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 [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14A-11(c) or ss. 240.14a-12
PennFed Financial Services, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
<PAGE>
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $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: Common
Stock.
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the 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>
(Letterhead of PennFed Financial Services, Inc.)
September 27, 1996
Dear Fellow Stockholder:
On behalf of the Board of Directors and management of PennFed Financial
Services, Inc., we cordially invite you to attend the Annual Meeting of
Stockholders of the Company. The Meeting will be held at 10:00 a.m., local time,
on Friday, October 25, 1996, at the Radisson Hotel, located at 690 Route 46,
Fairfield, New Jersey.
An important aspect of the annual meeting process is the annual
stockholder vote on corporate business items. I urge you to exercise your rights
as a stockholder to vote and participate in this process. Stockholders are being
asked to consider and vote upon proposals to elect two directors of the Company
and to ratify the appointment of auditors. In addition, the meeting will include
management's report to you on the Company's 1996 financial and operating
performance.
We encourage you to attend the Meeting in person. Whether or not you
plan to attend, however, please read the enclosed Proxy Statement and then
complete, sign and date the enclosed proxy and return it in the accompanying
postpaid return envelope as promptly as possible. This will save the Company
additional expense in soliciting proxies and will ensure that your shares are
represented at the Meeting.
Your Board of Directors and management are committed to the continued
success of PennFed Financial Services, Inc., and the enhancement of your
investment. As President, I want to express my appreciation for your confidence
and support.
Very truly yours,
/s/Joseph L. LaMonica
------------------
Joseph L. LaMonica
President and Chief
Executive Officer
<PAGE>
PENNFED FINANCIAL SERVICES, INC.
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
(201) 669-7366
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held on October 25, 1996
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of PennFed Financial Services, Inc. (the "Company") will be held at
the Radisson Hotel, located at 690 Route 46, Fairfield, New Jersey, at 10:00
a.m., local time, on Friday, October 25, 1996.
A Proxy Card and a Proxy Statement for the Meeting are enclosed.
The Meeting is for the purpose of considering and acting upon:
1. The election of two directors of the Company;
2. The ratification of the appointment of Deloitte &
Touche LLP as auditors for the Company for the fiscal
year ending June 30, 1997;
and such other matters as may properly come before the Meeting, or any
adjournments or postponements thereof. The Board of Directors is not aware of
any other business to come before the Meeting.
Any action may be taken on the foregoing proposals at the Meeting on
the date specified above, or on any date or dates to which the Meeting may be
adjourned. Stockholders of record at the close of business on September 6, 1996
are the stockholders entitled to vote at the Meeting and any adjournments or
postponements thereof. A complete list of stockholders entitled to vote at the
Meeting will be available for stockholders at the offices of the Company during
the ten days prior to the Meeting, as well as at the Meeting.
You are requested to complete and sign the enclosed Proxy Card which
is solicited on behalf of the Board of Directors, and to mail it promptly in the
enclosed envelope. The Proxy will not be used if you attend and vote at the
Meeting in person.
By Order of the Board of Directors
/s/William C. Anderson
-------------------
William C. Anderson
Chairman of the Board
West Orange, New Jersey
September 27, 1996
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE
OF FURTHER REQUESTS FOR PROXIES TO ENSURE A QUORUM AT THE MEETING.
A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
PENNFED FINANCIAL SERVICES, INC.
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
(201) 669-7366
ANNUAL MEETING OF STOCKHOLDERS
October 25, 1996
This Proxy Statement is furnished in connection with the solicitation
on behalf of the Board of Directors of PennFed Financial Services, Inc. (the
"Company") of proxies to be used at the Annual Meeting of Stockholders of the
Company (the "Meeting") which will be held at the Radisson Hotel, located at 690
Route 46, Fairfield, New Jersey, on Friday, October 25, 1996, at 10:00 a.m.,
local time, and all adjournments or postponements of the Meeting. The
accompanying Notice of Annual Meeting and this Proxy Statement are first being
mailed to stockholders on or about September 27, 1996. Certain of the
information provided herein relates to Penn Federal Savings Bank ("Penn Federal"
or the "Bank"), a wholly-owned subsidiary of the Company.
At the Meeting, stockholders of the Company are being asked to consider
and vote upon (i) the election of two directors of the Company and (ii) a
proposal to ratify the appointment of Deloitte & Touche LLP as the Company's
auditors for the fiscal year ending June 30, 1997.
