<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by registrant /x/
Filed by a party other than the registrant / / / / Confidential,
for Use of the
Check the appropriate box: Commission Only
/ / Preliminary proxy statement (as permitted by
/x/ Definitive proxy statement Rule 14a-6(e)(2))
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LONG ISLAND BANCORP, INC.
(Name of Registrant as Specified in its Charter)
LONG ISLAND BANCORP, INC.
(Name of Person(s) Filing Soliciting Material)
-------------
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(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>
[Company Logo and Address]
January 5, 1998
Dear Stockholder:
You are cordially invited to attend the annual meeting of
stockholders of Long Island Bancorp, Inc. (the "Company") which will be held on
February 17, 1998, at 9:30 a.m., at the Huntington Hilton, 598 Broadhollow Road,
Melville, New York (the "Annual Meeting"). The attached Notice of Annual
Meeting and Proxy Statement describe the business to be transacted at the Annual
Meeting.
The major business to be transacted at the Annual Meeting will be
the election of directors, approval to increase the authorized Common Stock and
the ratification of KPMG Peat Marwick LLP as our auditors. Officers of the
Company as well as representatives of KPMG Peat Marwick LLP will be present at
the Annual Meeting to respond to any questions that our stockholders may have
regarding the business to be transacted.
The Board of Directors of the Company has determined that the
matters to be considered at the Annual Meeting are in the best interests of the
Company and its stockholders. For the reasons set forth in the Proxy Statement,
the Board unanimously recommends a vote "FOR" each matter to be considered.
It is important that your shares be represented at the Annual
Meeting whether or not you are present. Please be sure to sign, date and mail
the enclosed Proxy Card in the postage-paid envelope provided, even if you plan
to attend in person.
If you attend the Annual Meeting, you may vote in person even if
you have already mailed in your Proxy.
On behalf of the Board of Directors and all the employees of the
Company and The Long Island Savings Bank, FSB, I thank you for your continued
support.
Sincerely,
John J. Conefry, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE>
[Company Logo and Address]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 17, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Long Island Bancorp, Inc. (the "Company") will be held on February 17, 1998, at
9:30 a.m., at the Huntington Hilton, 598 Broadhollow Road, Melville, New York
(the "Annual Meeting").
A Proxy Statement and Proxy Card for the Annual Meeting are
enclosed.
The Annual Meeting is for the purpose of considering and voting
upon the following matters:
1. The election of four directors of the Company for terms of three years
each;
2. The approval of the proposed increase in authorized Common Stock to
130,000,000 shares;
3. The ratification of the appointment of KPMG Peat Marwick LLP as the
Company's independent auditors for the fiscal year ending September
30, 1998; and
4. Such other business as may properly come before the Annual Meeting or
any adjournment thereof.
Note: The Board of Directors of the Company is not aware of any other business
to come before the Annual Meeting.
Any action may be taken on any one of the foregoing proposals at
the Annual Meeting on the date specified above or on any date or dates to which,
by original or later adjournment, the Annual Meeting may be adjourned.
Stockholders of record at the close of business on December 22, 1997, are the
stockholders entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof. A complete list of stockholders entitled to vote at the
Annual Meeting will be open for examination by any stockholder for any purpose
germane to the Annual Meeting during ordinary business hours at the Company's
principal office located at 201 Old Country Road, Melville, New York for a
period of ten days prior to the Annual Meeting and will also be available at the
Annual Meeting.
<PAGE>
You are requested to fill in, sign and date the enclosed proxy
which is solicited by the Board of Directors and to return it promptly by mail
in the enclosed envelope. The proxy will not be used if you attend and vote in
person at the Annual Meeting.
By Order of the Board of Directors,
Roger Teurfs
Secretary
Melville, New York
January 5, 1998
________________________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
________________________________________________________________________________
<PAGE>
- --------------------------------------------------------------------------------
LONG ISLAND BANCORP, INC.
201 Old Country Road
Melville, New York 11747
(516) 547-2000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
February 17, 1998
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- --------------------------------------------------------------------------------
GENERAL
- --------------------------------------------------------------------------------
This Proxy Statement is furnished to stockholders of Long Island
Bancorp, Inc. (the "Company") in connection with the solicitation by the Board
of Directors of the Company (the "Board of Directors") of proxies to be used at
the Annual Meeting of Stockholders to be held on February 17, 1998, at 9:30
a.m., at the Huntington Hilton, 598 Broadhollow Road, Melville, New York (the
"Annual Meeting"), and at any adjournment thereof. Only holders of record of
the Company's issued and outstanding common stock, par value $0.01 per share
(the "Common Stock"), as of the close of business on December 22, 1997 (the
"Record Date") are entitled to vote at the Annual Meeting and any adjournments
thereof. The accompanying Notice of Annual Meeting and form of proxy, the 1997
Annual Report to Stockholders, including the consolidated financial statements
for the fiscal year ended September 30, 1997, and this Proxy Statement are being
first mailed on or about January 5, 1998 to all stockholders entitled to vote at
the Annual Meeting.
- --------------------------------------------------------------------------------
Voting and Revocability of Proxies
- --------------------------------------------------------------------------------
A majority of the holders of the Common Stock must be
represented, either in person or by proxy, to constitute a quorum for the
conduct of business. In order to insure a quorum, stockholders are requested to
vote by completing the enclosed Proxy Card and returning it signed and dated in
the enclosed postage-paid envelope. Stockholders are urged to indicate their
vote in the spaces provided on the Proxy Card. PROXIES SOLICITED BY THE BOARD
OF DIRECTORS WILL BE VOTED IN ACCORDANCE WITH THE DIRECTIONS GIVEN THEREIN.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED FOR THE SPECIFIC
PROPOSALS PRESENTED IN THIS PROXY STATEMENT. Proxies marked as abstentions will
not be counted as votes cast. In addition, shares held in street name which
have been designated by brokers on Proxy Cards as not voted will not be counted
as votes cast. Proxies marked as abstentions or as broker non-votes, however,
will be treated as shares present for purposes of determining whether a quorum
is present. In the event that there are not sufficient votes for a quorum or to
approve or ratify any proposal at the time of the Annual Meeting, the Annual
Meeting may be adjourned in order to permit the further solicitation of proxies.
<PAGE>
The election of directors shall be by a plurality of votes cast
by the holders present in person or by proxy of shares entitled to vote thereon.
The holders of Common Stock may not vote their shares cumulatively for election
of directors.
As to the approval of the proposed increase in authorized Common
Stock, ratification of KPMG Peat Marwick LLP as independent auditors of the
Company and all other matters that may properly come before the Annual Meeting,
by checking the appropriate box, a shareholder may: (i) vote "FOR" the item;
(ii) vote "AGAINST" the item; or (iii) "ABSTAIN" from voting on such item.
Under the Company's Restated Bylaws (the "Bylaws"), unless otherwise required by
law, the Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") or the Bylaws, all matters submitted to stockholders at any
meeting, other than the election of directors, shall be decided by the
affirmative vote of a majority of the shares present in person or represented by
proxy at such meeting and entitled to vote on such matters.
The Board of Directors knows of no additional matters that will
be presented for consideration at the Annual Meeting. Execution of a proxy,
however, confers on the designated proxyholders discretionary authority to vote
the shares in accordance with their best judgment with respect to the election
of any person as a director where the nominee is unable to serve or for good
cause will not serve, matters incident to the conduct of the Annual Meeting, and
such other business, if any, that may properly come before the Annual Meeting or
any adjournments thereof.
A proxy may be revoked at any time prior to its exercise by the
filing of a written notice of revocation with the Secretary of the Company, by
delivering a duly executed proxy bearing a later date to the Secretary of the
Company at the address listed above, or by attending the Annual Meeting and
voting in person.
The cost of solicitation of proxies in the form enclosed herewith
will be borne by the Company. In addition to the solicitation of proxies by
mail, D.F. King & Co., Inc., a proxy soliciting firm, will assist the Company in
soliciting proxies for the Annual Meeting and will be paid a fee of $6,000, plus
reimbursement for out-of-pocket expenses. Proxies also may be solicited
personally or by telephone or telegraph by directors, officers and regular
employees of the Company and The Long Island Savings Bank, FSB (the "Bank"),
without additional compensation therefor. The Company will also request
persons, firms and corporations holding shares in their names, or in the name of
their nominees, which are beneficially owned by others, to send proxy materials
to and obtain proxies from such beneficial owners, and will reimburse such
holders for reasonable expenses incurred in connection therewith.
- --------------------------------------------------------------------------------
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
- --------------------------------------------------------------------------------
General
Stockholders of record as of the close of business on the Record
Date are entitled to one vote for each share of Common Stock then held except as
described below. As of the Record Date, there were 24,027,929 shares of Common
Stock outstanding.
As provided in the Certificate of Incorporation, record holders
of Common Stock who, directly or indirectly, beneficially own in excess of 10%
of the outstanding shares of Common Stock (the "Limit") are not entitled to any
vote in respect of the shares held in excess of the Limit. A person or entity
is deemed to own beneficially shares owned by an affiliate of, as well as
persons acting in concert with, such person or entity. The Certificate of
Incorporation authorizes the Board of Directors (i) to make all determinations
necessary to implement and apply the Limit, including determining whether
persons or entities are acting in concert, and (ii) to demand that any person
who is reasonably believed to beneficially own Common Stock in excess of the
Limit supply information to the Company to enable the Board of Directors to
implement and apply the Limit.
-2-
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based upon
such reports, the following table sets forth, as of December 1, 1997, certain
information as to the Common Stock beneficially owned by persons owning in
excess of 5% of the outstanding shares of Common Stock. Management knows of no
person, except as listed below, who owned more than 5% of the Company's
outstanding shares of Common Stock as of December 1, 1997.
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
---------------- -------------------- ----------------
The LISB Employee Stock 2,028,648 shares(1) 8.44 %
Ownership Trust
114 W. 47th Street
New York, New York 10036
Wellington Management Company 1,377,000 shares(2) 5.73 %
75 State Street
Boston, Massachusetts 02109
_____________________
(1) The Employee Stock Ownership Plan ("ESOP") is administered by a
committee consisting of three employees of the Bank who were appointed
by the Board of Directors of the Bank. The ESOP's assets are held in
trust (the "ESOP Trust"), for which CG Trust Company serves as trustee
(the "ESOP Trustee"). The terms of the ESOP Trust Agreement provide
that U.S. Trust Company of California, N.A., as the ESOP Investment
Manager (the "Investment Manager"), subject to the Investment
Manager's fiduciary responsibilities under the Employee Retirement
Income Security Act of 1974, as amended, will direct the ESOP Trustee
to vote, tender or exchange shares of Common Stock held in the ESOP
Trust in accordance with the following rules. The Investment Manager
will direct the ESOP Trustee to vote, tender or exchange shares of
Common Stock allocated to participants' accounts in accordance with
instructions received from the participants. The Investment Manager
will direct the ESOP Trustee to vote allocated shares as to which no
instructions are received and any shares in the "suspense account" or
that otherwise have not been allocated to participants' accounts in
the same proportion as allocated shares with respect to which the
Investment Manager receives instructions are voted.
Excludes amounts held by the Trustee for the benefit of the 401(k)
Trust.
(2) According to its filing on Schedule 13G with the Securities and
Exchange Commission dated January 24, 1997, Wellington Management
Company acquired such interest through its subsidiary Wellington Trust
Company, N.A. and claims sole voting power over -0- shares of Common
Stock, shared voting power with respect to 789,320 shares of Common
Stock and shared dispositive power as to 1,377,000 shares of Common
Stock. Shares of Common Stock beneficially owned by Wellington
Management Company are owned by a variety of investment advisory
clients of Wellington Management Company. No such client is known to
have an interest in more than 5% of the Common Stock.
