account for such event. Such
adjustment shall be effected by multiplying such number of Shares by an amount
equal to the number of Shares that would be owned after such event by a Person
who, immediately prior to such event, was the holder of record of one Share, and
the Exercise Price of the Options shall be adjusted by dividing the Exercise
Price by such number of Shares; provided, however, that the Committee may, in
its discretion, establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other business
reorganization in which the Company is not the surviving entity:
(i) any Options granted under the Plan which remain outstanding may be
canceled as of the effective date of such merger, consolidation, business
reorganization, liquidation or sale by the Board upon 30 days' written
notice to each Option holder in advance of the effective date of such
event; and
(ii) any Option which is not canceled pursuant to section 5.3(b)(i)
shall be adjusted in such manner as the Committee shall deem appropriate to
account for such merger, consolidation or other business reorganization.
Article VI
----------
Miscellaneous
-------------
Section 6.1 Status as an Employee Benefit Plan.
----------------------------------
This Plan is not intended to satisfy the requirements for
qualification under section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended. It is intended to be a non-
qualified incentive compensation program that is exempt from the regulatory
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The Plan shall be construed and administered so as to effectuate this intent.
Section 6.2 No Right to Continued Employment.
--------------------------------
Neither the establishment of the Plan nor any provisions of the Plan
nor any action of the Board or the Committee with respect to the Plan shall be
held or construed to confer upon any Eligible Individual any right to a
continuation of employment by the Company. The Company reserves the right to
dismiss any Eligible Individual or otherwise deal with any Eligible Individual
to the same extent as though the Plan had not been adopted.
Section 6.3 Construction of Language.
------------------------
Whenever appropriate in the Plan, words used in the singular may be
read in the plural, words used in the plural may be read in the singular, and
words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or section number shall
refer to an Article or section of this Plan unless otherwise indicated.
Section 6.4 Governing Law.
-------------
The Plan shall be construed, administered and enforced according to
the laws of the State of New York without giving effect to the conflict of laws
principles thereof, except to the extent that such laws are preempted by federal
law.
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<PAGE>
Section 6.5 Headings.
--------
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and
the text of the Plan, the text shall control.
Section 6.6 Non-Alienation of Benefits.
--------------------------
The right to receive a benefit under the Plan shall not be subject in
any manner to anticipation, alienation or assignment, nor shall such right be
liable for or subject to debts, contracts, liabilities, engagements or torts,
except as required pursuant to a Qualified Domestic Relations Order or as
otherwise permitted pursuant to section 4.7(a).
Section 6.7 Taxes.
-----
The Company shall have the right to deduct from all amounts paid by
the Company in cash with respect to an Option under the Plan any taxes required
by law to be withheld with respect to such Option. Where any Person is entitled
to receive Shares pursuant to the exercise of an Option, the Company shall have
the right to require such Person to pay the Company the amount of any tax which
the Company is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a sufficient number of Shares to
cover the amount re quired to be withheld.
Section 6.8 Approval of Shareholders.
------------------------
The Plan and all Options and Limited Stock Appreciation Rights granted
hereunder shall be conditioned on the approval of the Plan by the shareholders
of Astoria Financial Corporation. No Option or Limited Stock Appreciation
Rights granted under the Plan shall be effective, nor shall any such Option or
Limited Stock Appreciation Rights be exercised or any Shares issued or
purchased, prior to such approval.
Section 6.9 Notices.
-------
Any communication required or permitted to be given under the Plan,
including any notice, direction, designation, comment, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally or five (5) days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below, or at such other address as one such
party may by written notice specify to the other party:
(a) If to the Committee:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: Corporate Secretary
-------------------
(b) If to an Option holder, to the Option holder's address as shown
in the Company's personnel records.
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Exhibit B
1999 Stock Option Plan for Outside Directors
--------------------------------------------
of
--
Astoria Financial Corporation
-----------------------------
Article I
---------
Purpose
-------
Section 1.1 General Purpose of the Plan.
---------------------------
The purpose of the Plan is to promote the growth and profitability of
Astoria Financial Corporation, to provide Eligible Directors of Astoria
Financial Corporation and affiliates with an incentive to achieve corporate
objectives, to attract and retain key directors of outstanding competence and to
provide such Eligible Directors with an equity interest in Astoria Financial
Corporation.
Article II
----------
Definitions
-----------
The following definitions shall apply for the purposes of this Plan,
unless a different meaning is plainly indicated by the context:
Section 2.1 Association means Astoria Federal Savings and Loan
-----------
Association, a federally chartered savings institution, and any successor
thereto.
Section 2.2 Board means the board of directors of Astoria Financial
-----
Corporation.
Section 2.3 Change in Control of the Company means any of the
--------------------------------
following events:
(a) approval by the stockholders of Astoria Financial Corporation of a
transaction that would result in the reorganization, merger or
consolidation of Astoria Financial Corporation with one or more other
persons, other than a transaction following which:
(i) at least 51% of the equity ownership interests of the entity
resulting from such transaction are beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) in
substantially the same relative proportions by persons who,
immediately prior to such transaction, beneficially owned (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
of the outstanding equity ownership interests in Astoria Financial
Corporation; and
(ii) at least 51% of the securities entitled to vote generally in
the election of directors of the entity resulting from such
transaction are beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such transaction,
beneficially owned (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) at least 51% of the securities entitled to vote
generally in the election of directors of Astoria Financial
Corporation;
(b) the acquisition of all or substantially all of the assets of
Astoria Financial Corporation or beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the
outstanding securities of Astoria Financial Corporation entitled to vote
generally in the election of directors by any person or by any persons
acting in concert, or
B-1
<PAGE>
approval by the stockholders of Astoria Financial Corporation of any
transaction which would result in such an acquisition;
(c) a complete liquidation or dissolution of Astoria Financial
Corporation, or approval by the stockholders of Astoria Financial
Corporation of a plan for such liquidation or dissolution;
(d) the occurrence of any event if, immediately following such event,
at least 50% of the members of the Board of Directors of Astoria Financial
Corporation do not belong to any of the following groups:
(i) individuals who were members of the Board of Directors of
Astoria Financial Corporation on the date of this Agreement; or
(ii) individuals who first became members of the Board of
Directors of Astoria Financial Corporation after the date of this
Agreement either:
(A) upon election to serve as a member of the Board of
Directors of Astoria Financial Corporation by affirmative vote of
three-quarters of the members of such Board, or of a nominating
committee thereof, in office at the time of such first election;
or
(B) upon election by the stockholders of Astoria Financial
Corporation to serve as a member of the Board of Directors of
Astoria Financial Corporation, but only if nominated for election
by affirmative vote of three-quarters of the members of the Board
of Directors of Astoria Financial Corporation, or of a nominating
committee thereof, in office at the time of such first
nomination;
provided, however, that such individual's election or nomination did
not result from an actual or threatened election contest (within the
meaning of Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) other than by or on behalf of the
Board of Directors of Astoria Financial Corporation; or
(e) any event which would be described in section 2.3(a), (b), (c) or
(d) if the term "Association" were substituted for the term "Astoria
Financial Corporation" therein.
In no event, however, shall a Change in Control be deemed to have occurred as a
result of any acquisition of securities or assets of Astoria Financial
Corporation, the Association, or a subsidiary of either of them, by Astoria
Financial Corporation, the Association, or a subsidiary of either of them, or by
any employee benefit plan maintained by any of them. For purposes of this
section 2.4, the term "person" shall have the meaning assigned to it under
sections 13(d)(3) or 14(d)(2) of the Exchange Act.
Section 2.4 Code means the Internal Revenue Code of 1986 (including
----
the corresponding provisions of any succeeding law).
Section 2.5 Committee means the Committee described in section 3.1.
---------
Section 2.6 Company means Astoria Financial Corporation, a
-------
corporation organized and existing under the laws of the State of Delaware, and
any successor thereto, the Association and any successor thereto
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<PAGE>
and, with the prior approval of the Board, and subject to such terms and
conditions as may be imposed by the Board, any other savings bank, savings and
loan association, bank, corporation, financial institution or other business
organization or institution.
Section 2.7 Disability means a condition of total incapacity,
----------
mental or physical, for further performance of duty with the Company which the
Committee shall have determined, on the basis of competent medical evidence, is
likely to be permanent.
Section 2.8 Effective Date means the date on which the Plan is
--------------
approved by the holders of a majority of the Shares represented in person or by
proxy at a meeting duly called and held.
Section 2.9 Eligible Director means a member of the Board who is
-----------------
not also an employee or an officer of the Company.
Section 2.10 Exchange Act means the Securities Exchange Act of 1934.
------------
Section 2.11 Exercise Price means the price per Share at which
--------------
Shares subject to an Option may be purchased upon exercise of the Option,
determined in accordance with section 4.3.
Section 2.12 Fair Market Value means, with respect to a Share on a
-----------------
specified date:
(a) the final quoted sales price on the date in question (or if there
is no reported sale on such date, on the last preceding date on which any
reported sale occurred) as reported in the principal consolidated reporting
system with respect to securities listed or admitted to trading on the
principal United States securities exchange on which the Shares are listed
or admitted to trading; or
(b) if the Shares are not listed or admitted to trading on any such
exchange, the closing bid quotation with respect to a Share on such date on
the National Association of Securities Dealers Automated Quotations System,
or, if no such quotation is provided, on another similar system, selected
by the Committee, then in use; or
(c) if sections 2.12(a) and (b) are not applicable, the fair market
value of a Share as the Committee may determine.
Section 2.13 Limited Stock Appreciation Right means a right granted
--------------------------------
pursuant to section 4.7.
Section 2.14 Option means a right to purchase Shares that is granted
------
pursuant to section 4.1.
Section 2.15 Option Period means the period during which an Option
-------------
may be exercised, de termined in accordance with section 4.4.
Section 2.16 Person means an individual, a corporation, a bank, a
------
savings bank, a savings and loan association, a financial institution, a
partnership, an association, a joint-stock company, a trust, an estate, an
unincorporated organization and any other business organization or institution.
Section 2.17 Plan means the 1999 Stock Option Plan for Outside
----
Directors of Astoria Financial Corporation, as amended from time to time.
Section 2.18 Qualified Domestic Relations Order means a Domestic
----------------------------------
Relations Order that: (a) clearly specifies (i) the name and last known mailing
address of the Option holder and of each person given rights under such Domestic
Relations Order, (ii) the amount or percentages of the Option holder's benefits
under this Plan to be paid
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to each person covered by such Domestic Relations Order, (iii) the number of
payments or the period to which such Domestic Relations Order applies, and (iv)
the name of this Plan; and (b) does not require the payment of a benefit in a
form or amount that is (i) not otherwise provided for under the Plan, or (ii)
inconsistent with a previous Qualified Domestic Relations Order. For the
purposes of this Plan, a "Domestic Relations Order" means a judgment, decree or
order (including the approval of a property settlement) that is made pursuant to
a state domestic relations or community property law and relates to the
provision of child support, alimony payments, or marital property rights to a
spouse, child or other dependent of an Option holder.