Vote Required and Proxy Information
All shares of common stock of the Company, par value $.01 per share
(the "Common Stock"), represented at the Meeting by properly executed proxies
received prior to or at the Meeting and not revoked, will be voted at the
Meeting in accordance with the instructions thereon. If no instructions are
indicated, properly executed proxies will be voted for the nominees and the
adoption of the proposal set forth in this Proxy Statement. The Company does not
know of any matters, other than as described in the Notice of Annual Meeting of
Stockholders, that are to come before the Meeting. If any other matters are
properly presented at the Meeting for action, the persons named in the enclosed
form of proxy and acting pursuant thereto will have the discretion to vote on
such matters in accordance with their best judgment.
Directors shall be elected by a plurality of the votes present in
person or represented by proxy at the Meeting and entitled to vote on the
election of directors. In all matters other than the election of directors, the
affirmative vote of the majority of shares present in person or represented by
proxy at the Meeting and entitled to vote on the matter shall be the act of the
stockholders. Proxies marked to abstain with respect to a proposal have the same
effect as votes against the proposal. Broker non-votes have no effect on the
vote. One-third of the shares of the Common Stock, present in person or
represented by proxy, shall constitute a quorum for purposes of the Meeting.
Abstentions and broker non-votes are counted for purposes of determining a
quorum.
<PAGE>
A proxy given pursuant to this solicitation may be revoked at any time
before it is voted. Proxies may be revoked by: (i) filing with the Secretary of
the Company at or before the Meeting a written notice of revocation bearing a
later date than the proxy, (ii) duly executing a subsequent proxy relating to
the same shares and delivering it to the Secretary of the Company at or before
the Meeting, or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute revocation of a
proxy). Any written notice revoking a proxy should be delivered to Patrick D.
McTernan, Secretary, PennFed Financial Services, Inc., 622 Eagle Rock Avenue,
West Orange, New Jersey 07052-2989.
Voting Securities and Certain Holders Thereof
Stockholders of record as of the close of business on September 6, 1996
will be entitled to one vote for each share then held. As of that date, the
Company had 4,852,820 shares of Common Stock issued and outstanding. The
following table sets forth, as of September 6, 1996, information regarding share
ownership of: (i) those persons or entities known by management to beneficially
own more than five percent of the Common Stock, (ii) the Chief Executive Officer
of the Company and the executive officers of the Company and the Bank whose
aggregate compensation exceeded $100,000 in fiscal 1996 (the "Named Officers"),
and (iii) all directors and executive officers of the Company and the Bank as a
group. For information regarding the beneficial ownership of Common Stock by
directors of the Company, see "Proposal I. Election of Directors--General."
<PAGE>
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Beneficial Owner Owned Class
---------------- ----- -----
<S> <C> <C>
PennFed Financial Services, Inc. 406,065(1) 8.37%
Employee Stock Ownership Plan
622 Eagle Rock Avenue
West Orange, New Jersey 07052-2989
John Hancock Mutual Life Insurance Company 375,000(2) 7.73
and John Hancock Subsidiaries, Inc.
P.O. Box 111
Boston, Massachusetts 02117
and
The Berkeley Financial Group and
John Hancock Advisors, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199
Named Officers(3)
Joseph L. LaMonica 125,600 2.59
President and Chief
Executive Officer
Patrick D. McTernan 65,265 1.34
Executive Vice President,
General Counsel and Secretary
Lucy T. Tinker 58,695 1.21
Executive Vice President
and Chief Operating Officer
Jeffrey J. Carfora 15,144 .31
Senior Vice President and
Chief Financial Officer
Barbara J. Sanders 14,275 .29
Senior Vice President and
Lending Group Executive of the Bank
Directors and executive officers 529,843 10.92
of the Company and the Bank
as a group (10 persons)(4)
footnotes follow
</TABLE>
<PAGE>
(1) The amount reported represents shares held by the PennFed Financial
Services, Inc. Employee Stock Ownership Plan (the "ESOP"), 69,935 of which
have been allocated to accounts of participants. First Bankers Trust
Company, Quincy, Illinois, the trustee of the ESOP, may be deemed to
beneficially own the shares held by the ESOP which have not been allocated
to the accounts of participants. Pursuant to the terms of the ESOP,
participants in the ESOP have the right to direct the voting of shares
allocated to participant accounts.
(2) As reported by John Hancock Mutual Life Insurance Company ("JHMLIC"),
JHMLIC's wholly-owned subsidiary, John Hancock Subsidiaries, Inc. ("JHSI"),
JHSI's wholly-owned subsidiary, The Berkeley Financial Group ("TBFG"), and
TBFG's wholly-owned subsidiary, John Hancock Advisers, Inc., ("JHA") in a
statement as of December 31, 1995 on a Schedule 13G under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). JHMLI, JHSI and TBFG
reported indirect beneficial ownership of these shares. JHA reported sole
voting and dispositive powers as to all of such shares.