-3-
<PAGE>
STOCK OWNERSHIP OF MANAGEMENT
The table below presents the shares of Common Stock and the
percentage of Common Stock beneficially owned as of September 30, 1997 by (i)
the Company's directors, (ii) the executive officers named in the "Summary
Compensation Table" below (see "Executive Compensation") and (iii) the Company's
directors and executive officers, as a group.
<TABLE>
<CAPTION>
Shares of Common Stock Percent
Position(s) Beneficially Owned of Class
Name With the Company (1) (2) (3) (4) (5)
- ---- ---------------- ---------------------- --------
<S> <C> <C> <C>
John J. Conefry, Jr...... Chairman of the Board, 355,531 1.48%
and CEO
Lawrence W. Peters (6)... President and COO, 26,749 .11%
Director
Bruce M. Barnet (7)...... Executive Vice President, 36,155 .15%
Director
Clarence M. Buxton....... Director 85,096 .35%
Edwin M. Canuso.......... Director 79,824 .33%
Richard F. Chapdelaine... Director 84,360 .35%
Brian J. Conway.......... Director 85,792 .36%
Robert J. Conway (8)..... Director 75,335 .31%
Frederick DeMatteis...... Director 105,664 .44%
George R. Irvin (9)...... Director 77,056 .32%
Herbert J. McCooey....... Director 59,702 .25%
Robert S. Swanson, Jr.... Director 77,202 .32%
James B. Tormey,M.D.(10). Director 62,506 .26%
Leo J. Waters............ Director 36,832 .15%
Donald D. Wenk (11)...... Director 111,540 .46%
Troy J. Baydala.......... Director Emeritus 47,963 .20%
W. Douglas Singer........ Executive Vice President 87,852 .37%
Mark Fuster.............. Executive Vice President 87,106 .36%
Robert T. Volk........... Executive Vice President 79,646 .33%
All directors and
executive officers as a
group (19 persons)....... 1,661,911 6.92%
</TABLE>
-4-
<PAGE>
(1) Unless otherwise indicated, each person effectively exercises sole
voting and dispositive power as to the shares reported.
(2) Includes options granted under the Long Island Bancorp, Inc. 1994 Stock
Incentive Plan (the "Stock Incentive Plan") or the Long Island Bancorp,
Inc. 1994 Non-Employee Directors Stock Option Program (the "Director
Stock Option Program") which are currently exercisable. Excludes
remaining options granted in 1994 which are exercisable on March 29,
1999, options granted in 1995 which are exercisable in two equal
installments beginning on March 29, 1999, options granted in 1996 which
are exercisable in three equal installments beginning on March 29, 1999,
and options granted in 1997 which are exercisable in four equal
installments beginning on March 29, 1999.
(3) Includes shares awarded under The Long Island Savings Bank Management
Recognition and Retention Plan for Executive Officers (the "Executive
Officer MRP") and The Long Island Savings Bank Management Recognition
and Retention Plan for Non-Employee Directors (the "Director MRP" and,
together with the Executive Officer MRP, the "MRPs"). Under the MRPs,
awards are granted in the form of shares of Common Stock held by the
MRPs. Directors and executive officers earn shares of Common Stock
covered by the awards prior to 1997 at a rate of 20% per year commencing
one year from the date of the award. However, shares awarded in 1997
vest 50% on March 29, 1997 and 50% on March 29, 1998.
(4) Includes 2,587, 2,357, 2,357, 0, and 2,296 shares allocated under the
ESOP to the accounts of Messrs. Conefry, Singer, Fuster, Barnet and
Volk, respectively.
(5) The total number of shares of Common Stock outstanding on September 30,
1997 was 24,022,924. For purposes of this table, 279,219 shares of
Common Stock subject to stock options granted, in the aggregate, to all
directors and executive officers are not considered outstanding as such
options are not exercisable prior to March 29, 1999.
(6) Mr. Peters was elected President and Chief Operating Officer on March 1,
1997.
(7) Mr. Barnet was elected Executive Vice President, Director of Real Estate
and Development for both the Company and the Bank on October 3, 1996.
(8) Of the 75,335 shares of Common Stock beneficially owned, Mr. Robert J.
Conway has sole voting and investment power with respect to 67,335
shares of Common Stock and has shared voting and investment power with
respect to 8,000 shares of Common Stock.
(9) Of the 77,056 shares of Common Stock beneficially owned, Mr. Irvin has
sole voting and investment power with respect to 7,166 shares of Common
Stock and has shared voting and investment power with respect to 69,890
shares of Common Stock.
(10) Of the 62,506 shares of Common Stock beneficially owned, Dr. Tormey has
sole voting and investment power with respect to 60,506 shares of Common
Stock and has shared voting and investment power with respect to 2,000
shares of Common Stock.
(11) Of the 111,540 shares of Common Stock beneficially owned, Mr. Wenk has
sole voting and investment power with respect to 104,540 shares of
Common Stock and has shared voting and investment power with respect to
7,000 shares of Common Stock.
-5-
<PAGE>
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
The Board of Directors of the Company consists of fifteen
directors divided into three classes, Class I, Class II and Class III directors,
and one director emeritus. Upon election by the stockholders, the directors of
each class serve for a term of three years, with the directors of one class
elected each year. The Class I directors, consisting of Messrs. Conefry,
Chapdelaine, Irvin and Tormey, were elected to terms of office expiring at the
1998 annual meeting of stockholders. The Class II directors, consisting of
Messrs. DeMatteis, McCooey, Swanson, Canuso, Barnet and Peters were elected to
terms of office expiring at the 1999 annual meeting of stockholders. The Class
III directors, consisting of Messrs. Buxton, Conway (Brian J.), Conway (Robert
J.), Waters and Wenk, were elected to terms of office expiring at the 2000
annual meeting of stockholders. In all cases, directors serve until their
respective successors are duly elected and qualified.
The directors whose terms expire at the Annual Meeting are
Messrs. Conefry, Chapdelaine, Irvin, and Dr. Tormey. Each of these directors
(each a "Board Nominee") has been nominated by the Board to stand for
reelection, and, if elected, to serve for a term expiring at the annual meeting
of stockholders to be held in 2001. Each Board Nominee has consented to being
named in this Proxy Statement and to serve if elected.
UNLESS OTHERWISE INSTRUCTED, IT IS THE INTENTION OF THE PROXY
HOLDERS TO VOTE THE PROXIES RECEIVED BY THEM IN RESPONSE TO THIS SOLICITATION
FOR THE ELECTION OF THE BOARD NOMINEES AS DIRECTORS. 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 ANY SUCH NOMINEE. THE BOARD
PRESENTLY HAS NO KNOWLEDGE THAT ANY OF THE BOARD NOMINEES WILL REFUSE OR BE
UNABLE TO SERVE.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE BOARD
NOMINEES.
BOARD NOMINEES, DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the
Board Nominees and the other members of the Board of Directors of the Company.
<TABLE>
<CAPTION>
POSITION(S) HELD WITH DIRECTOR TERM
NAME AGE(1) THE COMPANY SINCE(2) EXPIRES
- ---- ------ --------------------- -------- -------
<S> <C> <C> <C> <C>
John J. Conefry, Jr........ 53 Chairman of the Board 01/15/80 1998
and CEO
Lawrence W. Peters......... 67 President and COO and 04/25/89 1999
Director
Bruce M. Barnet(3)......... 45 Executive Vice President, 06/24/86 1999
Director
Clarence M. Buxton......... 70 Director 01/15/74 2000
Edwin M. Canuso............ 72 Director 05/19/70 1999
Richard F. Chapdelaine(4).. 72 Director 11/22/88 1998
Brian J. Conway(5)......... 39 Director 03/28/89 2000
Robert J. Conway(5)........ 62 Director 08/17/83 2000
Frederick DeMatteis........ 74 Director 04/20/65 1999
</TABLE>
-6-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
George R. Irvin(3)......... 70 Director 09/21/76 1998
Herbert J. McCooey......... 71 Director 07/21/64 1999
Robert S. Swanson, Jr...... 72 Director 08/20/68 1999
Dr. James B. Tormey........ 68 Director 01/19/82 1998
Leo J. Waters.............. 62 Director 03/27/90 2000
Donald D. Wenk............. 67 Director 01/15/74 2000
Troy J. Baydala............ 79 Director Emeritus 08/15/72 -
</TABLE>
____________________
(1) As of November 1, 1997.
(2) All directors commenced service as directors of the Company on December
20, 1993, the date of the Company's incorporation. The dates set forth
above are the dates the individuals commenced service as directors of
the Bank.
(3) Bruce M. Barnet is the son-in-law of George R. Irvin.
(4) Mr. Chapdelaine served on the Board of Directors of the Bank from August
1968 to March 1986, at which time he left the Board. He was reappointed
to the Board of Directors of the Bank in November 1988.
(5) Brian J. Conway is the nephew of Robert J. Conway.
The following table sets forth certain information regarding the
executive officers who are not directors of the Company.
POSITION(S) HELD WITH
NAME AGE(1) THE COMPANY
---- ------ ---------------------
Joseph P. Bryant........ 50 Former Executive Vice President
W. Douglas Singer....... 47 Executive Vice President
Mark Fuster............. 50 Executive Vice President/Treasurer
Robert T. Volk.......... 45 Executive Vice President
____________________
(1) As of November 1, 1997.
Mr. Fuster has served as an executive officer of the Company
since December 21, 1993, the first meeting of the Board of Directors of the
Company. Messrs. Singer and Volk have served as executive officers of the
Company since March 29, 1994 and July 26, 1994, respectively. Mr. Bryant served
as an executive officer of the Company between July 26, 1994 and June 17, 1997.
All executive officers of the Company are elected annually and serve at the will
of the Board of Directors, until their respective successors have been elected
and qualified.
-7-
<PAGE>
BIOGRAPHICAL INFORMATION
Set forth below is certain information with respect to the directors,
Board Nominees and executive officers of the Company. Unless otherwise
indicated, the principal occupation listed for each person below has been his
principal occupation for the past five years.
DIRECTORS AND BOARD NOMINEES
JOHN J. CONEFRY, JR. has served as the Chairman of the Board of Directors
and Chief Executive Officer of the Company since December 21, 1993, the first
meeting of the Board of Directors of the Company, and as Chairman of the Board
of Directors of the Bank since January 25, 1994. He joined the Bank as an
employee on September 6, 1993 as Vice Chairman. On November 23, 1993, he was
elected Chief Executive Officer of the Bank. Mr. Conefry has been a Director of
the Bank since January 15, 1980. On September 7, 1996 he assumed the Presidency
of the Company and of the Bank. Mr. Conefry previously was employed by Merrill
Lynch, Pierce, Fenner & Smith, Inc., where he had been a Senior Vice President
since 1981. Prior to that, he had been a partner in the public accounting firm
of Deloitte Haskins & Sells. Mr. Conefry also serves on a number of boards of
not-for-profit organizations.
LAWRENCE W. PETERS has been a director of the Company since its formation
in 1993. He joined the Bank on April 13, 1989 as a Senior Executive Vice
President and Chief Lending Officer. Mr. Peters retired from his management
position on May 23, 1995 and rejoined the Company and Bank as President and
Chief Operating Officer on March 1, 1997. Prior to joining the Bank, Mr. Peters
was employed by Dime Savings Bank of New York as Vice Chairman and Director, and
was in charge of all lending functions.