Section 2.19 Share means a share of Common Stock, par value $.01 per
-----
share of Astoria Financial Corporation.
Article III
-----------
Administration
--------------
Section 3.1 Committee.
---------
The Plan shall be administered by a Committee which shall be the
Compensation Committee of Astoria Financial Corporation.
Section 3.2 Committee Action.
----------------
The Committee shall hold such meetings, and may make such
administrative rules and regulations, as it may deem proper. A majority of the
members of the Committee shall constitute a quorum, and the action of a majority
of the members of the Committee present at a meeting at which a quorum is
present, as well as actions taken pursuant to the unanimous written consent of
all of the members of the Committee without holding a meeting, shall be deemed
to be actions of the Committee. All actions of the Committee shall be final and
conclusive and shall be binding upon the Company and all other interested
parties. Any Person dealing with the Committee shall be fully protected in
relying upon any written notice, instruction, direction or other communication
signed by the secretary of the Committee and one member of the Committee, by two
members of the Committee or by a representative of the Committee authorized to
sign the same in its behalf.
Section 3.3 Committee Responsibilities.
--------------------------
Subject to the terms and conditions of the Plan and such limitations
as may be imposed from time to time by the Board, the Committee shall be
responsible for the overall management and administration of the Plan and shall
have such authority as shall be necessary or appropriate in order to carry out
its responsibilities, including, without limitation, the authority:
(a) to interpret and construe the Plan, and to determine all questions
that may arise under the Plan as to eligibility for participation in the
Plan, the number of Shares subject to the Options to be granted, and the
terms and conditions thereof;
(b) to adopt rules and regulations and to prescribe forms for the
operation and administration of the Plan; and
(c) to take any other action not inconsistent with the provisions of
the Plan that it may deem necessary or appropriate.
Article IV
----------
Option Grants
-------------
Section 4.1 Available Shares.
----------------
Subject to section 5.3, the maximum aggregate number of Shares with
respect to which Options may be granted at any time shall be equal to the excess
of:
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(a) 175,000 Shares; over
(b) the sum of:
(i) the number of Shares with respect to which previously granted
Options may then or may in the future be exercised; plus
(ii) the number of Shares with respect to which previously
granted Options have been exercised.
For purposes of this section 4.1, an Option shall not be considered as having
been exercised to the extent that such Option terminates by reason other than
the purchase of the related Shares.
Section 4.2 Option Grants.
-------------
(a) Following the Effective Date, a Person who becomes an Eligible
Director subsequent to the Effective Date shall be granted, on the 15th day of
the month following the month in which such individual becomes an Eligible
Director (or, if such date is not a business day, the first business day
thereafter), an Option to purchase 4,000 Shares. No Eligible Director shall be
granted more than one Option pursuant to this section 4.2(a).
(b) Subject to sections 4.2(c) and 4.1, on January 15, 2000 and on
January 15 of each calendar year during which the Plan is in effect (or, if such
date is not a business day, the first business day thereafter), each Person who
is an Eligible Director on such date shall be granted an Option to purchase
2,000 Shares.
(c) Notwithstanding sections 4.2(a) and (b), in the event that, as of
the first business day of any calendar month, the number of available Shares
determined under section 4.1 is less than the total number of Shares with
respect to which Options would be granted under sections 4.2(a) and (b) during
such month, each Eligible Director scheduled to receive a grant of Options
during such month shall be granted an Option for the number of whole Shares
determined by multiplying (i) the number of Shares with respect to which the
Eligible Director would have been granted an Option on such date by (ii) a
fraction, the numerator of which is the number of Shares that are then available
under section 4.1 and the denominator of which is the total number of Shares
that would have to have been available under section 4.1 in order to grant all
of the Options that would otherwise have been granted under sections 4.2(a) and
(b) during such month, and rounding to the nearest whole Share; provided,
however, that if rounding will require more Shares to be available than provided
in section 4.1, then the amount determined pursuant to this section 4.2(c) will
be calculated by rounding down to the lesser whole number.
(d) Any Option granted under this section 4.2 shall be evidenced by a
written agreement which shall specify the number of Shares covered by the
Option, the Exercise Price for the Shares subject to the Option, the Option
Period, all as determined pursuant to this Article IV. The Option agreement
shall also set forth specifically or incorporate by reference the applicable
provisions of the Plan.
Section 4.3 Exercise Price.
--------------
The price per Share at which an Option granted to an Eligible Director
under section 4.2 may be exercised shall be the Fair Market Value of a Share on
the date on which the Option is granted.
Section 4.4 Option Period.
-------------
The Option Period during which an Option granted to an Eligible
Director under section 4.2 may be exercised shall commence on the date the
Option is granted and shall expire on the earlier of:
(i) the last day of the one-year period commencing on the date the
Eligible Director ceases to be a director of the Company for any reason
other than removal for cause in accordance with the Company's bylaws;
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<PAGE>
(ii) removal for cause in accordance with the Company's bylaws; or
(iii) the last day of the ten-year period commencing on the date on
which the Option was granted.
Section 4.5 Method of Exercise.
------------------
(a) Subject to the limitations of the Plan and the Option agreement,
an Option holder may, at any time during the Option Period, exercise his right
to purchase all or any part of the Shares to which the Option relates; provided,
however, that the minimum number of Shares which may be purchased at any time
shall be 100, or, if less, the total number of Shares relating to the Option
which remain unpurchased. An Option holder shall exercise an Option to purchase
Shares by:
(i) giving written notice to the Committee, in such form and manner
as the Committee may prescribe, of his intent to exercise the Option;
(ii) delivering to the Committee full payment, consistent with
section 4.5(b), for the Shares as to which the Option is to be exercised;
and
(iii) satisfying such other conditions as may be prescribed in the
Option agreement.
(b) The Exercise Price of Shares to be purchased upon exercise of any
Option shall be paid in full in cash (by certified or bank check or such other
instrument as the Company may accept) or by one or more of the following: (i)
in the form of Shares already owned beneficially for a period of more than six
months by the Option holder having an aggregate Fair Market Value on the date
the Option is exercised equal to the aggregate Exercise Price to be paid; (ii)
after a period of six months from the date of grant of any such Option, by
requesting the Company to cancel without payment Options outstanding to such
Person for that number of Shares whose aggregate Fair Market Value on the date
of exercise, when reduced by their aggregate Exercise Price, equals the
aggregate Exercise Price of the Options being exercised; or (iii) by a
combination thereof. Payment for any Shares to be purchased upon exercise of an
Option may also be made by delivering a properly executed exercise notice to the
Company, together with a copy of irrevocable instructions to a broker to deliver
promptly to the Company the amount of sale or loan proceeds to pay the purchase
price. To facilitate the foregoing, the Company may enter into agreements for
coordinated procedures with one or more brokerage firms.
(c) When the requirements of section 4.5(a) and (b) have been
satisfied, the Committee shall take such action as is necessary to cause the
issuance of a stock certificate evidencing the Option holder's ownership of such
Shares. The Person exercising the Option shall have no right to vote or to
receive dividends, nor have any other rights with respect to the Shares, prior
to the date as of which such Shares are transferred to such Person on the stock
transfer records of the Company, and no adjustments shall be made for any
dividends or other rights for which the record date is prior to the date as of
which such transfer is effected, except as may be required under section 5.3.
Section 4.6 Limitations on Options.
----------------------
(a) An Option by its terms shall not be transferable by the Option
holder other than by will or the laws of descent and distribution, or pursuant
to the terms of a Qualified Domestic Relations Order, and shall be exercisable,
during the life of the Option holder, only by the Option holder or an alternate
payee designated pursuant to such a Qualified Domestic Relations Order;
provided, however, that an Eligible Director may, at any time at or after the
grant of an Option under the Plan, apply to the Committee for approval to
transfer all or any portion of such Option which is then unexercised to such
Eligible Director's spouse, and the lineal ascendents and lineal descendants of
such Eligible Director or his spouse, or any one or more of them, or to an
entity wholly owned by (including but not limited to a trust the exclusive
beneficiaries of which are) one or more of them or wholly owned jointly by one
or more of them and the Eligible Director. The Committee may approve or withhold
approval of such transfer in its sole and absolute discretion. If such transfer
is approved, it shall be effected by written notice to the Company given in such
form and
B-6
<PAGE>
manner as the Committee may prescribe and actually received by the Company prior
to the death of the person giving it. Thereafter, the transferee shall have with
respect to such Option, all of the rights, privileges and obligations which
would attach thereunder to the transferor. If a privilege of the Option depends
on the life, employment or other status of the transferor, such privilege of the
Option for the transferee shall continue to depend upon the life, employment or
other status of the transferor. The Committee shall have full and exclusive
authority to interpret and apply the provisions of the Plan to transferees to
the extent not specifically addressed herein.
(b) The Company's obligation to deliver Shares with respect to an
Option shall, if the Company so requests, be conditioned upon the receipt of a
representation as to the investment intention of the Person to whom such Shares
are to be delivered, in such form as the Committee shall determine to be
necessary or advisable to comply with the provisions of applicable federal,
state or local law. It may be provided that any such representation shall
become inoperative upon a registration of the Shares or upon the occurrence of
any other event eliminating the necessity of such representation. The Company
shall not be required to deliver any Shares under the Plan prior to (i) the
admission of such Shares to listing on any stock exchange on which Shares may
then be listed, or (ii) the completion of such registration or other
qualification under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable.
Section 4.7 Change in Control Cash Out.
--------------------------
(a) Each Option granted under this Plan shall be accompanied by a
Limited Stock Appreciation Right that is exercisable at the times and upon the
terms and conditions set forth herein. Each Limited Stock Appreciation Right
granted hereunder shall be exercisable for a period commencing on the date on
which a Change in Control of the Company occurs and ending six (6) months after
such date or, if later in the case of any Person, thirty (30) days after the
earliest date on which such Person may exercise the Limited Stock Appreciation
Right without subjecting himself to liability under section 16 of the Securities
Exchange Act of 1934, as amended. A Person in possession of a Limited Stock
Appreciation Right granted hereunder may exercise such Limited Stock
Appreciation Right by:
(i) giving written notice to the Committee, in such form and manner
as the Committee may prescribe, of his intent to exercise the Limited Stock
Appreciation Right; and
(ii) agreeing in such written notice to the cancellation of Options
then outstanding to him for a number of Shares equal to the number of
Shares for which the Limited Stock Appreciation Right is being exercised.
Except as provided in section 4.7(c), within ten (10) days after the giving of
such a notice, the Committee shall cause the Company to deliver to such Person a
monetary payment in an amount per Share equal to the amount by which the Change
in Control Consideration exceeds the Exercise Price per Share of each of the
Options being canceled.
(b) For purposes of section 4.7(a), the term Change in Control
Consideration shall mean the greater of (i) the highest price per Share paid by
any Person who initiated or sought to effect the Change in Control for a Share
during the period of one (1) year ending on the date of the relevant Change in
Control of the Company; and (ii) the average Fair Market Value of a Share over
the last ten (10) trading days preceding the date of exercise of the Limited
Stock Appreciation Right.