(3) Includes shares held directly, including restricted shares and shares
allocated to the accounts of the Named Officers under the ESOP, as well as
shares held jointly with family members, in retirement accounts, in a
fiduciary capacity, by certain members of the Named Officers' families, by
trusts of which the Named Officer is a trustee or substantial beneficiary,
with respect to which the Named Officer may be deemed to have sole voting
and/or investment powers. Also includes 53,550, 30,940, 27,370, 5,950 and
5,950 shares which Mr. LaMonica, Mr. McTernan, Ms. Tinker, Mr. Carfora and
Ms. Sanders, respectively, have the right to acquire pursuant to stock
options exercisable within 60 days.
(4) This amount includes shares held directly, including restricted shares and
shares allocated to the accounts of executive officers under the ESOP, as
well as shares held jointly with family members, in retirement accounts, in
a fiduciary capacity, by certain of the group members' families, by certain
related entities or by trusts of which the group member is a trustee or
substantial beneficiary, with respect to which shares the group member may
be deemed to have sole or shared voting and/or investment powers. This
amount also includes an aggregate of 216,580 shares which directors and
executive officers as a group have the right to acquire pursuant to stock
options exercisable within 60 days, and excludes 500 shares of which Barbara
Flannery, an officer of the Bank, and 6,080 shares of which Mario Teixeira,
Jr., a director of the Company, disclaim beneficial ownership.
PROPOSAL I. ELECTION OF DIRECTORS
General
The Company's Board of Directors currently consists of six members, each of
whom is also a director of the Bank. Each of the current directors of the
Company has served in such capacity since its incorporation in March 1994. The
Board is divided into three classes, each of which contains one-third of the
Board. One-third of the directors are elected annually. Directors of the Company
are generally elected to serve for a three-year term or until their respective
successors are elected and qualified.
<PAGE>
The following table sets forth certain information, as of September 6, 1996,
regarding the composition of the Company's Board of Directors, including each
director's term of office. The Board of Directors acting as the nominating
committee has recommended and approved the nominees identified in the following
table. It is intended that the proxies solicited on behalf of the Board of
Directors (other than proxies in which the vote is withheld as to a nominee)
will be voted at the Meeting FOR the election of the nominees identified below.
If a nominee is unable to serve, the shares represented by all valid proxies
will be voted for the election of such substitute nominee as the Board of
Directors may recommend. At this time, the Board of Directors knows of no reason
why either nominee may be unable to serve, if elected. Except as disclosed
herein, there are no arrangements or understandings between the nominee and any
other person pursuant to which the nominee was selected.
<TABLE>
<CAPTION>
Shares of
Common Stock Percent
Position(s) Held Director Term to Beneficially of
Name Age in the Company Since(1) Expire Owned(2) Class
---- --- -------------- -------- ------ -------- -----
<S> <C> <C> <C> <C> <C> <C>
NOMINEES
Patrick D. McTernan 44 Director, Executive Vice 1989 1996 65,265 1.34%
President, General
Counsel and Secretary
Marvin D. Schoonover 46 Director 1990 1996 24,636 .51
DIRECTORS CONTINUING IN OFFICE
William C. Anderson 48 Chairman of the Board 1979 1998 119,386 2.46
Amadeu L. Carvalho 67 Director 1990 1998 31,636 .65
Joseph L. LaMonica 46 Director, President and 1987 1997 125,600 2.59
Chief Executive Officer
Mario Teixeira, Jr. 60 Director 1971 1997 60,607(3) 1.25
</TABLE>
(1) Includes service as a director of the Bank prior to the formation of the
Company.
(2) Amounts include shares held directly, including restricted shares, as well
as shares held jointly with family members, in retirement accounts, in a
fiduciary capacity, by certain members of the director's family, held by
certain related entities or held by trusts of which the director is a
trustee or substantial beneficiary, with respect to which shares the
respective director may be deemed to have sole or shared voting and/or
investment powers. Amounts also include 53,550, 30,940, 53,550, 14,280,
9,520 and 9,520 shares which Messrs. LaMonica, McTernan, Anderson, Teixeira,
Carvalho and Schoonover, respectively, have the right to acquire pursuant to
stock options exercisable within 60 days. With respect to Messrs. LaMonica
and McTernan, amounts also include 2,549 shares which have been allocated to
each of their respective accounts under the ESOP.