BRUCE M. BARNET has been a director of the Company since its formation in
1993. He became a director of the Bank on June 24, 1986. As the President of
Sunset Developers, Inc., a real estate brokerage firm, he was active in the
development, sale and management of residential and commercial real estate in
the New York area since 1985. On October 3, 1996, Mr. Barnet was appointed
Executive Vice President, Director of Real Estate and Development, of the
Company and the Bank.
CLARENCE M. BUXTON has been a director of the Company since its formation
in 1993. He became a director of the Bank on January 15, 1974. Mr. Buxton is a
partner in Buxton, Davidson Associates, an employee benefit and estate planning
firm.
EDWIN M. CANUSO has been a director of the Company since its formation in
1993. He became a director of the Bank on May 19, 1970. He served the Bank
for 16 years as the Senior Executive Vice President in charge of real estate
management, development, construction and joint ventures. Mr. Canuso retired
from the Bank on January 1, 1993. He currently serves in a consulting capacity
to the Bank.
RICHARD F. CHAPDELAINE has been a director of the Company since its
formation in 1993. He became a director of the Bank on August 20, 1968. He is
the Chairman of the Board of Chapdelaine Corporate Securities & Co., and
Chapdelaine & Co., Inc., both firms dealing in financial services. He serves on
the Boards of Niagara University (Emeritus), and Golden Bear International.
BRIAN J. CONWAY has been a director of the Company since its formation in
1993. He became a director of the Bank on March 28, 1989. He is a Managing
Director of TA Associates, Inc., a private equity investment firm.
ROBERT J. CONWAY has been a director of the Company since its formation in
1993. He became a director of the Bank on August 17, 1983. Mr. Conway was
employed by AMF for 29 years. His last
-8-
<PAGE>
position with AMF was Corporate Vice President and Group Executive of the
Worldwide Bowling Products Group. He has worked as a professional equities
trader.
FREDERICK DEMATTEIS has been a director of the Company since its formation
in 1993. He became a director of the Bank on April 20, 1965. Mr. DeMatteis is
the Chairman of the Board and CEO of Leon D. DeMatteis Construction Corporation,
a real estate development and construction firm. He is the Chairman of the
Board for St. Vincent's Services and the Chairman of the Board of DM Airport
Developers, Inc. He serves as Chairman of RY Management Co., Inc., a real
estate building management firm. He is also a Director on the Board of Downtown
Lower Manhattan Association of New York and a Trustee of the Dante Foundation.
GEORGE R. IRVIN has been a director of the Company since its formation in
1993. He became a director of the Bank on September 21, 1976. As President of
Realty Syndicates Co., Mr. Irvin is an active developer of residential and
commercial real estate on Long Island.
HERBERT J. MCCOOEY has been a director of the Company since its formation
in 1993. He became a director of the Bank on July 21, 1964. Mr. McCooey is
retired. Prior to his retirement he served as Executive Vice President of Robb,
Peck, McCooey & Co., Inc., a specialist firm on the New York Stock Exchange. He
was also a Senior Floor Governor of the New York Stock Exchange.
ROBERT S. SWANSON, JR. has been a director of the Company since its
formation in 1993. He became a director of the Bank on August 20, 1968. Mr.
Swanson served as Chairman of the Board of S.B. Thomas Inc., a specialty baking
company. He retired in 1976.
JAMES B. TORMEY, M.D. has been a director of the Company since its
formation in 1993. He became a director of the Bank on January 19, 1982. Since
January 1, 1995 he has been retired from the active practice of medicine. Dr.
Tormey has served as a member of the Medical Ethics Committee of the Catholic
Diocese of Rockville Centre. He is a limited partner in the Rockville Centre
Medical Realty Association.
LEO J. WATERS has been a director of the Company since its formation in
1993. He became a director of the Bank on March 27, 1990. He is the President
of a private investment consulting firm.
DONALD D. WENK has been a director of the Company since its formation in
1993. He became a director of the Bank on January 15, 1974. From June 23, 1992
until January 25, 1994, Mr. Wenk served as Chairman of the Board of Directors of
the Bank. From January 25, 1994 until January 23, 1996, Mr. Wenk served as
Chairman of the Executive Committee of the Board of Directors of the Bank. He
is the Chairman of the Board of American Casting & Manufacturing Corporation.
TROY J. BAYDALA has been a director emeritus of the Company since soon
after its formation in 1993. He became a director of the Bank on August 15,
1972 and retired from the Board of the Bank on December 8, 1992 upon reaching
the mandatory retirement age of 75. Mr. Baydala retired in 1983 from his
position as Executive Vice President and Secretary of the Bank. He previously
served as a Senior Vice President of Franklin National Bank, where he worked for
23 years. Mr. Baydala was the President of the New York chapter of the American
Institute of Real Estate Appraisers (MAI).
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EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
W. DOUGLAS SINGER has been an Executive Vice President of the Company since
March 29, 1994. He is Executive Vice President and Treasurer of the Bank. He
joined the Bank in 1988 from Goldman Sachs & Co. where he was a Vice President
in its Mortgage Backed Securities Department.
MARK FUSTER has been the Treasurer of the Company since December 21, 1993
and Executive Vice President and Treasurer of the Company since January 23,
1996. He is Executive Vice President and Chief Financial Officer of the Bank.
Mr. Fuster joined the Bank in 1981. Prior to joining the Bank, Mr. Fuster
served as Vice President and Controller for the real estate and mortgage loan
department at another financial institution. Mr. Fuster had previously served
as a supervisor at the accounting firm of Peat Marwick Mitchell & Co.
ROBERT T. VOLK has been an Executive Vice President of the Company since
July 26, 1994. He is Executive Vice President and Director of Consumer Banking
at the Bank. Mr. Volk joined the Bank in 1989. He formerly served as Vice
President, Community Banking Group Administration at National Westminster Bank
USA.
JOSEPH P. BRYANT was an Executive Vice President of the Company from July
26, 1994 to June 17, 1997. He was Executive Vice President and Chief Mortgage
Officer of the Bank.
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COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
OF THE COMPANY AND OF THE BANK
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The Board of Directors meets on a monthly basis and may have
additional special meetings upon the request of the Chairman of the Board or a
majority of the Board of Directors. During the fiscal year ended September 30,
1997, the Board of Directors met thirteen times. All directors attended at least
75% of the aggregate number of meetings of the Board of Directors and committee
meetings, for those committees on which such director served, during this
period. The Board of Directors has established the following committees among
others:
The Compensation Committee consists of Chairman Chapdelaine and
Messrs. DeMatteis, Wenk and Swanson. The function of the Compensation Committee
is to review the performance and compensation of the officers of the Company,
make recommendations to the Board of Directors with respect thereto and
administer the Executive Officer MRP, including the granting of restricted
shares of Common Stock pursuant thereto, and the Stock Incentive Plan, including
the granting of options pursuant thereto. This committee meets on an as-needed
basis and met 3 times during fiscal 1997.
The Audit Committee consists of Chairman Waters and Messrs. Conway
(Brian J.), McCooey, and Tormey. The purpose of this Committee is to review the
progress of all internal audits, all independent audits and all periodic reports
of such audits submitted to the Audit Committee and to supervise and coordinate
with persons conducting such audits. This committee generally meets, at a
minimum, on a quarterly basis and met 7 times during fiscal 1997.
In addition to the Committees described above, the Board of Directors
has established an Executive Committee and a Planning and Development Committee.
The Board of Directors of the Bank (the "Bank Board") and the Board of
Directors are identically constituted. During fiscal 1997, the Bank Board met
thirteen times. No director attended fewer than 75% of the aggregate of Bank
Board and committee meetings, for those committees on which such director served
during the time he served, held during this period.
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The Bank Board also maintains executive, compensation and audit
committees, the membership of which is the same as the comparable committees of
the Board of Directors. The Committees of the Bank Board serve substantially
the same functions at the Bank level as those of the Company. The Compensation
and Audit Committees of the Bank Board met 3 times and 7 times, respectively,
during such period.
In addition to the Committees described above, the Bank Board has
established the Loan, Investment and Community Reinvestment Act ("CRA")
Committees.
There are no arrangements or understandings between the Company or any
person(s) pursuant to which any person is or was selected as a director or
nominee. There is no family relationship between any director, any Board
Nominee, any executive officer or any significant employee of the Company,
except that Brian J. Conway is the nephew of Robert J. Conway and Bruce M.
Barnet is the son-in-law of George R. Irvin.
No director, Board Nominee, officer, or affiliate of the Company, or
any owner of record or beneficially of more than five percent (5%) of the Common
Stock or any associate of such parties is, or has been involved in any legal
proceedings as a party adverse to the Company or its subsidiaries or has a
material interest adverse to the Company or its subsidiaries. During the past
five years no director, Board Nominee, executive officer, promoter or control
person is or has been involved in any proceeding of a nature requiring
disclosure herein which is material to an evaluation of the ability or integrity
of such director, Board Nominee or executive officer or to the stockholders'
voting or investment decision.
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TRANSACTIONS WITH CERTAIN RELATED PERSONS
- --------------------------------------------------------------------------------
Savings associations such as the Bank are subject to the restrictions
contained in Section 22(h) of the Federal Reserve Act (as implemented by
provisions of the Financial Institutions Reform, Recovery and Enforcement Act of
1989 ("FIRREA") and the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA")) and the Federal Reserve Board's Regulation O thereunder on
loans to executive officers, directors and principal stockholders. Under
Section 22(h), loans to a director, executive officer and to a greater than
10.0% stockholder of a savings association and certain affiliated interests of
such persons may not exceed, together with all other outstanding loans to such
person and affiliated interests, the institution's loans-to-one-borrower limit
(generally equal to 15.0% of the institution's unimpaired capital and surplus).
Section 22(h) also generally prohibits the making of loans above amounts
prescribed by the appropriate federal banking agency to directors, executive
officers and greater than 10.0% stockholders of a savings association and their
respective affiliates, unless such loan is approved in advance by a majority of
the board of directors of the institution with any "interested" director not
participating in the voting. Regulation O prescribes the loan amount (which
includes all other outstanding loans to such person) as to which such prior
board of director approval is required as being the greater of $25,000 or 5.0%
of the association's unimpaired capital and unimpaired surplus (up to $500,000).
Further, Section 22(h) requires that loans to directors, executive officers and
principal stockholders be made on terms substantially the same as, and following
credit-underwriting procedures that are not less stringent than, those offered
in comparable transactions to other persons and that do not involve more than
normal risk of repayment or present other unfavorable features, except that
extensions of credit to directors, executive officers, and principal
shareholders are permitted as long as the extension of credit is made pursuant
to a pension or benefit program that is widely available to employees and does
not give preference to directors, executive officers, and principal
shareholders. Section 22(h) also generally prohibits a depository institution
from paying the overdrafts of any of its executive officers or directors, unless
the payment of funds is made in accordance with a written, pre-authorized
interest-bearing extension of credit plan that specifies a method of payment or
a written, pre-authorized transfer of funds from another account of the account
holder at the institution.