(c) Notwithstanding anything herein contained to the contrary, the
Limited Stock Appreciation Rights granted hereunder shall be canceled
immediately prior to the effective time of a Change in Control of the Company
resulting from a transaction between the Company and another party pursuant to a
written agreement whereby the consummation of the transaction is conditioned
upon the availability of "pooling of interests" accounting treatment (within the
meaning of A.P.B. No. 16 or any successor thereto); provided, however, that the
cancellation of such Limited Stock Appreciation Rights shall be subject to the
following conditions:
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<PAGE>
(i) the existence of the Limited Stock Appreciation Rights would (in
the opinion of the firm of independent certified public accountants
regularly engaged to audit the Company's financial statements) render the
transaction ineligible for pooling of interests accounting treatment;
(ii) the cancellation of the Limited Stock Appreciation Rights would
(in the opinion of the firm of independent certified public accountants
regularly engaged to audit the Company's financial statements) render the
transaction eligible for pooling of interests accounting treatment;
(iii) the transaction is, in fact, consummated; and
(iv) the written agreement providing for the transaction provides for
each Person to whom a Limited Stock Appreciation Right has been granted to
receive, upon the effective date of such transaction, property other than
cash with a fair market value at least equal to the monetary payment that
would be made upon exercise of the Limited Stock Appreciation Right.
Article V
---------
Amendment and Termination
-------------------------
Section 5.1 Termination.
-----------
The Board may suspend or terminate the Plan in whole or in part at any
time prior to the tenth anniversary of the Effective Date by giving written
notice of such suspension or termination to the Committee. Unless sooner
terminated, the Plan shall terminate automatically on the day preceding the
tenth anniversary of the Effective Date. In the event of any suspension or
termination of the Plan, all Options theretofore granted under the Plan that are
outstanding on the date of such suspension or termination of the Plan shall
remain outstanding under the terms of the Option agreements evidencing such
Options.
Section 5.2 Amendment.
---------
The Board may amend or revise the Plan in whole or in part at any
time; provided, however, that if the amendment or revision:
(a) materially increases the benefits accruing under the Plan;
(b) materially increases the number of Shares which may be issued
under the Plan; or
(c) materially modifies the requirements as to eligibility for Options
under the Plan;
such amendment or revision shall be subject to approval by the shareholders of
the Company.
Section 5.3 Adjustments in the Event of a Business Reorganization.
-----------------------------------------------------
(a) In the event of any merger, consolidation, or other business
reorganization in which the Company is the surviving entity, and in the event of
any stock split, stock dividend or other event generally affecting the number of
Shares held by each Person who is then a holder of record of Shares, the number
of Shares covered by each outstanding Option and the number of Shares available
pursuant to section 4.1 shall be adjusted to account for such event. Such
adjustment shall be effected by multiplying such number of Shares by an amount
equal to the number of Shares that would be owned after such event by a Person
who, immediately prior to such event, was the holder of record of one Share, and
the Exercise Price of the Options shall be adjusted by dividing the Exercise
Price by such number of Shares; provided, however, that the Committee may, in
its discretion, establish another appropriate method of adjustment.
(b) In the event of any merger, consolidation, or other business
reorganization in which the Company is not the surviving entity:
B-8
<PAGE>
(i) any Options granted under the Plan which remain outstanding
may be canceled as of the effective date of such merger,
consolidation, business reorganization, liquidation or sale by the
Board upon 30 days' written notice to each Option holder in ad vance
of the effective date of such event; and
(ii) any Option which is not canceled pursuant to section
5.3(b)(i) shall be adjusted in such manner as the Committee shall deem
appropriate to account for such merger, consolidation or other
business reorganization.
Article VI
----------
Miscellaneous
-------------
Section 6.1 Status as an Employee Benefit Plan.
----------------------------------
This Plan is not intended to satisfy the requirements for
qualification under section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended. It is intended to be a non-
qualified incentive compensation program for self-employed individuals that is
exempt from the regulatory requirements of the Employee Retirement Income
Security Act of 1974, as amended. The Plan shall be construed and administered
so as to effectuate this intent.
Section 6.2 No Right to Continued Employment.
--------------------------------
Neither the establishment of the Plan nor any provisions of the Plan
nor any action of the Board or the Committee with respect to the Plan shall be
held or construed to confer upon any Eligible Director any right to a
continuation of his position as a director of the Company. The Company reserves
the right to remove any Eligible Director or otherwise deal with any Eligible
Director to the same extent as though the Plan had not been adopted.
Section 6.3 Construction of Language.
------------------------
Whenever appropriate in the Plan, words used in the singular may be
read in the plural, words used in the plural may be read in the singular, and
words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or section number shall
refer to an Article or section of this Plan unless otherwise indicated.
Section 6.4 Governing Law.
-------------
The Plan shall be construed, administered and enforced according to
the laws of the State of New York without giving effect to the conflict of laws
principles thereof, except to the extent that such laws are preempted by federal
law.
Section 6.5 Headings.
--------
The headings of Articles and sections are included solely for
convenience of reference. If there is any conflict between such headings and
the text of the Plan, the text shall control.
Section 6.6 Non-Alienation of Benefits.
--------------------------
The right to receive a benefit under the Plan shall not be subject in
any manner to anticipation, alienation or assignment, nor shall such right be
liable for or subject to debts, contracts, liabilities, engagements or torts,
except as required by a Qualified Domestic Relations Order or as otherwise
permitted pursuant to section 4.6(a).
Section 6.7 Taxes.
-----
The Company shall have the right to deduct from all amounts paid by
the Company in cash with respect to an Option under the Plan any taxes required
by law to be withheld with respect to such Option. Where any Person is entitled
to receive Shares pursuant to the exercise of an Option, the Company shall have
the right to require such Person to pay the Company the amount of any tax which
the Company is required to withhold with respect to such Shares, or, in lieu
thereof, to retain, or to sell without notice, a sufficient number of Shares to
cover the amount required
B-9
<PAGE>
to be withheld.
Section 6.8 Approval of Shareholders.
------------------------
The Plan and all Options and Limited Stock Appreciation Rights granted
hereunder shall be conditioned on the approval of the Plan by the shareholders
of Astoria Financial Corporation. No Option or Limited Stock Appreciation Right
granted under the Plan shall be effective, nor shall any such Option or Limited
Stock Appreciation Right be exercised or any Shares issued or purchased, prior
to such approval.
Section 6.9 Notices.
-------
Any communication required or permitted to be given under the Plan,
including any notice, direction, designation, comment, instruction, objection or
waiver, shall be in writing and shall be deemed to have been given at such time
as it is delivered personally or five (5) days after mailing if mailed, postage
prepaid, by registered or certified mail, return receipt requested, addressed to
such party at the address listed below, or at such other address as one such
party may by written notice specify to the other party:
(a) If to the Compensation Committee:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: Corporate Secretary
-------------------
(b) If to an Option holder, to the Option holder's address as shown
in the Company's records.
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<PAGE>
Exhibit C
ASTORIA FINANCIAL CORPORATION
EXECUTIVE OFFICER ANNUAL INCENTIVE PLAN
ARTICLE I - PLAN OBJECTIVES.
Section 1.1. The purpose of the Plan is to achieve the following
objectives: (i) to promote the achievement of Astoria Financial Corporation's
and the Astoria Federal Savings and Loan Association's performance objectives;
(ii) to link executive compensation to specific corporate performance
objectives; (iii) to provide a competitive reward structure for executive
management; and (iv) to encourage involvement and communication regarding
Astoria Financial Corporation's and the Astoria Federal Savings and Loan
Association's strategic plans and objectives.
ARTICLE II - PLAN DURATION.
Section 2.1 The Plan shall be effective for five consecutive Plan Years
beginning on the Effective Date and ending on December 31, 2003.
ARTICLE III - DEFINITIONS.
Section 3.1 When used in the Plan, the words and phrases below have the
following meanings:
(a) "AFC" means Astoria Financial Corporation, a Delaware
corporation, and any successor thereto.
(b) "AFC and the Association" means AFC, together with any other
organization that is required to be considered, along with AFC, a
single entity for purposes of consolidated financial reporting
under GAAP.
(c) "Association" means Astoria Federal Savings and Loan Association,
a federally chartered savings association, and any successor
thereto.
(d) "Board" means the Board of Directors of AFC.
(e) "Change of Control" means any of the following events:
(I) approval by the stockholders of AFC of a transaction
that would result in the reorganization, merger or consolidation
of AFC with one or more other persons, other than a transaction
following which:
(A) at least 51% of the equity ownership interests
of the entity resulting from such transaction are
beneficially owned (within the meaning of Rule 13d-3
promulgated under the Exchange Act) in substantially the
same relative proportions by persons who, immediately
prior to such transaction, beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Exchange
Act) at least 51% of the outstanding equity ownership
interests in AFC; and
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(B) at least 51% of the securities entitled to vote
generally in the election of directors of the entity
resulting from such transaction are beneficially owned
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) in substantially the same relative
proportions by persons who, immediately prior to such
transaction, beneficially owned (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) at least
51% of the securities entitled to vote generally in the
election of directors of AFC;
(II) the acquisition of all or substantially all of the
assets of AFC or beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 20% or more of the outstanding
securities of AFC entitled to vote generally in the election of directors
by any person or by any persons acting in concert, or approval by the
stockholders of AFC of any transaction which would result in such an
acquisition;
(III) a complete liquidation or dissolution of AFC, or
approval by the stockholders of AFC of a plan for such liquidation or
dissolution;
(IV) the occurrence of any event if, immediately
following such event, at least 50% of the members of the Board of Directors
of AFC do not belong to any of the following groups:
(A) individuals who were members of the Board of
Directors of AFC on the Effective Date of this Plan; or
(B) individuals who first became members of the
Board of Directors of AFC after the Effective Date of this Plan
either:
(i) upon election to serve as a member of the
Board of Directors of AFC by affirmative vote of three-
quarters of the members of such Board, or of a
nominating committee thereof, in office at the time of
such first election; or
(ii) upon election by the stockholders of AFC to
serve as a member of the Board of AFC, but only if
nominated for election by affirmative vote of three-
quarters of the members of the Board of Directors of
AFC, or of a nominating committee thereof, in office at
the time of such first nomination;
provided, however, that such individual's election or
nomination did not result from an actual or threatened
election contest (within the meaning of Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or
consents (within the meaning of Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) other
than by or on behalf of the Board; or
(V) any event which would be described in Section 3.1(e)
(I), (II), (III) or (IV) if the term "Association" were
substituted for the term "AFC" therein.
In no event, however, shall a Change in Control be deemed to have
occurred as a result of any acquisition of securities or assets of AFC,
Association, or a subsidiary of either of them, by AFC, Association, or a
subsidiary of either of them, or by any employee benefit plan maintained by
any of
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them. For purposes of this Section 3.1(e), the term "person" shall have the
meaning assigned to it under Sections 13(d)(3) or 14(d)(2) of the Exchange
Act.
(f) "Code" means the Internal Revenue Code of 1986, including the
corresponding provisions of any succeeding law..