(3) Amount excludes 6,080 shares of which Mr. Teixeira disclaims beneficial
ownership.
<PAGE>
The principal occupation of each director of the Company and each of
the nominees for director is set forth below. All directors and nominees have
held their present principal occupation for at least five years unless otherwise
indicated.
William C. Anderson--Mr. Anderson has been Chairman of the Board of the
Company since its incorporation in March 1994. Mr. Anderson is also the Chairman
of the Board and President of John Young Company, Inc., a real estate agency
located in Caldwell, New Jersey.
Joseph L. LaMonica--Mr. LaMonica has been President and Chief Executive
Officer of the Company since its incorporation in March 1994, and of Penn
Federal since 1988. Mr. LaMonica has served Penn Federal in various capacities
since joining the Bank in 1980. He also is a member of the Board of Directors of
the Saint James Foundation, a philanthropic organization, and serves in an
advisory capacity to the Ironbound Ambulance Squad. He currently serves on the
Board of Governors of the New Jersey Savings League.
Mario Teixeira, Jr.--Mr. Teixeira has been a licensed funeral director
since 1961. He is owner and President of the Buyus Funeral Home in Newark and
owns the Bernauer Funeral Home and the Rucki Funeral Home, both located in
Newark, as well as the Shaw-Buyus Home for Services, located in Kearny, New
Jersey. In addition, Mr. Teixeira is a partner in BRSB Preneed Association, a
partnership specializing in funerals.
Patrick D. McTernan--Mr. McTernan has been Executive Vice President,
General Counsel and Secretary of the Company since its incorporation. He joined
Penn Federal in 1989 as Senior Vice President and General Counsel and was
promoted to Executive Vice President and General Counsel in 1992. He also serves
as corporate Secretary. Prior to his employment with the Bank, he was a partner
in the law firm of Adams and McTernan located in South Orange, New Jersey. He is
currently a member of the Legal Committee of the New Jersey Savings League.
Amadeu L. Carvalho--Mr. Carvalho, retired Controller of the Singer
Company, currently is in private accounting practice in Elizabeth, New Jersey.
His practice includes tax services and business and strategic planning for small
and medium size companies.
Marvin D. Schoonover--Mr. Schoonover is a Senior Account Executive with
the EMAR Group, Inc., an insurance agency located in Livingston, New Jersey, and
is responsible for the marketing, sales and servicing of commercial property and
casualty insurance. Mr. Schoonover first joined the EMAR Group, Inc. in 1980.
Mr. Schoonover also is a licensed real estate salesperson.
Meetings and Committees of the Board of Directors
Meetings and Committees of the Company. Meetings of the Company's Board
of Directors are generally held on a monthly basis. For the fiscal year ended
June 30, 1996, the Board of Directors met 17 times. During fiscal 1996, no
incumbent director of the Company attended fewer than 75% of the aggregate of
the total number of meetings held by the committees of the Board of Directors on
which he served. The Board of Directors of the Company has standing Executive
and Audit Committees.
The Executive Committee is comprised of all members of the Board. The
Executive Committee meets on an as needed basis and exercises the power of the
Board of Directors between Board meetings, to the extent permitted by Delaware
law. This Committee did not meet during fiscal 1996.
<PAGE>
The Audit Committee is composed of Chairman Anderson (Chairman) and
Directors Carvalho and Teixeira. The Audit Committee reviews audit reports and
related matters to ensure effective compliance with regulatory and internal
policies and procedures. The Audit Committee met two times in fiscal 1996.
The entire Board of Directors acts as a nominating committee for
selecting nominees for election as directors. While the Board of Directors of
the Company will consider nominees recommended by stockholders, the Board has
not actively solicited such nominations. Pursuant to the Company's Bylaws,
nominations by stockholders generally must be delivered in writing to the
Secretary of the Company at least 30 days prior to the date of the Meeting. The
Board of Directors met one time during fiscal 1996 in its capacity as a
nominating committee.
Meetings and Committees of the Bank. The Bank's Board of Directors
meets twice monthly and may have additional special meetings upon the written
request of the Chairman of the Board, the President or at least three directors.
The Board of Directors met 27 times during the year ended June 30, 1996. During
fiscal 1996, no incumbent director of the Bank attended fewer than 75% of the
aggregate of the total number of Board meetings and the total number of meetings
held by the committees of the Board of Directors on which he served. The Bank
has standing Audit, Human Resources and Compensation Committees, as well as
other committees which meet periodically. Set forth below is a description of
certain committees of the Bank.