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<PAGE>
Savings associations also are subject to the requirements and
restrictions of Section 22(g) of the Federal Reserve Act (as implemented by
FDICIA) and Regulation O on loans to executive officers. Under Section 22 (g),
the Bank is prohibited from extending credit, unless secured by a perfected
security interest in qualifying United States or United States agency
obligations or a deposit account in the lending bank, to its executive officers,
except to finance the purchase, construction, maintenance or
improvement of the executive's residence or the education of the executive's
children or if for any other purpose the aggregate loans do not exceed at any
one time the higher of $25,000 or 2.5% of the institution's unimpaired capital
and unimpaired surplus but in no event more than $100,000. Under OTS
regulations in effect prior to the FIRREA and FDICIA amendments, similar
restrictions applied; however, a savings association could make loans such as
residential mortgage loans and consumer loans to officers and directors (and
other employees) at favorable interest rates and loan fees if certain procedures
were followed.
Although the Company does not, the Bank may from time to time make
loans to the directors and executive officers of the Company or the Bank or
members of their families, as well as to members of the public. In keeping with
earlier applicable OTS regulations, the loans were made by the Bank in the past
in the ordinary course of business and on substantially the same terms and
conditions, except for reduced interest rates and loan fees, as those of
comparable transactions prevailing at the time, and did not involve more than
the normal risk of repayment or present other unfavorable features. The Bank's
policy during fiscal 1997 complied in all respects with Sections 22(g) and 22(h)
of the Federal Reserve Act and Regulation O and provided, among other things,
that all loans made by the Bank to its directors and executive officers which,
when aggregated with all other extensions of credit to that director or
executive officer, exceeded $350,000 were required to be approved by the Bank
Board, be made in the ordinary course of business, on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and not involve more than the
normal risk of collectability or present other unfavorable features.
Mr. Barnet is the sole shareholder and President of Sunset Developers,
Inc. which until October 3, 1996 served as a real estate advisor and rendered
real estate services to the Bank and to subsidiaries of the Bank, pursuant to an
advisory agreement dated April 1, 1996 (1996 Advisory Agreement), covering 11
separate Bank owned properties. The 1996 Advisory Agreement consolidated four
separate Advisory Agreements previously existing between the Bank and Sunset
Developers. In connection with the 1996 Advisory Agreement, Sunset Developers
was entitled to an hourly fee for services rendered for each property covered
under the 1996 Advisory Agreement and result-based additional compensation for
10 of the properties covered under the 1996 Advisory Agreement. Sunset
Developers, Inc. received a total of $304,939 in fees from the Bank during the
fiscal year ended September 30, 1996. In connection with Mr. Barnet's joining
the Bank and Company on October 3, 1996 as Executive Vice President, Director of
Real Estate and Development, the 1996 Advisory Agreement was terminated pursuant
to a Termination Agreement dated October 3, 1996. Pursuant to the terms of the
Termination Agreement, all amounts due and owing to Sunset Developers were paid
by the Bank, and Sunset Developers released the Bank from any claims for
additional compensation and payment. The Company believes that the terms and
conditions of its relationship with Sunset Developers, Inc. were as favorable as
those that could be obtained from arms length negotiations with unassociated
third parties.
Mr. Buxton is an agent for certain large insurance companies. In such
capacity, he has acted as the agent for certain life and health insurance
policies provided by the Bank to its executive officers and other employees.
During fiscal 1997, the Bank paid $562,950 in premiums to these insurance
companies in connection with such policies and Mr. Buxton received compensation
from such insurance companies in connection therewith.
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BENEFICIAL OWNERSHIP REPORT
- --------------------------------------------------------------------------------
Section 16(a) of the Exchange Act and regulations promulgated
thereunder require the Company's directors and executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission (the "SEC") and the NASDAQ
reports of ownership and changes in ownership of common stock and other equity
securities of the Company. Officers, directors and greater than 10%
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, all filing requirements applicable to its officers,
directors and greater than 10% beneficial owners were complied with during the
fiscal year ended September 30, 1997.
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DIRECTOR'S COMPENSATION
- --------------------------------------------------------------------------------
DIRECTOR FEES. Non-employee members of the Board of Directors receive
an annual retainer of $6,000 and non-employee members of the Bank Board receive
an annual retainer of $18,000. In addition, each such member receives a fee of
$1,000 per meeting for attendance at Board meetings and a fee of $500 per
meeting for attendance at Committee meetings. For Board meetings of the Company
and the Bank held on the same day, only one fee is paid to cover both meetings.
For Committee meetings of the same Committee of the Company and the Bank held on
the same day, only one fee is paid for both meetings. Mr. Waters, Chairman of
the Audit Committee, and Mr. Chapdelaine, Chairman of the Compensation
Committee, each receive one Committee retainer fee of $12,000 per annum for
serving as Chairman of his Committee of the Company and the Bank, in addition to
any other compensation that they receive as members of the Board of Directors or
the Bank Board. Committee Chairmen who receive such a retainer receive no
additional compensation (e.g., Committee meeting fees) for serving in that
capacity regardless of the number of meetings held. Directors who are employees
of the Bank receive no fees or retainers. In addition, Mr. Canuso, Mr. Wenk,
Dr. Tormey and Mr. Baydala provide consulting services to the Bank. For these
services, Mr. Canuso receives a consulting fee of $30,000 per annum, Mr. Wenk
receives a consulting fee of $1,000 per month, and Dr. Tormey receives a
consulting fee of $1,000 per month. Mr. Wenk's consulting agreement was
terminated on March 1, 1997. Mr. Baydala receives a consulting fee of $500 per
Loan Committee meeting attended and $600 per day during which he performs loan
inspections and appraisals; such fees are expected to approximate between
$26,000 and $29,000 per annum.
The Company maintains a deferred fee plan for directors whereby
directors may elect to defer any or all fees earned for their services as a
director. During fiscal 1997, Messrs. Robert J. Conway and Lawrence W. Peters
deferred current fees paid pursuant to this plan.
OPTION PROGRAM FOR NON-EMPLOYEE DIRECTORS. The Company maintains a
non-employee director stock option program. The program automatically grants to
directors of the Company who are not employees of or consultants to the Bank or
the Company non-statutory options to acquire a fixed number of shares of Common
Stock. Under the program, each outside director received, in connection with
the consummation of the Bank's conversion from mutual to stock form, the
concurrent issuance of the Bank's capital stock to the Company and the sale of
the Company's Common Stock to the public (the "Conversion"), an option to
acquire a number of shares of the Common Stock equal to (a) 41,400 shares, plus
(b) 1,035 shares for each full and partial year of service by any such outside
director on the Bank Board (a "Conversion Grant"). Each new outside director
will receive an option to acquire 2,588 shares of the Common Stock, as of the
date of appointment or election to the Board of Directors (an "Initial
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Grant"). On each anniversary of any Conversion Grant and Initial Grant each
continuing outside director shall automatically receive an option to acquire 518
shares of the Common Stock. These additional options will be granted subject to
the availability of options within the program. Outside directors have to date
received fixed option awards, depending upon length of service on the Bank
Board, covering an aggregate 711,061 shares of Common Stock before forfeitures,
including an aggregate of 5,180 shares of Common Stock covering the 1997
automatic grant of options. Currently, 95,930 shares remain available for
future fixed option awards, as described above, to new outside directors and
current outside directors who continue to serve on the Board of Directors. The
exercise price per share of each option equals the fair market value of the
underlying shares of Common Stock on the date of grant of such option. All
options granted under the program become exercisable as to one-fifth of the
underlying shares on each of the first five anniversaries of the date of grant.
All option grants expire upon the earlier of ten years following the date of
grant, or, in the event of an involuntary termination, as defined in the
program, one year following the date the optionee ceases to be a director of the
Company. In the event of an involuntary termination, or upon the occurrence of
a change in control, as defined in the program, all options granted to an
outside director become 100% exercisable. In the event of a voluntary
termination, as defined in the program, the outstanding options will
automatically expire on the date of any such termination.
MANAGEMENT RECOGNITION AND RETENTION PLAN FOR NON-EMPLOYEE DIRECTORS.
The Bank maintains a management recognition and retention plan for directors of
the Bank and the Company who are not employees of or consultants to the Bank or
the Company. The plan provides for the automatic fixed grant of 17,913 shares
of restricted Common Stock to those individuals (a) who were directors of the
Company and the Bank on the date of the Conversion and (b) who are subsequently
elected or appointed as a director of both the Company and the Bank. To date,
outside directors as a group have received, in the aggregate, awards of 197,043
shares of restricted Common Stock net of forfeitures under the plan. 35,832
shares of restricted Common Stock remain available for future grants under the
plan. All grants of shares of restricted Common Stock vest at a rate of one-
fifth on each of the first five anniversaries of the date of grant. In the
event of a termination of board membership, other than a termination due to
retirement after age 75, death, or disability (as defined in the plan), all
unvested shares of restricted Common Stock will be forfeited by the former
director. In the event of any such retirement, death, or disability, or any
change in control, as defined in the plan, of the Company or the Bank, all
shares of restricted Common Stock become fully vested as of the date of any such
termination or change in control.
HEALTH CARE COVERAGE. The Bank has made available a plan of health
care coverage to directors who are not employees of the Bank or the Company and
who wish to participate in the plan. Such directors may choose to receive
health care coverage under one of the plans offered by the Bank. These include
a traditional reimbursement option, a point of service option, or a selection of
health maintenance organizations.
RETIREMENT BENEFIT PLAN. The Bank has adopted a non-qualified
Retirement Benefit Plan for directors who are not employees of the Bank or the
Company ("Eligible Directors"). Upon retirement from the Board of Directors at
age 65 or older, with a minimum of 15 years of service, the retirement benefits
provide continuation of the annual retainers received by Eligible Directors from
the Bank and the Company and Board meeting fees at the then current rate for a
period of ten years following retirement. In the event that an Eligible
Director retires from the Board of Directors with a minimum of five but less
than 15 years of service, such Eligible Director shall receive pro-rated
retirement benefits based on the years of service. Mr. Baydala is currently
receiving annual benefits of $36,000 under the Retirement Benefit Plan.
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EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
THE REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION AND
THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY ANY
GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR THE EXCHANGE ACT, EXCEPT AS TO THE
EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE,
AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committees of the Bank and the Company (together,
the "Committee") are identically constituted and, at the direction of the Board
of Directors, have jointly prepared the following report for inclusion in this
Proxy Statement. The Committee is comprised of Messrs. Chapdelaine, DeMatteis,
Wenk, and Swanson, four non-employee directors who are "disinterested persons"
within the meaning of Rule 16b-3 of the Exchange Act. The Committee has the
responsibility for all compensation matters concerning the Company's and the
Bank's executive officers.
COMPENSATION PHILOSOPHY. The executive compensation program links
management pay with the Company's annual and long-term performance. The program
is intended to attract and retain highly-qualified senior managers by providing
compensation opportunities that are consistent with the Company's performance.
The program provides for base salaries that reflect such factors as level of
responsibility, individual performance, internal fairness, and external
competitiveness, annual incentive bonus awards that are payable in cash for the
achievement of strategic acquisitions and/or divestitures, loan production,
improvement in asset quality, increased fee income, introduction of innovative
products and services, and the achievement of other significant annual financial
and operational objectives. The program also provides long-term incentive
opportunities in the form of stock options and restricted shares that strengthen
the mutuality of interest between management and the Company's stockholders and
encourage management continuity. From time to time, the Committee utilizes the
services of a recognized, external consulting firm to assess marketplace
compensation values and practices, and to assess the reasonableness of the
overall compensation program.
The Company strives to provide motivational compensation opportunities
that effectively and appropriately reward management for the achievement of
critical performance objectives. The Committee supports a pay-for-performance
policy that determines executive compensation amounts based on both corporate
and individual performance. Salaries and annual bonuses for senior corporate
executives are therefore based on the overall performance of the Company and on
their personal contributions to that performance. In addition, the program
provides stock incentive opportunities designed to align the interests of
executives and other key employees with other stockholders through the ownership
of Common Stock.