(g) "Corporate Performance Objectives" means for any Plan Year those
objective performance objectives selected and established by the
Committee in accordance with the requirements of Article VI of
the Plan.
(h) "Committee" means those members of the Compensation Committee of
AFC, appointed by and consisting of two or more members of the
Board, each of whom is an outside director as defined in Code
Section 162(m).
(i) "Disabled" means suffering from a mental or physical condition of
total incapacity which the Committee shall have determined, on
the basis of competent medical evidence, is likely to be
permanent and precludes further performance of duty with AFC and
the Association.
(j) "Discharge for Cause" means the termination upon the finding of
the Committee of an intentional failure to perform stated duties,
breach of a fiduciary duty involving personal dishonesty, which
results in material loss to AFC, Association or one of their
affiliates or willful violation of any law, rule or regulation,
other than traffic violations or similar offenses, or final
cease-and-desist order which results in material loss to AFC,
Association or one of their affiliates.
(k) "Effective Date" means January 1, 1999.
(l) "Employee" means any individual employed by AFC and the
Association as an employee, but does not mean an individual who
renders service solely as a director or independent contractor.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, including the corresponding provisions
of any succeeding law.
(n) "GAAP" means generally accepted accounting principles, as amended
from time to time and applied in preparing the financial
statements of AFC and the Association.
(o) "Participant" means an Employee who is selected by the Committee
as eligible to participate in the Plan for a Plan Year.
(p) "Plan" means the Astoria Financial Corporation Executive Officer
Annual Incentive Plan.
(q) "Plan Year" means the calendar year beginning January l and
ending December 31.
(r) "Retires" means terminates employment at a time when the Employee
is eligible to receive a benefit based upon his retirement or
early retirement as set forth in any tax-qualified retirement or
pension plan of AFC or Association.
(s) "Section 162(m) Employee" means, for any Taxable Year, an
Employee who, on the last day of such Taxable Year is the Chief
Executive Officer of AFC or is performing the functions of a
chief executive officer for AFC or is an executive whose
aggregate salary and
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bonus for such Taxable Year places him among the four most highly
compensated executive officers other than the Chief Executive
Officer. The determination of the Section 162(m) Employees for
any Taxable Year shall be made by applying standards in effect
under the Exchange Act for identifying the five executive
officers required to be named in AFC's Summary Compensation in
its proxy statement relating to such Taxable Year.
(t) "Taxable Year" means the taxable year of AFC for federal income
tax purposes.
ARTICLE IV - ELIGIBILITY AND PARTICIPATION.
Section 4.1 The Committee shall annually select the individual Employees,
if any, eligible for participation in the Plan.
Section 4.2 Eligibility normally shall be limited to top executive-level
Employees of AFC and the Association whose functional responsibility includes
the establishment of strategic direction and long-range plans for AFC and the
Association, including, but not limited to, the Chief Executive Officer, Vice
Chairmen and Executive Vice Presidents.
Section 4.3 An Employee who holds or assumes an eligible position shall
not be a Participant for any Plan Year unless selected by the Committee to
participate in the Plan for the Plan Year. An Employee who is hired, transferred
or promoted into an eligible position during a Plan Year and selected to
participate in the Plan for that Plan Year shall receive a prorated award for
that Plan Year. In no event shall a person who is a Section 162(m) Employee be
added to the Plan for any Plan Year after the close of the eighth month of the
Plan Year.
Section 4.4 In general, a Participant must be employed by AFC and the
Association on the last day of the Plan Year to receive an award. A Participant
who Retires, dies or becomes Disabled during a Plan Year shall receive a
prorated award for that Plan Year. In these circumstances, the amount of any
prorated award shall be calculated and paid after the end of the Plan Year on
the basis of the level of attainment of the established performance goals for
the entire Plan Year. A Participant who terminates employment with AFC and the
Association on or after the effective date of a Change of Control shall be
eligible for a prorated award, provided that his termination was not a Discharge
for Cause. In these circumstances, the amount of any prorated award shall be
calculated and paid at or as soon as practicable following termination of
employment on the basis of the level of attainment of the established
performance goals for the portion of the Plan Year preceding the Change of
Control, annualized to project full-year performance. The Committee shall have
the authority to determine whether a Participant who otherwise ceases employment
prior to the end of a Plan Year is eligible to receive a prorated award for that
Plan Year, provided that, following the occurrence of a Change of Control, the
Committee may not exercise its authority to deny a prorated award to any
Participant whose termination of employment is not a Discharge for Cause..
Section 4.5 Prorated awards shall be calculated by dividing the applicable
annual award by twelve and multiplying the result by the number of months of
service, rounded to the next highest whole month, of the Participant during the
Plan Year.
ARTICLE V - AWARD OPPORTUNITY.
Section 5.1 The Committee shall provide an award opportunity to
Participants who assist AFC and the Association in achieving certain of its
Corporate Performance Objectives for a Plan Year. The award opportunity for each
Plan Year shall be a percentage of each Participant's base salary earned during
the Plan Year. Differences in the amount of impact Participants may have on AFC
and the Association's success shall be recognized by varying award
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opportunities for Participants. The amount of a Participant's award, if any,
shall be based on the degree to which AFC and the Association achieve their
Corporate Performance Objectives.
Section 5.2 The Committee recognizes that the level of control and
influence a Participant has to impact the Corporate Performance Objectives is
influenced by the Participant's level of responsibility. As such, the Committee
shall establish annually, as provided below, a matrix which shall establish for
each Participant the award opportunity for such Participant if AFC and the
Association achieve their target Corporate Performance Objectives. The matrix
may also include enhanced or reduced award opportunity levels for such
Participant if AFC and the Association achieve at a level above or below the
target Corporate Performance Objectives.
ARTICLE VI - ESTABLISHMENT OF CORPORATE PERFORMANCE OBJECTIVES.
Section 6.1 As soon as practicable, but in any event within the first 90
days of each Plan Year, the Committee shall establish specific Corporate
Performance Objectives for AFC and the Association, including target levels and,
if deemed appropriate by the Committee, one or more enhanced or reduced award
opportunity levels associated with each Corporate Performance Objective. If the
Committee adds a Participant to the Plan for a Plan Year after initially
establishing the award opportunities and Corporate Performance Objectives for
the Plan Year, it shall establish the award opportunities and Corporate
Performance Objectives applicable to the new Participant within 30 days after
adding the Participant to the Plan. The Corporate Performance Objectives for a
Plan Year shall be based on one or more of the following criteria:
(a) Basic earnings per common share,
(b) Basic cash earnings per common share,
(c) Diluted earnings per common share,
(d) Diluted cash earnings per common share,
(e) Net income,
(f) Cash earnings,
(g) Net interest income,
(h) Non-interest income,
(i) General and administrative expense to average assets ratio,
(j) Cash general and administrative expense to average assets ratio,
(k) Efficiency ratio,
(l) Cash efficiency ratio,
(m) Return on average assets,
(n) Cash return on average assets,
(o) Return on average stockholders' equity,
(p) Cash return on average stockholders' equity,
(q) Return on average tangible stockholders' equity,
(r) Cash return on average tangible stockholders' equity.
The Corporate Performance Objectives may be based on the performance of AFC and
the Association in the absolute or in relation to its peers.
Section 6.2 Those Corporate Performance Objectives which have meanings
ascribed to them by GAAP, shall have the meanings assigned to them under GAAP as
in effect and applied to AFC and the Association on the date on which the
Corporate Performance Objectives are established, without giving effect to any
subsequent changes in GAAP, unless the Committee specifically provides otherwise
when it establishes the Corporate Performance Objectives. Corporate Performance
Objectives based upon cash earnings or cash returns shall refer to or be
calculated based upon net income plus non-cash charges for goodwill amortization
and amortization relating to employee stock ownership plans and restricted stock
plans and related tax benefits. Corporate Performance Objectives based upon cash
general
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and administrative expenses shall refer to general and administrative expenses,
calculated in accordance with GAAP, adjusted to eliminate non-cash amortization
expenses relating to employee stock ownership plans and restricted stock plans.
Section 6.3 The Committee shall assign a percentage weight to each
Corporate Performance Objective for each Plan Year. The weight assigned to any
one or more Corporate Performance Objectives may be zero, but the aggregate
weight assigned to all Corporate Performance Objectives shall equal 100%. The
Committee may assign different weightings to Corporate Performance Objectives
for each Participant or classes of Participants. The Committee shall establish a
matrix which shall set forth the Corporate Performance Objectives, the target
and other applicable performance levels with respect thereto, the weighting of
such Corporate Performance Objectives, if any, and the corresponding award
opportunity for each Participant.
Section 6.4 Under normal business conditions, once established for a Plan
Year as provided herein, Corporate Performance Objectives shall not be subject
to revision or alteration. However, unusual conditions may warrant a
reexamination of such criteria. Such conditions may include, but not be limited
to, a Change of Control, declaration and distribution of stock dividends or
stock splits, mergers, consolidation or reorganizations, acquisitions or
dispositions of material business units, infrequently occurring or extraordinary
gains or losses. In the event the Committee determines that, upon reexamination,
alteration of the Corporate Performance Objectives is appropriate, the Committee
shall reestablish the Corporate Performance Objectives to maintain as closely as
possible the previously established expected level of overall performance of the
Participants, taken as a whole, as is practicable. Notwithstanding the
foregoing, any adjustments to the award opportunities or Corporate Performance
Objectives applicable to a Section 162(m) Employee for a Plan Year shall conform
to the requirements of section 162(m) of the Code and the regulations
promulgated pursuant thereto.
ARTICLE VII - DETERMINATION AND PAYMENT OF AWARDS.
Section 7.1 As promptly as practicable, but in any event within 75 days
after the end of each Plan Year, the Committee shall certify the performance of
AFC and the Association relative to the Corporate Performance Objectives
established for Participants. Each Participant's award shall be determined by
multiplying the Participant's base salary earned during the applicable Plan Year
by the percentage set forth in the matrix established in Sections 6.3 and 6.4 of
the Plan, as possibly adjusted down, but not up, for such subjective factors as
the Committee deems appropriate, including, but not limited to, whether the
Participant's overall individual performance met expectations. Awards under the
Plan shall be paid in cash, subject to applicable withholding taxes, as soon as
practicable following the end of the Plan Year.
ARTICLE VIII - MAXIMUM AWARD.
Section 8.1 The maximum award that may be paid to any Participant for any
Plan Year is $2,000,000.
ARTICLE IX - PLAN ADMINISTRATION.
Section 9.1 The Committee shall direct and control the administration of
the Plan, taking into consideration the recommendations of the Chief Executive
Officer and members of the Board of Directors who do not serve on the Committee.
The Committee shall have the right and authority to perform the following
administrative tasks:
(a) to interpret the Plan,
(b) to adopt, amend or rescind rules and regulations relating to the
administration and interpretation of the Plan,
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<PAGE>
(c) to make all other determinations necessary or advisable for
administering the Plan,
(d) to exercise the powers conferred on the Committee under the Plan,
and
(e) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan in the manner and to the extent it
deems expedient to carry the Plan into effect, the Committee
being the sole and final judge of such expediency.