The Audit Committee is responsible for the oversight of the Bank's
Internal Audit Department and for the review of the Bank's annual audit report
prepared by the Bank's independent auditors. Only non-employee directors may
serve on the Audit Committee. The current members of the committee are Chairman
Anderson (Chairman) and Directors Carvalho and Teixeira. The Audit Committee met
six times during fiscal 1996.
The Bank's Human Resources Committee is responsible for the review and
approval of the numerous personnel policies of the Bank. This Committee
addresses, among other things, the Bank's benefit programs and plans and
affirmative action. The current members of the Human Resources Committee are
Directors Teixeira (Chairman), Schoonover and LaMonica. The Committee met one
time during fiscal 1996.
The Bank's Compensation Committee, which acts as the compensation
committee of the Company and the Bank, determines salary ranges and incentive
compensation. This Committee is also responsible for administering the Company's
Stock Option and Incentive Plan (the "Stock Option Plan") and Management
Recognition Plan (the "MRP"). The current members of the Compensation Committee
are Directors Carvalho (Chairman) and Teixeira. This Committee met one time
during the fiscal year ended June 30, 1996.
Director Fees
The Company's directors are not paid fees for their service in such
capacity. Non-employee directors of the Bank were paid a fee of $28,000 for
fiscal 1996 except for the Chairman who received $58,000. Non-employee directors
also received $350 for attendance at each meeting of the Board's standing
committees and $5,000 for the payment of an annual life insurance premium.
<PAGE>
Executive Compensation
The following table sets forth information regarding compensation paid
or granted to the Named Officers.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Restricted Securities
Stock Underlying All Other
Salary Bonus Award(s) Options Compensation
Name and Principal Position Year ($) ($) ($)(1) (#) ($)(2)
--------------------------- ---- --- --- ------ --- ------
<S> <C> <C> <C> <C> <C> <C>
Joseph L. LaMonica, 1996 $290,004 $ 29,000 $ --- $ --- $30,299
President and Chief 1995 290,002 29,000 624,750 133,875 25,152
Executive Officer 1994 290,000 --- --- --- 6,205
Patrick D. McTernan, 1996 $181,500 $ --- $ --- $ --- $26,189
Executive Vice President, 1995 181,500 --- 281,138 77,350 22,755
General Counsel and Secretary 1994 181,500 --- --- --- 5,707
Lucy T. Tinker, 1996 $172,067 $ --- $ --- $ --- $28,338
Executive Vice President and 1995 150,000 --- 281,138 68,425 21,831
Chief Operating Officer 1994 149,860 --- --- --- 2,998
Jeffrey J. Carfora, 1996 $110,000 $ --- $ --- $ --- $19,395
Senior Vice President and 1995 97,981 25,000 56,228 14,875 11,708
Chief Financial Officer(3) 1994 46,731 --- --- --- 970
Barbara J. Sanders, 1996 $117,412 $ --- $ --- $ --- $20,558
Senior Vice President and 1995 114,786 --- 56,228 14,875 18,151
Lending Group Executive of the 1994 112,238 --- --- --- 3,200
Bank
</TABLE>
(1) Based on the $10.50 closing price per share of the Common Stock on the
Nasdaq National Market on October 28, 1994, the date of grant. The shares of
restricted stock shall vest in five equal annual installments (beginning on
April 28, 1995) , subject to certain conditions. Dividends are paid on the
restricted shares to the extent and on the same date as dividends are paid
on all other outstanding shares of the Common Stock. Based on the $15.50
closing price per share of the Common Stock on the Nasdaq National Market on
June 30, 1996, the 35,700, 16,065, 16,065, 3,213 and 3,213 restricted shares
held by Mr. LaMonica, Mr. McTernan, Ms. Tinker, Mr. Carfora and Ms. Sanders,
respectively, as of June 30, 1996, had an aggregate market value of
$553,350, $249,008, $249,008, $49,802 and $49,802, respectively.
(2) Includes term life insurance premiums, income attributable under whole-life
insurance policy, employer contributions to Penn Federal's 401(k) Plan and
ESOP allocations, respectively, for fiscal 1996 as follows: Mr. LaMonica -
$1,577, $6,290, $2,248 and $20,184; Mr. McTernan - $900, $2,859, $2,246 and
$20,184; Ms. Tinker - $893, $5,030, $2,231 and $20,184; Mr. Carfora - $594,
$0, $1,819 and $16,982; and Ms. Sanders - $637, $0, $1,942 and $17,979.