Effective January 1, 1994, Internal Revenue Code of 1986, as amended
(the "Code") Section 162(m) places a limitation of $1 million per officer on the
deductibility of certain elements of compensation paid to the Named Executive
Officers (as defined below) of the Company and the Bank. As stated above, the
Committee designs its compensation arrangements to achieve various objectives.
Because of the importance placed by the Committee on establishing appropriate
compensation arrangements that will achieve these objectives, the Committee has
not taken into account the impact of Section 162(m) of the Code and does not
believe that the tax law should dictate compensation policies or have a
significant effect in determining compensation policies and practices for the
Company's executive officers. The Committee continues to study whether it is
possible or desirable to cause compensation arrangements in the future to be
exempt from the limitation imposed under Section 162(m) of the Code. To the
extent that the Committee's compensation objectives can be achieved in a manner
that maximizes the deductibility of compensation paid by the Company, it will
seek to do so.
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The following is a discussion of each of the elements of the Company's
executive compensation program, including a description of the decisions and
actions taken by the Committee with respect to fiscal 1997 compensation for the
Chief Executive Officer (the "CEO") and all executive officers as a group.
MANAGEMENT COMPENSATION PROGRAM. Compensation paid to the Company's
executive officers in the fiscal year ended September 30, 1997 (as reflected in
the tables that follow with respect to the Named Executive Officers) consisted
of the following elements: base salary, annual incentive bonus, restricted
shares under the Management Recognition and Retention Plan for Executive
Officers and stock options under the Stock Incentive Plan. Total annual cash
compensation for each executive officer varies each year based on the Company's
achievement of its annual objectives and the individual's performance.
With respect to determining the base salary of executive officers, the
Committee takes into consideration a variety of factors, including the
executive's level of responsibility and individual performance, the salaries of
similar positions in the Company, comparable companies in our industry and the
financial and operational performance of the Company in relation to its
competition in the industry. The Company participates in and reviews various
industry salary surveys. In addition, the Committee may, from time to time,
utilize the services of independent consultants to assess comparable external
salaries.
The Company's annual incentive bonus to its executive officers
(including the Named Executive Officers) is based on the achievement of
objective, financial, and operational performance targets and the discretion of
the Committee. These targets may include net operating income, completion of
certain strategic business transactions, attainment of certain critical
financial ratios, and other performance objectives as may be determined
annually. In determining individual incentive bonus awards, accountability of
executive officers and individual contributions towards the attainment of these
objectives are considered. In determining specific awards for the fiscal year
ended September 30, 1996, which were paid during fiscal 1997, the Committee
placed considerable emphasis on loan production, continued growth of market
share, financial performance as reflected by net income, and the introduction of
innovative relationship banking products in determining annual incentive bonus
for the Company's executive officers. The calculation of the Company's
financial performance with respect to the determination of these incentive bonus
awards is made as soon as is practicable after the completion of the Company's
fiscal year.
The long-term retention element of the management compensation program
is in the form of restricted share grants. These restricted shares are granted
and administered by the Committee under the Executive Officer MRP. The
Committee and the Board of Directors believe that providing executive officers
with stock ownership opportunities significantly aligns the interests of the
executives with stockholders and encourages the executives' long-term retention.
Restricted share grants under the Executive Officer MRP also recognize the past
contributions of these employees and provide an additional incentive for
shareholder value creation. On December 19, 1996, the Committee granted certain
officers and key employees (including the Named Executive Officers) restricted
shares that vested (with respect to the lapse of restriction) at the rate of 50%
on March 29, 1997 and 50% will vest on March 29, 1998.
The long-term incentive element of the Company's management
compensation program is in the form of stock option grants. These stock options
are granted and administered by the Committee under the Company's Stock
Incentive Plan (the "Plan"). The Plan is intended to create an opportunity for
executive officers and other key employees of the Company to acquire a
proprietary interest in the Company and thereby enhance their efforts in the
service of the Company and its stockholders.
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On the Grant Date (March 29, 1994), the Committee granted to certain
executive officers (including the Named Executive Officers) and certain other
key employees of the Company, stock options with an exercise price of $11.50 per
share that was the initial offering price (and then current fair market value)
of the Common Stock. Of the stock options granted to each executive officer and
key employees, 20% become exercisable on each succeeding anniversary of the
Grant Date. In 1995 stock options with an exercise price of $17.81 per share
(the current fair market value at grant date) were granted to executive officers
and certain key employees These options became exercisable in 20% annual
installments beginning on March 29, 1996. On December 19, 1996, options with an
exercise price of $33.625 per share (the then current fair market value) were
granted to executive officers and certain key employees. The Committee believes
that by rationing the exercisability of these stock options over a five-year
period, the executive retention impact of the Plan will be strengthened and
management's motivation to enhance the value of the Common Stock will be
influenced positively.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. John J. Conefry, Jr.,
Chairman and Chief Executive Officer of the Company, joined the Bank on
September 6, 1993 as Vice Chairman of the Bank Board. On November 23, 1993, he
was elected Chief Executive Officer of the Bank and on January 25, 1994 he was
elected Chairman of the Bank Board. On September 7, 1996, he was elected to the
additional position of President which he held until March 1, 1997, when Mr.
Lawrence W. Peters was appointed President and COO. Mr. Conefry has served as
the Chairman of the Board of Directors and Chief Executive Officer of the
Company since December 21, 1993. In consideration of Mr. Conefry's assumption
of these responsibilities the Company entered into an employment agreement with
Mr. Conefry that provided for a base salary of $600,000 per year through
December 31, 1995 and $700,000 per year beginning January 1, 1996. This amount
was determined based on an assessment of the degree of accountability of the
Chairman and Chief Executive Officer position during this critical period in the
Bank's and the Company's history, as well as an assessment of competitive
marketplace compensation for positions of comparable responsibility among
similar financial institutions. This employment agreement provides that the
base salary amount may be reviewed annually and adjusted at the sole discretion
of the Board of Directors. Similar agreements were entered into with other
executive officers of the Company in order to maintain a stable and competent
management group through and after the Conversion.
Mr. Conefry was awarded a bonus of $400,000 in December 1997 for the
fiscal year ended September 30, 1997 in recognition of his accountability for
adding shareholder equity value and for his contributions to the Company's
meeting its targeted performance objectives for the year. With respect to the
long-term retention and incentive elements of Mr. Conefry's compensation, grants
of restricted shares (as identified in the tables below) were made during fiscal
1997 and were based on the practices of comparable companies in our industry as
well as in recognition of Mr. Conefry's leadership and his level of
responsibility and seniority.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
<TABLE>
<S> <C> <C> <C>
Richard F. Chapdelaine, Frederick DeMatteis Robert S. Swanson, Jr. Donald D. Wenk
Chairman
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
One of the responsibilities of the Compensation Committee is to
determine the level of compensation for executive officers of the Company. The
Compensation Committee for 1997 consisted of directors Chapdelaine, DeMatteis,
Wenk, and Swanson, none of whom are officers or employees of or consultants to
the Company, the Bank or any of their subsidiaries.
-17-
<PAGE>
Although the Company does not, the Bank may, from time to time, make
loans to the Company's and the Bank's directors, executive officers, or members
of their families, subject to certain regulatory restrictions applicable
thereto. All loans outstanding to members of the Compensation Committees of the
Company or the Bank or to members of the Boards of Directors of the Company or
the Bank were made in the ordinary course of business of the Bank, were made on
substantially the same terms, including interest rate and collateral, as those
prevailing at the times the loans were made for comparable transactions with
other persons (except for reduced interest rates and loan fees for certain loans
made prior to August 9, 1989 under the applicable OTS regulations), and do not
involve more than the normal risk of collectability or present other unfavorable
features.
-18-
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
return on the Common Stock since April 14, 1994 (the date of the consummation of
the Conversion) with the cumulative total returns of both a broad equity market
index and a published industry index. The broad equity market index chosen was
the Nasdaq National Composite Index and the published industry index chosen was
the NASDAQ Bank Composite Index. The Common Stock began trading on April 14,
1994. As a result, the graph may not be indicative of possible future
performance of the Common Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
THE COMMON STOCK, NASDAQ NATIONAL COMPOSITE INDEX
AND NASDAQ BANK COMPOSITE INDEX (1)
[GRAPH OMITTED]
<TABLE>
<S> <C> <C> <C> <C>
GRAPH COORDINATES 4/14/94 9/30/94 3/31/95 9/30/95
LISB 100.00 133.63 147.31 206.23
NASDAQ BANK COMPOSITE INDEX 100.00 113.40 113.06 142.30
NASDAQ NAT'L COMPOSITE INDEX 100.00 105.49 113.32 144.96
<CAPTION>
<S> <C> <C> <C> <C>
GRAPH COORDINATES 3/31/96 9/30/96 3/31/97 9/30/97
LISB 236.74 243.06 278.30 395.62
NASDAQ BANK COMPOSITE INDEX 154.63 168.85 202.42 278.29
NASDAQ NAT'L COMPOSITE INDEX 152.98 171.26 170.37 236.57
</TABLE>
LISB Common Stock
NASDAQ National Composite Index
NASDAQ Bank Composite Index
____________________
(1) Assumes $100 invested on April 14, 1994 and all dividends reinvested
through the end of the Company's fiscal year ended September 30, 1997.
The price of the Common Stock issued at the Conversion was $11.50 per
share. The performance graph above is based upon closing prices on the
trading day specified. The Common Stock closed on April 14, 1994, its
first day of trading activity, at $11.875 per share.
-19-
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation paid by the Company or
any of its subsidiaries for services during the three fiscal years ended
September 30, 1997 to the Chief Executive Officer and the four highest paid
executive officers of the Company or its subsidiaries who each received total
salary and bonus in excess of $100,000 (the "Named Executive Officers"). In
addition, one executive officer of the Company who resigned during the year is
included in the table.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
RESTRICTED SECURITIES
NAME AND FISCAL SALARY BONUS OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITIONS (16) YEAR ($) ($) COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
- ------------------------ ---- ---- --- ($)(1) ($)(2) (#)(3) ($)(4) ($)(5)
------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John J.Conefry, Jr.(6).... 1997 700,000 400,000 0 170,000 30,000 0 59,210(7)
Chairman, Chief Executive
Officer and Director 1996 673,076 400,000 0 112,169 0 0 56,420
1995 600,000 350,000 0 712,500 0 0 98,728
Joseph P. Bryant (8)...... 1997 241,346 -0- 0 68,000 10,000 0 198,028(9)
Former Executive
Vice President 1996 248,076 125,000 0 28,356 0 0 31,680
1995 225,000 125,000 0 151,406 31,050 0 67,891
Bruce M. Barnet (10)...... 1997 218,077 50,000 0 0 30,741 0 12,797(11)
Director
Executive Vice President 1996 - - - - - - -
1995 - - - - - - -
W. Douglas Singer (12).... 1997 180,000 60,000 0 51,000 10,000 0 18,166(13)
Executive Vice President
and Treasurer 1996 180,000 45,000 0 29,334 0 0 20,141
1995 160,000 70,000 0 151,406 0 0 15,938
Mark Fuster (12).......... 1997 180,000 60,000 0 51,000 10,000 0 19,799(14)
Executive Vice President
and Chief Financial Officer 1996 180,000 45,000 0 30,731 0 0 19,955
1995 160,000 60,000 0 151,406 0 0 15,598
Robert T. Volk............ 1997 174,615 50,000 0 51,000 10,000 0 18,795(15)
Executive Vice President 1996 160,000 45,000 0 29,334 0 0 18,746
1995 155,962 80,000 0 151,406 0 0 18,334
</TABLE>
-20-
<PAGE>
(1) For fiscal 1997, there were no (a) perquisites with an aggregate value
over the lesser of $50,000 or 10% of the individual's total salary and
bonus for the year; (b) payments of above-market preferential earnings
on deferred compensation; (c) payments of earnings with respect to
long-term incentive plans prior to settlement or maturation; or (d)
preferential discounts on stock.