Section 9.2 The Board shall have the exclusive authority to amend, modify,
suspend or terminate the Plan at any time, with or without notice, except that
no amendment, modification, suspension or termination may in any manner
adversely affect the right of any Participant to receive any award amount which
has been awarded to him or her. To qualify for the exemption from the deduction
limitation of Code Section 162(m), shareholders must approve certain material
amendments to the Plan, such as a change in the business criteria upon which
Corporate Performance Objectives are based, the maximum amount of a
Participant's award, or a change in the defined class of Employees eligible to
participate in the Plan.
ARTICLE X - MISCELLANEOUS.
Section 10.1 The Plan does not, and shall not be deemed to, constitute a
contract of employment between AFC and the Association and any Participant.
Nothing in the Plan confers on any Employee the right to remain in the
employment of AFC and the Association or limits the right of AFC and the
Association to discharge the Employee. Nothing in the Plan shall be deemed to
limit the rights of any Participant which may exist pursuant to any employment
agreement between AFC and/or Association and the Participant.
Section 10.2 Nothing in this Plan shall be interpreted or construed to
limit the authority of the Board to establish and compensate any Participant in
the Plan in any manner outside of the scope and authority of this Plan.
Section 10.3 Because participation in the Plan does not guarantee any
award under the Plan, an Employee may not sell, transfer, assign, pledge, or
otherwise encumber any anticipated award and any attempt to do so shall be void,
and AFC and the Association shall not be liable in any manner for or subject to
the debts, contracts, liabilities, engagements, or torts of any person who might
anticipate an award under the Plan, except as stated in a Qualified Domestic
Relations Order.
Section 10.4 Notwithstanding any other provision of the Plan, the Plan is
subject to, and shall become effective only upon, approval by AFC's shareholders
at the meeting of shareholders on May 19, 1999 or any adjournment or
postponement thereof.
Section 10.5 This Plan is not intended to satisfy the requirements for
qualification under Section 401(a) of the Code or to satisfy the definitional
requirements for an "employee benefit plan" under Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended. It is intended to be a non-
qualified incentive compensation program that is exempt from the regulatory
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The Plan shall be construed and administered so as to effectuate this intent.
Section 10.6 Whenever appropriate in the Plan, words used in the singular
may be read in the plural, words used in the plural may be read in the singular,
and words importing the masculine gender may be read as referring equally to the
feminine or the neuter. Any reference to an Article or Section number shall
refer to an Article or Section of this Plan unless otherwise indicated.
Section 10.7 The Plan shall be construed, administered and enforced
according to the laws of the State of New York, without giving effect to the
conflict of laws principles thereof, except to the extent that such laws are
preempted by federal law.
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<PAGE>
Section 10.8 The headings of Articles are included solely for convenience
of reference. If there is any conflict between such headings and the text of the
Plan, the text shall control.
Section 10.9 AFC and the Association shall have the right to deduct from
all amounts paid by AFC and the Association, or any member thereof, in cash
under the Plan any taxes required by law to be withheld with respect to such
payment.
Section 10.10 Any communication required or permitted to be given under
the Plan, including any notice, direction, designation, comment, instruction,
objection or waiver, shall be in writing and shall be deemed to have been given
at such time as it is delivered personally or five (5) days after mailing if
mailed, postage prepaid, by registered or certified mail, return receipt
requested, addressed to such party at the address listed below, or at such other
address as one such party may by written notice specify to the other party:
(a) If to the Committee:
Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085
Attention: Corporate Secretary
-------------------
(b) If to a Participant, to the Participant's address as shown in AFC
and the Association's personnel records.
Section 10.11 The following provisions are included for the purposes of
complying with various laws, rules and regulations applicable to AFC and the
Association:
(a) Notwithstanding anything herein contained to the contrary, in no
event will the aggregate amount of compensation payable by the
Association to any person on account of his termination of
employment exceed three times such person's average annual total
compensation for the last five consecutive calendar years to end
prior to his termination of employment with the AFC and the
Association or for his entire period of employment with the AFC
and the Association and their respective predecessors, if less
than five calendar years.
(b) Notwithstanding anything herein contained to the contrary, any
payments pursuant to this Plan, are subject to and conditioned
upon their compliance with section 18(k) of the Federal Deposit
Insurance Act and any regulations promulgated thereunder.
(c) Notwithstanding anything herein contained to the contrary, if an
Participant is suspended from office and/or temporarily
prohibited from participating in the conduct of the affairs of
the Association pursuant to a notice served under section 8(e)(3)
or 8(g)(1) of the Federal Deposit Insurance Act, the
Association's obligations under this Plan shall be suspended as
of the date of service of such notice, unless stayed by
appropriate proceedings. If the charges in such notice are
dismissed, the Association, in its discretion, may (i) pay to the
Participant all or part of the compensation withheld while the
Association's obligations hereunder were suspended and (ii)
reinstate, in whole or in part, any of the obligations which were
suspended.
(d) Notwithstanding anything herein contained to the contrary, if the
Participant is removed and/or permanently prohibited from
participating in the conduct of the Association's affairs by an
order issued under section g(e)(4) or 8(g)(1) of the Federal
Deposit Insurance Act, all
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prospective obligations of the Association under this Plan shall
terminate as of the effective date of the order, but vested rights
and obligations of the Association and the Participant shall not
be affected.
(e) Notwithstanding anything herein contained to the contrary, if the
Association is in default, within the meaning of section 3(x)(1)
of the Federal Deposit Insurance Act, all prospective obligations
of the Association under this Plan shall terminate as of the date
of default, but vested rights and obligations of the Association
and the Participant shall not be affected.
(f) Notwithstanding anything herein contained to the contrary, all
prospective obligations of the Association hereunder shall be
terminated, except to the extent that a continuation of this Plan
is necessary for the continued operation of the Association: (i)
by the Director of the Office of Thrift Supervision or his
designee, at the time the Federal Deposit Insurance Corporation
enters into an agreement to provide assistance to or on behalf of
the Association under the authority contained in section 13(c) of
the Federal Deposit Insurance Act; (ii) by the Director of the
Office of Thrift Supervision or his designee at the time such
Director or designee approves a supervisory merger to resolve
problems related to the operation of the Association or when the
Association is determined by such Director to be in an unsafe or
unsound condition. The vested rights and obligations of the
parties shall not be affected.
If and to the extent that any of the foregoing provisions shall cease to be
required by applicable law, rule or regulation, the same shall become
inoperative automatically as though eliminated by formal amendment of the Plan.
Any of the foregoing provisions which, by their terms, apply only to the
Association shall not affect the rights and obligations of AFC.
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ASTORIA FINANCIAL CORPORATION
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ASTORIA FINANCIAL
CORPORATION FOR USE AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 19,
1999 AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned shareholder of Astoria Financial Corporation hereby authorizes
and appoints John M. Graham, Jr., William M. Thomas, Jr. or either of them proxy
of the undersigned, with full power of substitution, to attend and act as proxy
for the undersigned and to vote as designated below all shares of common stock
of Astoria Financial Corporation which the undersigned may be entitled to vote
at the Annual Meeting of Shareholders of Astoria Financial Corporation, to be
held on May 19, 1999 at 9:30 a.m., Eastern time, at the New Hyde Park Inn, 214
Jericho Turnpike, New Hyde Park, New York, 11040, and at any adjournment or
postponement thereof.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
The Board of Directors of Astoria Financial Corporation recommends a vote "FOR" Please mark your votes like this [X]
all nominees in Proposal No. 1 and "FOR" Proposal Nos. 2, 3, 4 and 5.
<S> <C>
1. The election of nominees George FOR WITHHOLD 2. The approval of the 1999 Stock Option FOR AGAINST ABSTAIN
L. Engelke, Jr., Robert J. Conway, [_] [_] Plan For Officers and Employees of [_] [_] [_]
Peter C. Haeffner, Jr., Ralph F. Astoria Financial Corporation.
Pallecshi and Leo J. Waters as
directors for terms of three years 3. The approval of the 1999 Stock Option [_] [_] [_]
each. Plan For Outside Directors of Astoria
Financial Corporation.
To withhold authority to vote FOR
any particular nominee, line or 4. The approval of the Astoria Financial [_] [_] [_]
strike out that nominee's name and Corporation Executive Officer Annual
then check the appropriate box as Incentive Plan.
to the remaining nominees.
5. The ratification of the appointment of [_] [_] [_]
KPMG LLP as independent auditors of
Astoria Financial Corporation for the
fiscal year ending December 31, 1999.
All proposals listed above in this revocable
proxy were proposed by Astoria Financial
Corporation. Astoria Financial Corporation
is not currently aware of any other business
that may come before the Annual Meeting. The
persons named as proxies herein will vote the
shares represented hereby as directed by the
Board of Directors of Astoria Financial
Corporation upon such other business as may
properly come before the Annual Meeting, and
any adjournment or postponement thereof,
including, without limitation, a motion to
postpone or adjourn the Annual Meeting.
THIS PROXY IS REVOCABLE. THIS PROXY, WHEN
PROPERLY EXECUTED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED
SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE NOMINEES
LISTED IN PROPOSAL NO. 1 AND FOR PROPOSAL
NOS. 2, 3, 4 AND 5.
The undersigned hereby acknowledges receipt,
prior to the execution of this proxy, of a
Notice of Annual Meeting of Shareholders of
Astoria Financial Corporation, a Proxy
Statement dated April 9, 1999 for the Annual
Meeting and a 1998 Annual Report and
Form 10-K of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid envelope.
X X Date:___________________, 1999
- ---------------------------------------- -------------------------------------------
Please sign name exactly as it appears hereon. If shares are registered in more than one name, all should sign, but if one signs, it
binds the others. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If a
corporation, please sign in full corporate name by an authorized officer. If a partnership, please sign in partnership name by an
authorized person.
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</TABLE>
<PAGE>
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE EMPLOYEE STOCK OWNERSHIP PLAN COMMITTEE, AS PLAN ADMINISTRATOR,
FOR THE ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION EMPLOYEE STOCK OWNERSHIP
PLAN
As a named fiduciary, the undersigned participant, former participant or
beneficiary of a deceased former participant in the Astoria Federal Savings and
Loan Association Employee Stock Ownership Plan (the "ESOP") hereby provides the
voting instructions hereinafter specified to State Street Bank & Trust Company,
the trustee of the ESOP (the "Trustee"), which instructions shall be taken into
account by the Trustee in voting, in person, by limited or general power of
attorney or by proxy, the shares and fractional shares of common stock of
Astoria Financial Corporation that are held by the Trustee, in its capacity as
Trustee, as of March 23, 1999, at the Annual Meeting of Shareholders of Astoria
Financial Corporation to be held on May 19, 1999 at 9:30 a.m., Eastern time, at
the New Hyde Park Inn, 214 Jericho Turnpike, New Hyde Park, New York, 11040, and
at any adjournment or postponement thereof.