(3) Mr. Carfora joined the Bank in December 1993.
<PAGE>
The following table sets forth certain information concerning the
number and value of stock options at June 30, 1996 held by the Named Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
Shares
Acquired
on Value Number of Securities Value of Unexercised
Exercise Realized Underlying Unexercised In-the-Money Options
Name (#) ($) Options at FY-End (#) FY-End ($)(1)
---- --- --- --------------------- -------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph L. LaMonica --- --- 53,550 80,325 $267,750 $401,625
Patrick D. McTernan --- --- 30,940 46,410 154,700 232,050
Lucy T. Tinker --- --- 27,370 41,055 136,850 205,275
Jeffrey J. Carfora --- --- 5,950 8,925 29,750 44,625
Barbara J. Sanders --- --- 5,950 8,925 29,750 44,625
(1) Represents the aggregate market value (market price of the Common Stock less
the exercise price) of the options granted based upon the exercise price of
the options ($10.50) and the closing price of the Common Stock ($15.50) on
the Nasdaq National Market on June 30, 1996.
</TABLE>
Employment Agreements
In connection with the Bank's mutual to stock conversion, the Bank
entered into employment agreements with Messrs. LaMonica and McTernan and Ms.
Tinker. Each employment agreement provides for an annual base salary in an
amount not less than the employee's then-current salary and an initial term of
three years. Each agreement provides for extensions of one year, in addition to
the then-remaining term under the agreement, on each anniversary of the
effective date of the agreement (i.e., each July 14), subject to a formal
performance evaluation performed by disinterested members of the Board of
Directors of the Bank. Each agreement provides for termination upon the
employee's death, for cause or in certain events specified by Office of Thrift
Supervision ("OTS") regulations. Each employment agreement is also terminable by
the employee upon 90 days notice to the Bank.
Each employment agreement provides for payment to the employee of the
greater of his or her salary for the remainder of the term of the agreement, or
299% of the employee's base compensation, in the event there is a "change in
control" of the Bank where employment terminates voluntarily or involuntarily in
connection with such change in control or within 12 months thereafter. This
termination payment is subject to reduction by the amount of all other
compensation to the employee deemed for purposes of the Internal Revenue Code of
1986, as amended (the "Code"), to be contingent on a "change in control," and
may not exceed three times the employee's average annual compensation over the
most recent five year period or be non-deductible by the Bank for federal income
tax purposes. For the purposes of the employment agreements, a "change in
control" is defined as any event which would require the filing of an
application for acquisition of control or notice of change in control pursuant
to 12 C.F.R. ss.ss. 574.3 or 574.4. Such events are generally triggered prior to
the acquisition of control of 10% of the Company's common stock. Each agreement
also guarantees participation in an equitable manner in employee benefits
applicable to executive personnel.
<PAGE>
Based on his or her current salary, if Mr. LaMonica, Mr. McTernan and
Ms. Tinker had been terminated as of June 30, 1996, under circumstances
entitling him or her to severance pay as described above, he or she would have
been entitled to receive a lump sum cash payment of approximately $1,004,166,
$597,550 and $500,141, respectively.
Defined Benefit Pension Plan
The Bank sponsored a defined benefit pension plan for its employees
until July 3, 1995, at which time the plan was terminated. At the time of
termination all participants in the plan became 100% vested. The assets were
distributed to the participants in the plan. Mr. LaMonica, Mr. McTernan, Ms.
Tinker, Mr. Carfora and Ms. Sanders received $102,027, $35,897, $104,883, $2,994
and $20,342, respectively.
Certain Transactions
The Bank has followed a policy of granting loans to eligible directors,
officers, employees and members of their immediate families for the financing of
their personal residences and for consumer purposes. All loans by the Bank to
its senior officers and directors are subject to OTS regulations restricting
loans and other transactions with affiliated persons of the Bank. Under
applicable law, all loans or extensions of credit to executive officers and
directors must be made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
the general public and must not involve more than the normal risk of repayment
or present other unfavorable features. In this regard, all outstanding loans to
the Bank's directors and senior officers have been made in the ordinary course
of business and on the same terms, including collateral and interest rates, as
those prevailing at the time for comparable transactions and did not involve
more than the normal risk of collectibility.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the subsidiary Bank's Board of Directors
has furnished the following report on executive compensation:
Penn Federal's Compensation Committee has responsibility for reviewing
the compensation policies and plans for the subsidiary Bank and its affiliates.
The policies and plans established are designed to enhance both short-term and
long-term operational performance of the Bank and to build stockholder value
through anticipated appreciation in the Company's Common Stock price.