(2) In fiscal 1995, 1996, and 1997 restricted stock awards were granted
under the Bank's Executive Officer MRP. The 1997 awards were 5,000,
2,000, 0, 1,500, 1,500 and 1,500 shares of Common Stock to Messrs.
Conefry, Bryant, Barnet, Singer, Fuster, and Volk respectively. The
dollar value of such 1997 awards set forth in the above table is based
upon $34.00 per share, which was the fair value of the Common Stock on
the date of the award of such grants. The dollar value of all unvested
awards based upon the closing price of the Common Stock of $47.00 per
share as reported on the NASDAQ system on September 30, 1997 is
$235,000, $94,000, $70,500, $70,500, and $70,500 respectively. The 1997
awards for Messrs. Conefry, Bryant, Singer, Fuster and Volk vested on
March 29, 1997, in the amounts of 2,500, 1,000, 750, 750 and 750 shares
respectively. The balance of the 1997 awards will vest on March 29,
1998.
(3) Reflects options granted under the Company's 1994 Stock Incentive Plan.
For a discussion of the terms of the grant and the vesting of options,
see "Option Grants in Last Fiscal Year" and the corresponding tables.
(4) For fiscal 1995, 1996 and 1997 the Bank had no long-term incentive
plans. Consequently, there were no payouts or awards under any
long-term incentive plan.
(5) Amounts include contributions to the 401(k) Savings Plan and Employee
Stock Ownership Plan, and the imputed income on the value of split
dollar life insurance and premiums paid for group term life insurance
policy. The split dollar life insurance policies are also owned by the
individuals but any cash surrender value proceeds received on
termination of a policy will be first used to refund the premiums paid
by the Company with respect to such policy.
(6) On November 23, 1993, John J. Conefry, Jr. was elected Chief Executive
Officer of the Bank. On January 25, 1994, he was elected Chairman of
the Bank Board. Mr. Conefry held the additional position of Presidency
of the Company and the Bank between September 7, 1996 and March 1, 1997.
As of January 1, 1996 his annual salary was increased to $700,000.
(7) Includes (i) imputed income on the value of split dollar life insurance
in the amount of $4,503, (ii) premium for group term life insurance in
the amount of $5,472, (iii) personal use of a company-provided
automobile in the amount of $9,248, (iv) 401(k) Savings Plan
contribution in the amount of $1,454, (v) ESOP contributions in the
amount of $9,750, and (vi) dividends on unvested restricted stock awards
of $28,783.
(8) Mr. Bryant resigned on June 17, 1997.
(9) Includes (i) severance payment in the amount of $175,000, (ii) premiums
for group term life insurance and split dollar life insurance in the
amounts of $1,457 and $1,293 respectively, (iii) personal use of a
company provided automobile in the amount of $4,830, (iv) ESOP
contributions in the amount of $9,750, (v) dividends on unvested
restricted stock awards of $3,421, and (vi) imputed cost of fringe
benefits of $2,277.
(10) Mr. Barnet was elected Executive Vice President on October 3, 1996.
-21-
<PAGE>
(11) Includes (i) premiums for group term life insurance and split dollar
life insurance in the amounts of $800 and $829, respectively, (ii)
personal use of company-provided automobile in the amount of $6,331, and
(iii) dividends on unvested restricted stock awards of $4,837.
(12) Effective September 22, 1997, the annual salaries of Messrs. Singer and
Fuster was increased to $215,000 per annum.
(13) Includes (i) premiums for group term life insurance and split dollar
life insurance in the amounts of $765 and $1,002, respectively, (ii)
401(k) Savings Plan contribution in the amount of $658, (iii) ESOP
contributions in the amount of $9,750, and (iv) dividends on unvested
restricted stock awards of $5,991.
(14) Includes (i) premiums for group term life insurance and split dollar
life insurance in the amounts of $1,132 and $982, respectively, (ii)
401(k) Savings Plan contribution in the amount of $1,931, (iii) ESOP
contributions in the amount of $9,750, and (iv) dividends on unvested
restricted stock awards of $6,004.
(15) Includes (i) premiums for group term life insurance and split dollar
life insurance in the amounts of $664 and $831, respectively, (ii)
401(k) Savings Plan contributions in the amount of $1,559, (iii) ESOP
contributions in the amount of $9,750, and (iv) dividends on unvested
restricted stock awards of $5,991.
(16) Mr. Peters was elected President and Chief Operating Officer of both the
Company and the Bank on March 1, 1997.
OPTION GRANTS IN LAST FISCAL YEAR
The following table lists all grants of options under the
Company's 1994 Stock Incentive Plan to the Named Executive Officers in fiscal
1997 and contains certain information about the potential value of such options
based upon certain assumptions to the appreciation of the Common Stock over the
life of the option.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED
ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE
----------------- APPRECIATION FOR
OPTION TERM(3)
----------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE EXPIRATION
NAME GRANTED (#) EMPLOYEES PRICE DATE 5%($) 10%($)
- ---- (1) IN FISCAL ($/SH) ---- ----- ------
---------- YEAR(2) ---------
(%)
---------
<S> <C> <C> <C> <C> <C> <C>
John J. Conefry, Jr. 30,000 22.2 $33.625 3/28/2007 $634,397 $1,607,688
Joseph P. Bryant(4) 10,000 7.4 $33.625 3/28/2007 $211,466 $ 535,896
Bruce M. Barnet 30,741 22.7 (5) 12/19/2006 $229,105 $ 580,768
W. Douglas Singer 10,000 7.4 $33.625 3/28/2007 $211,466 $ 535,896
Mark Fuster 10,000 7.4 $33.625 3/28/2007 $211,466 $ 535,896
Robert T. Volk 10,000 7.4 $33.625 3/28/2007 $211,466 $ 535,896
</TABLE>
-22-
<PAGE>
(1) All options are intended to be incentive stock options to the extent
permitted under Section 422 of the Code. The grants will be exercisable
in equal installments commencing one year from the date of grant, at a
rate of 20% per year; provided, however, that all options will be 100%
exercisable in the event the optionee terminates his employment due to
death, disability, retirement or in the event of a change of control of
the Company.
(2) Based upon a total of 135,295 options granted to employees and
consultants during fiscal 1997.
(3) Assumes a term of the option of 10 years.
(4) Mr. Bryant forfeited 50% of options granted in fiscal 1997 when his
employment terminated on June 17, 1997.
(5) Mr. Barnet forfeited 30,741 options issued under the 1994 Non-Employee
Directors Stock Option Program when he was appointed Executive Vice
President on October 3, 1996. An equivalent option position was issued
to Mr. Barnet from the employee option plan on December 19, 1996
restoring the forfeited options.
The following table sets forth information with respect to (i)
the number of shares of Common Stock underlying unexercised stock options held
by the Named Executive Officers and (ii) the value of such unexercised
in-the-money options, both as of September 30, 1997.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- -----------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES
SHARES VALUE UNDERLYING VALUE OF UNEXERCISED
ACQUIRED REALIZED UNEXERCISED OPTIONS IN-THE MONEY OPTIONS
NAME ON EXERCISE ($) AT FISCAL YEAR-END AT FISCAL YEAR-END
(#) (#) ($) (1)
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<S> <C> <C> <C> <C>
John J. Conefry, Jr.... - - 179,565/124,710 $6,042,683/$4,095,330
Joseph P. Bryant....... 30,050 $625,617 - -
W. Douglas Singer...... - - 42,260/29,840 $1,389,605/$ 948,695
Mark Fuster............ - - 42,260/29,840 $1,389,605/$ 948,695
Robert T. Volk......... - - 42,260/29,840 $1,389,605/$ 948,695
Bruce M. Barnet........ - - 10,245/20,599 $ 360,743/$ 722,678
</TABLE>
____________________
(1) Based upon the difference between $47.00, the closing price of the
Common Stock as reported on the NASDAQ system on September 30, 1997, and
the $11.50 exercise price of the options granted in 1994 and the $33.625
exercise price in the case of options granted in 1997.
-23-
<PAGE>
EMPLOYMENT AND OTHER AGREEMENTS
The Bank has entered into employment agreements with Messrs.
Conefry, Peters, Bryant, Barnet, Singer, Fuster, and Volk (the "Bank
Agreements"). Messrs. Conefry, Peters, Bryant, Barnet, Singer, Fuster and Volk
have also entered into employment agreements with the Company (the "Company
Agreements"). To ensure that no duplicate payments or benefits are received by
Messrs. Conefry, Peters, Bryant, Barnet, Singer, Fuster and Volk, any amounts
paid or benefits provided by the Company under the Company Agreements to such
officers will reduce commensurately any obligation of the Bank to pay such
amounts under the Bank Agreements, and vice versa. The term of employment under
Mr. Bryant's employment agreement with the Bank and Company terminated on June
17, 1997 pursuant to a separation agreement between Mr. Bryant and the Bank and
Mr. Bryant and the Company dated June 17, 1997.
The Bank Agreements and the Company Agreements establish the
respective duties and compensation of these officers and were intended to ensure
that the Bank and the Company would be able to maintain stable and competent
management. The Company Agreements provide for a three-year term of employment
for each officer as do their employment agreements with the Bank. Upon the
satisfactory completion of an annual performance review, the Bank Board, in its
sole discretion, may approve, as of each anniversary of the date of each of the
Bank Agreements, a one year extension of the officer's term of employment
thereunder. The term of employment under the Company Agreements will be
automatically extended on each anniversary of the date thereof for an additional
one year period unless, six months prior to any such anniversary, the relevant
officer or the Company elects not to extend (or further extend) the term of
employment thereunder. The annual base salary amounts for Messrs. Conefry,
Barnet, Singer, Fuster and Volk under their employment agreements are $700,000,
$225,000, $215,000, $215,000 and $180,000 respectively. The Bank Agreements and
the Company Agreements also provide that the base salary of the officers will be
reviewed annually for increase in the sole discretion of the Board of Directors
or the Bank Board, as the case may be. In addition to such base salary, the
Bank Agreements and the Company Agreements also provide for, among other things,
annual bonus payments (in the sole discretion of the Board of Directors or the
Bank Board, as the case may be), disability pay, entitlement to participate in
incentive, retirement, savings and welfare benefit plans, business expense
reimbursement, vacation and other benefits. Mr. Peters' Agreement with the
Company and Bank provides for a term of employment through December 31, 1998
with a base salary of $375,000 per annum. The term of Mr. Peters' employment
may be extended upon written agreement of the parties.
The Bank Agreements and the Company Agreements provide for
termination by the Bank or the Company, as the case may be, with or without
"cause" (as defined in the relevant employment agreements) at any time. In the
event that the Bank or the Company chooses to terminate the officer's employment
without cause or if the officer resigns from the Bank or the Company for "good
reason" (as defined in the relevant employment agreements), including, without
limitation, (i) failure of the Bank Board or the Board of Directors, as the case
may be, to appoint or reappoint the officer to his stated offices, (ii) a
material change in any officer's functions, duties or responsibilities causing
his or her position with the Bank or the Company to become one of lesser
responsibility, importance, or scope, (iii) any reduction in base salary or a
material reduction in other benefits, or (iv) a "change in control" (as defined
in the relevant employment agreements) of the Bank or the Company, the officer
will be entitled to a lump sum severance payment equal to three times such
officer's highest annual base salary and bonus payment. The Bank or the
Company, as the case may be, will also be required to continue the officer's
life, health, accident, dental and disability coverage for up to three years.