As to the proposals listed below which are more particularly described in the
Proxy Statement dated April 9, 1999, the Trustee will vote the common stock of
Astoria Financial Corporation held by the ESOP Trust to reflect the voting
instructions on this Confidential Voting Instruction, in the manner described in
the accompanying letter dated April 9, 1999 from the ESOP Committee.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such shares
shall be treated as described in the letter dated April 9, 1999 from the ESOP
Committee.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
The Board of Directors of Astoria Financial Corporation recommends a vote "FOR" Please mark your votes like this [X]
all nominees in Proposal No. 1 and "FOR" Proposal Nos. 2, 3, 4 and 5. The
directions, if any, given in this Confidential Voting Instruction will be kept
confidential from all directors, officers and employees of Astoria Financial
Corporation or Astoria Federal Savings and Loan Association.
<S> <C>
1. The election of nominees George L. FOR WITHHOLD 2. The approval of the 1999 Stock Option FOR AGAINST ABSTAIN
Engelke, Jr., Robert J. Conway, [_] [_] Plan For Officers and Employees of [_] [_] [_]
Peter C. Haeffner, Jr., Ralph F. Astoria Financial Corporation.
Pallecshi and Leo J. Waters as
directors for terms of three 3. The approval of the 1999 Stock Option [_] [_] [_]
years each. Plan For Outside Directors of Astoria
Financial Corporation.
To withhold authority to vote FOR
any particular nominee, line or 4. The approval of the Astoria Financial [_] [_] [_]
strike out that nominee's name Corporation Executive Officer Annual
and then check the appropriate Incentive Plan.
box as to the remaining nominees.
5. The ratification of the appointment of [_] [_] [_]
KPMG LLP as independent auditors of
Astoria Financial Corporation for the
fiscal year ending December 31, 1999.
In its discretion, the Trustee is authorized
to vote upon such other business as may come
before the Annual Meeting and any adjournment
or adjournments thereof or to cause such
matters to be voted upon in the discretion
of the individuals named in any proxies
executed by the Trustee.
All proposals listed above in this Confidential
Voting Instruction were proposed by Astoria
Financial Corporation.
The undersigned hereby instructs the Trustee
to vote in accordance with the voting instruction
indicated above and hereby acknowledges receipt,
prior to the execution of this Confidential
Voting Instruction, of a Notice of Annual Meeting
of Shareholders, a Proxy Statement dated April 9,
1999 for the Annual Meeting and a 1998 Annual
Report and Form 10-K of Astoria Financial
Corporation.
Please sign and date below and return promptly in the enclosed postage-paid envelope.
X Date: , 1999
- ---------------------------------------------------------------------- -----------------
Signature of participant, former participant or designated beneficiary of deceased former participant.
Please sign name exactly as it appears herein. When signing as attorney, executor, administrator, trustee or guardian,
please give your full title as such.
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</TABLE>
<PAGE>
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, AS PLAN
ADMINISTRATOR,
FOR THE ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION INCENTIVE SAVINGS PLAN
The undersigned participant, former participant or beneficiary of a deceased
former participant in the Astoria Federal Savings and Loan Association Incentive
Savings Plan (the "401K Plan") as a named fiduciary hereby provides the voting
instructions hereinafter specified to ChaseMellon Shareholder Services, L.L.C.,
as the designee of Astoria Federal Savings and Loan Association, as Plan
Administrator (the "Plan Administrator"), which instructions shall be taken into
account in directing the trustee of the 401K Plan (the "Trustee") to vote in
person, by limited or general power of attorney or by proxy the shares and
fractional shares of common stock of Astoria Financial Corporation that are held
by the Trustee, in its capacity as Trustee, as of March 23, 1999, at the Annual
Meeting of Shareholders of Astoria Financial Corporation to be held on May 19,
1999 at 9:30 a.m., Eastern time, at the New Hyde Park Inn, 214 Jericho Turnpike,
New Hyde Park, New York, 11040, and at any adjournment or postponement thereof.
As to the proposals listed below which are more particularly described in the
Proxy Statement dated April 9, 1999, the Plan Administrator of the 401K Plan,
will give voting directions to the Trustee. Such directions will reflect the
voting instructions on this Confidential Voting Instruction, in the manner
described in the accompanying letter from the Plan Administrator dated April 9,
1999.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such shares
shall be treated as described in the letter from the Plan Administrator dated
April 9, 1999.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
The Board of Directors of Astoria Financial Corporation recommends a vote "FOR" Please mark your votes like this [X]
all nominees in Proposal No. 1 and "FOR" Proposal Nos. 2, 3, 4 and 5. The
directions, if any, given in this Confidential Voting Instruction will be kept
confidential from all directors, officers and employees of Astoria Financial
Corporation or Astoria Federal Savings and Loan Association.
<S> <C>
1. The election of nominees George FOR WITHHOLD 2. The approval of the 1999 Stock Option FOR AGAINST ABSTAIN
L. Engelke, Jr., Robert J. Conway, [_] [_] Plan For Officers and Employees of [_] [_] [_]
Peter C. Haeffner, Jr., Ralph F. Astoria Financial Corporation.
Pallecshi and Leo J. Waters as
directors for terms of three years 3. The approval of the 1999 Stock Option [_] [_] [_]
each. Plan For Outside Directors of Astoria
Financial Corporation.
To withhold authority to vote FOR
any particular nominee, line or 4. The approval of the Astoria Financial [_] [_] [_]
strike out that nominee's name and Corporation Executive Officer Annual
then check the appropriate box as Incentive Plan.
to the remaining nominees.
5. The ratification of the appointment [_] [_] [_]
of KPMG LLP as independent auditors
of Astoria Financial Corporation for
the fiscal year ending December 31,
1999.
In its discretion, the Trustee is authorized
to vote upon such other business as may come
before the Annual Meeting and any adjournment
or postponement thereof or to cause such
matters to be voted upon in the discretion
of the individuals named in any proxies
executed by the Trustee.
All proposals listed above in this Confidential
Voting Instruction were proposed by Astoria
Financial Corporation.
The undersigned hereby instructs the Plan
Administrator to direct the Trustee to vote in
accordance with the voting instruction indicated
above and hereby acknowledges receipt, prior to
execution of this Confidential Voting Instruction,
of a Notice of Annual Meeting of Shareholders, a
Proxy Statement dated April 9, 1999 for the Annual
Meeting and a 1998 Annual Report and Form 10-K
of Astoria Financial Corporation.
Please sign and date below and return promptly in the enclosed postage-paid envelope.
X Date: , 1999
- ------------------------------------------------------------------ -------------------
Signature of participant, former participant or designated beneficiary of deceased former participant.
Please sign name exactly as it appears herein. When signing as attorney, executor, administrator, trustee or guardian, please give
your full title as such.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE EMPLOYEE STOCK OWNERSHIP PLAN COMMITTEE, AS PLAN ADMINISTRATOR,
FOR THE LISB EMPLOYEE STOCK OWNERSHIP PLAN
The undersigned participant, former participant, beneficiary of a deceased
former participant or alternative payee in The LISB Employee Stock Ownership
Plan (the "ESOP") as a named fiduciary hereby provides the voting instructions
hereinafter specified to CG Trust Company, the trustee of the ESOP (the
"Trustee"), which instructions shall be taken into account by the Trustee in
voting, in person, by limited or general power of attorney or by proxy, the
shares and fractional shares of common stock of Astoria Financial Corporation
that are held by the Trustee, in its capacity as Trustee, as of March 23, 1999,
at the Annual Meeting of Shareholders of Astoria Financial Corporation to be
held on May 19, 1999 at 9:30 a.m., Eastern time, at the New Hyde Park Inn, 214
Jericho Turnpike, New Hyde Park, New York, 11040, and at any adjournment or
postponement thereof.
As to the proposals listed below which are more particularly described in the
Proxy Statement dated April 9, 1999, the Trustee will vote the common stock of
Astoria Financial Corporation held by the ESOP Trust to reflect the voting
instructions received by the Trustee from ChaseMellon Shareholder Services, LLC.
in the manner described in the accompanying letter dated April 9, 1999 from the
ESOP Committee.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such shares
shall be treated as described in the letter dated April 9, 1999 from the ESOP
Committee.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
The Board of Directors of Astoria Financial Corporation recommends a vote "FOR" Please mark your votes like this [X]
all nominees in Proposal No. 1 and "FOR" Proposal Nos. 2, 3, 4 and 5. The
directions, if any, given in this Confidential Voting Instruction will be kept
confidential from all directors, officers and employees of Astoria Financial
Corporation or Astoria Federal Savings and Loan Association.
<S> <C>
1. The election of nominees George FOR WITHHOLD 2. The approval of the 1999 Stock Option FOR AGAINST ABSTAIN
L. Engelke, Jr., Robert J. Conway, [_] [_] Plan For Officers and Employees of [_] [_] [_]
Peter C. Haeffner, Jr., Ralph F. Astoria Financial Corporation.
Pallecshi and Leo J. Waters as
directors for terms of three years 3. The approval of the 1999 Stock Option [_] [_] [_]
each. Plan For Outside Directors of Astoria
Financial Corporation.
To withhold authority to vote FOR
any particular nominee, line or 4. The approval of the Astoria Financial [_] [_] [_]
strike out that nominee's name and Corporation Executive Officer Annual
then check the appropriate box as Incentive Plan.
to the remaining nominees.
5. The ratification of the appointment of [_] [_] [_]
KPMG LLP as independent auditors of
Astoria Financial Corporation for the
fiscal year ending December 31, 1999.
All proposals listed above in this Confidential
Voting Instruction were proposed by Astoria
Financial Corporation.
The undersigned hereby instructs the Trustee to
vote in accordance with the voting instruction
indicated above and hereby acknowledges receipt,
prior to the execution of this Confidential Voting
Instruction, of a Notice of Annual Meeting of
Shareholders, a Proxy Statement dated April 9,
1999 for the Annual Meeting and a 1998 Annual
Report and Form 10-K of Astoria Financial
Corporation.
Please sign and date below and return promptly in the enclosed postage-paid envelope.
X Date: , 1999
- --------------------------------------------------------------------------- ---------------
Signature of participant, former participant, designated beneficiary of deceased former participant or alternative payee under a
Qualified Domestic Relations Order.
Please sign name exactly as it appears herein. When signing as attorney, executor, administrator, trustee or guardian, please give
your full title as such.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, AS PLAN
ADMINISTRATOR,
FOR THE LONG ISLAND SAVINGS BANK 401(K) SAVINGS PLAN
The undersigned participant, former participant, beneficiary of a deceased
former participant or alternate payee in The Long Island Savings Bank 401K
Savings Plan (the "401K Plan") as a named fiduciary hereby provides the voting
instructions hereinafter specified to ChaseMellon Shareholder Services, L.L.C.,
as the designee of Astoria Federal Savings and Loan Association, as Plan
Administrator (the "Plan Administrator"), which instructions shall be taken into
account by the trustee of the 401K Plan (the "Trustee") in voting in person, by
limited or general power of attorney or by proxy the shares and fractional
shares of common stock of Astoria Financial Corporation that are held by the
Trustee, in its capacity as Trustee, as of March 23, 1999, at the Annual Meeting
of Shareholders of Astoria Financial Corporation to be held on May 19, 1999 at
9:30 a.m., Eastern time, at the New Hyde Park Inn, 214 Jericho Turnpike, New
Hyde Park, New York, 11040, and at any adjournment or postponement thereof.