One of the Committee's primary objectives in the compensation area is
to develop and maintain compensation plans which provide the Bank with the means
of attracting and retaining quality executives at competitive compensation
levels and to implement compensation plans which seek to motivate executives to
perform to the full extent of their abilities and which seek to enhance
stockholder value by aligning closely the financial interests of the Company's
executives with those of its stockholders. In determining compensation levels,
plans and adjustments, the Committee takes into account, among other things,
compensation reviews made by third parties each year. These studies primarily
compare the Bank's compensation to other local financial institutions.
<PAGE>
With respect to Mr. LaMonica's base salary in the fiscal year ended
June 30, 1996, the Committee took into account a comparison of salaries of chief
executive officers of local financial institutions. Likewise, each executive
officer's base salary was determined utilizing financial institution
compensation surveys. Mr. LaMonica's base salary for fiscal year 1996 was
unchanged from the level set by the Committee for fiscal year 1995 because it
was the judgment of the Committee that the competitive salary data indicated
that Mr. LaMonica's base salary was appropriate for fiscal year 1996. The
Committee determined, however, based on numerous achievements during the past
fiscal year attributable to Mr. LaMonica resulting in an increase in the Bank's
size and in the improvement of performance by the Bank, to award Mr. LaMonica a
cash bonus of $29,000.
The Bank and the Company have included stock option and restricted
stock awards as key elements in its total compensation package. Equity based
compensation provides a long-term alignment of interests and results achieved
for stockholders with the compensation rewards provided to executive officers by
providing those executives and others on whom the continued success of the
Company most depends with a proprietary interest in the Company. In fiscal 1995,
a Stock Option and Incentive Plan and a Management Recognition Plan were adopted
providing for the grant of several types of equity-based awards including stock
option and restricted stock awards. These plans were ratified by PennFed
Financial Services, Inc. stockholders in fiscal 1995.
In fiscal year 1995, all of the Bank's executive officers were granted
stock option and restricted stock awards, vesting over a five-year schedule.
Since the initial awards in fiscal 1995, no additional stock options or
restricted stock have been awarded to executive officers. Based upon the awards
of stock options and restricted stock and their respective vesting schedules,
26,775 stock options at an exercise price of $10.50 per share and 11,900 shares
of restricted stock vested for Mr. LaMonica in fiscal 1996.
Through the compensation programs described above, a significant
portion of the Bank's executive compensation is linked directly to individual
and corporate performance. The Committee will continue to review all elements of
compensation to assure that the compensation objectives and plans meet the
Company's business objectives and philosophy of linking executive compensation
to stockholder interests of corporate performance as discussed above.
In 1993, Congress amended the Internal Revenue Code to add Section
162(m) to limit the corporate deduction for compensation paid to a corporation's
five most highly compensated officers to $1.0 million per executive per year,
with certain exemptions. The Committee carefully reviewed the impact of this
legislation on the cost of the Bank's current executive compensation plans.
Under the legislation and regulations adopted thereunder, it is not expected
that any portion of the Company's (or subsidiaries) employee remuneration will
be non-deductible in fiscal 1996 or in future years by reason of compensation
awards granted in fiscal 1996. The Committee intends to review the Company's
(and subsidiaries) executive compensation policies on an ongoing basis, and
propose appropriate modifications, if the Committee deems them necessary, to
these executive compensation plans with a view toward implementing the Company's
compensation policies in a manner that avoids or minimizes any disallowance of
tax deductions under Section 162(m).
The foregoing report is furnished by the Compensation Committee of the
Board of Directors:
Amadeu L. Carvalho, Chairman Mario Teixeira, Jr.
<PAGE>
Stock Performance Presentation
The line graph below compares the cumulative total stockholder return
on the Common Stock to the cumulative total return of a broad index (all Nasdaq
U.S. Stocks) and a savings and loan industry index for the period July 14, 1994
(the date the Company became a publicly-traded company) through June 30, 1996.
While the Company's Common Stock was sold at $10.00 per share in the initial
public offering, the stock closed at $13.125 per share on July 14, 1994, its
first day of trading. The graph assumes that $100 was invested on July 14, 1994
to purchase shares of the Common Stock at the closing price on such date and not
at the initial offering price.