The officer would also be entitled to base salary through the date of
termination, any annual bonus previously awarded but not yet paid, reimbursement
for business expenses incurred prior to termination but not yet paid, payment
for unused vacation days, any other compensation or benefits under the Bank's or
the Company's benefit plans to which the officer is otherwise entitled (the
"Standard Entitlements"), and certain indemnification rights (to the extent
permitted by the OTS). In the event of death, the officer's beneficiary will be
entitled to continuation of two-thirds of the officer's base salary for three
months or the same payable in one lump sum at the Bank's or the Company's
discretion, as the case may be, a prorated annual bonus for the year of death,
and the Standard Entitlements. In the event of termination upon retirement, the
agreements require continuation of life and health insurance coverage for one
year that is substantially identical to the coverage maintained for such
individual prior to retirement and the
-24-
<PAGE>
Standard Entitlements. In the event of a termination for cause, the officer
will only be entitled to the Standard Entitlements and to certain
indemnification rights (in both cases, where applicable, only to the extent
permitted by the OTS). In the event of a "voluntary termination" (as defined in
the relevant employment agreements), the officer will only be entitled to such
payments or benefits as he would be if terminated for cause. In the event an
officer is disabled he may be suspended and shall be entitled to receive
two-thirds of base salary for the period of time specified in the Bank
Agreements or the Company Agreements. In addition, a disabled officer shall be
entitled to continued coverage under life, health and other welfare benefit
plans while such officer is disabled.
If an officer's term of employment under the Bank Agreements or
the Company Agreements is not extended and such officer's employment with the
Bank and the Company has not previously been terminated thereunder (x) with or
without cause, (y) voluntarily or for good reason by the officer, or (z) due to
death, disability or retirement, the officer shall be entitled to receive, upon
termination of employment (other than for cause) and in lieu of any other
severance payments, base salary continuation for the period commencing on the
date of termination and ending six months thereafter. The present value of this
base salary continuation may be paid to any relevant officer in one lump sum.
Notwithstanding the above, if (a) there occurs a change in control during the
officer's term of employment under the Bank Agreements or Company Agreements,
(b) such officer's term of employment under the Bank Agreements or the Company
Agreements is not extended through the second anniversary of any such change in
control, and (c) the employment of any such officer is subsequently terminated
(other than for cause), such officer, in lieu of the special severance and
welfare benefit continuation described in the first sentence of this paragraph,
shall be entitled to receive the severance and benefits to which he would have
been entitled had his employment been terminated without cause.
If any amounts payable in connection with any change in control
are determined to be "excess parachute payments" under Section 280G of the Code
resulting in the imposition of the 20% excise tax on such payments under Section
4999 of the Code, each officer will receive from the Company an additional
amount such that the effect of the imposition of that excise tax is effectively
eliminated.
To provide additional employment incentive to certain executives,
the Bank, in accordance with the terms of the Deferred Pension Plan (the
"Deferred Plan"), will provide a specified benefit, payable in 40 equal
quarterly installments to each participant upon reaching age 65. Generally, a
participant becomes vested in his benefit under the Deferred Plan at the rate of
10% on each anniversary of the participant's participation in the Deferred Plan.
Mr. Fuster will not be subject to the Deferred Plan's non-competition forfeiture
provisions unless he voluntarily terminates his employment with the Bank. The
Deferred Plan is a non-qualified plan and was adopted effective January 1, 1987.
The benefit payable under the Deferred Plan to Mr. Fuster is $250,000. Messrs.
Conefry, Barnet, Singer and Volk are not participants in the Deferred Plan. Mr.
Peters is currently receiving annual payments under this plan of $75,000 per
annum.
The Federal Deposit Insurance Corporation ("FDIC") has adopted
regulations that limit the payment, by banking institutions experiencing
financial difficulties, of "golden parachutes" and certain other benefits. The
golden parachute regulations prohibit any insured depository institution
(including its holding company, subsidiaries or affiliates) which is insolvent,
for which a conservator or receiver has been appointed, and as to which a
determination that such insured depository institution is troubled has been
made, and which has been assigned a composite OTS CAMEL rating of 4 or 5, or as
to which a proceeding to terminate deposit insurance has been instituted, from
making any payments that are contingent on or payable on or after termination of
employment, unless such payment falls within certain specific exceptions,
including payments under tax-qualified pension or retirement plans, bona fide
deferred compensation plans, non-discriminatory severance pay plans and payments
on account of death or disability. With certain exceptions, the regulations
also generally prohibit all insured depository institutions, their subsidiaries
and affiliated holding companies, regardless of their financial health, from
making certain indemnification payments for civil money penalties or other
enforcement action. If the Bank's or the Company's financial position at the
time of a change in control (or other termination other than for cause) is such
that it is subject to the regulations, termination payments under the Bank
Agreements and the Company Agreements may be limited.
-25-
<PAGE>
Under the Bank Agreements and the Company Agreements, the Bank
and the Company have agreed to indemnify the officers and hold them harmless, to
the fullest extent permitted by law and the OTS, against all expense, liability
and loss reasonably incurred by such officers as a consequence of being involved
in a legal action by reason of the fact that the officer was an executive or
director of the Bank or the Company. Such indemnification shall continue after
the officer shall cease to be an executive or director of the Bank or the
Company.
OTHER BENEFITS
RETIREMENT PLAN. The Bank has maintained a non-contributory,
tax-qualified defined benefit pension plan (the "Retirement Plan") for eligible
employees since 1940. All employees at least age 21 who have been employed for
a twelve-month period and are salaried employees, and are not paid on a
commission basis, are eligible to participate in the Retirement Plan. The
Retirement Plan provides for a benefit for each participant, including the
executive officers named in the executive compensation table above, equal to the
sum of (i) a participant's benefit accrued under the Retirement Plan as of
December 31, 1995 (as described below), plus (ii) 1.5% of the participant's
5-year average annual compensation (i.e., average compensation during the
highest 60 consecutive months of the participant's final 120 months of
employment) multiplied by the participant's years (and any fraction thereof) of
full-time employment after December 31, 1995, reduced by 1% of the participant's
primary social security benefit multiplied by the participant's years (and any
fraction thereof) of full-time employment after December 31, 1995. A
participant's benefit accrued under the Retirement Plan as of December 31, 1995
is equal to 2% of the participant's 3-year average annual compensation (i.e.,
average compensation during the highest 36 consecutive months of the
participant's final 120 months of employment) multiplied by the participant's
years (and any fraction thereof) of full-time employment before January 1, 1996,
reduced by 1% of the participant's primary social security benefit multiplied by
the participant's years (and any fraction thereof) of full-time employment from
January 1, 1986 to December 31, 1995. In no event can a participant receive
credit for more than 30 years of service. Compensation, as defined in the
Retirement Plan, excludes overtime payments, bonuses, other special payments or
awards, such as awards under the Executive Officer MRP and the 1994 Stock
Incentive Plan, and deferred compensation arrangements. A participant is fully
vested in his or her benefit under the Retirement Plan after five years of
service. For the 1995, 1996 and 1997 plan years, the Bank was not required to
make a contribution to the Retirement Plan.
-26-
<PAGE>
The following table illustrates annual pension benefits at age 65
under the current Retirement Plan provisions available at various levels of
compensation and years of service:
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
REMUNERATION(1), (2) 15 20 25 30 35
-------------------- --- --- --- --- --
<S> <C> <C> <C> <C>
$125,000................ $ 28,125 $ 37,500 $ 46,875 $ 56,250 $ 65,625
150,000................ 33,750 45,000 56,250 67,500 78,750
175,000................ 39,375 52,500 65,625 78,750 91,875
200,000................ 45,000 60,000 75,000 90,000 105,000
225,000................ 50,625 67,500 84,375 101,250 118,125
250,000................ 56,250 75,000 93,750 112,500 125,000(3)
300,000................ 67,500 90,000 112,500 125,000(3) 125,000(3)
400,000................ 90,000 120,000 125,000(3) 125,000(3) 125,000(3)
450,000................ 101,250 125,000(3) 125,000(3) 125,000(3) 125,000(3)
500,000................ 112,500 125,000(3) 125,000(3) 125,000(3) 125,000(3)
600,000................ 125,000(3) 125,000(3) 125,000(3) 125,000(3) 125,000(3)
</TABLE>
(1) The annual retirement benefits shown in the table do not reflect a
deduction for Social Security benefits, and there are no other offsets
to benefits. The amounts shown in the table do not include additional
benefits payable to Messrs. Peters and Fuster under the Deferred Pension
Plan. See discussion on Deferred Pension Plan under "Employment and
other Agreements".
(2) For the plan year beginning in 1996, the average final compensation for
computing benefits under the Retirement Plan cannot exceed $150,000 (as
adjusted for subsequent years pursuant to Code provisions).
(3) For 1997, applicable law limits the annual benefit payable under the
Retirement Plan to $125,000. For subsequent years, this limit is
indexed for inflation.
The following table sets forth the years of credited service
under the Retirement Plan as of September 30, 1997, for each of the individuals
named in the Executive Compensation Table.
PERIOD OF CREDITED SERVICE
YEARS MONTHS
John J. Conefry, Jr.............................. 4 1
Lawrence W. Peters (1)........................... 6 9
Joseph P. Bryant (2)............................. 3 8
Bruce M. Barnet.................................. 1 0
W. Douglas Singer................................ 9 8
Mark Fuster...................................... 16 8
Robert T.Volk.................................... 8 1
(1) Mr. Peters has resumed accruing credited service upon reentering employment
with the Bank on March 1, 1997.
(2) Mr. Bryant resigned on June 17, 1997.
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<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN. The Bank maintains an Employee
Stock Ownership Plan which became effective upon the Conversion, for the benefit
of eligible employees of the Bank and its affiliates that are participating
employers in the ESOP. On May 18, 1995, the Bank received a determination from
the Internal Revenue Service that the ESOP qualifies under Sections 401(a) and
4975(e)(7) of the Code and that the trust established to implement the ESOP is
tax-exempt under Section 501(a) of the Code.
Generally, each salaried employee, who has completed one year of
service with a participating employer, is eligible to participate in the ESOP.
An employee automatically becomes a participant in the ESOP after becoming an
eligible employee. Mr. Barnet is the only Named Executive Officer that is not
yet a participant in the ESOP.
Using proceeds of a loan from the Company (the "ESOP Loan") and a
minimal cash contribution from the Bank, the ESOP Trust purchased 7.72% of the
Common Stock issued in the Conversion. The loan principal amount totaled
$19,800,000 at September 30, 1997 and is payable by the ESOP Trust in quarterly
installments of principal plus interest at a rate of 6.15% per annum.
The shares of Common Stock purchased by the ESOP Trust were
placed in a "suspense account" where the shares are held subject to the
encumbrance of the ESOP Loan. As the ESOP Loan is repaid, generally with
periodic contributions to the ESOP Trust by the participating employers and cash
dividends, if any, paid on the shares of Common Stock purchased by the ESOP
Trust with the ESOP Loan proceeds, shares of Common Stock will be released from
the suspense account and allocated to participants' accounts at least annually.