As to the proposals listed below which are more particularly described in the
Proxy Statement dated April 9, 1999, the 401K Plan Administrator's designee will
give voting directions to the Trustee. Such directions will reflect the voting
instructions on this Confidential Voting Instruction, in the manner described in
the accompanying letter from the Plan Administrator dated April 9, 1999.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, for purposes of providing voting instructions, such shares
shall be treated as described in the letter from the Plan Administrator dated
April 9, 1999.
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed postage-paid envelope.)
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
The Board of Directors of Astoria Financial Corporation recommends a vote "FOR" Please mark your votes like this [X]
all nominees in Proposal No. 1 and "FOR" Proposal Nos. 2, 3, 4 and 5. The
directions, if any, given in this Confidential Voting Instruction will be kept
confidential from all directors, officers and employees of Astoria Financial
Corporation or Astoria Federal Savings and Loan Association.
<S> <C>
1. The election of nominees George L. FOR WITHHOLD 2. The approval of the 1999 Stock Option FOR AGAINST ABSTAIN
Engelke, Jr., Robert J. Conway, [_] [_] Plan For Officers and Employees of [_] [_] [_]
Peter C. Haeffner, Jr., Ralph F. Astoria Financial Corporation.
Pallecshi and Leo J. Waters as
directors for terms of three 3. The approval of the 1999 Stock Option [_] [_] [_]
years each. Plan For Outside Directors of Astoria
Financial Corporation.
To withhold authority to vote FOR
any particular nominee, line or 4. The approval of the Astoria Financial [_] [_] [_]
strike out that nominee's name and Corporation Executive Officer Annual
then check the appropriate box as Incentive Plan.
to the remaining nominees.
5. The ratification of the appointment [_] [_] [_]
of KPMG LLP as independent auditors
of Astoria Financial Corporation for
the fiscal year ending December 31,
1999.
All proposals listed above in this Confidential
Voting Instruction were proposed by Astoria
Financial Corporation.
The undersigned hereby instructs the Plan
Administrator to direct the Trustee to vote in
accordance with the voting instruction
indicated above and hereby acknowledges receipt,
prior to execution of this Confidential Voting
Instruction, of a Notice of Annual Meeting of
Shareholders, a Proxy Statement dated April 9,
1999 for the Annual Meeting and a 1998 Annual
Report and Form 10-K of Astoria Financial
Corporation.
Please sign and date below and return promptly in the enclosed postage-paid envelope.
X Date: , 1999
- ------------------------------------------------------------------ -----------------
Signature of participant, former participant, designated beneficiary of deceased former participant or alternate payee under a
Qualified Domestic Relations Order.
Please sign name exactly as it appears herein. When signing as attorney, executor, administrator, trustee or guardian, please give
your full title as such.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ASTORIA FINANCIAL CORPORATION
CONFIDENTIAL VOTING INSTRUCTION
SOLICITED BY THE COMMITTEE FOR THE
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
RECOGNITION AND RETENTION PLAN FOR OFFICERS AND EMPLOYEES
The undersigned participant or beneficiary of a deceased former
participant in the Astoria Federal Savings and Loan Association Recognition and
Retention Plan for Officers and Employees (the "Officer and Employee RRP")
hereby provides the voting instructions hereinafter specified to the Trustee of
the Officer and Employee RRP ("Trustee"), which instructions shall be taken
into account by the Trustee in voting, in person, by limited or general power of
attorney or by proxy, the shares of common stock of Astoria Financial
Corporation that are held by the Trustee, in its capacity as Trustee, as of
March 23, 1999 at the Annual Meeting of Shareholders of Astoria Financial
Corporation, to be held on May 19, 1999 at 9:30 a.m., Eastern time at the New
Hyde Park Inn, 214 Jericho Turnpike, New Hyde Park, New York, 11040, and at any
adjournment of postponement thereof.
As to the proposals listed below which are more particularly described
in the Proxy Statement dated April 9, 1999, the Trustee will vote the common
stock of Astoria Financial Corporation held by the Officer and Employee RRP
Trust so as to reflect the voting instructions on this Confidential Voting
Instruction, in the manner described in the accompanying letter from the
Committee dated April 9, 1999.
If the duly executed Confidential Voting Instruction is returned, but no
instruction is given, such shares will not be voted.
The Board of Directors of Astoria Financial Corporation recommends a
vote "FOR" all nominees in Proposal No. 1 and "FOR" Proposal Nos. 2, 3, 4 and 5.
The directions, if any, given in this Confidential Voting Instruction will be
kept confidential from all directors, officers and employees of either Astoria
Financial Corporation or Astoria Federal Savings and Loan Association.
1. The election of nominees George L. Engelke, Jr., Robert J. Conway, Peter
C. Haeffner, Jr., Ralph F. Pallecshi and Leo J. Waters as directors for
terms of three years each.
FOR WITHHOLD
[ ] [ ]
To Withhold authority to vote FOR any particular nominee, line or strike
out that nominee's name and then check the appropriate box as to the
remaining nominees.
2. The approval of the 1999 Stock Option Plan For Officers and Employees of
Astoria Financial Corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(Continued on reverse side. Please complete, sign and date on the reverse side
and promptly return in the enclosed envelope.)
<PAGE>
3. The approval of the 1999 Stock Option Plan For Outside Directors of
Astoria Financial Corporation.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. The approval of the Astoria Financial Corporation Executive Officer
Annual Incentive Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
5. The ratification of the appointment of KPMG LLP as independent auditors
of Astoria Financial Corporation for the fiscal year ending December 31,
1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
In its discretion, the Trustee is authorized to vote upon such other
business as may come before the Annual Meeting and any adjournment or
adjournments thereof or to cause such matters to be voted upon in the
discretion of the individuals named in any proxies executed by the Trustee.
All proposals listed above in this Confidential Voting Instruction were
proposed by Astoria Financial Corporation.
The undersigned hereby instructs the Trustee to vote in accordance with
the voting instruction indicated above and hereby acknowledges receipt, prior to
the execution of this Confidential Voting Instruction, of a Notice of Annual
Meeting of Shareholders, a Proxy Statement dated April 9, 1999 for the Annual
Meeting and a 1998 Annual Report and Form 10-K of Astoria Financial Corporation.
-------------------------------------
Date: , 1999
---------------------
Signature of participant or designated
beneficiary of deceased former participant.
Please sign name exactly as it appears herein.
When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as such.
<PAGE>
[LOGO] [LETTERHEAD]
April 9, 1999
To: All Astoria Federal Savings and Loan Association Recognition and Retention
Plan for Officers and Employees ("Officer and Employee RRP") Participants
Re: Annual Meeting of Shareholders to be held on May 19, 1999
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 19, 1999, enclosed please find the following
documents:
a) Confidential Voting Instruction form,
b) Proxy Statement dated April 9, 1999, including a Notice of Annual
Meeting of Shareholders,
c) 1998 Annual Report and Form 10-K, and
d) a return envelope, addressed to ChaseMellon Shareholder Services,
L.L.C., c/o Alan P. Eggleston, Executive Vice President and General
Counsel, Astoria Financial Corporation.
As a participant in the Officer and Employee RRP, you have the right to
direct the Officer and Employee RRP Trustee (Chase Manhattan Bank, N.A.) how to
vote the shares of Astoria Financial Corporation Common Stock ("Shares") held by
the Officer and Employee RRP Trust and awarded to you, but not yet earned and
distributed under the Officer and Employee RRP as of March 23, 1999, the meeting
record date. In general, the Officer and Employee RRP Trustee will be directed
to vote the Shares held by the Officer and Employee RRP Trust and awarded to you
by casting votes "FOR", "AGAINST", "WITHHELD" and "ABSTAIN" as to each proposal
as specified in the Confidential Voting Instruction form accompanying this
letter. If you do not direct the Trustee how to vote the Shares awarded to you,
and as to any Shares which may be held by the Officer and Employee RRP Trust
which are not yet awarded, the Officer and Employee RRP Trustee shall vote such
Shares in the same manner and proportion as the Shares held by the Officer and
Employee RRP Trust which have been awarded and as to which both instructions
have been received by May 10, 1999 and, with respect to the instructions so
received, directions have been given therein to the Trustee by participants or
designated beneficiaries of deceased former participant as to the manner in
which their awarded Shares should be voted.
Unanticipated Proposals
It is possible, although very unlikely, that proposals other than those
specified on the
<PAGE>
Confidential Voting Instruction form will be presented for shareholder action at
the 1999 Annual Meeting of Shareholders. If this should happen, the Officer and
Employee RRP Trustee will be instructed to vote upon such matters in the Officer
and Employee RRP Trustee's discretion, or to cause such matters to be voted upon
in the discretion of the individuals named in any proxies executed by the
Officer and Employee RRP Trustee.
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction form to signify your direction to the Officer
and Employee RRP TRustee. The Confidential Voting Instruction form should
-----------------------------------------------
then be sealed in the enclosed envelope provided and returned to Mr. Eggleston
- ------------------------------------------------------------------------------
for delivery to ChaseMellon Shareholder Services, L.L.C. for tabulation. To
- ------------------------------------------------------------------------------
direct the voting of your shares, the Confidential Voting Instruction form must
- -------------------------------------------------------------------------------
be received no later than May 10, 1999.
- ---------------------------------------
Please note that the instructions of individual participants will be kept
confidential. Instructions will be delivered by Mr. Eggleston in the sealed
evelopes and ChaseMellon Shareholder Services, L.L.C. and the Officer and
Employee RRP Trustee will not disclose your voting instructions to anyone
at either Astoria Federal Savings and Loan Association or Astoria Financial
Corporation.
This memorandum is subject in its entirety to the information set forth in
the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
The Officer and Employee RRP Committee
By: /s/ William J. Fendt
________________________________________
William J. Fendt, Chairman
<PAGE>
[LOGO] [LETTERHEAD]
April 9, 1999
To: All Astoria Federal Savings and Loan Association Incentive Savings Plan
("401K Plan") Participants with a portion of their account balance invested
in the Employer Stock Fund
Re: Annual Meeting of Shareholders to be held on May 19, 1999
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 19, 1999, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 9, 1999, including a Notice of Annual
Meeting of Shareholders,
c) 1998 Annual Report and Form 10-K, and
d) a postage-paid return envelope addressed to ChaseMellon Shareholder
Services, L.L.C., Proxy Tabulation Department (ChaseMellon Shareholder
Services, L.L.C. is the Confidential Voting Instruction tabulator for
the 401K Plan).