[GRAPHIC -- GRAPH PLOTTED TO POINTS LISTED IN CHART BELOW]
<TABLE>
<CAPTION>
07/15/94 12/30/94 06/30/95 12/29/95 06/28/96
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Nasdaq Total Return ........................... 100.00 105.95 132.11 149.82 169.61
PennFed Fin Svcs-NJ ........................... 100.00 78.10 96.19 112.38 118.10
SNL $500M - $1B Thrift ........................ 100.00 92.79 118.14 138.20 143.40
</TABLE>
PROPOSAL II. RATIFICATION OF THE APPOINTMENT OF AUDITORS
The Board of Directors has renewed the Company's arrangement for
Deloitte & Touche LLP to be its auditors for the 1997 fiscal year, subject to
the ratification of the appointment by the Company's stockholders. A
representative of Deloitte & Touche LLP is expected to attend the Meeting to
respond to appropriate questions and will have an opportunity to make a
statement if he or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S
AUDITORS FOR THE FISCAL YEAR ENDING JUNE 30, 1997.
<PAGE>
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials
for the next Annual Meeting of Stockholders, any stockholder proposal to take
action at such meeting must be received at the Company's administrative office
located at 622 Eagle Rock Avenue, West Orange, New Jersey 07052-2989, no later
than May 30, 1997. Any such proposal shall be subject to the requirements of the
proxy rules adopted under the Exchange Act.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons owning more than 10% of a registered class of the
Company's equity securities, to file periodic reports of ownership and changes
in ownership with the Securities and Exchange Commission and to provide the
Company with copies of such reports. Based solely upon information provided to
the Company by the directors and officers subject to Section 16(a), all Section
16(a) filing requirements applicable to such persons were complied with during
fiscal 1996, except for one report timely filed by Director Mario Teixeira, Jr.
in which certain of the amounts of securities directly and indirectly
beneficially owned were incorrectly reported. Mr. Teixeira has amended the
report to provide the correct amounts.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
Meeting other than those matters described above in this Proxy Statement.
However, if any other matter should properly come before the Meeting, it is
intended that holders of the proxies will act in accordance with their best
judgment.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of Common Stock. In addition to solicitation by mail,
directors, officers and regular employees of the Company and/or the Bank may
solicit proxies personally or by telegraph or telephone without additional
compensation.
BY ORDER OF THE BOARD OF DIRECTORS
/s/William C. Anderson
-------------------
William C. Anderson
Chairman of Board
West Orange, New Jersey
September 27, 1996
<PAGE>
REVOCABLE PROXY
PENNFED FINANCIAL SERVICES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 25, 1996
The undersigned hereby appoints the Board of Directors of PennFed Financial
Services, Inc. (the "Company"), and its survivor, with full power of
substitution, to act as attorneys and proxies for the undersigned to vote all
shares of common stock of the Company which the undersigned is entitled to vote
at the Annual Meeting of Stockholders (the "Meeting"), to be held on Friday,
October 25, 1996 at the Radisson Hotel, located at 690 Route 46, Fairfield, New
Jersey, at 10:00 a.m., local time, and at any and all adjournments thereof, as
directed herein:
I. The election of the following directors for three-year terms:
PATRICK D. MCTERNAN [ ] For [ ] Withheld
MARVIN D. SCHOONOVER [ ] For [ ] Withheld
II. The ratification of the appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending June 30, 1997.
[ ] For [ ] Against [ ] Abstain
In their discretion, the proxies are authorized to vote on any other business
that may properly come before the Meeting or any adjournment thereof.
The Board of Directors recommends a vote "FOR" the listed proposals.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED,
THIS PROXY WILL BE VOTED FOR THE PROPOSALS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Please be sure to sign and date this Proxy in the box below.
__________________________________
Date
__________________________________
Stockholder sign above
__________________________________
Co-holder (if any) sign above
<PAGE>
Detach above card, sign, date and mail in postage paid envelope provided.
PENNFED FINANCIAL SERVICES, INC.
This Proxy may be revoked at any time before it is voted by: (i) filing with
the Secretary of the Company at or before the Meeting a written notice of
revocation bearing a later date than this Proxy; (ii) duly executing a
subsequent proxy relating to the same shares and delivering it to the Secretary
of the Company at or before the Meeting; or (iii) attending the Meeting and
voting in person (although attendance at the Meeting will not in and of itself
constitute revocation of this Proxy). If this Proxy is properly revoked as
described above, then the power of such attorneys and proxies shall be deemed
terminated and of no further force and effect.
The above signed acknowledges receipt from the Company, prior to the execution
of this Proxy, of a Notice of the Meeting, a Proxy Statement and the Company's
Annual Report to Stockholders for the fiscal year ended June 30, 1996.
Please sign exactly as your name appears on this proxy card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