Effective January 1, 1997, cash dividends attributable to
allocated shares are paid out directly to participants. For each calendar year,
shares will be allocated to each participant who either is employed by a
participating employer as of the end of that year or who was employed during
that year but who retired, became disabled or died prior to the last day of that
year, an amount equal to 6.5% of the participant's eligible earnings for that
year subject to certain limitations, including a limitation for the plan year
beginning in 1997 of $160,000 (as adjusted for subsequent years pursuant to Code
provisions) on the amount of a participant's compensation that may be taken into
account in determining contributions under the ESOP. While the number of shares
had been allocated to participants' accounts based on the Initial Public
Offering price of $11.50 per share, effective January 1, 1997 shares will be
allocated based on the average market price over the year. To date,
approximately 417,000 shares have been allocated to participants' ESOP accounts.
A participant's account balance in the ESOP generally will become
vested and nonforfeitable at a rate of 20% as of each anniversary of the
participant's commencement of service. A participant's ESOP account generally
will be distributable in full in shares of Common Stock or cash, at the
participant's election, after termination of service.
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<PAGE>
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PROPOSAL 2
APPROVAL OF THE PROPOSED INCREASE IN AUTHORIZED COMMON STOCK
- --------------------------------------------------------------------------------
PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION
-------------------------------------------------------------------
By resolution dated November 25, 1997, the Board of Directors declared
it advisable and in the best interests of the Company to amend the Company's
Restated Certificate of Incorporation to increase the number of shares of stock
that the Company has the authority to issue to an aggregate of 135,000,000
shares, of which 130,000,000 would be Common Stock and 5,000,000 would be
Preferred Stock and directed that the Certificate of Incorporation be submitted
to a vote of the stockholders at the Annual Meeting. If the proposal is
adopted, Article IV (A) of the Certificate is hereby amended to read as follows:
ARTICLE IV (A). The total number of shares of stock which the
Corporation shall have authority to issue is 135,000,000 shares,
consisting of (i) 130,000,000 shares of Common Stock, par value $.01
per share ("Common Stock"), and (ii) 5,000,000 shares of Preferred
Stock, par value $.01 per share ("Preferred Stock").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS RESOLUTION FOR THE
FOLLOWING REASONS:
The Certificate of Incorporation currently authorizes the issuance of
up to 50,000,000 shares, consisting of 45,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. As of September 30, 1997, the Company had
24,022,924 shares of Common Stock and no shares of Preferred Stock outstanding.
As of September 30, 1997, the Company had 2,307,023 shares of Common Stock
reserved for issuance under the Company's stock option plans. In addition, the
Company had reserved 250,000 shares of Preferred Stock for possible issuance
pursuant to the Company's stockholder rights plan, adopted in April 1997.
The Board of Directors believes that it is in the best interest of the
Company and its stockholders to increase the number of authorized shares of
Common Stock in order to have additional shares available for issuance to meet a
variety of business needs as they may arise and to enhance the Company's
flexibility in connection with possible future actions. These business needs
and actions may include stock dividends, stock splits, employee benefit
programs, corporate business combinations, funding of business acquisitions, and
other corporate purposes. Although the Board periodically considers
transactions such as those listed above, it currently does not have plans to
issue any significant amount of such Common Stock or preferred stock, except as
described in the preceding paragraph.
The authorized shares of Common Stock and Preferred Stock in excess of
those presently issued will be available for issuance at such times and for such
purposes as the Board of Directors may deem advisable without further action by
the Company's stockholders, except as may be required by applicable laws or
regulations. In this regard, the rules of the National Association of
Securities Dealers, Inc. with respect to securities of companies approved for
trading on the NASDAQ National Market System, upon which the Company's Common
Stock trades, currently requires stockholder approval of (a) acquisition
transactions where the present or potential issuance of shares could result in
an increase of 20% or more in the number of shares of Common Stock outstanding,
(b) a stock option or purchase plan to be established pursuant to which stock
may be acquired by officers or directors, and (c) a transaction pursuant to
which the issuance would result in a change of control. The Board does not
intend to issue any stock except on terms or for reasons which the Board deems
to be in the best
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<PAGE>
interests of the Company. Because the holders of the Company's Common Stock do
not have preemptive rights, the issuance of Common Stock otherwise than on a
pro-rata basis to all current stockholders would reduce the current
stockholders' proportionate interests. However, in any such event, stockholders
wishing to maintain their interests may be able to do so through normal market
purchases. Any future issuance of Common Stock or preferred stock will be
subject to the rights of holders of outstanding shares of any preferred stock
which the Company may issue in the future. While the issuance of shares in
certain instances may have the effect of forestalling a hostile takeover, the
Board does not intend or view the increase in authorized Common Stock as an
anti-takeover measure, nor is the Company aware of any proposed or contemplated
transaction of this type, and this amendment to the Certificate of Incorporation
is not being recommended in response to any specific effort of which the Company
is aware to obtain control of the Company.
Adoption of the amendment to the Certificate requires the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock in
person or by proxy and entitled to vote. Abstention from voting on this
amendment (including broker non-vote) has the same legal effect as a vote
"against" this amendment. The Board of Directors unanimously recommends a vote
FOR the proposal to amend the Certificate to increase the number of shares of
Common Stock that the Company is authorized to issue. Proxies will be voted FOR
unless stockholders specify otherwise in their proxies.
In connection with this proposal, the Company recommends that each
stockholder consider the financial statements of the Company as set forth in the
Company's 1997 Annual Report to Stockholders, a copy of which is being furnished
to each stockholder together with this proxy statement.
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<PAGE>
- --------------------------------------------------------------------------------
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF AUDITORS
- --------------------------------------------------------------------------------
The Board of Directors has appointed KPMG Peat Marwick LLP to
perform the audit of the Company's financial statements for the year ending
September 30, 1998, subject to ratification by the Company's stockholders at the
Annual Meeting. KPMG Peat Marwick LLP served as the independent auditors of the
Company for the year ended September 30, 1997. Representatives from KPMG Peat
Marwick LLP will be present at the Annual Meeting and will be given the
opportunity to make a statement if they so desire, and will be available to
respond to appropriate questions from stockholders.
Unless marked to the contrary, the shares represented by the
enclosed proxy card, if executed and returned, will be voted FOR ratification of
the appointment of KPMG Peat Marwick LLP as the independent auditors of the
Company for the fiscal year ending September 30, 1998. The appointment of KPMG
Peat Marwick LLP as the Company's independent auditors must be approved by a
majority of the votes present in person or represented by proxy at the Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING SEPTEMBER 30, 1998.
- --------------------------------------------------------------------------------
OTHER MATTERS MAY PROPERLY COME BEFORE THE MEETING
- --------------------------------------------------------------------------------
The Board of Directors knows of no business that will be
presented for consideration at the Annual Meeting other than as stated in the
Notice of Annual Meeting of Stockholders. If, however, other matters are
properly brought before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote the shares represented thereby on such
matters in accordance with their best judgment.
Whether or not you intend to be present at the Annual Meeting,
you are urged to return your signed and dated proxy promptly. If you are
present at the Annual Meeting and wish to vote your shares, your proxy may be
revoked by voting at the Annual Meeting.
- --------------------------------------------------------------------------------
NOTICE OF BUSINESS TO BE CONDUCTED AT AN ANNUAL MEETING
- --------------------------------------------------------------------------------
The Restated Bylaws of the Company provide an advance notice
procedure for a stockholder to properly bring business before an annual meeting.
The stockholder must give written advance notice to the Secretary of the Company
not less than seventy (70) days nor more than ninety (90) days prior to the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is advanced by more than
twenty days, or delayed by more than seventy days, from such anniversary date,
notice by the stockholder to be timely must be so delivered not earlier than the
ninetieth day prior to such annual meeting and not later than the close of
business on the later of the seventieth day prior to such annual meeting or the
tenth day following the day on which public announcement of the date of such
meeting is first made.
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<PAGE>
The advance notice by shareholders must include the stockholder's
name and address, as they appear on the Company's record of stockholders, a
brief description of the proposed business, the reason for conducting such
business at the annual meeting, the class and number of shares of the Company's
capital stock that are owned beneficially and of record by such stockholder, and
any material interest of such stockholder in the proposed business. In the case
of nominations for election to the Board of Directors, certain information
regarding the nominee must be provided. Nothing in this paragraph shall be
deemed to require the Company to include in its proxy statement and proxy
relating to an annual meeting any stockholder proposal which does not meet all
of the requirements for inclusion established by the SEC in effect at the time
such proposal is received.
- --------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
- --------------------------------------------------------------------------------
In order to be eligible for inclusion in the proxy materials of
the Company for the Annual Meeting of Stockholders for the fiscal year ending
September 30, 1998, any stockholder proposal to take action at such meeting must
be received at the Company's executive offices at 201 Old Country Road,
Melville, New York 11747 no later than September 2, 1998. Any such proposals
shall be subject to the requirements of the proxy rules adopted under the
Exchange Act.
- --------------------------------------------------------------------------------
MISCELLANEOUS
- --------------------------------------------------------------------------------
A copy of the Company's Annual Report on Form 10-K (without
exhibits) for the year ended September 30, 1997, as filed with the SEC, will be
furnished without charge to stockholders of record upon written request to Long
Island Bancorp, Inc., 201 Old Country Road, Melville, New York 11747, Attention:
Mary M. Feder, Vice President, Investor Relations.
By Order of the Board of Directors,
Roger Teurfs
Secretary
Melville, New York
January 5, 1998
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,
DATE AND RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
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<PAGE>
PROXY>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
LONG ISLAND BANCORP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
February 17, 1998
The undersigned hereby appoints Frederick DeMatteis, Herbert J. McCooey,
Robert J. Conway, and Donald D. Wenk, and each of them, proxies for the
undersigned, with full power of substitution, to vote all shares of Long
Island Bancorp, Inc. Common Stock which the undersigned may be entitled to
vote at the Annual Meeting of Stockholders of Long Island Bancorp, Inc.,
Melville, New York, on Tuesday, February 17, 1998, at 9:30 A.M., or at any
adjournment thereof, upon the matters set forth on the reverse side and
described in the accompanying Proxy Statement and upon such other business as
may properly come before the meeting or any adjournment thereof.
Please mark this proxy as indicated on the reverse side to vote any
item. If you wish to vote in accordance with the Board of Directors
recommendations, please sign the reverse side; no boxes need to be checked.
ADDRESS CHANGE: PLEASE MARK ADDRESS CHANGE BOX ON REVERSE SIDE
(Continued and to be signed on other side)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/X/ Please mark
your vote
as this
The Board of Directors recommends a vote FOR
Items I through III.
FOR WITHHELD FOR AGAINST ABSTAIN
FOR ALL
Item I - ELECTION OF DIRECTORS / / / / Item III - Approval of Auditors. / / / / / /
Nominees: John J. Conefry, Jr.,
Richard F. Chapdelaine, George R. I PLAN TO ATTEND MEETING / /
Irwin, and Dr. James B. Tormey ADDRESS CHANGE
Please mark this box if you have / /
written address change information
on the reverse side.
WITHHELD FOR: (Write that nominee's name in the space
provided below).
___________________________________________________________
FOR AGAINST ABSTAIN Receipt is hereby acknowledged of the
Item II - Approval of proposed increase in / / / / / / Long Island Bancorp, Inc. Notice of
Authorized Common Stock to Meeting and Proxy Statement.
130,000,000 shares
Signature ______________________________________________________________________ Date ______________________________
Note: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
</TABLE>