As a participant in the 401K Plan with all or a portion of your account
balance invested in the Employer Stock Fund and a named fiduciary, you have the
right to participate in directing how the Plan Administrator (Astoria Federal
Savings and Loan Association) instructs the 401K Trustee (T. Rowe Price Trust
Company) to vote the shares of Astoria Financial Corporation Common Stock (the
"Shares") held by the 401K Plan as of March 23, 1999, the meeting record date
(provided that you had all or a portion of your account invested in the Employer
Stock Fund as of the most recent valuation date on or before the meeting record
date). In general, the 401K Trustee will be directed to vote the Shares held in
the Employer Stock Fund "FOR" and "AGAINST" as to each proposal listed on the
Confidential Voting Instruction card in the same proportions as instructions to
cast votes "FOR" and "AGAINST" each proposal are given by those individuals with
the right to give directions. Each individual's instructions are weighted
according to the value of the participant's interest in the Employer Stock Fund
as of the most recent valuation available prior to the record date. If you do
not file a Confidential Voting Instruction card on or before May 10, 1999, or if
you ABSTAIN, your directions will not count.
Unanticipated Proposals
It is possible, although very unlikely, that proposals other than those
specified on the
<PAGE>
Confidential Voting Instruction card will be presented for shareholder action at
the 1999 Annual Meeting of Shareholders. If this should happen, the 401K Trustee
will be instructed to vote upon such matters in the 401K Trustee's discretion,
or to cause such matters to be voted upon in the discretion of the individuals
named in any proxies executed by the 401K Trustee.
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Plan
Administrator. You should then seal the card in the enclosed envelope and return
-----------------------------------------------------------------
it to ChaseMellon Shareholder Services, L.L.C. To direct the voting of your
- ---------------------------------------------------------------------------
Shares, your instruction card must be received by ChaseMellon Shareholder
- -------------------------------------------------------------------------
Services, L.L.C. no later than May 10, 1999.
- --------------------------------------------
Please note that the instructions of individual participants are to be kept
confidential by ChaseMellon Shareholder Services, L.L.C. and the 401K Trustee,
who have been instructed not to disclose them to anyone at Astoria Federal
Savings and Loan Association or Astoria Financial Corporation.
This memorandum is subject in its entirety to the information set forth in
the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
Astoria Federal Savings and Loan Association
By: /s/ James J. Horvath
________________________________________
Plan Administrator
<PAGE>
[LOGO] [LETTERHEAD]
April 9, 1999
To: All Astoria Federal Savings and Loan Association Employee Stock Ownership
Plan (the "ESOP") Participants
Re: Annual Meeting of Shareholders to be held on May 19, 1999
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 19, 1999, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 9, 1999, including a Notice of Annual
Meeting of Shareholders,
c) 1998 Annual Report and Form 10-K, and
d) a postage-paid return envelope addressed to ChaseMellon Shareholder
Services, L.L.C., Proxy Tabulation Department (ChaseMellon Shareholder
Services, L.L.C. is the Confidential Voting Instruction tabulator for
the ESOP).
As a participant, and a "named fiduciary," in the ESOP, you have the right
to direct the ESOP Trustee (State Street Bank and Trust Company) how to vote at
the Annual Meeting the shares of Astoria Financial Corporation Common Stock
("Shares") allocated to your account in the ESOP. As a "named fiduciary," you
are the party who is identified in the voting section of the Trust as
responsible for directing the Trustee how to vote your allocated ESOP Shares.
The number of Shares in your ESOP account is shown on the enclosed Confidential
Voting Instruction card. Please mark the appropriate boxes on the card, sign,
date and return it in the enclosed postage-paid return envelope. If you sign,
date and return your card, but do not check the box for a particular proposal,
the Trustee will vote your shares according to the recommendation of the Board
of Directors for that particular proposal. For your ESOP voting instruction to
be counted by the Trustee, ChaseMellon Shareholder Services, L.L.C., must
receive your Confidential Voting Instruction card no later than May 10, 1999.
The ESOP Trust states that the Trustee will generally vote unallocated
Shares and allocated Shares for which it receives no written instructions in the
same manner and proportion as the allocated Shares for which voting instructions
have been received. The Trustee's vote must be in accordance with its fiduciary
duties and in a manner determined by the Trustee to be prudent and solely in the
interest of ESOP participants and beneficiaries.
<PAGE>
Unanticipated Proposals
It is possible, although very unlikely, that proposals other than those
specified on the Confidential Voting Instruction card will be presented for
shareholder action at the 1999 Annual Meeting of Shareholders. If this should
happen, the ESOP Trustee will be instructed to vote upon such matters in the
ESOP Trustee's discretion or to cause such matters to be voted upon in the
discretion of the individuals named in any proxies executed by the ESOP Trustee.
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Trustee.
You should then seal the card in the enclosed envelope and return it to
- -----------------------------------------------------------------------
ChaseMellon Shareholder Services, L.L.C. To direct the voting of Shares within
- ------------------------------------------------------------------------------
the ESOP, the Confidential Voting Instruction card must be received by
- ----------------------------------------------------------------------
ChaseMellon Shareholder Services, L.L.C. no later than May 10, 1999.
- --------------------------------------------------------------------
Please note that the instruction of individual participants are to be kept
confidential by ChaseMellon Shareholder Services, L.L.C. and the Trustee, who
have been instructed not to disclose them to anyone at Astoria Federal Savings
and Loan Association or Astoria Financial Corporation.
This memorandum is subject in its entirety to the information set forth in
the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
The ESOP Committee
By: /s/ James J. Horvath
--------------------------
James J. Horvath
<PAGE>
[LOGO] [LETTERHEAD]
April 9, 1999
To: All The Long Island Savings Bank 401(k) Savings Plan ("401K Plan")
Participants with a portion of their account balance invested in the Common
Stock of Astoria Financial Corporation
Re: Annual Meeting of Shareholders to be held on May 19, 1999
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 19, 1999, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 9, 1999, including a Notice of Annual
Meeting of Shareholders,
c) 1998 Annual Report and Form 10-K, and
d) a postage-paid return envelope addressed to ChaseMellon Shareholder
Services, L.L.C., Proxy Tabulation Department (ChaseMellon Shareholder
Services, L.L.C. is the Confidential Voting Instruction tabulator for
the 401K Plan).
As a participant in the 401K Plan with all or a portion of your account
balance invested in the common stock of Astoria Financial Corporation and a
named fiduciary, you have the right to directing how the 401K Trustee (CG Trust
Company) votes the shares of Astoria Financial Corporation Common Stock (the
"Shares") held by the 401K Plan as of March 23, 1999, the meeting record date.
In general, the 401K Trustee will vote the Shares held in the 401K Plan "FOR",
"AGAINST", "WITHHELD" or "ABSTAIN" as to each proposal as specified on the
Confidential Voting Instruction card accompanying this letter. If you do not
direct the Trustee how to vote the Shares held for your account, the 401K
Trustee shall vote such Shares in the same manner and proportion as the Shares
as to which instructions have been received by May 10, 1999.
Thus, through your directions, you will be exercising power and control as
a named fiduciary of the 401K Plan not only over the Shares allocated to your
account, but also with respect to a portion of the undirected Shares held by the
401K Plan.
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Plan
Administrator. You should then seal the card in the enclosed envelope and return
-----------------------------------------------------------------
it to ChaseMellon Shareholder Services, L.L.C. To direct the voting of your
- ---------------------------------------------------------------------------
Shares, your
- ------------
<PAGE>
instruction card must be received by ChaseMellon Shareholder Services, L.L.C.
- -----------------------------------------------------------------------------
no later than May 10, 1999.
- --------------------------
Please note that the instructions of individual participants are to be kept
confidential by ChaseMellon Shareholder Services, L.L.C. and the 401K Trustee,
who have been instructed not to disclose them to anyone at Astoria Federal
Savings and Loan Association or Astoria Financial Corporation.
This memorandum is subject in its entirety to the information set forth in
the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
Astoria Federal Savings and Loan Association
By: /s/ James J. Horvath
________________________________________
Plan Administrator
<PAGE>
[LOGO] [LETTERHEAD]
April 9, 1999
To: All Participants in The LISB Employee Stock Ownership Plan (the "ESOP")
Re: Annual Meeting of Shareholders to be held on May 19, 1999
---------------------------------------------------------
Dear Participants:
In connection with the Annual Meeting of Shareholders of Astoria Financial
Corporation to be held on May 19, 1999, enclosed please find the following
documents:
a) Confidential Voting Instruction card,
b) Proxy Statement dated April 9, 1999, including a Notice of Annual
Meeting of Shareholders,
c) 1998 Annual Report and Form 10-K, and
d) a postage-paid return envelope addressed to ChaseMellon Shareholder
Services, L.L.C., Proxy Tabulation Department (ChaseMellon Shareholder
Services, L.L.C. is the Confidential Voting Instruction tabulator for
the ESOP).
As a participant in the ESOP and a named fiduciary, you have the right to
direct the ESOP Trustee (CG Trust Company) how to vote the shares of Astoria
Financial Corporation Common Stock ("Shares") held by the ESOP as of March 23,
1999, the meeting record date. Pursuant to the terms of the ESOP, each
participant, as a named fiduciary, has the right to instruct the ESOP Trustee
how to vote the Shares allocated to that person's account in the ESOP as of the
record date. That number is shown on the enclosed Confidential Voting
Instruction card. In general, the ESOP Trustee will be directed to vote the
Shares held by the ESOP Trust and allocated to you by casting votes "FOR",
"AGAINST", "WITHHELD" or "ABSTAIN" as to each proposal as specified in the
Confidential Voting Instruction card accompanying this letter. The ESOP
generally states that if you do not direct the Trustee how to vote the Shares
allocated to your account, and as to the unallocated Shares held by the ESOP
Trust, the Trustee shall vote such Shares in the same proportion as Shares as to
which voting instructions are received from participants.
Thus, through your directions, you will be exercising power and control as
a named fiduciary of the ESOP not only over the Shares allocated to your
account, but also with respect to a portion of the undirected or unallocated
Shares held by the ESOP.
To be considered by the Trustee in determining how to vote the Shares held
by the ESOP Trust, your voting instruction must be received by ChaseMellon
Shareholder Services, L.L.C. not later than by May 10, 1999.
<PAGE>
Your instruction is very important. You are encouraged to review the
enclosed material carefully and to complete, sign and date the enclosed
Confidential Voting Instruction card to signify your direction to the Trustee.
You should then seal the card in the enclosed envelope and return it to
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ChaseMellon Shareholder Services, L.L.C. To direct the voting of Shares within
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the ESOP, the Confidential Voting Instruction card must be received by
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ChaseMellon Shareholder Services, L.L.C. no later than May 10, 1999.
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Please note that the instruction of individual participants are to be kept
confidential by ChaseMellon Shareholder Services, L.L.C. and the Trustee, who
have been instructed not to disclose them to anyone at Astoria Federal Savings
and Loan Association or Astoria Financial Corporation.
This memorandum is subject in its entirety to the information set forth in
the enclosed Proxy Statement, which you are encouraged to read and study
thoroughly.
Very truly yours,
The ESOP Committee
By: /s/ James J. Horvath
_______________________
James J. Horvath
